An economy is the realized system of human activities related to the production, distribution, exchange, and consumption of goods and services of a country or other area. An economic system is a System that involves the production, distribution and consumption of goods and services between
The composition of a given economy is inseparable from technological evolution, civilization's history and social organization, as well as from Earth's geography and ecology, e. Technological evolution is the name of a Science and technology studies Theory describing Technology development, developed by Czech philosopher Radovan History is the study of the past particularly the written record Those who study history as a Profession are called Historians Etymology Social organization or social institution, refers to a group of Social positions connected by Social relations performing a Social role. Geography (from Greek γεωγραφία - geografia) is the study of the Earth and its lands features inhabitants and phenomena Ecology (from Greek grc οἶκος oikos, "house(hold" and grc -λογία -logia) is the scientific study of g. ecoregions which represent different agricultural and resource extraction opportunities, among other factors. Agriculture refers to the production of goods through the growing of plants and fungi and the raising of domesticated Animals The study of agriculture The related terms resource extraction and resource extraction industry both refer to the practice of locating acquiring and selling any resource but typically a Natural Economy refers also to the measure of how a country or region is progressing in terms of product.
The word "economy" can be traced back to the word οικονομία, "one who manages a household", derived from οικος, "house", and νέμω, "distribute (especially, manage)". From οικονόμος of a household or family" but also senses such as "thrift", "direction", "administration", "arrangement", and "public revenue of a state". The first recorded sense of the word "economy", found in a work possibly composed in 1440, is "the management of economic affairs", in this case, of a monastery. Economy is later recorded in other senses shared by οικονομία in Greek, including "thrift" and "administration". The most frequently used current sense, "the economic system of a country or an area", seems not to have developed until the 19th or 20th century.
The earliest economic activity centered around food gathering and animal hunting. During the Stone Age, which lasted until about 11000 years ago, early humans wandered in tribal or family groups, hunting animals for food and picking nuts, berries, and fruits where they could. All of this continued until an agricultural revolution occurred. Through a gradual process of thousands of years, people eventually domesticated wild plants and animals. This meant that people would then graze the animals like sheep and use them for their own needs. Humans could now have a reliable supply of food which in turn improved people’s lives and provided leisure time. This revolution could then be used to develop other activities, such as bureaucracy. The demands of crops and herding animals also encouraged people to remain in one location, so villages and towns began to develop. That was the first human economic activity as trading was first performed among people. The food grown by individuals now would not only be used to feed themselves, but if they had more than they needed they could trade for other needed equipment. Continued improvement in agricultural technology—such as the plough, the tractor and better farming techniques—led to even better lives for people. The new technology improved crop yields and food quality, and also resulted in better methods for storing, transporting, and selling food. One result of this technological change was that people had more time to do other things beside produce food. They could become craftspeople, working with metal wood or cloth. Or they could host other things, including teaching, developing laws, practicing medicine, or leading their growing communities. These new crafts and skills that people developed from the leisure time they created from the new farming techniques, generated jobs and money. For example metal workers could sell their products to farmers and they would either barter with food, or would trade with capital (money). The money would then keep flowing around the community and the economic activity would increase.
Modern Economic Activities—Industrial Revolution and Urbanization The modern era for economics started around 1700 A. D. It was that time when a second agricultural revolution took place. Farmers began to apply new scientific knowledge to producing food, especially through the use of machines and equipment. This drove the development of manufacturing, and the Industrial Revolution was underway in the 1800’s. This revolution dramatically changed economic activities. Huge numbers of people were no longer needed as food producers. Many moved from farms to cities to find work in the new factories that were springing in there. Cities became the focus of economic activity during the Industrial Revolution. Urbanization shifted the population from the countryside to the cities. Cities that were built on manufacturing grew and expanded. By the beginning of the 1900’s, more and more people were working jobs not related to agriculture and manufacturing. This created the different types of industries (primary, secondary, tertiary). These jobs were created to provide consumers in the cities with services such as entertainment, shops and stores, banking and insurance.
All these revolutions and changes in economic system have brought us to today’s economy. There are 4 types of economic systems: traditional, command, market and mixed. Economic systems is the way economy works. The 4 basic resources to an economy are land, labor, capital, and technology. Land refers to all natural resources that we use to make something such as minerals, energy, water, or land. Labor refers to human energy, efforts and talents that go towards making something. Capital is money— money invested in machinery, buildings and the like. Technology includes all resources that are not natural resources, such as scientific knowledge which allows decisions to made. These are the world’s economic systems: 1) Traditional economy is an economy in which decisions are made based on what has been done in the past. People organize their economic choices by following their religion, custom and tradition. An example of how traditional economy worked would be if there was a new road to be built, elders might be consulted and the decision would be made according to the tradition of the people. 2) Command economy is an economy where decisions are made by a central authority, such as dictator or a government. Citizens are required to carry out these decisions with few personal choices. An example would if a new industry was to built there, people in power decided if it fit into their plans and if it met their needs. The citizens of the country would have to carry out these commands. A country that follows this economic system is North Korea. 3) Market economy is an economy where decisions are made by all members of the society based on their own needs and desires. Citizens make their own choices through buying and selling in the market place. If a factory were to be constructed, decisions would be made by a corporation, based on whether or not profit could be made. The government might or might not be involved. A country that uses this type of an economic system is the United States. 4) In mixed economies decisions are made within a system that has aspects of both market and command economies. Governments, businesses and individuals are all included in the making of the decision. So, if there was an automobile manufacturing industry to be built there, the decision to construct a road would be made after discussions among governments, businesses and consumers. The decision would rest in the hands of any of these groups. Canada is an example of a mixed economy.
The economy includes several sectors (also called industries), that evolved in successive phases. The Economy may be classified into subdivisions called sectors (also called Industries) in several ways For other uses of this term see Industry (disambiguation An industry (from Latin industrius, "diligent industrious"
In modern economies, there are three main sectors of economic activity:
More details about the various phases of economic development follow. Economic development is the development of economic wealth of countries or regions for the well-being of their inhabitants As this process was far from being homogeneous geographically, the balance between these sectors differs widely among the various regions of the world.
The ancient economy was mainly based on subsistence farming. Subsistence agriculture is self-sufficient farming in which farmers grow only enough food to feed the family and to pay taxes or feudal dues For most people the exchange of goods occurred through social relationships. There were also traders who bartered in the marketplaces. In Ancient Greece, when the word 'economy' arose, many people were bond slaves of the freeholders. The term ancient Greece refers to the period of Greek history lasting from the Greek Dark Ages ca Debt bondage or bonded labor is a means of paying off loans with direct labor instead of currency or goods In New Jersey, the Boards of Chosen Freeholders are the county legislatures of the 21 counties of the state. Economic discussion was driven by scarcity. Scarcity (also called paucity) is the problem of Infinite human needs and Wants, in a world of Finite Resources In other Aristotle (384-322 B. Aristotle (Greek Aristotélēs) (384 BC – 322 BC was a Greek philosopher a student of Plato and teacher of Alexander the Great. C. ) was the first to differentiate between a use value and an exchange value of goods. In Marx's critique of Political economy, any labor-product has a value and a use value, and if it is traded as a Commodity in markets it In Political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i (Politics, Book I. ) The exchange ratio he defined was not only the expression of the value of goods but of the relations between the people involved in trade. In Political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i Trade is the willing exchange of goods, services, or both Trade is also called Commerce. For most of the time in history economy therefore stood in opposition to institutions with fixed exchange ratios as reign, state, religion, culture and tradition. A reign is a period of time a person serves as a Monarch or Pope. A state is a political association with effective Sovereignty over a geographic Area and representing a Population. A religion is a set of Tenets and practices often centered upon specific Supernatural and moral claims about Reality, the Cosmos Culture (from the Latin cultura stemming from colere, meaning "to cultivate" generally refers to patterns of human activity and the symbolic The word tradition comes from the Latin traditionem acc of traditio which means "a giving up delivering up surrendering" and is used in a number of
In Medieval times, what we now call economy was not far from the subsistence level. Most exchange occurred within social groups. On top of this, the great conquerors raised venture capital (from ventura, ital. Venture capital (also known as VC or Venture) is a type of Private equity capital typically provided to immature high-potential growth companies ; risk) to finance their captures. The capital should be refunded by the goods they would bring up in the New World. The New World is one of the names used for the non-Eurasian/non-African parts of the Earth specifically the Americas and Australia. Merchants such as Jakob Fugger (1459-1525) and Giovanni di Bicci de' Medici (1360-1428) founded the first banks. Jacob Fugger (Jakob Fugger 6 March 1459 &ndash 30 December 1525) sometimes known as Jacob Fugger the Rich, was a German Giovanni di Bicci de' Medici (1360 &ndash February 20 to February 28 1429 was the founder of the famous and powerful Medici dynasty of Florence and the A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money The discoveries of Marco Polo (1254-1324), Christopher Columbus (1451-1506) and Vasco de Gama (1469-1524) led to a first global economy. Marco Polo ( September 15 1254 – January 9 1324 at earliest but no later than June 1325 was a Venetian trader and explorer Christopher Columbus (1451 &ndash May 20 1506 was an Italian Navigator, colonizer Dom Vasco da Gama, 1st Count of Vidigueira ('vaʃku dɐ 'gɐmɐ ( Sines or Vidigueira, Alentejo, Portugal, ca Globalization (or globalisation) in its literal sense is the process of transformation of local or regional phenomena into global ones The first enterprises were trading establishments. Generally a company is a form of Business organization. The precise definition varies In 1513 the first stock exchange was founded in Antwerpen. A stock exchange, share market or bourse is a Corporation or Mutual organization which provides "trading" facilities for Stock ||-||-||-||} Antwerp ( Dutch:, French: Anvers) is a City and Municipality in Belgium and the capital of the Economy at the time meant firstly trade. Trade is the willing exchange of goods, services, or both Trade is also called Commerce.
The European captures became branches of the European states, the so-called colonies. This article is about a type of political territory For other uses see Colony (disambiguation. The rising nation-states Spain, Portugal, France, Great Britain and the Netherlands tried to control the trade through custom duties and taxes in order to protect their national economy. For the online game see Jennifer Government NationStates. The nation-state is a certain form of State that derives its legitimacy Spain () or the Kingdom of Spain (Reino de España is a country located mostly in southwestern Europe on the Iberian Peninsula. Portugal, officially the Portuguese Republic (República Portuguesa is a country on the Iberian Peninsula. This article is about the country For a topic outline on this subject see List of basic France topics. See also Kingdom of Great Britain Great Britain (Breatainn Mhòr Prydain Fawr Breten Veur Graet Breetain is the larger of the two main islands The Netherlands ( Dutch:, ˈnedərlɑnt is the European part of the Kingdom of the Netherlands, which consists of the Netherlands the Netherlands Customs is an Authority or agency in a Country responsible for collecting and safeguarding customs duties and for controlling the flow of goods The so-called mercantilism (from mercator, lat. Mercantilism is the idea that a colony should export more goods than it imports and that a colony should sell at higher prices and buy at lower prices : merchant) was a first approach to intermediate between private wealth and public interest. Merchants function as professionals who deal with Trade, dealing in commodities that they do not produce themselves in order to produce Profit. The public interest refers to the "common well-being" or "general welfare The secularization in Europe allowed states to use the immense property of the church for the development of towns. Secularization or secularisation generally refers to the process of transformation by which a Society migrates from close identification with religious institutions The influence of the nobles decreased. Nobility is a government-privileged title which may be either hereditary (see Hereditary titles) or for a lifetime The first Secretaries of State for economy started their work. Secretary of State is a commonly used title for a Government Official. Bankers like Amschel Mayer Rothschild (1773-1855) started to finance national projects such as wars and infrastructure. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Amschel Mayer Rothschild ( 12 June 1773 – 6 December 1855) was a German banker of the Rothschild family financial dynasty Infrastructure typically refers to the technical structures that support a society such as Roads Water supply, Wastewater, Power grids Economy from then on meant national economy as a topic for the economic activities of the citizens of a state.
The first economist in the true meaning of the word was the Scotsman Adam Smith (1723-1790). An economist is an expert in the Social science of Economics. Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. He defined the elements of a national economy: products are offered at a natural price generated by the use of competition - supply and demand - and the division of labour. Factor prices are the prices that the Factors of production of a finished item attract Competition is a rivalry between individuals groups nations or animals for territory or resources Supply and demand is an Economic model describing effects on price and quantity in a Market. Division of labour or specialization is the specialization of cooperative labour in specific circumscribed tasks and roles intended to increase the Productivity He maintained that the basic motive for free trade is human self interest. Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions The so-called self interest hypothesis became the anthropological basis for economics. Anthropology (/ˌænθɹəˈpɒlədʒi/ from Greek grc ἄνθρωπος anthrōpos, "human" -λογία -logia) is the study of Thomas Malthus (1766-1834) transferred the idea of supply and demand to the problem of overpopulation. Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834 was an English political economist and demographer who expressed views Overpopulation refers to a condition where an Organism 's numbers exceed the Carrying capacity of its Habitat. The United States of America became the place where millions of expatriates from all European countries were searching for free economic evolvement. The United States of America —commonly referred to as the An expatriate (in abbreviated form expat) is a person temporarily or permanently residing in a country and culture other than that of the person's upbringing In Europe wild capitalism started to replace the system of mercantilism (today: protectionism) and led to economic growth. Mercantilism is the idea that a colony should export more goods than it imports and that a colony should sell at higher prices and buy at lower prices For the protectionist Australian political party from the 1880s to 1909 see Protectionist Party Economic growth is the increase in the amount of the goods and services produced by an economy over time The period today is called industrial revolution because the system of production and division of labour enabled the mass production of goods. The Industrial Revolution was a period in the late 18th and early 19th centuries when major changes in agriculture manufacturing and transportation had a profound effect on the Division of labour or specialization is the specialization of cooperative labour in specific circumscribed tasks and roles intended to increase the Productivity Mass production (also called flow production, repetitive flow production, series production, or serial production) is the production of
Starting in England, simultaneous related processes of mechanization, and the enclosures of the commons, led to increases in wealth for the controllers of capital, and mass poverty, starvation, urbanization and pauperization for much of the population. England is a Country which is part of the United Kingdom. Its inhabitants account for more than 83% of the total UK population whilst its mainland Poverty (also called penury) is deprivation of common necessities that determine the quality of life including food clothing shelter and safe Drinking water, and Starvation (also called inanition) is a severe reduction in Vitamin, Nutrient, and Energy intake and is the most extreme form of Urbanizationn (also spelled urbanisation) is the physical growth of Urban areas into rural or natural land as a result of population in-migration to an existing This led some, such as Karl Marx (1818-1883) and the German industrialist and philosopher Friedrich Engels, (1820-1895) to describe economy as the "system of capitalism". Friedrich Engels (28 November 1820 – 5 August 1895 was a German social scientist and philosopher, who The exploitation of labour and nature by the capitalist is creating a surplus value. The term " exploitation " may carry two distinct meanings The act of utilizing something for any purpose Workforce (Voyager episode The workforce is the labour pool in Employment. Surplus value is a concept created by Karl Marx in his critique of Political economy, where its ultimate source is unpaid Surplus labor The capital will accumulate itself and finally destroy the competition. Most generally the accumulation of capital refers simply to the gathering or amassment of objects of value the increase in wealth or the creation of wealth Competition is a rivalry between individuals groups nations or animals for territory or resources Therefore the system of communism should liberate the economy from the reign of capital. Communism is a Socioeconomic structure that promotes the establishment of an egalitarian, classless, stateless Society based The first centrally planned economy was established after the Russian Revolution of 1917 by Lenin. A planned economy or directed economy is an Economic system in which the Government or Workers' councils manages the Economy. See also Russian Revolution (1905 The Russian Revolution of 1916 refers to a series of popular revolutions in Russia, and the events surrounding them Other states launched social security systems in order to minimize the effects of uncontrolled capitalism, called Manchester capitalism. Social security primarily refers to a Social insurance program providing social protection or protection against socially recognized conditions including poverty old Manchester Capitalism, Manchester School, Manchester Liberalism or Manchesterism are terms for political economic and social movements of the 19th century
After the chaos of two World Wars and the devastating Great Depression, policymakers searched for new ways of controlling the course of the economy. A world war is a War affecting the majority of the world's most powerful and populous nations This was explored and discussed by Friedrich August von Hayek (1899-1992) and Milton Friedman (1912-2006) who pleaded for a global free trade and are supposed to be the fathers of the so called neoliberalism. Friedrich August von Hayek CH ( May 8, 1899 March 23, 1992) was an Austrian British Economist Milton Friedman (July 31 1912 November 16 2006 was an American Nobel Laureate Economist and Public intellectual. Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions Originally coined by its critics and opponents " neoliberalism " is a label referring to the recent reemergence of Economic liberalism or Classical liberalism However, the prevailing view was that held by John Maynard Keynes (1883-1946), who argued for a stronger control of the markets by the state. John Maynard Keynes 1st Baron Keynes CB (ˈkeɪnz "cains" (5 June 1883 &ndash 21 April 1946 was a British Economist whose ideas Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information The theory that the state could alleviate economic problems and instigate economic growth through state manipulation of aggregate demand is called Keynesianism. In Economics Keynesian economics (ˈkeɪnziən also Keynesianism and Keynesian Theory) is based on the ideas of twentieth-century British economist In the late 1950s the economic growth in America and Europe—often called Wirtschaftswunder (ger. The term ( German for "economic miracle" describes the rapid reconstruction and development of the economies of West Germany and Austria : economic miracle)—brought up a new form of economy: consumption. In 1958 John Kenneth Galbraith (1908-2006) was the first to speak of an affluent society. The Affluent Society is a 1958 book by Harvard Economist John Kenneth Galbraith. In most of the countries the economic system is called a social market economy. The social market economy was the main economic model used in Western and Northern Europe during the Cold War era
What economist Robert Reich terms, "the not quite golden age" (WW II to the mid-1970s) gave way to the current global economy, or supercapitalism. Robert Bernard Reich (born June 24, 1945) is an American politician academic writer and political commentator  This economic revolution took place in tandem with a radical transformation of Western cultures, and the growth of oligarchical/plutocratic tendencies within the polities of Western democracies. Together the political, economic and cultural developments in the Western World since c. 1963 constitute what Robert Struble has called "the postmodernist revolution."
Discussion of such issues as the politics of the World Bank, the World Trade Organization and global players within the World Economic Forum, as well as global ecology and sustainability, have all influenced the definition of economy. The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e The World Economic Forum (WEF is a Geneva -based Non-profit foundation best known for its Annual Meeting in Davos, Switzerland Ecology (from Greek grc οἶκος oikos, "house(hold" and grc -λογία -logia) is the scientific study of Sustainability, in a general sense is the capacity to maintain a certain process or state indefinitely
Joseph E. Stiglitz has defined economy to be a global public good. Joseph Eugene Stiglitz (born February 9, 1943) is an American Economist and a professor at Columbia University. Economists like Peter Barnes and Alexander Dill are reclaiming the commons and providing definitions that embrace new phenomena like freeware. An economist is an expert in the Social science of Economics. Peter Barnes, ( January 10 1931 &ndash July 1 2004) was an English Olivier Award -winning Playwright and Common land (a common) is a piece of land owned by one person but over which other people can exercise certain traditional rights such as allowing their livestock to graze Freeware is computer Software that is available for use at no cost or for an optional fee Game theorists such as Ernst Fehr and Klaus M. Game theory is a branch of Applied mathematics that is used in the Social sciences (most notably Economics) Biology, Engineering, Ernst Fehr is an Austrian Economist. He is director of the Institute for Empirical Research in Economics at the University of Zurich, Switzerland Schmidt are contradicting the notion of omnipresent economic self-interest. Under the gift economy extensive grassroot movements have arisen; also the credit programs of Nobel laureate Muhammed Yunus. A gift economy is a Social theory in which goods and services are given without any explicit agreement for immediate or future Quid pro quo. For other meanings see Grass roots (disambiguation. A grassroots movement (often referenced in the context of a Political movement Muhammad Yunus (মুহাম্মদ ইউনুস pronounced bn-Latn ''Muhammôd Iunus'' (born 28 June 1940 is a Bangladeshi Banker and Economist In 2006 the World Bank started issuing its Wealth of Nations Report, tracking social and human capital. The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e Definition In the absence of agreement about its meaning the term "social" is used in many different senses referring among other things to attitudes Human capital refers to the stock of skills and knowledge embodied in the ability to perform labor so as to produce Economic value.
There are number of ways to measure economic activity of a nation. These methods of measuring economic activity include:
The GDP - Gross domestic product of a country is a measure of the size of its Economy. Consumer demand or consumption is also known as personal consumption expenditure In Finance, the exchange rates (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets Government debt (also known as public debt or national debt) is Money (or credit) owed by any level of government either Central government In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time Unemployment occurs when a person is available to work and currently seeking work but the person is without work. The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of Exports and imports in an While often useful, it should be noted that GDP only includes economic activity for which money is exchanged.