If a diplomat at the American Embassy in Brussels were to draft a report on the political situation in Belgium, giving a status report on the protracted negotiations to form a coalition government (167 days and counting), he or she would assign a "PGOV" tag (Traffic Analysis by Geography and Subject - TAGS) so that it would get proper distribution in Washington. Likewise, a report from Embassy Paris on the series of public sector union strikes to protest President Sarkozy's proposed pension reforms might carry ELAB - Labor Sector Affairs.
I don't know what system the British Embassy in Washington might apply to "tag" a report on the economic impact - both domestic and international - of almost eight years of the George W. Bush administration, but it is possible that the homeland of Adam Smith and John Maynard Keynes might still use the term political economy. Thanks to Typepad's tag system, I've chosen political economy to describe that nexus of government action and market reaction that describes much of our economic world.
Somehow, in the shorthand of university course listings and textbooks, "political science" came into its own (and always sought legitimacy in quantification through often obtuse statistical studies). Political economy got shortened into economics, where Econ 101 maintained the necessary "macro" understanding of political underpinnings, and Econ 102 or microeconomics looked at the market through the motivation and workings of the enterprise.
So, back to our diplomats reporting on the political/economic situations in their respective countries of assignment. Now, thanks to the Governor of the Belgian National Bank, the protracted political crisis has a price tag: 2.5 billion euros. Echoing the concerns of the Belgian Employer's Federation, the nation's central banker sees folly in ignoring the economy by the narcissistic political class.
In France, where the strikes have tapered off (for now), the head of the employer's federation condemned the "masochism" of the unions, where a recent strike cost an estimated 60 million euros to Air France alone.
Since we don't have an American Embassy in Washington, we'll have to look to the outside world to judge the cost of allowing the dollar to lose its world reserve currency status; of essentially giving the trillion dollar Clinton/Gore budget surplus away in tax breaks for the wealthy; of allowing the country's infrastructure to literally collapse; of spending without limit, using the national credit card. Congress recently estimated the cost of the Iraq war - so far - at $1,500,000,000,000 (I think I got the zeros right, but it's $1.5 trillion).
So, "political economy" might be a term worth reviving. Political choices, whether dithering over forming a government, striking-before-negotiating, or charging your wars 'cause you can't choose betweens guns or butter - all of those "choices" bear an economic cost.