The term “economy” in its contemporary sense came into use only quite recently. It is often assumed that the idea of the economy, defined as the relations of material production and exchange in a given territory and understood as an object of expert knowledge and government administration, was introduced by political economists such as William Petty, François Quesnay, and Adam Smith in the seventeenth and eighteenth centuries, or even by Aristotle. In fact, however, this use of the term developed only in the 1930s and 1940s and was well established only by the 1950s (T. Mitchell 2005).
In earlier periods, “economy” (usually with no definite article) referred to a way of acting and to the forms of knowledge required for effective action. It was the term for the proper husbanding of material resources or the proper management of a lord's estate or a sovereign's realm. “Political economy” came to mean the knowledge and practice required for governing the state and managing its population and resources (Tribe 1978; Poovey 1998). Michel Foucault (1991) connects the development of this expertise to the wider range of practices known as “government,” in an older sense of that term referring not to the official institutions of rule but to a variety of forms of knowledge and technique concerned with governing personal conduct, managing the health and livelihoods of a population, and controlling the circulation of material and political resources.
What is the difference between the older meaning of “economy,” understood as a way of exercising power and accumulating knowledge, and the contemporary idea of “the economy,” understood as an object of power and knowledge? Foucault (1991, 92) does not address this question but simply relates the two meanings by suggesting that “the very essence of government—that is the art of exercising power in the form of economy—is to have as its main object that which we are today accustomed to call ‘the economy.’” This conflation has led several scholars to argue that the economy emerged as a distinct object in the late eighteenth or early nineteenth century. Others read Karl Polanyi's (1944/2001) argument that in the same period market relations were “disembedded” from society as another version of this idea. Polanyi, however, is describing the emergence not of the economy but of society, formed as an object of political discourse in response to the increasingly unrestrained relations of what he calls “market economy.”
The emergence of the economy in the mid-twentieth century differs from the era of nineteenth-century governmentality in at least three important senses. First, economists and government agencies defined the economy in a way that enabled them to claim new powers to measure it, manage it, and make it grow. They defined it not in terms of human labor, the management of resources, or the accumulation of national wealth but as the circulation of money. The economy is the sum of all those transactions in which money changes hands, and its size and growth are calculated by estimating this sum. Second, the idea of the economy belongs to the postimperial era of nation-states, in which human sociality is understood as a series of equivalent national units. Each of these units claims the right to its own national state, replacing the earlier system of European colonial empires, and each is thought to be composed of a series of distinct sociotechnical spaces: a society, an economy, and a culture (T. Mitchell 2002). Third, the emergence of the idea that state, society, economy, and culture exist as separate spheres, which collectively fill the space of the nation-state, coincided with the twentieth-century development of the social and cultural sciences as distinct professional and academic fields. Political science, sociology, economics, and anthropology (and the study of national literatures and histories in the case of Western societies) each contributed to the making of its respective object, providing it with concepts, calculations, agents, and methods of evaluation. Portrayed as merely an object of knowledge, the economy, along with these other spheres, was in fact enmeshed in the new forms of academic expertise and professional knowledge.
Acknowledging the role of economics and other professional expertise in making the economy does not mean that the economy is just a “representation” or merely a “social construction.” Making the economy involved a wide range of sociotechnical projects that embedded people and things in new machineries of calculation, new techniques of accounting, and new impulsions of discipline and desire. The development of marketing and brand identity, the management of the flow of money by corporate and national banks, New Deal programs such as electrification and the building of dams, colonial development schemes and the postwar projects of development agencies and the World Bank: all contributed to the organization of worlds that could now be described and measured as the economy.
Firmly established by the 1950s, the modern idea of the economy was soon subject to criticism. Researchers pointed out that its measurement does not take proper account of unpaid labor, especially the work of maintaining and reproducing households, which is performed largely by women. It cannot measure illegal, unreported, or unregistered economic activity, such as the global arms trade or the informal, small-scale farming, manufacturing, and commerce that play a large role in many countries. It treats the natural world only as resources to be consumed and cannot express the cost of the exhaustion of nonrenewable resources, the destruction of species, or irreversible changes in the global climate.
These criticisms were made by writers and researchers mostly operating outside the academic discipline of economics. But even economists began to acknowledge the increasing difficulty of accurately measuring or describing the economy. The growth in the production of film and music, tourism and information, telecommunications and the Internet, legal and consulting services, health care, and other forms of expertise and culture created economies whose products seem increasingly ethereal. Even in the case of consumer goods such as food, clothing, cars, and electronics, the creation of value through brand identity and through the shaping of fashion and taste has made the economic world seem less material and more difficult to measure or predict.
These changes in the economy have sometimes been described in American studies, as in cultural studies more broadly, as marking the transition to a postmodern stage of capitalism (Jameson 1991; Lowe and Lloyd 1997). Such accounts homogenize the changes and attribute them to the force of an underlying logic of the development of capital. They also invoke an earlier era, modernity, in which representations were more firmly anchored to material realities. The genealogy of the concept of the economy cautions against this view. There was never an era in which a simple, material reality could be captured and represented as the economy. The possibility of representing the economy as the object of economic knowledge rested on the proliferation of sociotechnical processes of representation. It was the spread of new forms of representational practice that made it possible to attempt the social-scientific representation of that world. The economy, the new object of economics, was constructed out of not only numerical quantifications but an entire process of branding, product development, information production, and image making that formed both the possibility of the modern economy and the increasing impossibility of its representation.
The contemporary idea of the economy has also been affected by the rise of neoliberal economics, which has turned attention away from the economy and back toward the seemingly simpler idea of “the market.” The trouble is that markets, like economies, must be made. They are produced not by the natural working of self-interest but by the complex organization of desire, agency, price, ownership, and dispossession. Economics (especially in a wider sense of the term, encompassing fields such as accounting and management) helps to produce these arrangements, by providing instruments of calculation and other necessary equipment (Callon 1998), just as it helped to produce the economy. However, while the idea of the economy refers to a specific territory, usually the nation-state, the market has no particular spatial connotation. It can refer to the trading floor of a futures exchange or a transnational network. Unlike the economy, therefore, it does not invoke the role of the state, as the power that governs economic space and defines its task as the management and growth of the economy and the nurturing and regulation of economic actors. The regulation of markets and the forming and governing of market agencies is dispersed at numerous levels.
The idea of the economy survives today as much as a political concept as an object of economic theory. A sign taped to the wall in the Democratic Party campaign headquarters for the 1992 U.S. presidential election proclaimed, “It's the economy, stupid!” Placed there, it is said, as a reminder of where the campaign should keep its focus, it reminds us today of the work that is done to make the existence of the economy appear obvious and its truths uncontestable. It also should remind us that the goal of fixing what the economy refers to has remained surprisingly resilient. While the field of cultural studies, American and otherwise, has paid much attention to other organizing concepts, such as nation, class, gender, society, and of course culture itself, it has often left the idea of the economy untouched. There have been a number of interesting studies of different “representations” of the economy. These usually assume, however, that the economy itself remains as a kind of underlying material reality, somehow independent of the intellectual equipment and machinery of representation with which it is set up and managed. In the same way, academic economics is often criticized for misrepresenting the “true nature” of the economy. The task now is to account for the great success of economics and related forms of expertise in helping to make the economy in the first place.
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