What Is the Importance of the Economy and Its Systems

To start with, throughout the History economy has been existed but in different ways in which Karl Marx classified history based on economy, which demonstrate that economy changes over time and diverse from a country to another therefore this paper give us more details about economy to know what is economy ? Is it something modern? Or why is it important? How many types of economic system do we have? And eventually we have an example of German economy as a case study.

According to Blaug 'Economy' has been defined that it is the Social science in which it focuses on the Wealth in the field of its production, distribution and its consumption, on the other hand; it has been said that there is no exact definition for the Scope of Economy or economics and there are different definitions by different economists for example an English economist Alfred Marshal in Nineteenth Century defined Economic “[as] a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment, and with the use of the material requisites of wellbeing” which is agreed by various Economist, also another Definition which has been marked as more infallible and it is that “economics is what economists do” which has been stated by Canadian Economist Jacob Viner.

Eventually, Historically, the Economy was existed in Greek Era, Medieval Era and also in 18th Century but as a separated subject its birth goes back to the work of Adam smith who was known as Scottish Philosopher in which he fully wrote about economy in his work ‘An Inquiry into the Nature and Causes of the Wealth of Nations’.

What is the Importance of the Economy? It is significant to study Economy because there are many reasons behind it for example in governments or companies an economist because of having experience or knowledge they can be helpful on giving insight and predicting on any decision makings, and also it helps us to have a successful businesses because being an expert in economy can help us forecast the behavior of costumers not to encounter barriers on analyzing troubles some data another importance of the studying of economy is to learn about economic perspective of different countries because it effects the success and failure of the international companies. On the other hand, according to Manfredi, he claimed that a government can only provide effective economic decision when politician are well-informed about the nature of economy meaning they need to be expert in economy.

There are four different types of economic system. One of the is the Traditional economic system in which it goes back to the ancient procedures of economy and still exist in the rural place or third world countries, which is related to the agriculture, fishing gathering or hunting. And the second one is the Command economic system which mostly the economic system of society are dominated by the government and all significant part of industries are owned by government such as aircrafts or railroads. This type of system is efficient and beneficial, but majority of this system concentrate on precious sources within government specially on oil which impacts on its efficiency. China is an example that have Command economic system. Furthermore, the third type of economy system is Market economy system which is completely opposite to the command one because companies are allowed to use resources to produce what is in their benefit and for whom because government has no interference in this system. For example Hong Kong holds this system. Eventually the last system is the Mixed economic system, whereby the command and market economic systems are combined in which government controls important industries like railroads and aircrafts and sometimes intervene in the rule making of private sector for the good India is an example of having this system.

The German economy as a case study. According to Amadeo Germany possess high level of economy which is listed with US, japan and also china, on the other hand; Germany has the mixed economic system in which it has a free market which means it respects the private property system which incorporations and businessmen and women are free in marketing but despite of that government give some confines in which it gives some rules for the sake of citizens safety and also it is command one in which it controls some services such as education and hospital institutions. Moreover, as Germany is one of the Eurozone members, it has a better economy and low unemployment level in entire Europe but lately it encountered some barriers according to Lagarde, such as having low wage growth that Germany intended to increase it and the another barrier is that the “balanced Savings and investment” in which people in Germany has less usage of money but instead they save it which prevents the increase of economy in the Government.

To sum up, in this paper we have learnt that economy is not modern but it was existed from ancients and changed overtime, and economy has different definitions but mostly accepted one is “economics is what economists do” which is stated by Canadian economist Jacob Viner and has been mentioned that economy is significant in different ways in which it helps us to be successful in businesses. Also this paper provided the types of economic systems such as Traditional, Command, Market and Mixed economic systems and each country has different system therefore this paper only focused on German economy as a case study and found out the German economy is a Mixed one and it possess a high level of economy rate.

Reference List

• Agarwal, P., (2020), Economic Systems, (online), Available at: https:www.intelligenteconomist.comeconomic-systems Accessed on 18th May 2021
• Ambadeo. K., (2020), Germany’s Economy, Its Success and Challenges, (online), Available at: https:www.thebalance.comgermany-s-economy-3306346 Accessed on 18th May 2021
• Blaug, M., (2020), Economics, (online), Available at: https:www.britannica.comtopiceconomics#ref38849 Accessed on 17th May 2021
• Durham University, (2020), Why is it Important to study economics?, (online), Available at: https:www.durhamisc.comblogwhy-is-it-important-to-study-economics Accessed on 17th May 2021
• Edwards, J., (2020), the Economic Challenges Facing Germany in the 2020s, (online), Available at:https:www.investopedia.comarticlesinvesting1221153-economic-challenges-germany-faces-2016.asp Accessed on 18th May 2021
• Manfredi, A., (2019). What is the importance of economics?, (online), Available at:https:www.researchgate.netpostWhat_is_the_importance_of_economics#:~:text=Economics is important for many,what we consider most important. Accessed on 17th May 2021