Politics and Economics are two different terms having different meanings and serving different purposes in a social system.
Politics vs Economics
The difference between Politics and Economics is that the former is mainly an activity that is concerned with the organization and governance of a society. While the latter is an academic discipline that studies the material condition of a society
Politics refers to the act of organizing the society through the exercise of power or authority. Such activity entails making laws, implementing them and allocating resources to different sections of the society, and so on.
Economics, on the other hand, refers to the branch of social science that studies the activities related to the economic system of a society viz production, consumption, and distribution of resources.
Comparison Table Between Politics and Economics (in Tabular Form)
|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 is concerned with 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 representation and reconciliation of diverse conflicting interests by providing them with a share in power according to their relative importance in the society.||It studies the production, consumption and distribution of resources, market interactions, and effects of those interactions and so on.|
|Actors involved||Individual Politicians, Political parties and Pressure groups, and so on.||Economists|
What is Politics?
It is described as the act of organizing a society through the exercise of power or authority. The term has been derived from the Greek word Politicos which means ‘related to citizens’.
It is a multidimensional term that has been defined using different connotations. Positively, it is defined as ‘conflict resolution’ or ‘collective decision-making’. Descriptively, it is defined as the science or art of government or ‘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 the representation and reconciliation of diverse interests by giving them a share in power in proportion to their relative importance in the society.
As the science and art of government, it is found in the formal structures of governance 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 struggle for power.
Nonetheless, certain characteristics of politics are common in all the above-mentioned definitions:
- Politics is an activity.
- Politics is a social activity that is it transpires out of association between or among people.
- Politics emerges out of the existence of diverse opinions, interests, needs, and wants.
- Politics exists where there is a competition or clash among these diverse interests, opinions, wants, or needs. If there is no conflict, there is no politics.
- And finally, Politics is about the search for resolution of these conflicts and taking decisions accordingly that are binding on the whole society.
What is Economics?
It is a branch of social science that is concerned with the study of the material conditions of a society. These include production, consumption, and distribution of resources, demand and supply, and so on.
As a discipline, it employs scientific methods to study how individuals, groups, organizations, and society at large make use of scarce resources to meet its ends.
Three questions are most pertinent to the discipline:
- What leads individuals to exchange resources that are limited?
- How producers and consumers conduct themselves in a market arena and how their interactions lead to mutually favourable exchange?
- How can the government compensate for the limitations of the market to make exchanges mutually favourable for producers and consumers?
To deal with these questions, Economists try to:
- Observe, describe, and measure the changes in market exchanges over time.
- Expound the effects of market interactions like the creation of costs that mutually benefit the buyer and seller.
- Propose and develop a hypothesis and use models e.g. demand-supply model to test those hypotheses.
- Collect data from real-world events and put them into models to check the validity of those models.
- And finally, predict the future behaviour of economic variables based on those models.
These questions are dealt with at two levels based on which the discipline has developed two branches:
- Macroeconomics: It observes, analyses, and describes the economy as a system of interactions between production and consumption, utilization of resources like land, labour and capital, economic growth, inflation, and public policies that affect the wealth of a nation.
- Microeconomics: It observes, analyses, and describes the basic constituents of the economy like economic agents, the interaction between those economic agents, and the outcome of such interactions.
Main Differences Between Politics and Economics
- Both the 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 household’.
- The main difference between Politics and Economics is that the former is an activity related to the organisation 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.
- Economics is concerned with the availability of resources in a society. While Politics is concerned with the distribution of those resources in a society.
- Politics involves representation and aggregation of demands and interests in a society and responding to those demands and interests through lawmaking, law implementation, and law adjudication. While, Economics involves studying the behaviour of economic agents in a market scenario, the nature of those interactions and the results of those interactions. It also studies the role played by the government in compensating the shortcomings of the market interactions.
- The main actors involved in Politics are individual politicians, political parties, and pressure groups and so on. While the Economists are the main actors in the academic discipline of Economics.
Both Economics and Politics are indispensable components of a society. It is the interrelation between them that makes a society to function and develop. Economics is concerned with the availability of resources in a society. Politics, on the other hand, relates to the ‘authoritative allocation’ of those resources in a society. Consequently, both of them are necessary to run a society successfully.