Economy

The words “economy” and “economics” derive from the Greek roots “oikos,” meaning “house,” and “nomia,” meaning “management.” Literally the word refers to how we manage our “house” at scales from individual households to communities, nations, and the whole world. In modern usage, “the economy” is often equated with “the market economy”—the sum of all the transactions of goods and services for money. But this is far too narrow a definition. A broader definition often used is “the allocation of scarce resources among alternative desirable ends” (Farley and Costanza 2002). This definition implies the analysis of what ends are desirable, what resources are scarce, and how best to allocate the resources to achieve the ends. Certainly the market and the goods and services exchanged in it are a part of this, but many desirable ends exist outside the market, as do many scarce resources. So a better …

This essay may be found on page 77 of the printed volume.

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