Why does an economy exist

Generali

I've been reading a few things here and there and I was wondering why people think an economy exists, i.e. a bunch of people working together and exchanging stuff and having a monetary system.

chucknorris

I'll be first (unless someone else is typing faster than me), I'm going for the first option. For example farmers produce food but can't build tractors. Tractor manufacture's employees can build tractors but they can't produce a large enough variety of food to comfortably survive. So instead of doing a little bit of everything, we are far more efficient by specialising and trading with each other.

Generali

chucknorris wrote: »

I'll be first (unless someone else is typing faster than me), I'm going for the first option. For example farmers produce food but can't build tractors. Tractor manufacture's employees can build tractors but they can't produce a large enough variety of food to comfortably survive. So instead of doing a little bit of everything, we are far more efficient by specialising and trading with each other.

People keep saying on these threads that the problem with xxx is that the Government will get less tax. Surely, if that is correct, the economy exists to provide for the Government; to pay for the NHS, education, pensions and so on.

antrobus

Generali wrote: »

I've been reading a few things here and there and I was wondering why people think an economy exists, i.e. a bunch of people working together and exchanging stuff and having a monetary system.

Theory of Comparative Advantage.

chucknorris

Generali wrote: »

People keep saying on these threads that the problem with xxx is that the Government will get less tax. Surely, if that is correct, the economy exists to provide for the Government; to pay for the NHS, education, pensions and so on.

I was thinking more of an economy in its purest and basic form, i.e. why they first started up and continued, (bartering etc.). We survive and thrive much better as a community. Of course in the wider picture a community requires administration, and hence government, with differing opinions about the management and criteria introducing politics.

CLAPTON

An economy exists rather like the weather exists; it's a fact of life

What the economy achieves or aspires to achieve is a mixture of certain laws about production plus a lot politics.

System

An economy exists because individuals living in isolation quickly discover thay they can improve their lives by exchanging things and skills with their neighbours.
The moment they devise a way of postponing their call on others' output to a more convenient time, eg by some form of child-minding credit system, they have an economy.

Take it from there.

Gangaweed

An economy exists to allow specialisation of skills, which mean that we can consume things we could not (individually) make.

padington

The economy exists to find meaning through relationships to move towards a greater consciousness. Same reason why we exist and why the universe exists.

lostinrates

Why does an economy exist?

Because we cannot all afford first class dear one.

Thrugelmir

Everyday you and I go fishing using rods. We spend 14 hours fishing and only catch enough fish to feed ourselves for a single day.

So I go on reduced rations for a few days. Rather than fishing I spend my time making a fishing net.

Once the net is finished I go fishing. In 14 hours in a single day I can catch enough fish to feed us both for a day. This frees up your time.

I'm not a builder however you are. So while I'm fishing for both us. You can build a wooden house for us to live in.

Once the house is finished. You return to fishing. While I build a bigger and better fishing net.

The fishing net results in the both of us being able to catch enough fish in a single day to feed us for a week.

We now have 12 days of time available. So we use to build a canoe. We do an additional days fishing. Load the catch in the canoe and paddle over to Eire. Where we exchange the fish for a deep freezer.

The deep freezer means that we store our fish for longer periods.

The story continues............