economy

An economy consists of the economic system of a country or other area; the labor, capital, and land resources; and the manufacturing, production, trade, distribution, and consumption of goods and services of that area.
A given economy is the result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions.
A market-based economy may be described as a spatially limited social network where goods and services are freely produced and exchanged according to demand and supply between participants (economic agents) by barter or a medium of exchange with a credit or debit value accepted within the network. Capital and labor can move freely across places, industries and firms in search of higher profits, dividends, interest, compensations and benefits. Rent on land allocates this generally fixed resource among competing users.
Contemporary Capitalism is a market economy in which most of the production capacity is owned and directed by the private sector. Government role is limited, to a great extent, to the following tasks: providing for defense and internal security, administering justice and prisons, making laws and regulations, enforcing contracts, laws and regulations, correcting market imperfections and failures, ensuring full employment without inflation, promoting balanced economic growth and development, providing for the poor, children, and elderly, protecting against and assisting in emergencies and natural disasters, providing basic opportunities to all members of society, preventing future calamities and disasters, and pursuing national goals established by society at large such as protection of the environment and natural resources. Government levies taxes and borrow money to pay for the goods and services it provides to society.
On the other hand, traditional socialism is a command-based economy in which markets and the free exchange of goods and services, as well as manufacturing, production, trade and distribution are replaced or done by government central planning and state owned enterprises. In this economy all private owners of capital (called capitalist) and of land (called landowners) are not allowed or banned; and the only permitted private ownership is of consumption goods. Capital labor, and land are assigned by the state and free movement of labor is severely restricted. There are no profits, dividends, interest or rent. Labor compensation and benefits as well as investment expenditures are decided by central planners.
Finally, a mixed economy contains elements of both capitalism and socialism which essentially means a market-based economy with a varied degrees of government central planning and state owned enterprises.

Economic phases of precedence
The economy may be considered as having developed through the following Phases or Degrees of Precedence.

• The ancient economy was mainly based on subsistence farming.
• The industrial revolution phase lessened the role of subsistence farming, converting it to more extensive and mono-cultural forms of agriculture in the last three centuries. The economic growth took place mostly in mining, construction and manufacturing industries. Commerce became more significant due to the need for improved exchange and distribution of produce throughout the community.
• In the economies of modern consumer societies phase there is a growing part played by services, finance, and technology—the (knowledge economy).

In modern economies, these phase precedences are somewhat differently expressed by degrees of activity^]

• Primary stage/degree of the economy: Involves the extraction and production of raw materials, such as corn, coal, wood and iron. (A coal miner and a fisherman would be workers in the primary degree.)
• Secondary stage/degree of the economy: Involves the transformation of raw or intermediate materials into goods e.g. manufacturing steel into cars, or textiles into clothing. (A builder and a dressmaker would be workers in the secondary degree.) At this stage the associated industrial economy is also sub-divided into several economic sectors (also called industries). Their separate evolution during the Industrial Revolution phase is dealt with elsewhere.
• Tertiary stage/degree of the economy: Involves the provision of services to consumers and businesses, such as baby-sitting, cinema and banking. (A shopkeeper and an accountant would be workers in the tertiary degree.)
• Quaternary stage/degree of the economy: Involves the research and development needed to produce products from natural resources and their subsequent by-products. (A logging company might research ways to use partially burnt wood to be processed so that the undamaged portions of it can be made into pulp for paper.) Note that education is sometimes included in this sector.

Other sectors of the developed community include :

• the Public Sector or state sector (which usually includes: parliament, law-courts and government centers, various emergency services, public health, shelters for empoverished and threatened people, transport facilities, air/sea ports, post-natal care, hospitals, schools, libraries, museums, preserved historical buildings, parks/gardens, nature-reserves, some universities, national sports grounds/stadiums, national arts/concert-halls or theaters and centers for various religions).
• the Private Sector or privately-run businesses.
• the Social sector or Voluntary sector
• .