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The economy is the institution that provides for the production and distribution of goods and services, which people in every society need. Sometimes they can provide these things for themselves, and sometimes they rely on others to provide them. When people rely on others for goods or services, they must have something to exchange, such as currency (in industrialized societies) or other goods or services (in nonindustrialized societies). The customs surrounding exchange and distribution of good and services shape societies in fundamental ways.
Macrosociology vs. microsociology
Sociologists use two approaches when studying society. In macrosociology, sociologists analyze large-scale social forces, such as institutions. They identify and analyze the structure of societies. The second approach sociologists use is microsociology, the study of social interaction. These sociologists focus on face-to-face interaction, how people act around others. This method is focused more on individuals than groups.
The two dominant economic systems in the world are capitalism and socialism. Most societies have varying blends of the two systems. Common hybrids of capitalism and socialism are welfare capitalism and state capitalism.
Capitalism is a system under which resources and means of production are privately owned, citizens are encouraged to seek profit for themselves, and success or failure of an enterprise is determined by free-market competition.
Example: The United States is one of the most purely capitalistic societies in the world. Most U.S. businesses are privately owned, but the government does regulate business practices.
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