The first important task for a society is to maintain itself. There must be food, clothing and shelter for its members. Modem men spend most of their daytime making a living. It is not sufficient that there must be a system of production in society equally important in its distributive system. The more complex the society, the more its welfare rate on the distributive system. In a simple society, the problem of distribution is simple because the society is usually self-supporting. The family in the simple society satisfies its needs all most directly. But in a complex society goods pass through many hand until they reach the consumer.
In our country, one of the major causes of economic ills is mal-distribution of goods. Economic institutions arise out of the goods and need. They are basic ideas, norms and statuses, which govern our economic life.
In the primitive days, man satisfied hunger by searching for food and living upon whet he could raise. As an aid in this search for food primitive people invented weapons and tools. The procuring fruits, berries, greens and seed were supplemented by some hunting.
In places where animals were abundant, the technique of hunting people did not go separately but rather lived in small groups and moved in a group for hunt. Man moved forward again and he learned to domesticate animals, particularly the big animals such as cattle.
Most of the hunting people had already domesticated the dog, which aided in the hunt and also helped some what in transportation. The domestication of animal became a group responsibility. In order to secure pasture the people followed their animals in flocks and herds.
Group organization took a new aspect. Instead of human life being organized around the mother and children. The creator shifted to the flocks and herds. Women were subordinated and men came into a larger dominance.
The development of agriculture came next. When men turned to whole culture, he invented new tools, which supplement culture by crude field culture in a relatively large scale. With the rise of agriculture men passed from the flesh diet of nomadism to a large use of vegetable foods. The roaming life of the hunting and pastoral stage gave way to the more settled life of agriculture. With the stable life of agriculture there seem to have associated others inventions.
Pottery making, the weaver of hair or wool or cotton are more often founded among agricultural groups. With the cultivation of the soil populations multiplied. Agriculture led to the establishment of village communities. The making of money becomes an occupation, which besides adding to human welfare also created an unlimited amount of human ill will and misery.
Down to the middle of the eighteenth century, agriculture was the leading occupational activity of mankind. With the industrial revolution and with the manufacture of tool on a large scale, here developed a new type of agriculture. The division of land into farms under independent ownership became common. The increase in population inaugurated the era of scientific agriculture of the twentieth century. Labor system came into vogue.
The Industrial Revolution furthered specializations. With specialization, the volume of trade increased. The city arose as a centre of trade with these early cities, located places for trade. The goods were assembled at certain place on certain days and sold. The city developed into a from of an economic group besides being social and political group, the handicrafts-men of the city banded together for protection in guilds which may said to constitute the forerunners of trade unions of today. These guilds were however manufacturers, associations rather than workers associations.
The use of the factory system in the latter part of the eighteenth century and in the early nineteenth century gives birth to capitalism. The application of steam as a motive force in operating machinery revolutionized industry. Power driven machinery supplemented the hand driven tools. Due to the loss of personal contact between the employer and the labor on account of the large size of the factory labor capital disputes became intensified. Labor organized itself for its protection. Capital likewise began to organize for its advancement.
The twentieth century has brought about mass production rise of many near monopolies and a high degree of division of labor. New market situation has been profoundly altered. The consumer has become more and more dependent upon the institutions of the market place.
Advertising profoundly influences consumers wants and habits of buying. A product is associated with a popular film star. So that it may, appeal takes an increasing interest in consumer production. These laws providing for pure food and drugs per standard methods of packing and labeling and for licensed inspection. The prices are fixed by the government. The traditional theory of economic competition has now been replaced by government has control in the fields of production has now been replaced. Government has control in the fields of production, exchange and consumption. The age of Lassiez faire is gone.