From the FT’s Alphaville: Let's get back to basics on the word "economy," which has in some cases come to mean the very opposite of its original linguistic meaning. The word stems from the Latin word "oeconomia", meaning household management. But its practical use goes back to the 1660s when it was understood as general frugality and a judicious use of resources. From this we can infer that an economy is delivered when the factors of production are organised in such a way that resource-sparing efficiencies are generated. Those efficiencies then allow for additional output to be created because freed-up resources can be dedicated to further production. The more economy, the greater the output, the bigger the wealth pie. According to that logic "the economy" is a specific system by which savings are delivered through smart organisation, innovative techniques and resource deployment. When those savings are put to new use a wealth effect is experienced to the benefit of all. Today, the ...
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