The term “economy” is rooted in ancient Greece and is a combination of the two roots “oikos” and “nomos”. The first is translated from Greek as a house or household, and the second is a law. Consequently, the economy - a set of laws, rules, norms of housekeeping. The interpretation of this concept for more than two millennia has changed and enriched enough.
Modern interpretations of the concept under consideration
Firstly, the economy is the economy itself (a set of objects, means, things, substances of the spiritual and material world that are used by man to provide appropriate conditions for his life and meet existing needs).
This interpretation of the term in question is its perception as the created and applied life support system, as well as the maintenance and improvement of the conditions of existence of the human race.
Secondly, economics is a science (a body of knowledge regarding the economy and human activities associated with it) about the rational use of various, usually limited, resources to meet the vital needs of a single person and society as a whole; about relations between people arising in the process of managing.
Economics as a science and how the economy itself is terminologically differentiated by introducing two etymologically related concepts - “economics” and “economy”. The first is the economy itself (economics in kind), and the second is economic science - economic theory. This division contributes to a clearer understanding of the concept under consideration.
It is generally accepted that economics as a science was first interpreted by the outstanding philosopher of antiquity, Socrates (470-390 BC). Unfortunately, he preached mainly in squares and streets, so there was no written evidence of this. After the death of the philosopher, his work was continued by the closest students - Plato and Xenophon. They told humanity what Socrates was working on.
It should be clarified that the direct use of the term “economics” in Russian is considered incorrect, therefore it is replaced by the term “economic theory”.
From the point of view of the subjective perception of the concept under consideration (as an economic system and the totality of knowledge about it), individual authors highlight the third importance of the economy: the relationship of people arising in the process of production first, then distribution, further exchange, and finally, consumption of goods and services.
Thus, the economy - the economy, the science of it, as well as the management and relations between people in its process.
Interpretation of the concepts of "economic phenomena and processes"
These are the results of the simultaneous influence of a large number of economic reasons. Economic phenomena and processes are constantly born, evolve and annihilate (are in continuous motion). This is their so-called dialectic. An example of such phenomena and processes can be: the exchange of goods, bankruptcy, finance, marketing, etc. But political marketing does not apply to economic phenomena.
The economic process - the stages of the evolution of material production, as well as its production forces (direct manufacturers, their skills, knowledge, skills, equipment, etc.) and production relations formed on their basis, including relations regarding ownership of existing means of production (private, cooperative, state, etc.), the exchange of activities based on the division of labor and relationships in the distribution of existing material goods.
Inside economic processes, two specific layers of human relationships can be distinguished: the first is superficial (visually visible), and the second is internal (hidden from observation). The study of visually visible economic relations is available to everyone, therefore, from childhood, a person forms a typical economic thinking based on real knowledge of the management mechanism. This kind of thinking is most often subjective. It is limited to a certain horizons of a single person and quite often is based on partial and one-sided data.
Economic theory, however, seeks to reveal the internal content and how some economic phenomena are interconnected with others (their causal relationship).
Classification of the considered processes
Socio-economic phenomena are divided into relevant types, as well as types, based on criteria such as the social nature and interests of society, the nature of their implementation in a particular society. This division is conditional, however, it helps to present their internal content and a number of features of their functioning.
Types of economic phenomena can be divided based on the following areas:
1. The nature of social actors allows us to distinguish three categories of economic processes and phenomena:
- class character (main subjects and driving force - the corresponding classes);
- national character (the main driving force is the nation);
- of a nationwide nature (subjects - social groups and segments of the population of the corresponding country).
2. Features of their content include the following socio-economic phenomena and processes:
- regarding the solution of the general problems of the scientific and technological revolution;
- with regard to solving specific problems regarding the functioning of banking and industrial capital;
- in the field of solving problems of interethnic relations;
- regarding the solution of problems of civil rights and freedoms.
3. The scope and depth of their action identifies the following economic processes and phenomena:
- international and domestic;
- local and large-scale, etc.
Socio-economic phenomena can also be divided into: destructive and creative, transitional and stable.
In economics, most processes are interconnected. An important point is not only the identification of the fact of the relationship of economic processes and phenomena, but also their forecasting and effective management by giving mathematical quantitative certainty. This is done by statistics. Moreover, one group of indicators acts as factors (reasons) that determine the dynamics of another set of indicators, which are referred to as effective.
The relationships under consideration are classified based on the nature, dependence and method of studying the relationship. It does not apply to economic phenomena: electrification of bodies, decay of the core, sunbeam, snowfall, etc.
Economics methodology
This is a science regarding methods of cognition and research of the economic aspect of economic phenomena. It is customary to single out general and particular methods of cognition of economic phenomena.
In turn, the former include the following methods:
- Materialistic dialectics (all processes and phenomena are analyzed in continuous dynamics, constant development and close interconnection).
- Scientific abstraction (obligatory allocation of significant features of the studied phenomena and processes, excluding secondary ones).
- The unity of historical and logical knowledge (the consideration of society from the point of view of historical sequence in addition to the logical method of research, revealing the sequence of appearance and evolution of economic laws and categories).
Private methods for studying economic phenomena include:
- Economic-mathematical (determination of the qualitative and quantitative characteristics of these phenomena and obtaining from a variety of variations the most acceptable solution to the economic problem posed).
- The method of analysis and synthesis (complex economic phenomena are divided into the simplest components, which are subsequently subjected to detailed analysis, as a result of which interconnections of the whole system as a whole are established on the basis of a generalization of individual parts).
- Graphic image method (visual display of the ratios of various economic indicators under the influence of a dynamic economic situation).
- The method of social practice (the process during which economic phenomena are first carefully studied, and then the scientific justification obtained in the course of this study is confirmed or denied by public practice).
- The method of induction and deduction (the transition from private conclusions to general, and vice versa).
Economic analysis
It is a systematic set of methods, techniques and methods that are used in order to obtain economic conclusions regarding a particular business entity.
Economic analysis - a system of special knowledge in the following areas:
- Analysis of economic phenomena, as well as processes regarding their causal relationship between themselves, which are formed under the influence of subjective economic factors and objective laws.
- The scientific rationale for business plans.
- Identification of negative and positive factors, as well as a quantitative measurement of their actions.
- Disclosure of economic development trends and determination of the degree of non-use of internal reserves.
- Making optimal and adequate management decisions.
The analysis of economic phenomena includes important points: the establishment of the relationship, interdependence and interdependence of factors and causes.
Unemployment as an example of an economic phenomenon
Its main reason is a change in entrepreneurial demand relatively constantly changing under the influence of the accumulated capital of labor.
Unemployment is an economic phenomenon within the framework of a market form of activity associated with production, which is manifested in the fact that an economically active population has no work and stable earnings for reasons beyond its control.
The reasons for the economic phenomenon
They can be classified based on the point of view of various economic doctrines:
- Malthusianism (the main cause of unemployment is an excess of population);
- technological theory (any technical innovation “pushes” workers out of the production process);
- Keynesianism (lack of aggregate (effective) demand relative to goods and factors of production);
- monetarism (according to his representative F. Hayek, the reason for this economic phenomenon is the deviation of earnings and equilibrium prices from their stable level and the state of market orderliness, which results in the emergence of economically unjustified allocation of labor resources, which, in turn, leads to a state of demand imbalance and labor offers);
- Marxist theory ("relative overpopulation", the cause of which, in turn, is an increase in the scale of the organic structure of capital during its accumulation, and therefore (within the framework of the exclusively capitalist mode of production) there is a relative decrease in the demand for labor).
In all of the above theories, the causality of such an economic phenomenon as unemployment is undoubtedly correctly noted. If we summarize them, we can get a fairly objective universal definition of the reasons for its formation: the lack of aggregate demand for both goods and factors of production, provided that the organic structure of capital is increased.
Ownership as an economic phenomenon
Initially, it appeared as a relationship between the representatives of the human race regarding the use of spiritual and material goods, as well as the conditions for their creation, or as a historically established public way of alienating the good.
Property as an economic relation appears during the formation of human society.
On the process of monopolization of property, so to speak, all forms of economic and non-economic coercion to labor are held. Thus, the ancient mode of production was associated with extra-economic coercion, backed up by the right of ownership of the slave, Asian - by the right of ownership of the land, under feudalism - the right of ownership of both the individual and the land.
Economic coercion to work is based on ownership of the conditions of production or on ownership of capital.
This economic phenomenon - this education is very complex and quite multidimensional. Historically, property has two forms: general and private. Their difference in character, forms and methods of appropriation, level of socialization. Between them there is a rather complicated interaction.
First, they have a common essential principle, and they, as a rule, are correlated as fundamental differences (their difference cannot be brought to the exact opposite). In this regard, private property can be transformed into general, and vice versa. Secondly, the economic phenomenon under consideration, reflecting the deep processes of the economic side of society, cannot but change.
A variety of basic forms of ownership
Private property is divided into the following types:
- single (individual);
- joint (divisible and indivisible);
- general;
- brought to the scale of an association or state, or transnational monopoly.
The content of the common property is based on the size of the community and its status. It can be both at the family (household) stage, and at the community level or association, or state, or society (people).
Economic phenomena, examples of which were given earlier (unemployment and property), are not isolated. This may also include inflation, deflation, economic growth, globalization, all types of activities, etc. The economic phenomena do not include, for example, such a procedure as elections. Any physical or chemical phenomenon or process (ice melting, evaporation, electrolysis, etc.) is not economic.
In the economy, there are such economic phenomena that are considered the simplest, arising earlier than others and constituting the basis for the emergence of more complex ones. An example of this is the exchange of goods.
Central Method of Economics
It is the modeling of economic phenomena - their description through a formalized language using mathematical algorithms and corresponding symbols to identify the functional relationships between these phenomena or processes. This implies idealization of the object.
The peculiarity is, within the framework of a theoretical study, the allocation of such a concept as an ideal object, which does not exist in reality, but acts as the basis for constructing the theory. In the process of constructing such objects, the researcher significantly simplifies reality, he consciously abstracts from the properties inherent to them in reality or gives them virtual features. This allows you to more clearly see the analyzed relationship and present them mainly in the mathematical aspect.
In accordance with the existing methodology, if there is a need to explain the phenomenon, a mathematical model is constructed that reflects its main features. The following are conclusions, interpreted as justification of the observed facts or as statements that do not contradict the economic situation.
The next stage is the collection of empirical information for the subsequent testing of the model. Provided that after numerical experiments, acceptable results are obtained, such a model can be considered that the theoretical result has received empirical confirmation.
Limited methodology
It is expressed in the fact that the underlying mathematical model is equipped with a complexity limit. In essence, only one of the most important factors is grasped and described. Complication leads to difficulties in the practical application of the obtained mathematical statement.
Another important drawback is the fact that, without exception, all the assumptions made in mathematics can be verified in a formal way. This indicates the possibility of constructing both a useless and ineffective or even knowingly false model.
Mathematical thinking is analytical thinking. It divides the phenomenon into its constituent parts, which may result in inadequacy in relation to the expression of reality, especially regarding social phenomena. The so-called formality of mathematics prevents the expression of the specifics of economic relations in society.
