The great Scottish scientist Adam Smith is considered the founder of such a great science as economics. Today this great science is one of the most relevant and necessary. Knowledge of various economic processes not only simplifies the life of people, but also helps to regularly replenish the budget, and teaches you to earn and save.
What is the economy?
In today's world, there is a huge need for economically educated people. The importance of the economy is growing every year. This science is being taught even in schools. In every developed country, there are many economic universities that almost every year modernize and open up progressive faculties.
What kind of science is this and what is the purpose of the economy? Social science, studying the market and the behavior of participants in the process of economic activity, exploring how people dispose of property, how they try to satisfy their inorganic needs, is the economy.
Economics and its goals
Many earthly resources are inherently limited. Fresh water, food, livestock, tissues are terrestrial resources that can be lost. Unlike resources, human needs are not limited. The goal of the economy is to balance limited resources and unlimited human needs.
The famous American scientist, psychologist Maslow Abraham Harold believed that all basic human needs can be expressed in a pyramid. The basis of the geometric figure is physiological needs, that is, the human need for food, water, clothing, housing, and procreation. Actual economic issues are based on this pyramid. The top of the figure is a person's need for self-expression.
Economic sectors
To date, only three sectors of the economy have been singled out, which in science are called primary, secondary and tertiary. The first sector combines the goals and objectives of the economy in the study of agriculture, fisheries, hunting, and forestry. The second sector is responsible for construction and manufacturing, while the tertiary sector is based on the services sector. Some economists also prefer to single out the Quaternary sector of the economy, which includes education, banking, marketing, information technology, but in fact, this studies the tertiary sector.
Forms of economics
To understand the purpose of the economy for sure, you need to familiarize yourself with the forms of the economy. Children begin to study this important topic even in high school, not in social studies, and then continue to delve into it in high school and university. In total, four forms of this social science are distinguished.
Market economy
The market economy is based on free entrepreneurial activity, contractual relations, and a variety of forms of ownership. The state in this case has only an indirect effect on the economy. Characteristic features of this form are free competition, independence and autonomy of the entrepreneur, the ability to choose a supplier, customer focus. The main goal of the economy in this case is to maintain communication between the buyer and the entrepreneur.
Traditional economy
The traditional economy has not yet outlived itself, because still underdeveloped countries remain. Customs play a major role in this economic form. Agriculture, manual labor, such primitive technologies (the use of plows, hoes, plows) are characteristic features of this system. Primitive society was built on a hierarchy and traditional economy, but even today some African, Asian and South American countries still retain this form. At its core, the traditional form is the very first manifestation of economic science.
Administrative command economics
An administrative command economy or a planned one existed in the USSR, but is still relevant in North Korea, as well as in Cuba. All material resources are in state, public ownership, the state fully controls the economy and its development. State bodies in the administrative-command economy are single-handedly planning output, as well as regulating prices for it. The huge advantage of this economic form is a small social stratification.
Mixed economy
A mixed economy depends on both entrepreneurs and the state. If the administrative-command form includes only state property, then in the mixed form there is also private property. The goal of a mixed economy is the right balance. State property is most often kindergartens, transport, libraries, schools, universities, hospitals, roads, legal services, law enforcement agencies and more. People are free to do business. Businessmen independently manage their property, make decisions on the release of products, hire and fire employees, train employees. The state is funded by people who pay taxes.
