A society’s economy is based on the production of goods and the provision of services. Goods are the material objects produced to satisfy the needs and desires of human beings. Consumer goods can be non-durable, as in the case of food and beverages, or durable, as in the case of real estate. The capital goods are used to produce other goods. Examples of capital goods are machinery, equipment, buildings, etc.
Services are activities aimed at satisfying these needs and desires and which are not directly related to the production of goods.
A medicine is an example of a good produced to satisfy people’s needs. A pizza, on the other hand, is a good product to satisfy the desire of many people. The doctor, unlike a pizzaiolo, which produces a good, pizzas, is a service provider, because he does not produce a material good. But in providing his services, the doctor uses material goods: medicines, syringes, medical devices, etc. It is evident that goods and services are interconnected, as it is almost impossible to provide a service that does not involve any good.
Goods and services result from the transformation of nature’s resources into objects that are useful to human beings. This occurs through production processes .
Distribution and consumption
Almost all adults participate in the economic life of the country where they live, with the production, distribution and consumption of goods and services as activities. When a worker works, he is working in production . And when this same worker buys a good or service, he is participating in the distribution . Finally, when he consumes the good or uses the purchased service, he is participating in the economy as a consumer .
Production processes
The production process consists of three main components: work , raw materials and production instruments . The work is any activity performed by man, physical and mental, which results in goods and services. There is no exclusively physical or exclusively mental work. Even a job that appears to be purely physical requires at least a little mental effort. And even a job that is almost exclusively mental, like that of a scientist, requires some physical effort, such as handling equipment and work instruments.
The work can be classified according to the degree of intellectual or professional training it requires. The unskilled labor can be accomplished without much learning. The work of a mechanical lathe, for example, falls into this category. Already skilled laborit requires a certain degree of technical knowledge and learning. In general, because they require more years of study and a higher degree of professional training, qualified jobs are better paid. A doctor, for example, has spent many years of his life studying. Few people have the necessary skills and abilities to become a doctor. It is natural, therefore, that a doctor is better paid than someone who exercises a profession that does not require much study or training. This is one of the main reasons why it is so important for a government to invest in the education and professional training of its people. Education is the key to progress and economic development.
The second main component of the production process is the raw material , which are the objects that, in the production process, are transformed to constitute the final good. Examples of raw materials are paper and ink used by a publisher to publish a magazine. These elements become the magazine; if paper or ink is missing, the magazine cannot be produced. Before being transformed into raw materials, these components are found in nature in the form of natural resources . A natural resource is an element of accessible nature that can be incorporated into man’s economic activity. The third component is the instruments of production, which are the things that, directly or indirectly, allow us to transform the raw material into a final good. In the case of the publisher, the machines that make the magazines are the instruments of production.
Together, the instruments of production and the raw material constitute the means of production .
The productive forces
Productive forces : the set of means of production added to human labor.
The productive forces have evolved a lot throughout history. In the past, before the Industrial Revolution, production was carried out using simple instruments that were driven by animal traction or human force. From the Second Industrial Revolution, new machines were created. Steam and, later, electricity and oil started to be used as energy sources.
Production relations
In virtually every production process, people depend on each other. It is practically impossible for anyone to be able to produce all the goods and services they need. To produce the goods and services they need, human beings establish relationships with each other. Such relationships are called production relationships .
Every productive process depends on at least two basic social agents: workers and owners of the means of production.
Workers participate in production through their labor force. The owners, on the other hand, participate in the production process as owners of the means of production. In this way, both are linked in the production process.
Each type of society has its own relations of production. The set of productive forces and relations of production is called the mode of production . The world has known various modes of production throughout its history.
The main modes of production
As explained above, mode of production is the way in which a society produces its goods and services, how it uses them and how it distributes them. Production mode is also called the economic system . It is possible that there is more than one mode of production in a society. However, in every society there is a dominant mode of production.
Some of the main modes of production are the communal , the primitive , the slave , the feudal , the Asian , the capitalist and the socialist .
The primitive communal mode of production emerged in the early days of humanity and exists, somewhat differently, among some indigenous peoples in Brazil. In the communal production mode, people work together. Land is the main means of production. Both the land and the fruits of labor are communal, that is, they are collective property, belonging to all.
The slavery mode of production existed in ancient Greece and Rome, in Brazil and in other countries of America during the 16th and 19th centuries. The slave economy was basically agrarian. In slave societies, the means of production and slaves belonged to the master. The slave was considered nothing more than a working tool. The relations of production were relations of dominance and subjection. A few masters exploited a large number of slaves, who had no rights.
The Asian mode of production , also called the hydraulic society , was prevalent in India and ancient Egypt and in the civilizations of the Incas, the Maya and the Aztecs.
The hydraulic society was characterized by having a strong state and a very efficient bureaucracy that was able to maintain the total power of the state. In fact, the state was absolutist and centralizing, headed by pharaoh or emperor. The means of production and the labor force belonged to the state.
Society was divided into castes – type of hierarchical social organization. The priestly caste held religious knowledge; the caste of the scribes was the state bureaucracy that administered agricultural production and the construction of hydraulic works; the military caste was responsible for the defense of the community. There were also peasants and artisans, who were socially disenfranchised, and, finally, slaves, who were forced to carry out the roughest jobs.
The feudal mode of production predominated in western Europe during the V-XVI centuries. The feudal economy was based on the countryside. The owners of the means of production – nobles and bishops – lived in their fiefdoms. They had their own armies and were relatively independent from the king.
In the feudal system, local lords, owners of large lands, were the owners of power. These nobles, in an attempt to gain more power, entered into alliances with other less powerful nobles: in exchange for military assistance and the provision of other services, one noble gave land to another less powerful. The nobleman who provided the land was called the feudal lord ; whoever received the land was called a vassal . This relationship was made official in a ceremony in which the vassal promised loyalty to you.
The relations of production in feudalism were based on the master’s ownership of the land and the servant’s agricultural work. The servants were not slaves. They were not owned by the master – they could not be bought, rented or sold. In addition, the servants had the right to cultivate a piece of land given by the master. In return, they paid taxes and rents and worked on the land of the lord without being renumbered. It is important to note that the servant could not buy or sell any piece of land that belonged to the master. Since the servant’s first duty was to cultivate the master’s lands, there was not much time left for him to work for himself.
European feudalism ceased to exist due to several factors: prolonged wars, epidemics and, above all, new economic processes. The renaissance of commerce, which had practically disappeared during the Middle Ages, and the urban renaissance, which resulted in the emergence of new cities, were the main reasons for the end of feudalism. A new social class was created – the mercantile bourgeoisie – whose interests clashed with the privileges of the nobility and with the main characteristics of the feudal mode of production.
Trade and manufacturing production were on the rise in Europe, requiring an increasing number of free workers. The servants abandoned the fiefdoms, as they were attracted by the progress of the new cities and new job opportunities. The countryside, on the other hand, became increasingly dangerous, as there were successive peasant revolts.
