Economic Sectors


Figure 1.--The development of settled agriculture in river valleys and the wealth it created made civilization possible. And that civilization developed the technology to farm beyond river valleys. The plant life and animals availble also had a major impact on civilization. As historian, Jared Diamond points out, the plant and animal life available on Eurasian land mass was a major assett. Human productivy unil the 19th century was limited primarily to human and animal power. The Industrial Revolution required new sources of energy.

The two basic sectors are commonly seen as the the agricultural and industrial sectors, but this is an oversimplification. Industrial is commonly see a a generic term for a modern, complex economy. The aricultural sector developed first and the appearance of agriculture is what in fact generated civilzation. The wealth created by intensive agriculture vastly exceeded that which could be generated by hunter gatherers. Live stock raising is generally associated with agriculture, but some people advanced from the hunter-gathering level by associating with migrating heards or ctully domesticating the hears to a degree. This was the pattern in Central Asia. Another early economic sector was mining. The production of metals preceeded agricultural, but became much more sophisticated when praticed by the more advanced and better organized agricultural socities. Fisheries was another early sector, but unlike agricultural and live stock raising, remained largely a hunting activity until the 20th century. Agricultural societies financed and made possible the development of civlization. In the wake of civilization, artisans began producing the acoutements of civilization. Agriculture ramained the primary source of wealth for milenia. And this did not begin to change until the 19th century. In many areas of the developing world, agriculture continues to be the principal economic activity. True industrial production began with the Industrial Revolution fist in Britain and then in Europe in general as well as North America. Modern industrial societies have many important sectors beyond actual manufacturing, including construction, energy, financial, information, leisure, services, natural resources (fisheries, forestry, and mining, social (education and health), transportation, and trade. One important observation is that the portion of the ecomony devoted to producing goods and swevices is in many modern economies becoming overwealmed by the goverbmental sector, a development with profound economic and social consequences.

Agriculture

All of the early civilizations of the ancient world developed in river valleys where conditiins were most appropriate for settled agriculture. The same pattern occurred in Tigris-Euphrates, Nile, Yellow, and Indus Rivers. It was here that early hunter gatheres first settled down and began to grow and husband crops innsettled communities. Many of these crops have had profond consquences on humnan culture and society. Human agriculture used the native plants in these river valleys and as a result the crops varied from one civilization to another. Gradually plants were imported from distant regions. Agriculture provided both food and raw material for textiles. The appearance of agriculture is what in fact generated civilzation. The wealth created by intensive agriculture vastly exceeded that which could be generated by hunter gatherers. Agriculture financed and made possible the development of civlization. In the wake of civilization,artisans began producing the acoutements of civilization. One food crop, the potato, was imported from the Americas as a result of the Spanish conquests and had a profound impact on European society including making the industrial revolution possivle. Another plant, cotton, played a major role in the industrial revolution. Agriculture ramained the primary source of wealth for milenia. And this did not begin to change until the 19th century. In many areas of the developing world, agriculture continues to be the principal economic activity.

Livestock

Livestock raising is generally associated with agriculture, but some people advanced from the hunter-gathering level by associating with migrating heards or ctully domesticating the hears to a degree. This was the pattern in Central Asia.

Mining and Metalurgy

Another early economic sector was mining. The production of metals preceeded agricultural about 50 millenia. Metals were extremely valuable to early man and a prime factor in the development of trade. The early ages of mankind are defined by metals (copper, broze, and iron). The differences were defined by technological capabilities required to use the different metals--essentially the ability to generate high tempeatures. There was no gold age, but gold must have been the first metal acquired by man. While gold is rare, it is also incorruptible and thus can be found in nature. As it is bright, man probably first found it streams while seeking water or seafood. And because it was malleable and had a low melting point, early man with limited technical capasbilities was able to develop basic metallurgical skills. And these same skills could be used to work on other metals such as more abundant than copper and copper alloys like bronze. The capability to manufacture iron was particulsrly important because it was harder Metals have played important roles in history. . , but became much more sophisticated when praticed by the more advanced and better organized agricultural socities. And the metal tools developed played major roles in advancing civilization. A major reason for the development of early Phoenecian and Greek colonies in the Mediterranean was the pursuit of metals. Metals were a primary factor in the Peloponnesian War. Iron/steel tools and arms have played major roles in economics and history. Gold and siolver did not drive the European drive for sea routes to Asia, but for a long time was one of the few commofities that could be offered the Chinese. In the mercantile economies that developed after the Middkle ages, acquiering gold and silver became the central economic objedctive of the new nation states. Gold was a major factor driving the European colonization of the Americas. And the gold and silver found there had a major impact on the European economy. And with the Industrial Revolution, not only did the basic metals become even more important, but new metals such as aluminum, cobalt, chromium, magnesium, tungsten, titanium, uranium, and other metals become important.

Energy


Pre indutrial era

Throughout history, energy has been a driver of both survival and then civilizatio itself. Energy in the raw form of fire appears to be the firsr step in differentiating humans from the other animals, some of which wre preying on early humans. The first major source of energy was wood, burned for warmth, lighting, and cooking. Wood has many uses besides fuel, used as a major building, but for millenia it was also used for fuel. This worked fine when populations were low. Growing populations caused environmental damage bringing down owhole cibilzations such as Meso-America because of the enviromental damage of curring down forrests. The forests of Europe began disappearing because if the demand for lumber and the use of wood for fuel.

Coal

Coal is not a hydrocarbon. It can be used to produce hydrocarbons, but it is not a hydrocarbon because it does not contain hydrogen. It is an inpure form of carbon in the form of a combustible black or brownish-black sedimentary rock. The impurities vary widely depending on the type of coal and the location of the mines. Like a metal, coal is mined. The Industrial Revolution (mid-18th century) created an enormous demand for fuel to power machinery, especially with the invention of the stream engine (early-18th century). Early steam engines wre powered by wood, but coal quickly became the preferred fuel. Wood was more expensive and coal pound for pound packed more energy. A pound of coal produced four times as much energy as the same amount of wood and was less expensive as forest reserves disappeared. Coal-fired railroads dramatically speed up and reduced the cost of land transportation. Steamships did the same for riverine and ocean transport. Machines powered by coal greatly increased productivity and lesened physical toil. Coal powered industrilization enabled Western society to be the first to offer a prosperous life to the average person. Coal dominated the 19th century.

Hydrocarbons

Hydrocarbons are organic compoundd consisting exclusively of hydrogen and carbon. Carbon has four electrons in its outermost shell and thus four bonds to make. It is only stable if all four bonds are made. The carbon atoms join together to form the framework of the compound, and the hydrogen atoms attach to them in many different configurations. The various hydrocarbon molecules contain different numbers of carbon anf hydrogen joined together in different patterns. There are two types: Aliphatic Hydrocarbon (open chain) and Cyclic Hydrocarbon (closed chain). Some of the important molecules include: benzene, butane, ethene, hexane, keroscene, methane, napthene, octane, propane, propene, and others. The most important fuels (diesel, gasoline, and aviation fuel) are not molecules, but are made up of a mix of hydrocarbon molecules. The exact mix defends on the crude oil and the refinery process. Oil drilling and petro-chemocals are sometime included within the mining sector. Drilling and mining are different and the product, oil and gas, is not a metal. Hydrocarbons occur in two primary forms: petroleum and natural gas. They at first were used fo lihting and lubricants. When the internal combustion engine was developed, it became a primary fuel. Chemists over time developed many othes uses bfor oil as a raw material to produce: plastics, fibres, rubbers, solvents, explosives, and industrial chemicals. Just as the 19th century was dominated by coal. The 20th century was dominated dominated by a whole new enery source--oil.. Natural gas was at first flared, but by the late-20th century had becoming an increasinly important fuel and like oil as a raw material. Oil at first was used primarily to produce kersoscene for lighting as whale oil availability declined. It was also used as lubricants for industrial machinery. A major impetus for oil was the military competition in Europe leading to World War I. Navies began shifting to oil and airplanes and submarines could hardly be run on coal. The developmnt of the intenal combustion engine also drove the demand of oil. Enviromentl concerns, especilly air quality, also drove the shift. This created a problem for Europe. The great powers (Britain, France, and Germany) had coal, but no oil. Russia had oil in the Caucauses, but was not yet industrualized, albeit rapidly growing. The one industrial power that had oil was the United States. And this made a major difference in World War I. The Allies had all the oil they needed. Germany had very little. Tanks and trucks which the Allies had in large numbers had a huge impact on the battlefield. After World War I which had Americans began buying in large numbers even before the War began to reshape Amnerica and the industrial economy. This did mot occur in Europe. Workers there vcould mot afford cars and manufactuters made mo attempt to produce a car like Ford's Model-T that workers could aford. America continued to dominate the oil industry. And American oil again played a major role in the Allied World War II victory. With the development of Middle Eastern oil fields and the depletion of American fields, a major shift in world trade occurred, The oil producers formed the Organization of Petroleum Exporing Countries (OPEC) to increase oil prices. The Oil Shock and Arab Oil Embargo severely damaged both the American and European ecoonomies. It also caused a massive transfer of wealth from developed countries to oil exporters, especially in the Middle East. The industrialized countries were harmed, but little imprtant benefits were achieved in the oil countries, except greater purchases of comsumer products. Price increases could have wrecked the world economy, but American oil men developed new technologies to reopen depleted fields anf open new fields (fracking and horizontal drilling). This reversed the dcline in Ameican production and has been a major factor in keeping oil prices low. And America has even larger reserves of natural gas. Europeans have talked about using these technologies, but have failed to so. We have seen claims that geological structures are different in Eurioe, but Green opposition to hydrocarbons seem more of a factor. Not producing hydrocarbons has no benecials ebniromental imacts, because the Europeans continue to import hydrcarbons. Apparently the Europeans prefer to spend vast sums importing oil and gas from the Russians and Arabs.

Renewables


Fisheries

Fisheries was another early sector, but unlike agricultural and live stock raising, remained largely a hunting sctivity until the 20th century. Trafitional fisheries was a more important sector historically than is the case today when an increasing portion of seafood demand is being supplied by aquaculture. This varies widely by geography. Islands and coastal populations were mosr dependent of seafood protein. Fisheries would play a role in the discovery of North America.

Fur Trade

The fur trade is a worldwide industry dealing in obtaining and marketing animal fur. It is primarily a northern hemisphere activity because this is wearing the fur-bearing amimls are located and where the demand for warm clothing such as fur coats is strongest. And in modern times with the economic development of Wesretern Europe where people could best afford expensive, fashionable clothing using animal fur. The industry was of huge economic importance (16th-19th centuries) and played a major role in the exploration and colonization of Siberiaand North America. Russia at first dominated the fur trade. And as the market increased in Europe, this drove the Russian expansion east into Siberia and eventually even Pacific North America (Alaska). The same dynamic was at play in Europe. Portraits of European royalty often show fur items. Ermine in particular became a symbol of royalty. Russian domination of the fur trade and the high prices thay demanded was a factor in motivating the Europeans to seak out alternative supplies which of course meant sailing west to North America. The Danes, English/British, French, and Swedes were involved (17th century), but the struggle for North America came down to a conlict between the English and French. The fur trade was the most valuable activity in French Canada. The British answered by moving into the Hudson Bay area. In the end, it would be the larger settler popultion in the British Atlantic Coast colonies with its more diverse and dynamic economy and the Royal Navy that would settle who controlled North America in the French and Indian War (1756-63). Nef Franklin's beaver hat woul help cemen his image and successful diplomacy in Frnce (1777-78). America became more strongly involved after the Louisian Purchase which opened up the rich fur bearing areas of the Rocky Mounains (1803). The famed montain men paddling up the Missouri River would be the beginning of the settlement of the West beyond the Mississippi. While te trapers were after various animals, it was the beaver that was the backbone of the fur trade.

Manufacturing

The two basic sectors are commonly seen as the the agricultural and industrial sectors, but this is an oversimplification. Industrial is commonly see a a generic term for a modern, complex economy. The first msnufacturing was artisanal handicrafts involving textiles, pottery, and other products. As civilization developed, the products became increasingly diverse and sophisticated. True industrial production began with the Industrial Revolution fist in Britain and then in Europe in general as well as North America.

Communications

Communications is not specific to human, but sending sophiticated messages is. Animals communicate with sound, sight, and chemical signals. Humans do the same, but sound is by far the most important. Sight can convey messages verry rapidly. It was how sighting of the Spanish Armada was conveyed to the English fleet and Queen Elizabeth by lighting pyres along the coast. And sending visual signls is how naval ships communicated into the 20th century along with early wireless. There are, however, limits to what can be conveyed by sight both the sophisticated of the message and the distance. Sophisticated messages required language. And wih the development of language even the most sophisticated thoughts could be commuicated over distance. The limiting factor became speed. At first this meant the speed man could travel. And with the domestication of horses, the upper limit was the speed of horses. Great empires like Persia and Rome built extensive road networls to speed delivery of messages and commerce. Empires without horses, like the Inca, were limited to human runners. Messages were also delivered by sea which were limyed by sail and oar power. These were the upper limits on the speed of communications. This was the case for millenia. And there were no notable exceptions until science and the Insustrial Revolution began to transform Europe and North America (late). The advances began to transform communications (early-19th century). The first advance was steam power which began to increase ship sea speeds and then land speeds with the railroads (1830s). And at the same time electronic systems were invented and soone commercial telegram systens wre developed (1837). Virtually at the same time, countries in Europe and North America instituted sophisticated postal systems which relably and inexpensively delivered letters. A turing point here was the British Penny Black, the first adhesive postage stamp (1840). Very quickly electronic technologies imoroved, although they were expensive. The first sucessful oceanic cables connected America with Europe (1851). The Rockies proved a bigger challenge. The first transcontinebtal telgraph system concted the East with California (1861). Cables soon spanned the globe. The next step was the telephone invented by Alexander Graham Bell and others (1876). Like the telegraph the telephone required a land wire connection. The next step was wireless communication. This began soon after with what became known as wirless (1888). Guglielmo Marconi began developing a wireless telegraph system using radio waves (1894). This at first required a large transmitter and were limited to sending cryptic telegraph-like coded messages. Huge advances were made during World War I which by the end of the War allowed spoken messages and music leading to the radio industry (1920s). Radio replaced wireless in popular terminology, aerm based on how electronic messages radiated. Tehnology improved, but no major advnces were made until after World War II, artifacts of the Cold War Spave Race. The first major innovation was the personal computer and email (1980s). These at first depended on land lines. Modern wirless commuications and the cellphone was the next step (1973) although it was not for several years until it became a common consumer item (2000s).

Modern Sectors

Modern industrial societies have many important sectors beyond actual manufacturing, including construction, energy, financial, information, leisure, services, natural resources (fisheries, forestry, and mining), social (education and health), transportation, and trade.

Government

One important observation is that the portion of the ecomony devoted to producing goods and swevices is in many modern economies becoming overwealmed by the governmental sector, a development with profound economic and social consequences.









CIH







Navigate the Children in History Website:
[Return to the Main Economics page]
[About Us]
[Introduction] [Biographies] [Chronology] [Climatology] [Clothing] [Disease and Health] [Economics] [Freedom] [Geography] [History] [Human Nature] [Ideology] [Law]
[Nationalism] [Presidents] [Religion] [Royalty] [Science] [Social Class]
[Bibliographies] [Contributions] [FAQs] [Glossaries] [Images] [Links] [Registration] [Tools]
[Children in History Home]





Created: 12:46 AM 7/2/2010
Last updated: 8:06 AM 4/3/2019