Politics vs Economics: Difference and Comparison

Politics and Economics are two different terms with different meanings and purposes in a social system.

Key Takeaways

1. Politics is making decisions, allocating resources, and influencing a group or organization. At the same time, economics studies how individuals, businesses, and societies produce, distribute, and consume goods and services.
2. Politics involves activities such as campaigning, lobbying, and policymaking, while economics focuses on analyzing the principles and mechanisms that govern the production and exchange of resources in a market system.
3. The two fields are interconnected, as political decisions can significantly impact economic systems and policies, while economic factors influence political agendas and outcomes.

Politics vs. Economics

The difference between Politics and Economics is that the former is mainly an activity concerned with a society’s organization and governance. While the latter is an academic discipline that studies the material condition of a society

Politics refers to the act of organizing society through the exercise of power or authority. Such activity entails making laws, implementing them and allocating resources to different sections of society, and so on.

Economics, on the other hand, refers to the branch of social science that studies the activities related to society’s economic system viz production, consumption, and distribution of resources.

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Comparison Table

Parameter of Comparison	Politics	Economics
Meaning	It is the act of organizing a society using power or authority.	It is an offshoot of social science concerned with the study of the material conditions of a society.
Orientation	It is practice-oriented.	It is theory-oriented.
Relation to resources	It concerns the ‘authoritative allocation of resources’ in a society.	It is concerned with the availability and management of resources in a society.
Function	It is a social activity that involves the representation and reconciliation of diverse conflicting interests by providing them with a share in power according to their relative importance in society.	It studies the production, consumption, and distribution of resources, market interactions, effects of those interactions, and so on.
Actors involved	Individual Politicians, Political parties, Pressure groups, and so on.	Economists

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What is Politics?

It is described as organizing a society by exercising power or authority. The term derives from the Greek word Politicos which means ‘related to citizens’.

Positively, it is defined as ‘conflict resolution’ or ‘collective decision-making.’ Descriptively, it is defined as the science or art of government or the ‘allocation of scarce resources.’ And negatively, it is defined as a field of manipulation or deception.

As ‘conflict resolution’ or ‘collective decision-making,’ Politics involves representing and reconciling diverse interests by giving them a share in power in proportion to their relative importance in society.

As the science and art of government, it is found in the formal governance structures viz the legislature, the executive, and the judiciary.

And as manipulation or deception, Politics can be found in all forms of social interactions that involve a power struggle.

Nonetheless, specific characteristics of politics are common in all the definitions mentioned above:

1. Politics is an activity.
2. Politics is a social activity that transpires from the association between or among people.
3. Politics emerges out of the existence of diverse opinions, interests, needs, and wants.
4. Politics exists where there is competition or clash among these diverse interests, opinions, wants, or needs. If there is no conflict, there is no politics.
5. And finally, Politics is about the search for a resolution to these conflicts and making decisions binding on the whole society.

 

What is Economics?

It is a branch of social science concerned with studying the material conditions of a society. These include production, consumption, distribution of resources, demand, supply, etc.

As a discipline, it employs scientific methods to study how individuals, groups, organizations, and society at extensive make use of scarce resources to meet their ends.

Three questions are most pertinent to the discipline:

1. What leads individuals to exchange resources that are limited?
2. How do producers and consumers conduct themselves in a market arena, and how do their interactions lead to mutually favorable exchange?
3. How can the government compensate for the limitations of the market to make exchanges mutually favorable for producers and consumers?

To deal with these questions, Economists try to:

1. Observe, describe, and measure the changes in market exchanges over time.
2. Expound on the effects of market interactions, like creating costs that mutually benefit the buyer and seller.
3. Propose and develop a hypothesis and use models, e.g., the demand-supply model, to test those hypotheses.
4. Collect data from real-world events and put them into models to check the validity of those models.
5. And finally, predict the future behavior of economic variables based on those models.

These questions are dealt with at two levels based on which the discipline has developed two branches:

1. Macroeconomics: It observes, analyses, and describes the economy as a system of interactions between production and consumption, utilization of resources like land, labor, and capital, economic growth, inflation, and public policies that affect the wealth of a nation.
2. Microeconomics:  It observes, analyses, and describes the fundamental constituents of the economy, like economic agents, the interaction between those economic agents, and the outcome of such interactions.

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Main Differences Between Politics and Economics

1. Both terms trace their origin in the Greek city-states. While ‘Politics’ has been derived from the term Politicos meaning ‘related to citizens’. ‘Economics’ has been derived from the term Oikonomia which means ‘management of the household.’
2. The main difference between Politics and Economics is that the former is an activity related to the organization and governance of a society. While the latter is an offshoot of social science concerned with the study of the material conditions of a society.

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References

1. https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0003055400203304
2. https://ideas.repec.org/b/elg/eebook/1801.html