Economic activity as the most important process of creating life's goods

In order to function normally in society, the population must drink, eat, dress, dress, live in an apartment or house, etc. And since in a pure form this does not exist, people have to produce it. And at the ordinary level, it turns out that the economy and production are one and the same.

But in the primitive, slave-owning or feudal society, such a thing as "economics" did not exist. Production was then based on non-economic methods: coercion and violence. And getting the result became the main goal, which did not depend on the amount of costs.

Economic activity is impossible without production. The participants in the production must adhere to the principle of general economic expediency. In such a relationship, the economy takes place. Thus, it must be linked to results and costs incurred.

The ratio of these indicators is effective. Economic activity should reflect the effectiveness of production of the whole society. And since in such production the basis is the satisfaction of the needs of citizens, the effectiveness of the product obtained expresses the overall economic result.

Classification of types of economic activity (according to the all-Russian classifier OKVED) is carried out on certain grounds. They characterize a certain field of activity, technology and production processes.

Effective economic activity is a state in which the needs of the population are most fully satisfied. At the same time, the degree of satisfaction of the needs of one citizen can not be increased by worsening the situation of another. This is called "Pareto-efficiency" in honor of the Italian economist. Productivity is the most important category of the economy.

There are 4 stages of economic activity.

1) Reproduction. This is a recurring process of production. It can be extended or simple. At the last, the volumes of output do not grow, but at the first - on the contrary. In the current society, of course, the extended one prevails.

2) Distribution. It is the spread of the benefits resulting from the production of goods among members of society. Also this stage includes the distribution of members of society and means of production by industry and spheres, to economic enterprises and regions, to work sites and workshops. In this case, this stage is an element of production.

3) Exchange. An independent function that is the movement of a product. In production - the exchange of abilities and activities.

4) Consumption. The final stage of the movement of the product, as a result of which human needs are met. It includes personal consumption, which ensures the reproduction of labor force, and creates incentives for improving production and further development. In addition, there may be a production consumption at which materials are consumed in the process of creating products.

Thus, economic activity passes through production to distribution, exchange, and then to consumption.