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Economy
The economy is the planned action for creating and distributing resources in a society. The rules for this creation and distribution of resources are determined by politics.
The participants in the economy are businesses, public authorities and private households. Other participants, such as associations, are assigned to these three groups. Participants act in the economy in the form of production, trade and exchange, consumption and disposal.
Business Administration and Economics
In economics, a distinction is made between business administration and economics. Business administration is the study of economics from the perspective of companies and at the company level. Economics is the study of economics from the perspective of society. The societal perspective can refer to a region, a country or even the entire world.
Economic Systems
Economic systems can be organised in various ways:
- Subsistence economies: This form of economy describes partly stateless economic systems in which the individual participants in the economy are essentially self-sufficient. It describes the economy of hunter-gatherer societies, but can still be observed today in many countries around the world, regionally in agriculture and livestock farming.
- Market economy: An economic system in which all resources are distributed via markets according to supply and demand. The state intervenes only minimally in economic activity, but guarantees compliance with certain rules, e.g. in contract law.
- Planned economy: In this economic system, resources are distributed on the basis of economic plans. This can be done through centralised or decentralised planning.
- Participatory economics or Parecon: In this economic system, the members of a society jointly decide on the distribution of resources. This means that there is no ownership of the means of production, i.e. raw materials and tools.
The three-sector model
The economy can be divided into three sectors:
- Primary sector: The primary sector encompasses all original resource extraction, such as hunting, forestry, fishing, agriculture and mining.
- Secondary sector: The secondary sector comprises industrial production and manufacturing. These companies typically process products from the primary sector.
- Tertiary sector: The tertiary sector comprises the service industry. This includes transport services, hospitality, trade, maintenance, education, healthcare and many other areas.
This classification is based on the three-sector model developed by Allan G. B. Fisher (The clash of progress and security, 1935), Colin G. Clark (The conditions of economic progress, 1940) based on Sir William Petty (Political Arithmetick … , 1690), and Jean Fourastié (Le Grand Espoir du XXe siècle. Progrès technique, progrès économique, progrès social. [The Great Hope of the 20th Century. Technical Progress, Economic Progress, Social Progress], 1949).
