Thursday, February 06, 2014

Economic Motivation (7) Sectors

A modern economy consists of five institutional sectors. Each one is motivated by a different love.

1. Household Sector
This sector consists of family activities. In the western world, the household sector focuses on consumption, but in other parts of the world households engage in production. The household sectors owns assets and supplies labour to the market sector. The motivation in the household sector is love of family.

2. Market Sector
Most people can improve their situation by supplying what they are most efficient at producing to the market and buying what they need from the most efficient producers. In a modern economy, the market sector is the largest sector in the economy. The motivation for the market sector is love of self and doing to others what you want others to do to you. The market sector functions better if there is more of the latter than the former.

3. Shared Services Sector
Some of the services that people need are not available from the market, so groups will get together to provide them for themselves. The services are provided by a subscription or membership fee. Sports clubs and horticultural societies are examples. The motivation for this sector is love of neighbour and love of self. The sector is more effective if there is not too much love of self. Churchs fit into this sector, and the next.

4. Philanthropic Sector
Charities and other philanthropic groups provide goods and services to people in need. Income in this sector comes from donations. In a strong society, this sector will be effective. The motivation in this sector is love of neighbour and love of others.

5. Government Sector
This sector uses coercion to change people’s behaviour. It provides shared services like defence and justice. Love of self is a strong motivator in this sector, because those with government power assume that they no better than others what is good for them. They are willing to take other people’s money to do what they think is good.

Modern economics analysis focusses on the market and government sectors. The other three sectors are equally important in a strong society.

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