What are the causes and effects of transformation of economic systems?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There can be a number of causes and effects of transformations of economic systems.  Let us look at a major cause and a major effect of such transformations.

A main cause of changes in economic systems is technology.  When different technologies become available, economic systems can be radically transformed.  Changes in agricultural technology, for example, can make it possible for fewer people to grow more food.  This can free large numbers of workers from farming to do other things.  Perhaps the best example of technological change transforming an economic system was the Industrial Revolution. 

The major impact of these transformations is a change in the relations between people in society.  For example, when most people were doing subsistence farming, people tended to live in small villages that were very tightly knit together.  There were strong social bonds between the various people.  When this sort of economic system started to disappear and people moved to cities to work in factories, the tight bonds were severely weakened.  People came to see one another more as members of what sociologists call “secondary groups” than as members of “primary groups.” 

Thus, economic transformation is often caused by technological change and it can lead to changes in the social relationships between people in a society.

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