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An economy is an area of the production, distribution and trade, as well as consumption of goods and services. 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 a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure, legal systems, and 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, , , or . 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, innovation (new products, services, processes, expanding markets, diversification of markets, niche markets, increases revenue functions) and changes in industrial relations (most notably Child labour being replaced in some parts of the world with universal access to education).
The most frequently used current sense, denoting "the economic system of a country or an area", seems not to have developed until the 1650s. Dictionary.com , "economy." The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. October 24, 2009.
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 based primarily on subsistence farming. The Shekel are the first to refer to a unit of weight and currency, used by the Semitic peoples. 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..
Most exchange of goods had 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., noting that economic historian Moses Finley maintained "serf" was an incorrect term to apply to the social structures of classical antiquity. The economic discussion was driven by scarcity.
In Chinese economic law, the huge cycle of Institution contains an idea. Serving a non-market economy promotes a firm's tenure that is legally guaranteed and protected from bureaucratic opportunities.
The European captures became branches of the states, the so-called colonies. The rising Spain, Portugal, France, Great Britain and the Netherlands tried to control the trade through custom duties and mercantilism (from mercator, lat.: merchant) was a first approach to intermediate between private wealth and public interest. The secularization in Europe allowed states to use the immense property of the church for the development of towns. The influence of the nobles decreased. The first Secretaries of State for economy started their work. Bankers like Amschel Mayer Rothschild (1773–1855) started to finance national projects such as wars and infrastructure. Economy from then on meant national economy as a topic for the economic activities of the citizens of a state.
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, and transport had a profound effect on the socioeconomic and cultural conditions starting in the United Kingdom, then subsequently spreading throughout Europe, North America, and eventually the world. The onset of the Industrial Revolution marked a major turning point in human history; almost every aspect of daily life was eventually influenced in some way. In Europe wild capitalism started to replace the system of mercantilism (today: protectionism) and led to economic growth. The period is called the Industrial Revolution because the system of production and division of labor enabled the mass production of goods.
After the chaos of two and the devastating Great Depression, policymakers searched for new ways of controlling the course of the economy. This was explored and discussed by Friedrich August von Hayek (1899–1992) and Milton Friedman (1912–2006) who pleaded for a global free trade and are supposed to be the fathers of the so-called neoliberalism. However, the prevailing view was that held by John Maynard Keynes (1883–1946), who argued for a stronger control of the markets by the state. The theory that the state can alleviate economic problems and instigate economic growth through state manipulation of aggregate demand is called Keynesianism in his honor. In the late 1950s, the economic growth in America and Europe—often called Wirtschaftswunder (German for economic miracle) —brought up a new form of economy: mass consumption economy. In 1958, John Kenneth Galbraith (1908–2006) was the first to speak of an affluent society in his book The Affluent Society. In most of the countries the economic system is called a social market economy.
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 Chinese Century, Brazil, and India bring attention and interest to economies different from the usually dominating Western-type economies and economic models.
Other sectors of the developed community include:
Due to the growing importance of the financial sector in modern times,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" , Austrian Institute for Economic Research, 2009) the term real economy is used by analysts as well as politicians "Perry and Romney Trade Swipes Over 'Real Economy'" , The Wall Street Journal, August 15, 2011 to denote the part of the economy that is concerned with the actual production of goods and services, "Real Economy" definition in the Financial Times Lexicon as ostensibly contrasted with the paper economy, or the financial side of the economy, "Real economy" definition in the Economic Glossary 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).• Deardorff's Glossary of International Economics, search for real
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