He starts with a discussion of the different meanings assigned to the term political economy.
One common variant is study
concerned with measuring the costs and benefits entailed by particular policies or particular structures of decision-making. In other words, it is concerned with the economics of public policy but with essentially political questions of who gains, who loses, and how. (p. 3)
Another is:
[T]he "new political economy" [i.e. public choice economics] school, which wants to apply the assumptions, language, and logic of neoclassical economics to political behavior itself, and indded to the entire range of public and private decision-making. (p. 3)
Thus, political economy is concerned with the connections between economics and political science in analyzing public policy. He points out that there are several kinds of political economy theory and that:
The criterion for identifying such a theory is whethr or not it claims to depict a systematic relationship between economic and political processes. (p. 5)
The theories draw on different disciplines (mostly economics and political science) and have devloped over time from debates between social theorists.
This debate instituted basic distinctions -- between the individual, society, and the state -- which have formed a triangular framework shaping later theorizing. (p. 6)
He gives a "crude summary" of the development of political economy since the Enlightenment.
1. Orthodox liberalism -- regards the individual (his behavior and interests) as analytically and normatively fundamental. Society is the aggregate or an outcome of the pursuit of individual interests. Politics and the state are an agency through which individual interests are pursued.
2. "Social" critiques of liberalism -- attack the liberal assumption that individuals exist and act in isolation; asserts that "society" shapes individual behavior.
The demand for social explanations divided according to distinctions between society and state:
3a. "Economism" -- asserts (similarly to the liberals) that political processes are outcomes of nonpolitical processes. But sees them as an outcome of interaction between social forces rather interactions between individuals. The social forces might be classes (in the case of Marxism) or interest groups (in the case of pluralist theory). But the possibility of states or other specifically political structures was excluded.
3b. "Politicism" -- asserts that political structures develop interests of their own and can impose those interests on economic interests. "Power" is seen as fundamental to the shaping of the economic system.
He identifies three themes, two deterministic:
a. how politics determines aspects of the economy
b. how economic institutions determine political processes,
and one interactive:
c. which conceives of politics and economics as being functionally distiguishable but involved in exchange and reciprocal influence.
He suggests that deterministic theories are preferable when we "want a formula readily adaptable to action." (p. 7)
Interactive theories are more comprehensive, but more difficult to translate into policy.
Staniland, M. (1985). Fad, theory, or problem? in What is Political Economy?: A Study of Social Theory and Underdevelopment. New Haven, CT: Yale University Press.