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Social goals of the economy

Social goals of the economy

Learn about broad social goals, analyze the goals affected by a potential government policy.

Taking care of our needs is as important as taking care of ours life and our well-being; it is the most important of all human aspirations.

Carl Menger

I have always argued that the laws of economics are the laws of life.

Herbert Simon

At all times, people didn't know what they wanted until you showed it to them.

Steve Jobs

1. Economy as meeting human needs

Historically, for mankind, labor has been and remains the main means of ensuring their existence and the basis of economic activity of people. In the process of economic activity between people there were relationships that gave the opportunity to provide for themselves, to improve welfare through more effective methods. The system of relations for the use of resources in economic activity began to be called the economy. Also economics - is the science of organization and management of material production, efficient use of resources, distribution, exchange, marketing and consumption of goods and services. The first chapter already mentioned that man has a hierarchy of needs, which the famous American sociologist Abraham Maslow proposed to depict in the form of a pyramid. We will remind that at the heart of such pyramid there are physiological needs in foodstuff, clothes, habitation, reproduction of a sort. The next level is the need for security, protection from negative external factors (encroachment on freedom and life) and from social problems (unemployment, poverty, etc.). The third and subsequent levels concern the interaction of man and society - the need for friendly communication, self-expression, recognition. All needs can be divided into certain groups, ie to classify needs. Such a classification can be carried out according to various criteria. The division of human needs into physical or material (in food, clothing, housing, household items) and spiritual (in education, creativity, aesthetic pleasure, etc.) is obvious. If we take as a criterion who is affected and how the needs are met, we can distinguish personal (individual), group (collective) and social needs. For example, a person can meet the need for food and clothing individually; the need of class students to win the competition may be group; a clean and safe environment can be a public need. On the basis of time, needs can be divided into current and future. For example, for a certain high school student, the need to have a textbook in economics is current, and, say, the acquisition

own car - a promising need. Needs are always realized by a person, they are given a more specific meaning, associated with the uniqueness of this person.

Among the factors influencing the formation of needs, a special place is occupied by age and sex, place of residence, cultural traditions and habits, income level and so on.

Businesses and governments also have needs. Businesses strive to have their own

at the disposal of buildings, vehicles, necessary information systems, etc. The government (community, local community), embodying the collective needs of citizens or their

own, seeks to build roads, schools, hospitals, etc. Along with human development is the development of its needs. Human needs are not only quantitatively increasing, but also qualitatively changing. We can conclude that human needs are limitless in their development. This is due to the development of production and scientific and technological progress, as well as the development of man himself, his intellect. Significant influential needs in modern conditions has advertising. Satisfaction of some needs gives rise to others. This is reflected in the boundless growth of needs, which is natural.

2. Processes that meet the needs

The means to meet the needs is good. Economic science distributes all life

goods into two groups: gift goods (non-economic) and economic. Gift goods (mostly natural) are available to people in an amount much greater than the magnitude of the need for them. These goods do not need to be produced, so people can consume them for free: air, solar goods are a rare good. Economic goods are those goods and services that are insufficient to meet the needs of people and can be increased only through labor and other resources. . Consumer goods directly meet the needs of consumers. Investment goods are all goods that are used to produce consumer goods. Their useful properties are consumed not to meet the needs of people, but to carry out the production process. Individual consumption goods are consumer goods and means of production that are consumed only by those who are willing and able to pay for them. Public goods are not created for sale to consumers, nor are they bought or sold on the market. Funds for the creation of these goods are usually collected by the state in the form of taxes. Public goods include public security, national defense, etc. Economic goods are divided into commodity services. Goods are products of labor that meet the needs not of those who produce them, but of those who receive them in the process of exchange. Services are actions that meet human needs. Almost everyone during his life uses the services of education, medicine and more.

For the production of any goods need resources (what and why they are created).

Main production resources:

• land - natural resources needed for production of goods and services;

• work - all the physical and mental abilities of man used in production

goods and services;

• capital - a set of material goods: machines, machines, buildings, roads, etc.

(money is used to buy machinery, equipment and other means of production, but do not produce anything directly, so they are not considered as a production resource);

• entrepreneurial abilities - the ability of a person to organize production, to accept

risk-related solutions, innovation, etc. (according to statistics, only 5-10% of the adult population have the ability to entrepreneurial activity, ie can most effectively combine modern factors of production, encourage efficient workforce, develop production on risky, innovative basis).

Recently, more and more economists are recognizing full-fledged production

resource information. In order for the goods produced to reach the consumer, it is necessary to sell them on the market. The process of receiving goods for money is called exchange. In many modern states, mechanisms for redistribution of goods are provided for those citizens who cannot participate in the exchange process (ie do not have enough money). In this way, the state undertakes to meet some of the needs of its citizens.

Thus, the processes of production, exchange, distribution and consumption of goods are key

in meeting human needs and the functioning of the economy. In these processes

a large number of people are involved. They are called participants, or subjects of economic relations.

The subjects of economic relations can be:

  • households (families) as owners of production resources and entrepreneurs - users of these resources;
  • employers and employees;
  • landowners, real estate owners and tenants who take land and real estate into use;
  • taxpayers and financial authorities;
  • creditors and debtors, etc. The state regulates legal relations between entities. What gives rise to economic relations is called the object of economic relations.

They include:

  • finished products (housing, goods in retail chains);
  • revenues of the state budget or an individual family;
  • material resources (land, buildings, machinery, equipment);
  • financial resources (bank loans, investment, insurance, pension funds funds);
  • profits of entrepreneurs.


Further Resources


Economics - Economic Systems and Social Goals


February 7, 2015


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