What is the economy

what is the economy

Explaining what the economy is is not easy. In fact, although it has a concept, the term itself is something very extensive and, for many, difficult to understand 100%, even for expert economists.

However, if you've always wanted know what the economy is, what is its objective, what types exist and other aspects of it, then this compilation that we have prepared can help you calm the curiosity you feel about the subject.

What is the economy

what is the economy

Concepts of economics there are many. Those that are easy to understand not so much. If we go to the RAE and look for the term economy, the definition it gives us is the following:

"Science that studies the most effective methods to satisfy material human needs, through the use of scarce goods."

This already clarifies the issue a bit, but the truth is that there are many conceptualizations about the economy. Some of the most notable are:

"Economics is the study of humanity in its daily work." A. Marshall.

"Economics is the study of the way in which societies use scarce resources to produce valuable goods and distribute them among different individuals." P. Samuelson (Nobel Prize winner).

"Economic science is the study of human behavior as a relationship between ends and means that are scarce and susceptible to alternative uses." L. Robbins.

The latter is one of the most used in the career of economics.

In conclusion, we can say that economics is the discipline that studies how the goods available to people are managed in order to satisfy needs. At the same time, it is also in charge of analyzing the behavior and actions that human beings do in relation to goods.

For example, the economy would be that study that is carried out in a society to find out how it is organized to satisfy the needs of human beings, both in material and immaterial consumption needs, dealing with production, distribution, consumption and, therefore Finally, the exchange of goods and services.

Characteristics of the economy

After seeing several definitions of what the economy is, what can be clear to you is that they all have a series of characteristics in common. These are:

  • Treat economics as a social science. This is because, if you notice, they all speak of the study of human behavior as a society.
  • Study the resources that a country has. These are scarce, and it will depend on the needs of each human being, as well as their behavior, whether they are finished or distributed and consumed properly.
  • Take financial decisions into account, especially because it analyzes how the human being would behave when there is a shortage of some good or service.

Where are you from

Characteristics of the economy

Now that you have a better understanding of what economics is, you should know what the origin of the term is, and why it arose. To do this, we have to go back to the ancient civilizations that existed in Mesopotamia, Greece, Rome, the Arab, Chinese, Persian and Indian civilizations.

Really the first to use the word "economy" were the Greeks, who used it to refer to household management. At this time, philosophers such as Plato or Aristotle formulated the first definitions of economy while, with the passage of time, this concept was perfected. In the Middle Ages, for example, there were many names that contributed their knowledge and their way of seeing this science, such as Saint Thomas Aquinas, Ibn Khaldun, etc.

But, really, economics as a science did not emerge until the XNUMXth century. At that time Adam Smith was the "culprit" that the economy was considered as such when publishing his book, "The Wealth of Nations." In fact, many experts describe that the publication of this was the birth of economics as an independent science, not linked to philosophy itself.

That definition of economics is known today as classical economics, and it is because now there are several economic currents.

Types of economy

Types of economy

Within economics, different segmentations can be distinguished, for example, according to approaches, according to the area of ​​study, philosophical currents, etc. In general, within what is the economy you find:

  • Microeconomics and Macroeconomics. They are the best known concepts and refer to the actions carried out by people, companies and governments to satisfy the needs and tackle the shortage of goods (microeconomics), or the study of the national system and commercial actions , trends and global data of the whole set (macroeconomics).
  • Theoretical and empirical economics. Another large group is that which encompasses the economy of rational models (theoretical) and that which is based on "reality" and refutes the theories of the former (empirical).
  • Normative and positive. This distinction is based above all on the being of the economy. While the first strictly follows some norms that characterize the economy, in the second what it does is apply a changing concept as society and human beings transform.
  • Orthodox and heterodox. There is a differentiation at the academic level. The first refers to a relationship between rationality, the individual, and the balance that exists between the two; while the second tells us about currents that base their study on institutions, history and the social structure that arises in society.
  • Traditional, centralized, market or mixed economy. For many, this is the best classification of the economy, and it is based on four different types, being:
    • Traditional: it is the most basic, and studies the relationship between people and goods and services.
    • Centralized: it is so called because power is held by a figure (Government) and it is the one that controls all the economic actions that are carried out.
    • Market: it is not controlled by the Government but is governed based on the supply and demand of goods and services.
    • Mixed: it is a combination of two of the above, the planned (or centralized) and the market. In this case, it starts from a government control and regulation.

Is it clearer to you what the economy is?

The content of the article adheres to our principles of editorial ethics. To report an error click here!.

Be the first to comment

Leave a Comment

Your email address will not be published. Required fields are marked with *



  1. Responsible for the data: Miguel Ángel Gatón
  2. Purpose of the data: Control SPAM, comment management.
  3. Legitimation: Your consent
  4. Communication of the data: The data will not be communicated to third parties except by legal obligation.
  5. Data storage: Database hosted by Occentus Networks (EU)
  6. Rights: At any time you can limit, recover and delete your information.