οίκος – "household" and νέμoμαι – "manage") is an area of the production
, as well as consumption
by different agents. 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'.
A given economy is the result of a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, 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
(new products, services, processes, expanding markets, diversification of markets, niche markets, increases revenue functions) such as, that which produces intellectual property and changes in industrial relations
(most notably child labor
being replaced in some parts of the world with universal access to education
Today the range of fields of study examining the economy revolves around the social science
, but may include sociology
), and geography
). Practical fields directly related to the human activities involving production
, and consumption
of goods and services
as a whole are engineering
, business administration
, applied science
, and finance
Due to the growing importance of the financial sector in modern times,
the term real economy
is used by analysts
as well as politicians
to denote the part of the economy that is concerned with the actual production of goods and services,
as ostensibly contrasted with the paper economy
, or the financial side of the economy,
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).
words "economy" and "economics
" can be traced back to the Greek
word οἰκονόμος (i.e. "household management"), a composite word derived from οἶκος ("house;household;home") and νέμω ("manage; distribute;to deal out;dispense") by way of
οἰκονομία ("household management").
The first recorded sense of the word "economy" is in the phrase "the management of œconomic affairs", found in a work possibly composed in a monastery in 1440.
"Economy" is later recorded in more general senses, including "thrift" and "administration".
The most frequently used current sense, denoting "the economic system of a country or an area", seems not to have developed until the 1650s.
Storage room, Palace of Knossos.
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.
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.
The ancient economy was mainly based on subsistence farming
. The Shekel
referred to an ancient unit of weight and currency. 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.
For most people, the exchange of goods occurred through social relationships. There were also traders who bartered in the marketplaces. In Ancient Greece
, where the present English word 'economy' originated, many people were bond slaves
of the freeholders
. The economic discussion was driven by scarcity
10 Ducats (1621), minted as circulating currency by the Fugger Family
Early modern times
Recognition of the concept of “the economy”
The contemporary concept of "the economy" wasn't popularly known until the American Great Depression
in the 1930s.
Late 20th – beginning of 21st century
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 different from the usually dominating Western type economies and economic models.
Economic phases of precedence
The economy may be considered as having developed through the following phases or degrees of precedence.[according to whom?]
Other sectors of the developed community include :
- 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 private sector or privately run businesses.
- the social sector or voluntary sector.
The main indicators used to monitor the performance of an economy are:
(gross domestic product) of a country is a measure of the size of its economy. 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.
Black market peddler on graffiti, Kharkiv
An informal economy is the set of economic activities operating as to partially avoid being taxed or regulated, in contrast to a formal economy. The informal economy is thus not included in that government's gross national product
(GNP). Although the informal economy is often associated with developing countries
, all economic systems contain an informal economy in some proportion.
Informal economic activity is a dynamic process that includes many aspects of economic and social theory including exchange, regulation, and enforcement. By its nature, it is necessarily difficult to observe, study, define, and measure. No single source readily or authoritatively defines informal economy as a unit of study.
The terms "underground", "under the table" and "off the books" typically refer to this type of economy. The term black market
refers to a specific subset of the informal economy. The term "informal sector" was used in many earlier studies, and has been mostly replaced in more recent studies which use the newer term.
The informal sector makes up a significant portion of the economies in developing countries but it is often stigmatized as troublesome and unmanageable. However, the informal sector provides critical economic opportunities for the poor and has been expanding rapidly since the 1960s. As such, integrating the informal economy into the formal sector is an important policy challenge.
Economic research is conducted in fields as different as Agricultural, Development, Econometrics, Environmental, Game theory, Industrial Organization, International, Labor, Macroeconomics, Mathematical, Monetary, Public, Regional and Urban, Education, and Economics History.
- ^ James, Paul; with Magee, Liam; Scerri, Andy; Steger, Manfred B. (2015). Urban Sustainability in Theory and Practice: Circles of Sustainability. London: Routledge. p. 53.
- ^ "Archived copy" (PDF). Archived from the original (PDF) on November 11, 2013. Retrieved October 26, 2014.
- ^ "How governments should deal with the rise of the gig economy". The Economist. Retrieved October 8, 2018.
- ^ The volume of financial transactions in the 2008 global economy was 73.5 times higher than nominal world GDP, while, in 1990, this ratio amounted to "only" 15.3 ("A General Financial Transaction Tax: A Short Cut of the Pros, the Cons and a Proposal" Archived April 2, 2012, at the Wayback Machine, Austrian Institute for Economic Research, 2009)
- ^ "Meanwhile, in the Real Economy", Wall Street Journal, July 23, 2009
- ^ "Bank Regulation Should Serve Real Economy", Wall Street Journal, October 24, 2011
- ^ "Perry and Romney Trade Swipes Over ‘Real Economy'", Wall Street Journal, August 15, 2011
- ^ "Real Economy" Archived February 9, 2018, at the Wayback Machine definition in the Financial Times Lexicon
- ^ "Real economy" definition in the Economic Glossary
- ^ • Deardorff's Glossary of International Economics, search for real.
• R. O'Donnell (1987). "real and nominal quantities," The New Palgrave: A Dictionary of Economics, v. 4, pp. 97-98.
- ^ Dictionary.com, "economy." The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. October 24, 2009.
- ^ Sheila C. Dow (2005), "Axioms and Babylonian thought: a reply", Journal of Post Keynesian Economics 27 (3), p. 385-391.
- ^ Charles F. Horne, Ph.D. (1915). "The Code of Hammurabi : Introduction". Yale University. Retrieved September 14, 2007.
- ^ Anticipating The Wealth of Nations: The Selected Works of Anders Chydenius (1729-1803)
- ^ François Quesnay. An Encyclopedia of the Early Modern World- preview entry:Physiocrats & physiocracy. Charles Scribner & Sons. Retrieved February 24, 2014.
- ^ Goldstein, Jacob (February 28, 2014). "The Invention Of 'The Economy'". NPR - Planet Money. Retrieved April 6, 2017.
- Aristotle, Politics, Book I-IIX, translated by Benjamin Jowett, Classics.mit.edu
- Barnes, Peter, Capitalism 3.0, A Guide to Reclaiming the Commons, San Francisco 2006, Whatiseconomy.com
- Dill, Alexander, Reclaiming the Hidden Assets, Towards a Global Freeware Index, Global Freeware Research Paper 01-07, 2007, Whatiseconomy.com
- Fehr Ernst, Schmidt, Klaus M., The Economics Of Fairness, Reciprocity and Altruism - experimental Evidence and new Theories, 2005, Discussion PAPER 2005-20, Munich Economics, Whatiseconomy.com
- Marx, Karl, Engels, Friedrich, 1848, The Communist Manifesto, Marxists.org
- Stiglitz, Joseph E., Global public goods and global finance: does global governance ensure that the global public interest is served? In: Advancing Public Goods, Jean-Philippe Touffut, (ed.), Paris 2006, pp. 149/164, GSB.columbia.edu
- Where is the Wealth of Nations? Measuring Capital for the 21st Century. Wealth of Nations Report 2006, Ian Johnson and Francois Bourguignon, World Bank, Washington 2006, Whatiseconomy.com.
Wikimedia Commons has media related to Economy
Wikivoyage has a travel guide for Economy
- Friedman, Milton, Capitalism and Freedom, 1962.
- Rothbard, Murray, Man, Economy, and State: A Treatise on Economic Principles, 1962.
- Galbraith, John Kenneth, The Affluent Society, 1958.
- Mises, Ludwig von, Human Action: A Treatise on Economics, 1949.
- Keynes, John Maynard, The General Theory of Employment, Interest and Money, 1936.
- Marx, Karl, Das Kapital, 1867.
- Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776.
Last edited on 7 May 2021, at 08:59
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