Earliest roots , depicting a merchant leading camels through the desert As long as someone has been making, supplying and distributing goods or services, there has been some sort of economy; economies grew larger as societies grew and became more complex.
Sumer developed a large-scale economy based on
commodity money, while the
Babylonians and their neighboring
city states later developed the earliest system of
economics as we think of, in terms of rules/laws on
debt, legal contracts and law codes relating to business practices, and private property. 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, The economic discussion was driven by
scarcity. In Chinese economic law, the huge cycle of
institutional innovation contains an idea. Serving a non-market economy promotes a firm's tenure that is legally guaranteed and protected from bureaucratic opportunities.
Middle Ages In the Middle Ages, what is now known as an economy was not far from the subsistence level. Most exchange occurred within
social groups. On top of this, the great conquerors raised what we now call
venture capital (from
ventura, ital.;
risk) to finance their captures. The
capital should be refunded by the goods they would bring up in the
New World. The discoveries of
Marco Polo (1254–1324),
Christopher Columbus (1451–1506) and
Vasco da Gama (1469–1524) led to a first
global economy. The first
enterprises were trading establishments. In 1513, the first
stock exchange was founded in
Antwerp. Economy at the time meant primarily
trade. The European captures became branches of the
European states, the so-called
colonies. The rising
nation-states
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.
Industrial Revolution The first
economist in the true modern meaning of the word was the Scotsman
Adam Smith (1723–1790) who was inspired partly by the ideas of
physiocracy, a reaction to mercantilism and also later Economics student, Adam Mari. He defined the elements of a national economy:
products are offered at a
natural price generated by the use of
competition -
supply and demand - and the
division of labor. He maintained that the basic motive for
free trade is human self-interest. The so-called self-interest hypothesis became the
anthropological basis for economics.
Thomas Malthus (1766–1834) transferred the idea of supply and demand to the problem of
overpopulation. 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.
20th century The contemporary concept of "the economy" wasn't popularly known until the American
Great Depression in the 1930s. After the chaos of two
World Wars 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 (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.
21st century in 2015 With
the fall of the Iron Curtain and the transition of the countries of the Eastern Bloc towards democratic government and market economies, the idea of the
post-industrial society is brought into importance as its role is to mark together the significance that the
service sector receives instead of industrialization. Some attribute the first use of this term to Daniel Bell's 1973 book,
The Coming of Post-Industrial Society, while others attribute it to social philosopher Ivan Illich's book,
Tools for Conviviality. The term is also applied in philosophy to designate the fading of
postmodernism in the late 90s and especially in the beginning of the 21st century. 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
China,
Brazil, and
India bring attention and interest to economies different from the usually dominating Western-type economies and economic models. == Elements ==