Historical Overview of Economics

Humans first relied upon hunting and gathering to survive. Social systems of subsistence depended upon the family or small groups for food and did not have a recognizable economy. But through agriculture, specialization, settlement, and trade, an economy did emerge.

With the development of agriculture came pastoral and horticultural societies with more dependable food supplies and surplus. This surplus allowed division of labor, and many in the society took on new roles—specializing in making clothes, tools, or shelter. People could settle in one place and begin producing a surplus of other goods, which in turn led to trade. The primary sector dominated this pre‐industrial economy, and cottages or homes produced limited manufacturing. Sociologists studying the transformation from hunting and gathering to pre‐industrial society primarily interest themselves in how surplus, trade, and accumulation of possessions led to social inequality (the situation where some people have more possessions and power than others).

Primary sector dominance shifted to the secondary sector in the mid‐eighteenth century with the Industrial Revolution. Beginning in England with the invention of steam power, the force of production moved from muscle to machine. The limited manufacturing in cottages or homes of pre‐industrial society gave way to centralized, mass production in factories. Workers, now earning wages, became more specialized, doing single repetitive tasks rather than making a product from start to finish.

The secondary sector dominance gave way to tertiary sector dominance in many economies during the mid‐twentieth century. Economists call such economies postindustrial because they depend upon service industries and high technology. As the steam engine powered the Industrial Revolution, computers have fueled the Information Revolution in the twentieth century. In the Information Revolution, information and ideas have replaced manufactured goods as the basis for the economy. Consequently, the economy requires a more literate labor force, which must now communicate through computers rather than simply manipulating machines.

Today, countries may be agricultural (primary sector), industrial (secondary sector), or postindustrial (tertiary sector). The poorest countries are agricultural, while the wealthiest are postindustrial. With the rise of technology, computers, and the Internet, sociologists and economists point to the growing global economy (an economy where product or information development, production, and distribution cross national borders). For example, automobiles, a major production of industrialized nations, were once manufactured and assembled in one country. With the global economy, other countries make many parts for vehicles considered “American,” and workers in the United States now assemble vehicles once considered “foreign.”