Economic Systems in Global Perspective
The economy is the social institution that ensures the maintenance of society through the production, distribution. and consumption of goods and services.Goods are tangible objects that are necessary (such as food, clothing. and shelter) or desired (such as DVDs and electric toothbrushes). Services are intangible activities for which people are willing to pay (such as drycleaning. a movie, or medical care). In high-income nations today. many of the goods and services that we consume are information goods. Examples include databases and surveys ("intermediate products") and the mass media, computer software. and the Internet("information goods"). Some goods and services are produced by human labor laborlabor (the plumber who unstops your sink. for example); others are primarily produced by capital (such as Internet access available through a service provider).Labor refers to the group of people who contribute their physical and intellectual services to the production process in return for wages that they are paid by firms (Boyes and Melvin. 2002). Capital is wealth (money or property) owned or used in business by a person or corporation. Obviously. money. or financial capital, is needed to invest in the physical capital (such as machinery. equipment, buildings. warehouses. and
factories) used in production. For example. a person who owns a thousand shares of Dell Computer stock owns financial capital, but these shares also represent anan ownership interest in Dell's physical capital. To better understand the economy In the United States today. let's briefly look at three broad categories of economies: postindustrial, industrial. and postindustrial economies.