the economic organisation of society

Almudena Corrales Marbán

THE ECONOMIC ORGANISATION OF SOCIETY

How does economies work?

SOCIAL STUDIES DEPARTMENT

3rd ESO


INTRODUCTIONThe economic systems in the world today

include subsistence models, capitalism, planned economies and mixed models. All these systems help people’s needs and desires in different ways.

Our planet resources are limited, and economic exploitation can can lead to the overuse of resources and the creation of excessive amount of waste.

Future generations should work on this problem or we will not have enough natural resources . We must all work together to consume the Earth’s resources responsibly.


1. HOW ECONOMIC ACTIVITY WORKS?People have individual needs, such as food, clothes, hygiene and exercise, whereas society has collective needs, such as healthcare, justice, communication and education.

WHAT IS ECONOMIC ACTIVITY?Economic activity describes all the jobs done by workers in order to satisfy the needs of people and societies by providing goods or services.


2. THE THREE PHASES OF THE ECONOMIC ACTIVITY

2.1. PRODUCTION

The company decides on the products to be produced, the amount and the manufacturing process. These products can be goods or services.

GOODS

• Consumer goods, which satisfy the desires or needs of the consumer, such as clothes and furniture.

• Intermediate goods, such as machines and tools, are used to manufacture consumer goods

SERVICES

• Healthcare, public transport, police,etc

• They require infrastructure and the investment of the government.


2.2. DISTRIBUTION

Distribution occurs after the production and consists of the delivery of goods or services to the consumer. This involves:

Storage, transport, marketing, sale of goods.

There are two steps in the sales process:

WHOLESALE

Wholesalers buy a large number of products and sell them to companies,

who then sell the goods to individual consumers

RETAIL

Retail businesses buy a small number of gooods from wholesalers and sell

them directly to the public in shops


An example of distribution

AMAZON


http://clipset.20minutos.es/amazon-y-su-ejercito-de-15-000-robots-preparan-a-navidad/

To know more…..

Amazon testing a drone!!!


2.3. CONSUMPTION

The buying of goods and services allows people to satisfy their needs. This means they are able to consume products or use goods and services

People consume goods, such as food or drinks, and use others, such as television or computers.


3. THE FACTORS THAT AFFECT PRODUCTION

THE KEY INGREDIENTS FOR THE PRODUCTION OF GOODS ARE:

• NATURAL RESOURCES• LABOUR • CAPITAL• TECHNOLOGY AND EXPERTISE


3.1. Natural resources

Nature gives us many elements that we transform to satisfy the needs of human society. Because these resources are limited and could run out soon, we need to make sure we do not overexploit them.


3.2. Labour

Labour is all human activity, whether physical or intelllectual, that is required to produce goods or provide services that are necessary for people and society.


3.3. CapitalCapital includes all of the resources used to produce goods and services. There are two type of capitals:

Physical capital. This includes the land on which the business is built, the construction and maintenance of the premises, and the machinery and raw materials needed for the production of goods and services. All this requires a considerable investment.

Financial capital. Money needed to begin production. This includes loans of banks or other institutions.


3.4. Technology and expertiseTechnical expertise makes possible the design, construction and use of machines and devices for the production of goods and services.

We can distinguish three types of production according to this technology: • Manual production• Mechanical production• Hi-tech production

Competitive companies require quality training programmes for the employees and also laboratories to reach new technology and new products


4. THE ECONOMIC SECTORS

Economic sectors are so diverse that they have been traditionally divided into three large economic sectors. However, a fourth sector has been recently added to this classification.

1. THE PRIMARY SECTOR2. THE SECONDARY SECTOR3. THE TERTIARY SECTOR4. THE QUATERNARY SECTOR


4.1. The primary sector

This sector includes activities that produce food for consumption and raw materials for industry. It consists of agriculture, livestock farming, fishing and forestry.


4.2. The secondary sectorThis sector includes all economic activities that transform raw materials found in nature through industrial processes into manufactured products. The main activities are:

• Industry

• Construction

• Exploitation of energy sources

(water, oil, gas)


4.3. The tertiary sectorThis sector includes a wide variety of activities. It does not produce material goods like the primary and secondary sectors. It provides services to the population or to companies such as healthcare, education, transport, tourism, trade and culture.

This sector is the fastest-growing sector due to the appearence and expansion of an information society, which has aided the development of scientific and technical research, including on-line services and shops.


4.4. The quaternary sectorThis is a new economic sector based on expertise that includes activities related to the creation, distribution and manipulation of information, ans also social, cutural and economic innovation and research. Workers in these fields need special training and high levels of expertise. The use of advance technology


5. ECONOMIC SYSTEMS

All societies need to think about what products they can make, how they make them, and who they will make them for.These systems can be organised in different ways according to the society’s beliefs and historical background.

• The subsistence system• The capitalist system• The planned economy system• Alternative economies


5.1. The subsistence system

This system is chracteristic of societies with low levels of development, people produce what they need to meet their basic needs. They work the land for food, build their own houses, make their own clothes, etc. Any surplus goods are sold in local markets.


5.2. The capitalist systemThis system defends free competition between individuals and companies to develop economic activities. It is also called the free market system.

It is based on the LAW OF SUPPLY AND DEMAND for fair prices for goood and services that people need. The means of production are private.

Capitalism started with the Industrial Revolution in the late 18th century.

A little bit of critical thinking


5.3. The planned economy systemIn this systen, the state owns the means of production and controls all aspects of the economy. It decides how much is produced. It also decides how much goods will cost and what to do with the profits.

Today this system exists in countries like China or North Korea. China, however, is changing it slowly by openning its economy to foreign countries and investment.


5.4. Alternative economiesThese economies reject capitalism because they say it does not meet the real needs of its citizens and promotes inequality.

They suggest unique model for society that is based on solidarity between people, respect for nature and the common good.

the economic organisation of society

Education