Why ‘political economy analysis’ has lost the plot, and we need to get back to power and politics

July 10, 2014 12 By Duncan Green

Adrian Leftwich (right), a much-loved guru of the ‘Thinking and Working Politically’ (TWP) movement, died in April 2013. But in testament to his importance (and the slow grind of adrian leftwichacademic publishing), his last paper only came out last month, and it is an important one.

Written with David Hudson of UCL (and universally referred to as the ‘Hudwich paper’), From Political Economy to Political Analysis critiques the way TWP has evolved. In a nutshell, it fears that it has succumbed to two temptations – trying too hard to look like economics, and succumbing to pressure to turn itself into a toolkit. Time to get back to power and politics.

I loved the paper for two main reaons: it nails the origins of my disquiet at the way that in polite society, we often say ‘political economy’ when we actually mean politics, and it puts human agency back in to what can sometimes seem like a defeatist exercise (political economist = someone who comes and explains why your project has failed). Some highlights:

‘Political economy has thus now virtually become a shorthand term for the emerging consensus that it is not only technical, administrative or managerial factors that explain poor development performance. The way in which political and economic processes interact is also critical in promoting or frustrating developmental processes.

There have been three broad phases – or ‘generations’ – of political economy work:

The ‘first generation’, in the 1990s, mainly addressed issues of ‘governance’ (and especially the reasons for the absence of ‘good governance’), but largely from a technical, administrative, managerial, capacity-building and, subsequently, public sector management perspective. Work in this tradition continues.

The ‘second generation’ is best typified by DFID’s Drivers of Change, Sida’s Power Analysis, and the Dutch SGACA work (Strategic Governance and Corruption Analysis). Importantly, these approaches and the many studies they generated made a huge contribution. They ‘brought politics back in’, with a greater emphasis on historical, structural, institutional and political elements that shaped the context within which actors worked.

The ‘third generation’, often combining elements from the previous two, has come to be strongly influenced by assump­tions, concepts and methods drawn from economics. It emphasises the way in which institutional incentives shape behaviour to produce positive or dysfunctional developmental outcomes. In short, political economy has come to be the economics of politics, and less about political analysis.’

But the latest twists have some serious limitations:

‘The key analytical concepts are seldom well-defined, carefully differentiated or usefully disaggregated. Among these we include institutions, structure, agency, ideas, contingency and – above all – power. The way they are used tends to provide for lumpy, one-dimensional analysis. It does not allow analysts or policy makers to reach the detailed inner politics that shapes or frustrates change.

politics v economics

The explanatory core of third generation political economy has increasingly come to focus on how interests, incentives and institutions shape and explain both how agents behave and the political processes and practices that affect development outcomes.

The net effect has been to transform the analysis of politics into the economics of politics. And, by effectively reducing politics to a form of ‘market’, much recent political economy misses what is distinctively political about politics – power, interests, agency, ideas, building coalitions and the impact of contingency.

Political analysis on the other hand takes politics, power and agency much more seriously. Unlike second and third generation political economy, political analysis enables one to dig down to the level of messy, everyday politics.
This is where there are competing ideas, interests, values and preferences; where specific groups and interests struggle over the control, production, use and distribution of resources; where conflict is negotiated; where bargains are struck; and where formal and informal political settlements, alliances and coalitions are made and broken. Here politics collapses and violent conflict can break out; institutions are contested, shaped, implemented, avoided, undermined or amended; contingency, critical junctures and windows of opportunity disturb old patterns or open up new possibilities and – crucially – here the different players use different sources, forms, expressions and degrees of both de jure and de facto power.

There is now a growing realisation that we need to refocus not simply on ‘big structures’ but also on actors – in short, agency, defined as the ability of individuals, organisations and groups of collective actors to consciously deliberate and act strategically to realise their intentions, whether developmental or not. But, whether individual or collective, agents do not work politically in a limitless, structureless and institution-free plane of open possibilities.

The structural and institutional contexts of power – formal and informal, local and external – always and everywhere consti­tute constraints. However, while structures new-yorker-keep-things-precisely-as-they-areand institutions are constraints, they are not destiny. People, groups, organisations and coalitions do not move in unison, like reeds in the wind, to a change of incentives.

Structures and institutions provide opportunities and resources that agents can use – and hence also provide room for manoeuvre. The point is that structures and institutions of power not only constrain political actors, but can also provide the resources which they, as agents, can find and use to initiate or bring about change.

Political analysis does not ignore interests, incentives or institutions, but goes further and deeper. It differentiates and disag­gregates interests, ideas, incentives and institutions, and also has the analysis of power (and the sources and forms of power) at its core.

Political analysis focuses on how the structures and institutions of power shape how agents behave, and how they do or can strategise, frame, generate, use, mobilise and organise power and institutions to bring about domestically owned deliberation and appropriate change in the politics of development.

Ultimately, if you wish to defeat poverty, prepare to address the power and the politics that keeps people poor. That is why political analysis matters.’

If you want to understand what TWP is all about, the full 108 page paper is a great place to start.