One of the hot topics this autumn, alongside the war in Ukraine, has been the debt brake. Out of all Europeans, Finns are particularly concerned about debt. When people discuss debt and other financial matters, they will often ask economists what they think. To make the debate on economic policy more varied, it is important to also listen to the views of social scientists.
Economists often tend to talk about figures, such as debt, as if they were neutral truths. Economics has often been criticised for being a discipline with too few voices. Even though the discipline is wider in reality, it is true that its most influential part is still based on the neoclassical mainstream, which typically treats the economy as a law-like phenomenon and ignores the impact of context. In economism, the economy is seen as non-political and out of democracy’s reach.
Social scientists can, however, highlight how the economy and politics are intertwined. Economic decisions, e.g. ones regarding income distribution, consumption, production and ownership, are based on political values, and there is rarely one right answer. How the economy works (or how it is theorized) is based on the relative strengths in society at the time, and is open to alternative developments.
As well as climate change and the loss of biodiversity, we are also living in a “New Gilded Age”, where wealth and power belong to the few. This is fuelled by the increasing monopolisation of Big Tech.
At the same time, both old and new superpowers are using “weaponised interdependence” to harness more and more sectors into instruments of geoeconomical conflicts. To understand and deal with the most burning economic issues of our times, we need multivoiced sociological understanding which examines power relationships with a critical eye.
One field of study which combines several disciplines and might challenge the traditional economic debate is political economy. It is not a separate discipline and is not limited only to the study of politics; as an interdisciplinary field of study, it draws instead from the concepts, questions, theories and methods of many disciplines, while being primarily based on the social sciences.
The political economics which modern economics is based on was born more than 200 years ago. It described the production and exchange of goods, but it also wanted to offer up capitalism as an alternative to dictatorship. This original version should not be mistaken for modern political economy, as the modern version is multidisciplinary and covers a much wider range of research topics.
Political economy approaches economy as one method of examining, doing and presenting politics. It studies economic institutions, economic policy and economic discourse, as well as the political dimensions of the economy and economics. In other words, all the phenomena which clearly have both an economic and a political aspect. Political economy can put the economic debate into a whole new framework by digging into the assumptions, ideologies and political objectives behind the economic debate and economic policy, or the ways of doing and producing these.
It shines a light on the underlying power relationships and social norms. Political economy reveals what principles the current capitalist system relies on, and what alternatives there are.
In order to make the economic debate more varied, it is essential that political economy actively takes on issues which have previously been blind spots, particularly in economics, which examines the economy in quite a narrow way. Recent topics examined in Finnish political economy include looking at economic policy through a feminist lens, which highlights the kind of inequality which neo-classical economics cannot reach. Another issue that has been highlighted is how state-driven industrial policy is: successful industrial and innovation policy often requires a state-driven overall strategy. Recent research into growth models highlights the importance of demand to push growth.
Political economy has also gone back to studying the power of corporations. As an example, my colleagues and I are studying the power of Big Tech, particularly within the context of EU lobbying. This research highlights what it means that Apple, Microsoft, Amazon, Meta and Google have become important lobbyists in Brussels. These platforms also control our political debate online. While investment into data centres is celebrated in public, Finnish research has highlighted these data centres’ security policy interests, and the sovereignty issues due to the potential to weaponise interdependence.
The debt brake is directly linked to the EU’s rules on economic policy, which are examined in political economy. It has been highlighted that the EU rules create pressure to save, which makes it almost impossible to increase the investment rate. For a long time, political economy has been studying quantification, i.e. how numbers are used and produced in politics. The concept of neo-constitutionalism states that economic rules are used to isolate the economy, such as monetary policy, from the democratic decision-making.
Political economy, and particularly the branch of global political economy, has also extended its geographical research subject to the agency of the countries in the Global South.
In general, the financial crisis and the politics of austerity that followed acted as a wakeup call for the global political economy, which had slid into analysis of power balances on a macro level, and led it to deepen its analysis of macro-level financial theory, the mechanisms of the financial markets, players as shapers of economic policy ideas, big business and innovation policy. Now, this field of study offers deeper perspectives than the media debates on how to govern in a sustainable way on a global level in the era of trade wars, militarisation and Big Tech. It reveals that global control works through the combined effect of the aspirations of public and private players.
In our economic debate Finland is seen as an “island”, an open economy that is simply trying to adapt, like a piece of driftwood, through cost-based competitiveness. The global political economy, on the other hand, places Finland in the global economy and highlights global themes, such as the debt crisis in the Third World – an issue that Finland should also have a role in solving.
Laura Nordström, PhD, BA, post-doctoral researcher, University of Helsinki
Nordström used a study published in the paper Poliittinen talous as source and inspiration for this article.
In 2025, postdoctoral researcher Laura Nordström was awarded the UACES (University Association for Contemporary European Studies) Best PhD Thesis prize. In her thesis “Power of experts in the EU: Birth of the Troika and resilience of the EMU paradigm in the European debt crisis of 2010”, Nordström studied the impact of experts and the technocracy on the economic crisis in Europe.
