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

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.

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12 Responses to “Why ‘political economy analysis’ has lost the plot, and we need to get back to power and politics”
  1. Jean Boulton

    Brilliant blog! The dance between institutional factors, details of context and events is the home of complexity theory – and I share the frustration with a focus on tools 🙂 A complexity worldview frames the approach you are describing, in my view!

  2. Cornelius Chipoma

    I can understand Hudson’s and Leftwich’s pitch for politics as power dynamics. But, I would not be as quick to dispense with the Third Way of PE. For a technical person that has to translate PE into actual programming, talking politics and power dynamics does not tell one what to do. The Third Way has helped to define levers that lend themselves to a degree of manipulation. Overall, I am not convinced that the distinction made is unequivocal because there are overlaps conceptually.

  3. Heather Marquette

    I’m pretty sympathetic to Cornelius’s point (as I almost always am to his comments on this blog!). I think the proof is in the pudding, as the British say, and so the next stage of this research for David Hudson and me is to make this research relevant for staff working in the field. How do you actually take the great analytical ideas and translate them into practice? I actually don’t think the ‘problem-driven PEA’ is very practical, and the ‘levers’ are often only partially useful, at best, because they exclude issues around power and ideas. But how you talk about these things – and, importantly, where and when you apply them – are really important. Very happy to share these with interested folk as they emerge!

    • Duncan Green

      Thanks Heather – purely on a pedantic point, what we say is ‘the proof of the pudding is in the eating’, although ‘the proof is in the pudding’ is definitely much more zen…….

  4. Diana Cammack

    I am not convinced of the distinction either, because PEA is really an art, not a science, and every PEA report I have read, since early DOC reports, has been different than others. They depend on the context, topic under study, and authors/researchers’ interests, capacities and ability to access info. Our recent (so, Type 3?) PE report on decentralisation in Malawi for ODI/DFID (http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8944.pdf) certainly deals with institutions, structures, systems but it also deals with culture, social concerns, and politics – right down to the individual and local level. So, to me, a good PEA does all these things – politics AND institutions, incentives, etc. and the dichotomy is not as stark as presented here.

  5. Nathalie Herlemont

    This is really, really interesting! And this gave me the reasons why I was so uncomfortable with the concept of “political economy” and the various ways it is used… I am a lecturer on “sociology of actors”, so more connected with political analysis… Thanks for this post!

  6. Cornelius Chipoma


    I worry when theory becomes impractical. I think that the goal of good theorizing is to keep a healthy connection to practice. In my mind, the third way PEA pushes us beyond those wonderful but clearly not helpful labels (clientelism, corruption, patronage, neopatrimonialism, ‘strong man’ politics etc.) of the governance PEA genre. This kind overplays the dominance of state politics while treating individuals as passive except for those who have access to state power and so are complicit. So principally, my sense is that PEA has been influenced by different biases about how political transformation, and, in turn, development might happen.

    Type 1 PEA and its obsession with state politics (not denying that it is the elephant in the political room) marched on at the expense of understanding how change might happen through alternative modalities. Type II PEA tried to make a break with Type 1 but felt obligated (legitimized) to carry on with the not so helpful labels. The third way, in contrast, focuses on individual agency in the exercise of politics. As a technical person, this allows me a little more scope to decipher beyond just blaming state politics. For example, looking back to your posting on the poor and service delivery, what explains why, faced with the same dysfunctional state structure, some public schools do better than others? If I can get to the bottom of this puzzle (particularly using ‘problem-driven PEA’ ), I might be able to find the conditions that account for positive deviance and hopefully escalate them enough to create ground-swell and trigger broader reform. In short, at least for me, Type III PEA is helpful theoretically because it is much more humanly inclined (therefore how humans behave say in principal/agent relationships) without claiming that context does not matter.

  7. Tess Newton Cain

    Thanks for this blog and looking forward to more discussion via the comments. I was looking forward to reading the entire paper but 108 pages!! I’m sure it is a great piece of work and who knows I might actually read it after all but the reality is, not many people will which is a shame. My recommendation to Heather and the others at DLP is to spend some time communicating this piece of work in manageable and meaningful chunks so that as many people as possible get the messages it contains.

  8. Vaqar Ahmed

    I agree with Tess. The key now lies in communicating this work in easy to understand and less technical manner. When we say…’Ultimately, if you wish to defeat poverty, prepare to address the power and the politics that keeps people poor’…we also need to understand that the power structure in the developing countries should also be able to comprehend such frameworks, may they be PEA or political analysis. Another important aspect is that the curriculum which governs our social sciences is still not talking in this direction. These tools must find their way in textbooks so that graduates starting to practice development administration have a fair idea of what has been done in the past, what are current gaps and where to pick up from.