The concepts of system and economic system

The term system is relatively new in its especial sense meant today. It was introduced in the middle of the twentieth century by the German biologist Ludwig von Bertalanffy. It was later used in the general system theory applicable to many different disciplines. So, terms such as economic system, communication system, and information system came into being[3]. In the general theory of systems, a system is defined as “any set composed of interconnected parts geared towards achieving a particular end by acting in harmony”[4].

Systems differ from one another in accordance to the goals they pursue, the parts they consist of, and the sort of relation among the parts. Consequently, we can speak about natural systems, man- made systems, and social systems. The solar system is an example of the first, the internal system of an aircraft is an example of the second. A nation is an example of the third. Social systems are made up of people, their behavior, and the relationship among them if they are altogether preplanned in order to achieve a goal. Social systems in this sense are systems controlling human life in all its dimensions and can be composed of subsystems such as political system, economic system, cultural system, and the like.

A new notion must be introduced as a constituent of social system. It is values and beliefs. This component imposes itself because a social system is, as we have already seen, made up of human behavior and relations between individuals. They are in turn influenced by the opinions they hold. The content of these opinions relate to beliefs and values. As the result, a social system is one in which people’s behavior and relations are directed towards gaining ends in accordance with the opinions they hold.

From this point of view, we can say that economic system is a subsystem to social system. The word “economic” refers not to a set of activities but to a facet of every activity people have on the basis of calculating cost and effect with the purpose of providing livelihood. The general objectives an economic system may pursue can include the establishment of justice, self-sufficiency, development, and public welfare and well being. In different economic systems, these goals are interpreted and heretically arranged differently as their values and beliefs dictate.

Veklav halsukski believes that “there are four fundamental factors that shape economic systems: resources, participants, processes, and institutions”[5]. He goes on explaining them in detail.

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