The contemporary revival of interest in political economy highlights the coexistence of different and opposed conceptions among scholars and policy makers in addressing the interface between the economy and the polity. One set of approaches focuses on individual actors in the marketplace or in the public sphere, while another set of approaches shifts the emphasis to the state as a self-contained and internally undifferentiated collective actor. This chapter outlines a conception of political economy that moves beyond this dichotomy and develops the view that individuals, markets, and states are embedded in a relational field composed of multi-level social interdependencies and institutions. The aim of the chapter is to explore the ‘constitution’ of political economy as the multi-layered and relatively persistent configuration of domains and sub-domains in which economic structures and political actions mutually reinforce or hinder one another, thereby determining the dynamics of social wealth – what we call ‘commonweal.’ The chapter conceptualises political economy as a relational field resulting from overlapping spheres of social life. It refers to the social relationships enabling the material provision of human needs and brings to the fore the political dimension of need satisfaction, which involves balancing and coordinating differentiated interests in society.

Both the economy and the polity are embedded in a relational field. This field generates the range of relative positions that individuals and groups take within it while making other positions impossible. The constitutions of the economy and of the polity reflect objective arrangements of positions providing constraints and opportunities for human agency. They may also shape actors to follow specific courses of action rather than others. Certain policy actions may be compatible with the existing economic constitution but not with the existing political constitution, and vice versa. Only policy actions compatible with both the economic and the political constitution can be conducted without changes in either. A constitutional heuristic is needed to assess whether a certain policy is feasible under a given constitutional settlement or not. This chapter focuses on the multi-dimensional and multi-level architecture that policy design should follow in light of the relevant constitutional heuristic. Policy actions are designed and implemented across manifold modes of association in the material sphere and plural modes of collective action in the political sphere. The chapter provides a framework grounded in constitutional heuristic for the analysis of embedded policy measures in the industrial, credit, and international trade fields.