An economic system is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, entities, decision-making processes and patterns of consumption that comprise the economic structure of a given community; as such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce and in what quantities and who receives the output of production; the study of economic systems includes how these various agencies and institutions are linked to one another, how information flows between them and the social relations within the system. The analysis of economic systems traditionally focused on the dichotomies and comparisons between market economies and planned economies and on the distinctions between capitalism and socialism. Subsequently, the categorization of economic systems expanded to include other topics and models that do not conform to the traditional dichotomy.
Today the dominant form of economic organization at the world level is based on market-oriented mixed economies. Economic systems is the category in the Journal of Economic Literature classification codes that includes the study of such systems. One field that cuts across them is comparative economic systems, which include the following subcategories of different systems: Planning and reform. Productive enterprises. Public economics. National income and expenditure. International trade, finance and aid. Consumer economics. Performance and prospects. Natural resources. Political economy. There are multiple components to economic system. Decision-making structures of an economy determine the use of economic inputs, distribution of output, the level of centralization in decision-making and who makes these decisions. Decisions might be carried out by a government agency, or by private owners. An economic system is a system of production, resource allocation and distribution of goods and services in a society or a given geographic area.
In one view, every economic system represents an attempt to solve three fundamental and interdependent problems: What goods and services shall be produced and in what quantities? How shall goods and services be produced? That is, by whom and with what resources and technologies? For whom shall goods and services be produced? That is, to enjoy the benefits of the goods and services and how is the total product to be distributed among individuals and groups in the society? Every economy is thus a system that allocates resources for exchange, production and consumption; the system is stabilized through a combination of threat and trust, which are the outcome of institutional arrangements. An economic system possesses the following institutions: Methods of control over the factors or means of production: this may include ownership of, or property rights to, the means of production and therefore may give rise to claims to the proceeds from production; the means of production may be owned by the state, by those who use them, or be held in common.
A decision-making system: this determines, eligible to make decisions over economic activities. Economic agents with decision-making powers can enter into binding contracts with one another. A coordination mechanism: this determines how information is obtained and used in decision-making; the two dominant forms of coordination are planning and markets. An incentive system: this induces and motivates economic agents to engage in productive activities, it can be based on moral suasion. The incentive system may encourage the division of labor. Organizational form: there are two basic forms of organization: actors and regulators. Economic actors include households, work gangs and production teams, joint-ventures and cartels. Economically regulative organizations are represented by the market authorities. A distribution system: this allocates the proceeds from productive activity, distributed as income among the economic organizations and groups within society, such as property owners and non-workers, or the state.
A public choice mechanism for law-making, establishing rules and standards and levying taxes. This is the responsibility of the state, but other means of collective decision-making are possible, such as chambers of commerce or workers’ councils. There are several basic questions that must be answered in order for an economy to run satisfactorily; the scarcity problem, for example, requires answers to basic questions, such as what to produce, how to produce it and who gets what is produced. An economic system is a way of answering these basic questions and different economic systems answer them differently. Many different objectives may be seen as desirable for an economy, like efficiency, growth and equality. Economic systems are segmented by their property rights regime for the means of production and by their dominant resource allocation mechanism. Economies that combi
Public economics is the study of government policy through the lens of economic efficiency and equity. At its most basic level, public economics provides a framework for thinking about whether or not the government should participate in economic markets and to what extent it should do so. In order to do this, microeconomic theory is utilized to assess whether the private market is to provide efficient outcomes in the absence of governmental interference. Inherently, this study involves the analysis of government taxation and expenditures; this subject encompasses a host of topics including market failures and the creation and implementation of government policy. Public economics builds on the theory of welfare economics and is used as a tool to improve social welfare. Broad methods and topics include: the theory and application of public finance analysis and design of public policy distributional effects of taxation and government expenditures analysis of market failure and government failure.
Emphasis is on analytical and scientific methods and normative-ethical analysis, as distinguished from ideology. Examples of topics covered are tax incidence, optimal taxation, the theory of public goods; the Journal of Economic Literature classification codes are one way categorizing the range of economics subjects. There, Public Economics, one of 19 primary classifications, has 8 categories, they are listed below with JEL-code links to corresponding available article-preview links of The New Palgrave Dictionary of Economics Online and with similar footnote links for each respective subcategory if available: JEL: H – Public Economics JEL: H0 – General JEL: H1 – Structure and Scope of Government JEL: H2 – Taxation and Revenue JEL: H3 – Fiscal Policies and Behavior of Economic Agents JEL: H4 – Publicly Provided Goods JEL: H5 – National Government Expenditures and Related Policies JEL: H6 – National Budget and Debt JEL: H7 – State and Local Government. In 1971, Peter A. Diamond and James A. Mirrlees published a seminal paper which showed that when lump-sum taxation is not available, production efficiency is still desirable.
This finding is known as the Diamond–Mirrlees efficiency theorem, it is credited with having modernized Ramsey's analysis by considering the problem of income distribution with the problem of raising revenue. Joseph E. Stiglitz and Partha Dasgupta have criticized this theorem as not being robust on the grounds that production efficiency will not be desirable if certain tax instruments cannot be used. One of the achievements for which the great English economist A. C. Pigou is known, was his work on the divergences between marginal private costs and marginal social costs. In his book, The Economics of Welfare, Pigou describes how these divergences come about:...one person A, in the course of rendering some service, for which payment is made, to a second person B, incidentally renders services or disservices to other persons, of such a sort that payment cannot be extracted from the benefited parties or compensation enforced on behalf of the injured parties. In particular, Pigou is known for his advocacy of what are known as corrective taxes, or Pigouvian taxes: It is plain that divergences between private and social net product of the kinds we have so far been considering cannot, like divergences due to tenancy laws, be mitigated by a modification of the contractual relation between any two contracting parties, because the divergence arises out of a service or disservice to persons other than the contracting parties.
It is, possible for the State, if it so chooses, to remove the divergence in any field by "extraordinary encouragements" or "extraordinary restraints" upon investments in that field. The most obvious forms which these encouragements and restraints may assume are, of course, those of bounties and taxes. Externalities arise when consumption by individuals or production by firms affect the utility or production function of other individuals or firms. Positive externalities are education, public health and others while examples of negative externalities are air pollution, noise pollution, non-vaccination and more; the government can intervene in the market, using an emission tax for example to create a more efficient outcome. Pigou describes as positive externalities, examples such as resources invested in private parks that improve the surrounding air, scientific research from which discoveries of high practical utility grow. Alternatively, he describes negative externalities, such as the factory that destroys a great part of the amenities of neighboring sites.
In 1960, the economist Ronald H. Coase proposed an alternative scheme whereby negative externalities are dealt with through the appropriate assignment of property rights; this result is known as the Coase theorem. Public goods, or collective consumption goods, exhibit two properties. Something is non-rivaled if one person's consumption of it does not deprive another person, a firework display is non-rivaled - since one person watching a firework display does not prevent another person from doing so. Something is non-excludable. Again, since one cannot prevent people from viewing a firework display it is non-excludable. Conceptually, another example of public good is the service, provided by law enforcement organizations, such as sheriffs and police. Cities and towns are served by only one
An economist is a practitioner in the social science discipline of economics. The individual may study and apply theories and concepts from economics and write about economic policy. Within this field there are many sub-fields, ranging from the broad philosophical theories to the focused study of minutiae within specific markets, macroeconomic analysis, microeconomic analysis or financial statement analysis, involving analytical methods and tools such as econometrics, economics computational models, financial economics, mathematical finance and mathematical economics; the professionalization of economics, reflected in academia, has been described as "the main change in economics since around 1900." Economists debate the path. It is a debate between a scholastic orientation, focused on mathematical techniques, a public discourse orientation, more focused on communicating to lay people pertinent economic principles as they relate to public policy. Surveys among economists indicate a preference for a shift toward the latter.
Most major universities have an economics faculty, school or department, where academic degrees are awarded in economics. Getting a PhD in economics takes six years, on average, with a median of 5.3 years. The Nobel Memorial Prize in Economics, established by Sveriges Riksbank in 1968, is a prize awarded to economists each year for outstanding intellectual contributions in the field of economics; the prize winners are announced in October every year. They receive their awards on the anniversary of Alfred Nobel's death. Economists work in many fields including academia, government and in the private sector, where they may "...study data and statistics in order to spot trends in economic activity, economic confidence levels, consumer attitudes. They assess this information using advanced methods in statistical analysis, computer programming they make recommendations about ways to improve the efficiency of a system or take advantage of trends as they begin."In contrast to regulated professions such as engineering, law or medicine, there is not a required educational requirement or license for economists.
In academia, to be called an economist requires a Ph. D. degree in Economics. In the US government, on the other hand, a person can be hired as an economist provided that they have a degree that included or was supplemented by 21 semester hours in economics and three hours in statistics, accounting, or calculus. A professional working inside of one of many fields of economics or having an academic degree in this subject is considered to be an economist. In addition to government and academia, economists are employed in banking, accountancy, marketing, business administration and non- or not-for profit organizations. Politicians consult economists before enacting economic policy. Many statesmen have academic degrees in economics. Economics graduates are employable in varying degrees depending on the regional economic scenario and labour market conditions at the time for a given country. Apart from the specific understanding of the subject, employers value the skills of numeracy and analysis, the ability to communicate and the capacity to grasp broad issues which the graduates acquire at the university or college.
Whilst only a few economics graduates may be expected to become professional economists, many find it a base for entry into a career in finance – including accounting, insurance and banking, or management. A number of economics graduates from around the world have been successful in obtaining employment in a variety of major national and international firms in the financial and commercial sectors, in manufacturing, retailing and IT, as well as in the public sector – for example, in the health and education sectors, or in government and politics. Small numbers go on to undertake postgraduate studies, either in economics, teacher training or further qualifications in specialist areas. In Brazil, unlike most countries in the world where the profession is not regulated, the profession of Economist is regulated by Law. 1411 of August 13, 1951. The professional designation of economist, according to the said law, is exclusive to the bachelors in economics graduates in Brazil. According to the United States Department of Labor, there were about 15,000 non-academic economists in the United States in 2008, with a median salary of $83,000 the top ten percent earning more than $147,040 annually.
Nearly 135 colleges and universities grant around 900 new Ph. D.s every year. Incomes are highest for those in the private sector, followed by the federal government, with academia paying the lowest incomes; as of January 2013, PayScale.com showed Ph. D. economists' salary ranges as follows: all Ph. D. economists, $61,000 to $160,000. D. corporate economists, $71,000 to $207,000. The largest single professional grouping of economists in the UK are the more than 1000 members of the Government Economic Service, who work in 30 government departments and agencies. Analysis of destination surveys for economics graduates from a number of selected top schools of economics in the United Kingdom, shows nearly 80 percent in employment six months after graduation – with a wide range of roles and employers, including regional and international organisations, across many sectors; this figure compares favourably with the national picture, with 64 percent of economics graduates in employment. Some current we
Heterodoxy is a term that may be used in contrast with orthodoxy in schools of economic thought or methodologies, that may be beyond neoclassical economics. Heterodoxy is an umbrella term; these might for example include anarchist, Marxian, evolutionary, Austrian, social, post-Keynesian, ecological economics among others. Economics may be called conventional economics by its critics. Alternatively, mainstream economics deals with the "rationality–individualism–equilibrium nexus" and heterodox economics is more "radical" in dealing with the "institutions–history–social structure nexus". Many economists dismiss heterodox economics as "fringe" and "irrelevant", with little or no influence on the vast majority of academic mainstream economists in the English-speaking world. A recent review documented several prominent groups of heterodox economists since at least the 1990s as working together with a resulting increase in coherence across different constituents. Along these lines, the International Confederation of Associations for Pluralism in Economics does not define "heterodox economics" and has avoided defining its scope.
ICAPE defines its mission as "promoting pluralism in economics." In defining a common ground in the "critical commentary," one writer described fellow heterodox economists as trying to do three things: identify shared ideas that generate a pattern of heterodox critique across topics and chapters of introductory macro texts. One study suggests four key factors as important to the study of economics by self-identified heterodox economists: history, natural systems and power. A number of heterodox schools of economic thought challenged the dominance of neoclassical economics after the neoclassical revolution of the 1870s. In addition to socialist critics of capitalism, heterodox schools in this period included advocates of various forms of mercantilism, such as the American School dissenters from neoclassical methodology such as the historical school, advocates of unorthodox monetary theories such as Social credit. Other heterodox schools active before and during the Great Depression included Technocracy and Georgism.
Physical scientists and biologists were the first individuals to use energy flows to explain social and economic development. Joseph Henry, an American physicist and first secretary of the Smithsonian Institution, remarked that the "fundamental principle of political economy is that the physical labor of man can only be ameliorated by… the transformation of matter from a crude state to a artificial condition...by expending what is called power or energy."The rise, absorption into the mainstream of Keynesian economics, which appeared to provide a more coherent policy response to unemployment than unorthodox monetary or trade policies contributed to the decline of interest in these schools. After 1945, the neoclassical synthesis of Keynesian and neoclassical economics resulted in a defined mainstream position based on a division of the field into microeconomics and macroeconomics. Austrians and post-Keynesians who dissented from this synthesis emerged as defined heterodox schools. In addition, the Marxist and institutionalist schools remained active.
Up to 1980 the most notable themes of heterodox economics in its various forms included: rejection of the atomistic individual conception in favor of a embedded individual conception. From 1980 mainstream economics has been influenced by a number of new research programs, including behavioral economics, complexity economics, evolutionary economics, experimental economics, neuroeconomics; as a consequence, some heterodox economists, such as John B. Davis, proposed that the definition of heterodox economics has to be adapted to this new, more complex reality:...heterodox economics post-1980 is a complex structure, being composed out of two broadly different kinds of heterodox work, each internally differentiated with a number of research programs having different historical origins and orientations: the traditional left heterodoxy familiar to most and the'new heterodoxy' resulting from other science imports. There is no single "heterodox economic theory". What they all share, however, is a rejection of the neoclassical orthodoxy as representing the appropriate tool for understanding the workings of economic and social life.
The reasons for this rejection may vary. Some of the elements found in heterodox critiques are listed below. One of the most broadly accepted principles of neoclassical economics is the assumption of the "rationality of economic agents". Indeed, for a number of economists, the notion of rational maximizing behavior is taken to be synonymous with economic behavior; when some economists' studies do not embrace the rationality assumption, they are seen as placing the analyses outside the boundaries of the Neoclassical economics discipline. Neoclassical economics begins with the a priori assumptions that agents are rational and that they seek to maximize their individual utility (or prof
Development economics is a branch of economics which deals with economic aspects of the development process in low income countries. Its focus is not only on methods of promoting economic development, economic growth and structural change but on improving the potential for the mass of the population, for example, through health and workplace conditions, whether through public or private channels. Development economics involves the creation of theories and methods that aid in the determination of policies and practices and can be implemented at either the domestic or international level; this may involve restructuring market incentives or using mathematical methods such as intertemporal optimization for project analysis, or it may involve a mixture of quantitative and qualitative methods. Unlike in many other fields of economics, approaches in development economics may incorporate social and political factors to devise particular plans. Unlike many other fields of economics, there is no consensus on what students should know.
Different approaches may consider the factors that contribute to economic convergence or non-convergence across households and countries. The earliest Western theory of development economics was mercantilism, which developed in the 17th century, paralleling the rise of the nation state. Earlier theories had given little attention to development. For example, the dominant school of thought during medieval feudalism, emphasized reconciliation with Christian theology and ethics, rather than development; the 16th- and 17th-century School of Salamanca, credited as the earliest modern school of economics did not address development specifically. Major European nations in the 17th and 18th century all adopted mercantilist ideals to varying degrees, the influence only ebbing with the 18th-century development of physiocrats in France and classical economics in Britain. Mercantilism held that a nation's prosperity depended on its supply of capital, represented by bullion held by the state, it emphasised the maintenance of a high positive trade balance as a means of accumulating this bullion.
To achieve a positive trade balance, protectionist measures such as tariffs and subsidies to home industries were advocated. Mercantilist development theory advocated colonialism. Theorists most associated with mercantilism include Philipp von Hörnigk, who in his Austria Over All, If She Only Will of 1684 gave the only comprehensive statement of mercantilist theory, emphasizing production and an export-led economy. In France, mercantilist policy is most associated with 17th-century finance minister Jean-Baptiste Colbert, whose policies proved influential in American development. Mercantilist ideas continue in the theories of economic neomercantilism. Following mercantilism was the related theory of economic nationalism, promulgated in the 19th century related to the development and industrialization of the United States and Germany, notably in the policies of the American System in America and the Zollverein in Germany. A significant difference from mercantilism was the de-emphasis on colonies, in favor of a focus on domestic production.
The names most associated with 19th-century economic nationalism are the American Alexander Hamilton, the German-American Friedrich List, the American Henry Clay. Hamilton's 1791 Report on Manufactures, his magnum opus, is the founding text of the American System, drew from the mercantilist economies of Britain under Elizabeth I and France under Colbert. List's 1841 Das Nationale System der Politischen Ökonomie, which emphasized stages of growth, proved influential in the US and Germany, nationalist policies were pursued by politician Henry Clay, by Abraham Lincoln, under the influence of economist Henry Charles Carey. Forms of economic nationalism and neomercantilism have been key in Japan's development in the 19th and 20th centuries, the more recent development of the Four Asian Tigers, most China. Following Brexit and the United States presidential election, 2016, some experts have argued a new kind of "self-seeking capitalism" popularly known as Trumponomics could have a considerable impact on cross-border investment flows and long-term capital allocation The origins of modern development economics are traced to the need for, problems with the industrialization of eastern Europe in the aftermath of World War II.
The key authors are Paul Rosenstein-Rodan, Kurt Mandelbaum, Ragnar Nurkse, Sir Hans Wolfgang Singer. Only after the war did economists turn their concerns towards Asia and Latin America. At the heart of these studies, by authors such as Simon Kuznets and W. Arthur Lewis was an analysis of not only economic growth but structural transformation. An early theory of development economics, the linear-stages-of-growth model was first formulated in the 1950s by W. W. Rostow in The Stages of Growth: A Non-Communist Manifesto, following work of Marx and List; this theory modifies Marx's stages theory of development and focuses on the accelerated accumulation of capital, through the utilization of both domestic and international savings as a means of spurring investment, as the primary means of promoting economic growth and, development. The linear-stages-of-growth model posits that there are a series of five consecutive stages of development which all countries must go through during the process of development.
These stages are "the traditional society, the pre-conditions for take-off, the take-off, the drive to maturity, the age of high mass-consumption" Simple versi
Natural resource economics
Natural resource economics deals with the supply and allocation of the Earth's natural resources. One main objective of natural resource economics is to better understand the role of natural resources in the economy in order to develop more sustainable methods of managing those resources to ensure their availability to future generations. Resource economists study interactions between economic and natural systems, with the goal of developing a sustainable and efficient economy. Natural resource economics is a transdisciplinary field of academic research within economics that aims to address the connections and interdependence between human economies and natural ecosystems, its focus is how to operate an economy within the ecological constraints of earth's natural resources. Resource economics brings together and connects different disciplines within the natural and social sciences connected to broad areas of earth science, human economics, natural ecosystems. Economic models must be adapted to accommodate the special features of natural resource inputs.
The traditional curriculum of natural resource economics emphasized fisheries models, forestry models, minerals extraction models. In recent years, other resources, notably air, the global climate, "environmental resources" in general have become important to policy-making. Academic and policy interest has now moved beyond the optimal commercial exploitation of the standard trio of resources to encompass management for other objectives. For example, natural resources more broadly defined have recreational, as well as commercial values, they may contribute to overall social welfare levels, by their mere existence. The economics and policy area focuses on the human aspects of environmental problems. Traditional areas of environmental and natural resource economics include welfare theory, land/location use, pollution control, resource extraction, non-market valuation, resource exhaustibility, environmental management, environmental policy. Research topics could include the environmental impacts of agriculture and urbanization, land use in poor and industrialized countries, international trade and the environment, climate change, methodological advances in non-market valuation, to name just a few.
Hotelling's rule is a 1938 economic model of non-renewable resource management by Harold Hotelling. It shows that efficient exploitation of a nonrenewable and nonaugmentable resource would, under otherwise stable economic conditions, lead to a depletion of the resource; the rule states that this would lead to a net price or "Hotelling rent" for it that rose annually at a rate equal to the rate of interest, reflecting the increasing scarcity of the resource. Nonaugmentable resources of inorganic materials are uncommon. Vogely has stated that the development of a mineral resource occurs in five stages: The current operating margin governed by the proportion of the reserve depleted; the intensive development margin governed by the trade-off between the rising necessary investment and quicker realization of revenue. The extensive development margin in which extraction is begun of known but uneconomic deposits; the exploration margin in which the search for new deposits is conducted and the cost per unit extracted is uncertain with the cost of failure having to be balanced against finding usable resources that have marginal costs of extraction no higher than in the first three stages above.
The technology margin which interacts with the first four stages. The Gray-Hotelling theory is a special case, since it covers only Stages 1–3 and not the far more important Stages 4 and 5. Simon has stated that the supply of natural resources is infinite These conflicting views will be reconciled by considering resource-related topics in depth in the next section, or at least minimized. Furthermore, Hartwick's rule provides insight to the sustainability of welfare in an economy that uses non-renewable resources; the perpetual resource concept is a complex one because the concept of resource is complex and changes with the advent of new technology, new needs, to a lesser degree with new economics. On the one hand, a material can enter a time of shortage and become a strategic and critical material, but on the other hand a material can go out of use, its resource can proceed to being perpetual if it was not before, the resource can become a paleoresource when the material goes completely out of use.
Some of the complexities influencing resources of a material include the extent of recyclability, the availability of suitable substitutes for the material in its end-use products, plus some other less important factors. The Federal Government became compellingly interested in resource issues on December 7, 1941, shortly after which Japan cut the U. S. off from tin and rubber and made some other materials difficult to obtain, such as tungsten. This was the worst case for resource availability, becoming a critical material. After the war a government stockpile of strategic and critical materials was set up, having around 100 different materials which were purchased for cash or obtained by trading off U. S. agricultural commodities for them. In the longer term, scarcity of tin led to comple
Welfare is a type of government support for the citizens of that society. Welfare may be provided to people of any income level, as with social security, but it is intended to ensure that the poor can meet their basic human needs such as food and shelter. Welfare attempts to provide poor people with a minimal level of well-being either a free- or a subsidized-supply of certain goods and social services, such as healthcare and vocational training. A welfare state is a political system wherein the State assumes responsibility for the health and welfare of society; the system of social security in a welfare state provides social services, such as universal medical care, unemployment insurance for workers, financial aid, free post-secondary education for students, subsidized public housing, pensions, etc. In 1952, with the Social Security Convention, the International Labour Organization formally defined the social contingencies covered by social security; the first welfare state was Imperial Germany, where the Bismarck government introduced social security in the late 19th century.
In the early 20th century, Great Britain introduced social security around 1913, adopted the welfare state with the National Insurance Act 1946, during the Attlee government. In the countries of western Europe and Australasia, social welfare is provided by the government out of the national tax revenues, to a lesser extent by non-government organizations, charities. In the U. S. welfare program is the general term for government support of the well-being of poor people, the term social security refers to the US social insurance program for retired and disabled people. In other countries, the term social security has a broader definition, which refers to the economic security that a society offers when people are sick and unemployed. In the U. K. government use of the term welfare includes help for poor people and benefits, including specific social services such as help in finding employment. In the Roman Empire, the first emperor Augustus provided the Cura Annonae or grain dole for citizens who could not afford to buy food every month.
Social welfare was enlarged by the Emperor Trajan. Trajan's program brought acclaim including Pliny the Younger; the Song dynasty government supported multiple programs which could be classified as social welfare, including the establishment of retirement homes, public clinics, paupers' graveyards. According to economist Robert Henry Nelson, "The medieval Roman Catholic Church operated a far-reaching and comprehensive welfare system for the poor..."Early welfare programs in Europe included the English Poor Law of 1601, which gave parishes the responsibility for providing welfare payments to the poor. This system was modified by the 19th-century Poor Law Amendment Act, which introduced the system of workhouses. Public assistance programs were not called welfare until the early 20th century when the term was adopted to avoid the negative connotations that had become associated with older terms such as charity, it was predominantly in the late 19th and early 20th centuries that an organized system of state welfare provision was introduced in many countries.
Otto von Bismarck, Chancellor of Germany, introduced one of the first welfare systems for the working classes. In Great Britain the Liberal government of Henry Campbell-Bannerman and David Lloyd George introduced the National Insurance system in 1911, a system expanded by Clement Attlee; the United States inherited England's poor house laws and has had a form of welfare since before it won its independence. During the Great Depression, when emergency relief measures were introduced under President Franklin D. Roosevelt, Roosevelt's New Deal focused predominantly on a program of providing work and stimulating the economy through public spending on projects, rather than on cash payment. Modern welfare states include Germany, the Netherlands, as well as the Nordic countries, such as Iceland, Norway and Finland which employ a system known as the Nordic model. Esping-Andersen classified the most developed welfare state systems into three categories. In the Islamic world, one of the Five Pillars of Islam, has been collected by the government since the time of the Rashidun caliph Umar in the 7th century.
The taxes were used to provide income for the needy, including the poor, orphans and the disabled. According to the Islamic jurist Al-Ghazali, the government was expected to store up food supplies in every region in case a disaster or famine occurred; the World Bank's 2019 World Development Report on The Changing Nature of Work considers whether traditional social assistance models continue to be appropriate given that, in 2018, 8 in 10 people in developing countries still receive no social assistance while 6 in 10 work informally beyond the government's reach. Welfare can take a variety of forms, such as monetary payments and vouchers, or housing assistance. Welfare systems differ from country to country, but welfare is provided to individuals who are unemployed, those with illness or disability, the elderly, those with dependent children, veterans. A person's eligibility for welfare may be constrained by means testing or other conditions. Welfare is provided by governments or their agencies, by private organizations, or a combination of both.
Funding for welfare comes from general government revenue, but when d