This paper investigates certain dimensions of the term "political economy" with specific reference to its application in analyzing educational organizations. The first section reviews classical and modern formulations of political economy to show how modern political economists operate within a received paradigm embodying five basic assumptions and practices: (1) the use of microeconomic concepts in the analysis of the political behavior of groups; (2) an unresolved tension between the "purely scientific" (explanatory and predictive) and the "value-laden" (normative or prescriptive) dimensions of the concepts of political economy; (3) an underlying assumption of "economic man", i.e., that everyone desires more wealth with no sacrifice; (4) an implied hedonistic theory of motivation; and (5) an implied definition of politics as the mobilization of efforts to gain scarce resources in pursuit of individual and collective self-interest. The second section examines these assumptions by looking at alternative conceptions of some of the undergirding concepts. The following issues were examined: (1) the critical dimension (the assumption of objective neutrality in the social sciences and the critical function of theory); (2) definitions of rationality (a critique of the ethnocentricity of prevailing models, and some alternative possibilities); (3) theories of motivation (a critique of the behavioristic emphasis in current theories, followed by perspectives based in cognitive psychology); and (4) politics and prediction (the inherent deficiencies of a predictive science of political economy in rapidly changing social conditions). (TE)