The purpose of the economy. Economics and its role in society

The great Scottish scholar Adam Smith is considered the founder of such a great science as economics. To date, this great science is one of the most urgent and necessary. Knowledge of various economic processes not only makes life easier for people, but also helps to regularly replenish the budget, teaches you how 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 economical universities that almost every year modernize and open progressive faculties.

What is this science and what is the goal of the economy? Social science studying the market and the behavior of participants in the process of economic activity, exploring how people manage property, how they try to satisfy their unorganized needs and is the economy.

Economy and its objectives

Many terrestrial resources are inherently limited. Fresh water, food, cattle, fabrics are earth resources that can be lost. Unlike resources, the needs of a person are not limited. The goal of the economy is to keep in balance limited resources and unlimited human needs.

The famous American scientist, psychologist Maslow Abraham Harold believed that all the basic human needs can be expressed in a pyramid. The basis of the geometric figure are physiological needs, that is, human need for food, water, clothing, shelter, and the continuation of the family. Topical issues of the economy are based on this pyramid. The top of the figure is the person's need for self-expression.

Sectors of the economy

To date, only three sectors of the economy have been identified , which in science are called primary, secondary and tertiary. The first sector unites the goals and objectives of the economy in the study of agriculture, fisheries, hunting, forestry. The second sector is responsible for the construction and manufacturing industries, whereas the tertiary sector takes as its base the service sector. Some economists prefer to allocate also the Quaternary sector of the economy, which includes education, banking services, marketing, information technology, but in fact, it also studies the tertiary sector.

Forms of economy

To understand the purpose of the economy for sure, you need to familiarize yourself with the forms of the economy. This important topic is being studied by children in high school not in the lessons of social studies, and then they continue to be studied in high school and university. There are four forms of this social science.

Market economy

The market economy is based on free entrepreneurial activity, contractual relations, the diversity of forms of ownership. The state in this case has only an indirect impact on the economy. Characteristic features of this form are free competition, independence and independence of the entrepreneur, the ability to choose a supplier, the buyer's orientation. The main goal of the economy in this case is to maintain communication between the buyer and the entrepreneur.

Traditional economics

The traditional economy has not yet outlived itself, because there are still underdeveloped countries. Customs play a major role in this economic form. Agriculture, manual labor, such primitive technologies (use of plow, hoes, plow) are characteristic features for this system. Primitive society was built on a hierarchy and traditional economy, but today some African, Asian and South American countries still retain this form. In its essence, the traditional form is the very first manifestation of economic science.

Administrative and command economy

The administrative-command economy or planned economy 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 single-handedly plan production, and also regulate prices for it. A 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 a 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 so on. People are free to engage in entrepreneurial activities. Businessmen dispose of their property independently, make decisions about the release of products, hire and fire workers, train employees. The state is financed by people who pay taxes.

The economic growth

Economic growth of the country largely determines the economy and its role in the life of society. Economic growth allows each state to produce more goods, produce services and goods. The more the country produces goods, and the more demand for them, the greater the profit this state will receive. Economic growth should be sustainable, but in no case not an emergency.

The result expected from economic growth is a significant improvement in the quality of life of the population. But, unfortunately, this is incredibly difficult, since literate economists are less and less. There are several factors that can raise the standard of living of the country.

One of the most important factors is the progress of technology and science. Thanks to new mechanisms, technology, the Internet millions of times increased labor productivity, efficiency. A unique, modern, high-quality product is in demand in the sales market.

Another factor of economic growth is the labor force. If an employee does not have a higher education, is lazy, is not experienced, does not know how to make decisions, then the company will not have success. Human capital is incredibly highly valued in modern society. Education in a higher education institution, work experience, knowledge of foreign languages, personal qualities of a person play a huge role in hiring. The economy and its role in the life of society are incredibly high, so it is so important to listen to the advice of experienced scientists. Human capital allows an employee to receive additional income. This term was derived in the 20th century in economic science.