An economy[a] is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources.[3] A given economy is a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure, legal systems, and natural resources as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. In other words, the economic domain is a social domain of interrelated human practices and transactions that does not stand alone.
Economic agents can be individuals, businesses, organizations, or governments. Economic transactions occur when two groups or parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. However, monetary transactions only account for a small part of the economic domain.
Economic activity is spurred by production which uses natural resources, labor and capital. It has changed over time due to technology, innovation (new products, services, processes, expanding markets, diversification of markets, niche markets, increases revenue functions) and changes in industrial relations (most notably child labor being replaced in some parts of the world with universal access to education).
The word economy in English is derived from the Middle French's yconomie, which itself derived from the Medieval Latin's oeconomia. The Latin word has its origin at the Ancient Greek's oikonomia or oikonomos. The word's first part oikos means "house", and the second part nemein means "to manage".[7]
The most frequently used current sense, denoting "the economic system of a country or an area", seems not to have developed until the 1650s.[8]
Ancient Roman mosaic from Bosra, depicting a merchant leading camels through the desert
As long as someone has been making, supplying and distributing goods or services, there has been some sort of economy; economies grew larger as societies grew and became more complex. Sumer developed a large-scale economy based on commodity money, while the Babylonians and their neighboring city states later developed the earliest system of economics as we think of, in terms of rules/laws on debt, legal contracts and law codes relating to business practices, and private property.[9]
The Babylonians and their city state neighbors developed forms of economics comparable to currently used civil society (law) concepts. They developed the first known codified legal and administrative systems, complete with courts, jails, and government records.[10]
The ancient economy was based primarily on subsistence farming.[11] The Shekel are the first to refer to a unit of weight and currency, used by the Semitic peoples. The first usage of the term came from Mesopotamia circa 3000 BC. and referred to a specific mass of barley which related other values in a metric such as silver, bronze, copper, etc. A barley/shekel was originally both a unit of currency and a unit of weight, just as the British Pound was originally a unit denominating a one-pound mass of silver.[12]
Most exchange of goods had occurred through social relationships. There were also traders who bartered in the marketplaces. In Ancient Greece, where the present English word 'economy' originated,[7] many people were bond slaves of the freeholders.[13] The economic discussion was driven by scarcity.[citation needed]
In Chinese economic law, the huge cycle of institutional innovation contains an idea. Serving a non-market economy promotes a firm's tenure that is legally guaranteed and protected from bureaucratic opportunities.[14]
Middle Ages
In the Middle Ages, what is now known as an economy was not far from the subsistence level. Most exchange occurred within social groups. On top of this, the great conquerors raised what we now call venture capital (from ventura, ital.; risk) to finance their captures. The capital should be refunded by the goods they would bring up in the New World. The discoveries of Marco Polo (1254–1324), Christopher Columbus (1451–1506) and Vasco da Gama (1469–1524) led to a first global economy. The first enterprises were trading establishments. In 1513, the first stock exchange was founded in Antwerp. Economy at the time meant primarily trade.
The first economist in the true modern meaning of the word was the Scotsman Adam Smith (1723–1790) who was inspired partly by the ideas of physiocracy, a reaction to mercantilism and also later Economics student, Adam Mari.[15] 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 labor. He maintained that the basic motive for free trade is human self-interest. The so-called self-interest hypothesis became the anthropological basis for economics. Thomas Malthus (1766–1834) transferred the idea of supply and demand to the problem of overpopulation.
The contemporary concept of "the economy" wasn't popularly known until the American Great Depression in the 1930s.[17]
After the chaos of two World Wars and the devastating Great Depression, policymakers searched for new ways of controlling the course of the economy.[citation needed] 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.[18][19] 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. The theory that the state can alleviate economic problems and instigate economic growth through state manipulation of aggregate demand is called Keynesianism in his honor.[20] In the late 1950s, the economic growth in America and Europe—often called Wirtschaftswunder (German for economic miracle) —brought up a new form of economy: mass consumption economy. In 1958, John Kenneth Galbraith (1908–2006) was the first to speak of an affluent society in his book The Affluent Society.[21] In most of the countries the economic system is called a social market economy.[22]
With the fall of the Iron Curtain and the transition of the countries of the Eastern Bloc towards democratic government and market economies, the idea of the post-industrial society is brought into importance as its role is to mark together the significance that the service sector receives instead of industrialization. Some attribute the first use of this term to Daniel Bell's 1973 book, The Coming of Post-Industrial Society, while others attribute it to social philosopher Ivan Illich's book, Tools for Conviviality. The term is also applied in philosophy to designate the fading of postmodernism in the late 90s and especially in the beginning of the 21st century.
With the spread of Internet as a mass media and communication medium especially after 2000–2001, the idea for the Internet and information economy is given place because of the growing importance of e-commerce and electronic businesses, also the term for a global information society as understanding of a new type of "all-connected" society is created. In the late 2000s, the new type of economies and economic expansions of countries like China, Brazil, and India bring attention and interest to economies different from the usually dominating Western-type economies and economic models.
The Industrial Revolution phase lessened the role of subsistence farming, converting it to more extensive and mono-cultural forms of agriculture in the last three centuries. The economic growth took place mostly in mining, construction and manufacturing industries. Commerce became more significant due to the need for improved exchange and distribution of produce throughout the community.
the public sector or state sector (which usually includes: parliament, law-courts and government centers, various emergency services, public health, shelters for impoverished and threatened people, transport facilities, air/sea ports, post-natal care, hospitals, schools, libraries, museums, preserved historical buildings, parks/gardens, nature-reserves, some universities, national sports grounds/stadiums, national arts/concert-halls or theaters and centers for various religions).
The gross domestic product (GDP) of a country is a measure of the size of its economy, or more specifically, monetary measure of the market value of all the final goods and services produced.[29] The most conventional economic analysis of a country relies heavily on economic indicators like the GDP and GDP per capita. While often useful, GDP only includes economic activity for which money is exchanged.[citation needed]
Due to the growing importance of the financial sector in modern times,[30] the term real economy is used by analysts[31][32] as well as politicians[33] to denote the part of the economy that is concerned with the actual production of goods and services,[34] as ostensibly contrasted with the paper economy, or the financial side of the economy,[35] which is concerned with buying and selling on the financial markets. Alternate and long-standing terminology distinguishes measures of an economy expressed in real values (adjusted for inflation), such as real GDP, or in nominal values (unadjusted for inflation).[36][37]
^Sometimes spelled oeconomy or, with a ligature, œconomy in British English, both are pronounced /iːˈkɒnəmi/. The term is ultimately derived from Greekοἰκονομία, from οἶκος, "house", and νέμω, "to manage". In contemporary times, however, the spelling that begins with œ has become obsolete and rarely used, since it has been reduced to e in American English or separated as oe in British English. From the eighteenth century, the spelling oeconomy dropped the letter o, thus making economy the common spelling for the term.[1][2]
^Laura Bratton (September 28, 2023). "Sorry, London — New York Is Still the Financial Capital of the World". The Messenger. Archived from the original on October 11, 2023. Retrieved October 1, 2023. The GDP of the New York City metropolitan area is larger than the country of South Korea...New York City was ranked as the most competitive city in the financial industry for the fifth straight year.
^Bronson, Bennet (November 1976), "Cash, Cannon, and Cowrie Shells: The Nonmodern Moneys of the World", Bulletin, vol. 47, Chicago: Field Museum of Natural History, pp. 3–15.
^de Ste. Croix, G.E.M. (1981). The Class Struggle in the Ancient Greek World. Cornell University Press. pp. 136–137., noting that economic historian Moses Finley maintained "serf" was an incorrect term to apply to the social structures of classical antiquity.
^Gregory, Paul; Stuart, Robert (2004). Stuart, Robert C. (ed.). Comparing Economic Systems in the Twenty-First Century (7th ed.). Houghton Mifflin. p. 538. ISBN978-0618261819. OCLC53446988. Market Economy: Economy in which fundamentals of supply and demand provide signals regarding resource utilization.
^Kahle, Lynn R.; Gurel-Atay, Eda, eds. (2014). Communicating Sustainability for the Green Economy. New York: M.E. Sharpe. ISBN978-0765636805.
^"In the shadows". The Economist. June 17, 2004. Archived from the original on July 31, 2021. Retrieved July 30, 2022.
^Kjeldsen-Kragh, Søren (2007). The Role of Agriculture in Economic Development: The Lessons of History. Copenhagen Business School Press DK. p. 73. ISBN978-8763001946.
^Potůček, Martin (1999). Not Only the Market: The Role of the Market, Government, and the Civic Sector. New York: Central European University Press. p. 34. ISBN0585316759. OCLC45729878.
^Backhouse, Roger (2002). The Penguin history of economics. London: Penguin Books. ISBN0140260420. OCLC59475581. Archived from the original on July 30, 2022. Retrieved July 30, 2022. The boundaries of what constitutes economics are further blurred by the fact that economic issues are analysed not only by 'economists' but also by historians, geographers, ecologists, management scientists, and engineers.
^Blum, Matthias; Colvin, Christopher L. (2018). Blum, Matthias; Colvin, Christopher L. (eds.). Introduction, or Why We Started This Project. Palgrave Studies in Economic History. Springer International Publishing. pp. 1–10. doi:10.1007/978-3-319-96568-0_1. ISBN978-3319965680. {{cite book}}: |work= ignored (help)
_per_capita_in_2020.png)
_02.jpg)
