How do politics and economics influence eachother?

In theory, economics could be non-political. An ideal economist should ignore any political bias or prejudice to give neutral, unbiased information and recommendations on how to improve the economy of a country. However, the reality is that they are strongly linked and both influences the other.

For much of human history, economies have been virtually stagnant. The roots of global exchange had emerged by the 2nd century BC in the Silk Road, an extensive network of land and sea routes that linked Asia to Europe and remained important until the 15th century. The roots of modern capitalism emerged in Western Europe after 1500, particularly in the Dutch Republic and England. The accumulation of capital and the making of profit grew increasingly important, eventually becoming the main focus of the economy. Accompanying these changes was the growth of international trade, financial institutions, new economic theories and technologies that increased productivity. However, for the next three centuries, economic growth remained slow.

Many economic issues are seen through the eyes of political beliefs, and as a result they are inherently political. As a result, there is often economic evidence to support both sides of a political debate about policies for a country’s economy. For example, some people are instinctively more suspicious of government intervention. Therefore, they prefer economic policies which seek to reduce government interference in the economy. On the other hand, economists may have a preference for promoting greater equality in society and be more willing to encourage government intervention to pursue that end.

The Industrial Revolution was a new much more efficient means of production. More production meant more consumption and wealth began to increase rapidly. As a result, the desire for political control over this new wealth also increased.

Starting with the textile industry, the Industrial Revolution transformed manufacturing. From the mid-18th century, a series of inventions led to the full steam-driven mechanization of textile production in Britain only a century later, and productivity skyrocketed. The final major ingredients of the Industrial Revolution were institutions. They encompass a variety of arrangements between economic actors, including political systems, legal codes and financial bodies.