Tuesday, July 11, 2017

Indonesia Economic System

Indonesia Economic System
Each state's economic system depends on the state own view or politic concept. Some countries follow economic system of free fight liberalism. Such a system runs free competition in of the economic system. People are free to compete in economic in economic system although they encounter many inflicted losses. Those who become the leader of economic activity will control the state's economic life. As the consequence, some people do much exploitation to others. Economic system of free fight liberalism is generally applied in liberal countries.

Moreover, some other countries follows economic system of etatism (it refers to the socialist system). In such a system, the government take a control the state's economy. With its apparatus, the government insists and extinguishes the potency and creation capacity of the units of economy beside the government's sector. The economic system of etatism is usually applied in communist countries.

Furthermore, another country focuses its economic power on certain groups. These groups have the monopoly right in economic activity. Indonesia had ever been carried out such an economic system in the era of VOC.

How is the condition of Indonesia economic system nowadays?

Indonesia is built and develop based on Pancasila and 1945 Constitution. Therefore, all the government's and the people's activities in a country and society should be based on Pancasila and 1945 Constitution.

Indonesian economic system follows the democracy of economic principles. Democracy of economy is implied in the fifth principle of Pancasila. The principle states that people have to have a chance to benefit from the state's prosperity and wealthy evenly. Therefore, people must enact their roles in the economic system actively to obtain therm. Furthermore, it contains the nation's aspiration or concept to gain equitable and prosperous people. Thus, Pancasila holds the position as the ideological base of Indonesia economic system.

Indonesian economic system has the democracy of economic principles. It is asserted more in 1945 Constitution with the amendment and alteration by People's Consultative Council (MPR). The alteration of section 33, 1945 Constitution consists of five clauses. Four clauses are the principles of Indonesian economy, those are follows.
  1. Economy is arranged as the collective venture based on family relationship.
  2. The significant branches of production which control people livelihood is under the government's controls.
  3. The land, water, and natural wealthy will be controlled by the government to use for the large people's prosperity.
  4. National economy is carried out based on democracy of economy under the principles of collectiveness, efficiency, injustice, sustainable, environmental concept, autonomous, and to keep the balance of national economic development and unity.
In accordance with 1945 Constitution in section 33, the economic activity is developed by cooperation. Cooperation is the most appropriate economic system with the principles of family relationship. Besides, cooperation support fully the low-class society.

Read: Cooperative

The significant branches of production which related to people livelihood is under the government's controls. The management of the branches of production is hold by BUMN. such corporation are needed mostly by people. The corporation's control and use are arranged by the state on a purpose that all elements of society can utilize them in an effective way.

The land, water, and natural wealthy within refers to the natural resources. The natural resources need to explore, to cultivate, and to use for people's prosperity. Therefore, the government takes a control on them. But, it does not mean the government possesses and cultivates all the resources. Some private companies have the opportunities to explorer and to cultivate them. While, the government manages, conducts, and guides the activity on a purpose that people or private companies take participation to reach the nation's prosperity.

In Indonesian economic system, the government and people, either low-class society or the entrepreneurs, reach together the nation's prosperity actively. Furthermore, the government has a role to make a plan, to conduct, and to guide the use the state resources. Thus, the government, the private entrepreneurs, and people make a solid cooperation to each other. That's all the significant meaning of Indonesia economy.

The economic system which involves the government, the private entrepreneurs, and people to assists each other in economic democracy is called democracy of economy. Democracy of economy is asserted in section 33, clause 4 of 1945 Constitution.

Sunday, July 9, 2017


Cooperation / cooperative
In Indonesian economic system, cooperative becomes an appropriate corporation to Indonesian nature and identity. What are the roles, the type, and the use of cooperation in Indonesia? What are the principle of cooperation to be appropriate corporation to Indonesian identity? Examine the following explanation!

The Role of Cooperation in Indonesian Economy

The role of cooperation in Indonesian economy is very significant because of
  1. cooperation is based on the family relationship principles and it tends to be appropriate to Indonesian identity;
  2. cooperation is appropriate corporation to low-class society. While, high-class society give the supporting aids to develop it.
The role of cooperation in Indonesia economy is stated in the explanation section 33 of 1945 Constitution. This section states that cooperation is an appropriate form of corporation to gain society's prosperity. By the explanation in the section 33 of 1945 Constitution, cooperation holds the position as the pillar of national economy and becomes an integrated part in the system of Indonesian economy. Laws No. 25 of 1992 about cooperation states that cooperation has a definition as follows.

Cooperation is a corporation of which the members tend to person by person or corporation of cooperation of which the activity is run based in on the principle of cooperation. Cooperation becomes also as the move of people economy based on the principle of family relationship.

The Types of Cooperation

The types of cooperation covers credit cooperation, consumers, producers, marketing, and services.

The Benefit of Cooperation

The benefit of cooperation can be viewed from two sectors; those are the use of cooperation in the sector of economy and the use of cooperation in the sector of social.
1) The use of cooperation in the sector of economy as follows.
  • To increase the income of the cooperation's members. The profit of cooperation will be returned to the members according to their service and participation.
  • To offer the cheap goods and services to consumers that goods sold at the stores in order that those who includes as the poor cooperation members are able to consume them.
  • To grow the motif to attempt in humaneness. In running the production, the cooperation does not only obtain a profit, but also serves the cooperation members necessities.
  • To grow the honesty and the open manner in the cooperation management. Each member has the right to be a cooperation board and to know about the cooperation monetary report.
  • To give a training for society about how to spend their income in an effective way and how to use them economically.
2) The benefit of cooperation in the sector of social as follows.
  • To stimulate the realization of society's peaceful life.
  • To stimulate the realization of the human rules which builds on the principles of the family relationship, not on the materialistic connectivity.
  • To educate the members of cooperation to have the spirit of cooperating and family relationship.

The Principles of Cooperation

The principles of economy are stated in Laws No. 25 of 1992 about cooperation. The principles are explained as follows.
  1. Cooperation runs the principles of cooperation. In this case, the cooperation membership refers to the voluntary and open membership. Cooperation is managed in a democratic way. Besides, cooperation distributes the rest of activity output fairly and in proportion to each member's endeavor. It gives a limited recompense towards the capital and autonomy.
  2. Cooperation develops the production by carrying out the principles of cooperation education and cooperation between cooperation.
These principles set cooperation to have functions as a corporation and as the activation of people's economy in the social nature. The principles of economy is elaborated in the following details.
  1. The cooperation membership refers to the voluntary membership. It means, people cannot be compelled to be a cooperation member. A cooperation member can be resigned with the condition that is set in the base fiscal. The cooperation membership refers to open the membership. It means, people have a right to be a cooperation member. Cooperation does not differentiate those who would like to be the cooperation members.
  2. Cooperation management is run under democratic way. It means, the management is carried out based on the members intention and decision by cooperation members meeting. The cooperation member meeting becomes the highest power holder in cooperation.
  3. The profit distribution or the rest of output activity (SHU/Sisa Hasil Usaha)) is not based only on the members capital, but it is based on members service to cooperation.
  4. Each member pays his capital to cooperation. As a capital owner, each member will get his recompense properly. The amount of the recompense is limited. It means, the recompense is not greater than the bank interest.
  5. Cooperation follows the principle of autonomy.
  6. Education of cooperation tends to improve the cooperation members abilities, skills, and knowledge.
  7. Cooperation of between cooperation tends to strengthen solidarity between cooperation to realize the purpose of cooperation.

Saturday, July 8, 2017

Cooperation Among Economics Agents and The Informal Sectors of Corportaion

The Cooperation Among Economic Agents

In daily activity, we find many forms of cooperation carried out among BUMN/BUMD, privates, and cooperaion/
1. The form of cooperation run by BUMN/BUMD with cooperation as follows.
  • Cooperation function as the payment location of electrie bill.
  • Cooperation by village Unit Cooperation (KUD) distributes fertilizer and farming tools from fertilizer factory production.
  • KUD holds the purchasing of farmers unhulled rice in the field which is forwarded to BULOG.
2. The form of cooperation run by private company and cooperation as follows.
  • Cooperation distribute the consumption products as the products of the private industry.
  • Cooperation coordinate the products of small industries to be marketed to the wholesaler.
3. The form of cooperation carried out by BUMN/BUMD with private company as follows.
  • To hold the collective exhibition of products of production.
  • BUMN and BUMD develop small scale industries.

The Informal Sectors of Cooperation

Informal Sectors of Corportaion
Examples of the informal sector of corporation (pixabay.com)
The existence of BUMN does not make the private companies and corporations do not have any other activity. Besides three formal sectors of corporation, people have the right of proper occupation and livelihood. It is stated in the section 27 of 1945 Constitution as follows.

"Every citizen has the right of proper occupation and livelihood for humanity."

This section strengthen that each member of society has the right to determine his occupation in accordance with his talents, ability, and interest. The occupation does not tend to be in contradiction with the rules, laws, and norms prevail in society. The member of society can determine the occupations from the informal sector of corporation. Informal sector of corporation becomes the fact in our daily life that develops in society. It overwhelms some sectors, those are agriculture, husbandry, fishery, trade, small industries, and service.

Informal sector of corporation is brought out to support the realization of nation's prosperity. Although it holds small production, but informal sector of corporation gives significant contribution in economic development.

The figure above perform the informal corporation activity. Other examples of the informal corporation as follows.
  1. The traveling merchants who offer their selling products, such as ice, medicine, bakso, toys, and so on. They do not have permanent location to sell their products. They come to the consumers to offer their products.
  2. Public transportation and pedicab drivers who offer service of transportation.
  3. The food seller who fulfills consumers necessities of food.

The Difference of Formal Sector and Informal Sector

Formal Sector
Informal Sector
Relatively reachable
By birocracy (based on the rule)
Informal (like family organization)
From legal monetary institution
From illegal monetary institution
Depends on the government’s protection
Product supply
The large amount in good quality
The little amount with changeable quality
Work relationship
Based on work contract
Based on trust

Friday, July 7, 2017

The Government's Role to Overcome the Problems of Labour

Problems of Labour

The more expanding population that is not equalized with the extension of the work opportunity leads to bad effect to social and country environment. By Department of Labour and Transmigration, the government attempt to solve the problem. In order to obtain the best solution of the problem, the government requires private and society's support.

The government's attention towards the effect of unemployment to the security of social environment is indicated by some wise measures as follows.

Raising the Labour Quality

The labour quality can be improved by these following steps.
  • Make an effort to bring an education development into reality in order to deliver qualified labour. For example, establishing renew curriculum of education.
  • Organize the work training to provide sufficient skills and abilities in accordance with the demand of the world of work.

Extending the Field of Work

It can be realized by following ways.
  • Support and motivate some private enterprises.
  • Establish full work projects.
  • Develop program of transmigration.
  • Provide large opportunity to the Indonesia labour to go work abroad.
  • Provide information of job vacancy by Department of Labour and Transmigration, government's offices, and mass media.
  • Establish new industrialization that enable the labour absorption.
  • Increase the developing of village areas.

Controlling Population

Controlling population in order to lessen the rapid growth of population can be run by intensifying family planning program.

Overcoming the Bad Effect Of Unemployment towards Social Environment Security

It can be carried out by the following measures.
  • Raising economic development.
  • Increasing the improvement of society's nutrition and health.
  • Providing some aids to society. For example, food subsidy to some village areas.
  • Increasing security and means of judicature system to decrease the rate of criminality.

Beside the government, other possible elements to concern on the effect of unemployment are society and the entrepreneurs. They hold the measures as follows.
  1. The entrepreneurs raise the effort of investation, extensification, and diversification to absorb new labour.
  2. The project of agro tourism in Banyuwangi. Besides running the agro tourism, the entrepreneurs take some efforts to improve society;s skills and abilities by holding a guide training regularly, developing art small houses, and give some opportunities for schools to send the students to have a hotel work practice in the project of agro tourism.
The government, society, and the entrepreneurship had paid their interest fully to the effect of unemployment in the social environment. What is your opinion? Don't you want to give the same attention? Try to implement your attention toward the effect of unemployment to the security social environment! You absolutely have to make it in accordance with your capability.
  1. Taking a part in the system of environment security in the living areas.
  2. If your father was an entrepreneur, take some positive learning from him of how he established the work opportunities in the future.
  3. Collecting some funds to help the orphan as the victims of the effect of unemployment.

Thursday, July 6, 2017

The Market Position in Economic Activity

The Market Position in Economic Activity

How is the position of the concrete market and the abstract market in economic activity? We will discuss this subject in the following explanation.

The Position of Concrete Market in Economic Activity

The concrete market has an important role. It functions to fulfill everything that people need directly. People go to the market everyday to run economic activity.

1) A farmer sells his crops.
2) A producer holds the trade.
3) The small industry businessmen buy some raw materials or sell their products.
4) The housewives go shopping to fulfill their daily basic requirements.
5) The pedicab drivers, the rural transportation drivers, and some labour offer service to the consumers.

Those are some examples of economic activity. It is obvious that society's economic activity is mostly taking place at the market.

The uses of the concrete markets to society's economic activity are follows.
a.  It gives more chance to people to hold the consumption, production, and distribution. For examples.

  1. Consumers get goods and services they need.
  2. Producers buy raw materials and sell their products.
  3. Distributors distribute their commodities.

b. As a place to have goods and service transaction.

c. To notify some information of goods and services price as the price is set by a bargaining activity at the market.

d. It gives the businessmen stimulus to develop their business. In the concrete market they are easy to promote and to sell their products.

e. It makes a country development run well. Market provides many different useful matters needed fir the development.

f. Market absorbs many human resources. For example, at the market people have the right to make their livelihood as merchants, security guards, cleaning service, parking attendants, food and drink sellers, rest room attendants, and pedicab drivers. In other words, market assists to reduce the rat of unemployment.

g. It provides some information about many different demands and bargaining of goods and services needed by consumers.

The position of the Abstract Market in Economic Activity

It has been explained in the previous elaboration that the concrete market has important roles. So, does the abstract market, particularly, relating to the foreign economic relationship, the production development, and the labour problems.

The position of the abstract market in economic activity are follows.
1. Relating to the foreign economy
a) The foreign currency exchange has some roles as follows. 
  1. The place to have a currency exchange. For example, an importer who need money in US dollar to pay his imported commodity is able to exchange his rupiah money into US dollar in the foreign currency exchange.
  2. The place to get some information about exchange value of rupiah towards foreign currency (foreign money). Thus, the position of rupiah can be detected in international economy. This case will indicate the good or bad condition of national economy.

b) Indonesian Commodity Exchange (Bursa Komoditi Indonesia/BKI) has these following roles.
  1. The place of world well-run commodity.
  2. The means to develop Indonesia's exporting potency into internationally high rate. For examples, rubbers, tobaccos, and textiles.
  3. The place to get information about the price of international commodity which is to be an important thing for some exporters.

2. Relating to the production development.
Money and capital market (stock exchange) have the following roles.
  1. The place for businessmen to get capital in order to develop their business.
  2. The place for capital investors to obtain interest from their invested capital.

3. Relating to the problem of the labour force
The labour market roles as a place where people get information about vacancy in country or abroad. Thus, the rate of unemployment can be reduced.

4. The foreign currency exchange, the stock exchange. Indonesian commodity exchange and the labour market absorbs the number of labour. It comes to occur because many people get involved in the abstract market activity as either as the market agent or as the employee.

The Problem of Matters Pertaining to Labour in Indonesia

Problem of Matters Pertaining to Labour in Indonesia

Indonesia saves some problems of matters pertaining to manpower which involves the sector of social, economy, politic, law, humanity, and others. Those problems are handled by Department of Labour and Transmigration.

Now, we will discuss some problem of matters pertaining to manpower in Indonesia in details. Th problems embrace the number of labour, the quality of labour, the spread of labour, and the rate of unemployment.

The Number of Labour

The number of labour in Indonesia keep increasing as Indonesian population grows rapidly. As you know, the growth of Indonesian population expands at full speed. So, the number of the labour fast develops. In 2000, Indonesian population is more than 200 million, while the number of the labour is about more than 135 million. Such a condition needs the spread of the field of work. In contrary, the field of work grows in a little number. As the consequence, the number of the unemployment gets increased particularly, the open employment.

The Quality of Labour

Most of Indonesian labour possesses low level education and insufficient skills and ability. The young labour that has just been graduated from school or university mostly do not have the capability and experience yet to enter the world of work. It can be stated that Indonesia labour has low quality. Such condition drives the coming of some effects as follows.
  1. The Indonesian labour is not ready yet to encounter the global human resources competition. Those who are able to be a winner in the global competition of the globalization era are those who possess high quality and high competitiveness.
  2. The low quality of the labour leads to the low work productivity and make natural resources hard to manage whereas Indonesia saves abundant natural resources. Because of the low quality of the labour, all natural resources cannot be utilized effectively and in efficient.
  3. The Indonesia labour is not ready yet to enter the field of work while most companies need only a ready-to work and qualified labour. So, the increasing of the labour every year cannot be develop. As the result, the rate of unemployment is rising.

The Spread of Labour

The spread of the labour in Indonesia is not evenly distributed. The accumulation of the labour occurs in a densely populated island, such as Java while, some other areas, especially isolated areas, are lack of labour. Such condition raises some effects as follows.
  1. The hard problem of unemployment is accumulated in Java.
  2. The obstructed developing in some isolated areas because of the lack of the labour.
  3. The abundant potential natural resources in other areas out of Java are not utilized yet in effectively because of the lack of the labour.

The Rate of Unemployment

It had been explained before that the number of unemployment get increased every year. Such condition is caused by the following factors.
  1. The great numbers of the labour are not in accordance with the extension of sufficient field of work.
  2. The labour who does not have high qualification and skills or capability needed by the world of work tends to be unemployment.
  3. The unemployment are not able to run the private enterprise and to make field of work. They do not have capital, skills, perseverance, tenacitu, and courage.
  4. The labour does not spread evenly in Java. It leads un the unempoyment accumulation in Java.

The rate of unemployment is called also by the level of unemployment. It is calculated by the following formula.

The example to calculate the rate of unemployment.

In 2009 the number of the labour force in Y country is about 74,415,456 and the number of unemployment (the work seeker) is about 2,411,397. How many rate of unemployment is in Y country in 2009!
Besides the rate of unemployment in general, you can calculate the rate of unemployment based on the level of education.

In 2009, the number of the labour force of elementary school graduate in Y country is about 23,275,150 and the number of unemployment of elementary school graduate is about 586,455. How many rate of unemployment is of elementary school graduated in 2009?

Wednesday, July 5, 2017

The Problems and Definition of Labour Force

The Problems of Indonesia Labour Force and Labour

A demonstration explodes on a large scale when the government plans to revise the labour force regulation. As labors representative, a labour union refuses the Revision of Labour Force Regulation. It comes to occur as the regulation cannot protect the labour interest.

This case indicates how significant the problem of labour in the sector of economy. The problem does not only concern on labour and entrepreneurship's interest, but also on the government and people's interest. Therefore, it is important for you to learn the problem pertaining to the labour force. The problem of the labour comes as the rapid increase of the number of the labour force is not equal to the availability of sufficient field of work. Now, we will discuss about the problems of the labour force and the labour and their effects.

The Definition of Labour Force

The labour force is related closely to the number of population. The increase of population must be followed by the increase of the number of the labour force.
Population can be categorized based on the age as follows.
  • People refer to 0 - 14 years old is included as the non productive population population (under the age of work).
  • People refers to 15 - 54 years old is included as the productive population (on the age of work).
  • People refers to above 64 years old is included as the non productive population (above the age of work).

The productive population (in the age of 15 - 64 years old) can be arranged into two classes, those are the class of labour force, and the class of non labour force.

The class of labour force can be divided into four classes, those are full-time employment, open unemployment, under unemployment. and disguise unemployment.
a. The full-time employment is those who contribute their capability in a production activity.
b. The open unemployment are those who do not work at all, but they try to seek for it (they will get work any time).
c. Under unemployment are those who work but it is not in accordance with their skill or background of education. Furthermore, they do not employ their capability fully as the lack of the field of work.
  1. A scholar gets work but the work is not in accordance with his background of education.
  2. A farmer does not have anything to do anymore after planting rice plants. He waits only for the season to clear of weeds and to harvest the crops.
d. Disguise unemployment means a condition where a certain job is completed by excessive workers so that they cannot totally work.
An area of rice field is carried out by five people, but it is hold by ten people. The excess of labour is five people and it is called by disguise unemployment.

Those who are not included as the labour force are those who includes in the age of work but do not work and do not seek for work. For examples, students, university student, and housewives.

The number of labour force always changes every year. It conforms to the change of the number of population and the change of population composition based on the age.

The Relationship between Market and Distribution

The Relationship between Market and Distribution

Distribution is an activity of delivering goods and services to a market from producers to consumers by a trading. Thus, the market has a relationship with the distribution. It can be examined in the following explanation.

Something, goods distribution takes place in a limited area or location surrounding the producers, or in an extend location. The extend area of distribution determines the types of the market.

The types of the market based on the large area of the distribution can be divided into three types. Those are goods characteristics, fluency transportation, and the number of the consumers and the spreading of it.

1 Goods Characteristics
Quick rotten goods can only be distributed to a certain areas while imperishable goods distribute to the larger area.

2 Fluency Transportation
Goods can be distributed to the larger areas if the fine transportation exists.

3. The Number of The Consumers and The Spreading of It.
Goods which are needed by country people will be distributed to all country areas. While goods which are needed only by people of a region will be distributed only in the region.

Based on three matters above, it can be examined that market can be categorized into four types, those are local market, regional market, national market, and international market.

1. Local Market
Local market is a market which covers a certain location. It usually lies in a residence or a village. The selling goods are consumption goods which are needed by surrounding people. For example, rice, fish, vegetables, and snack. Thus, local market is a concrete market or a real market.

2. Regional Market
Regional market is a market overwhelms a certain region. In the regional market the middle traders serve retails traders. The selling goods are mostly consumption goods which is as industrial products. FOr examples, soaps, toothbrushes, tea, cogge, cigarettes, snacks, and shoes. Regional market is included as a concrete market. For example, Pasar Johar, Pasar Beringharjo, Pasar Gedhe, Pasar Kliwon, Pasar Kembang, Pasar Bintoro, Pasar Baru, Pasar Besar, and Pasar Atas.

3. National Market
National market is a market that sells consumer goods to all part of a country. The selling goods are the consumption goods, the resources of production, the letter of value (stock), and the foreign currency. The national market tends to a concrete market and an abstract market.

The example of the abstract market is the capital market, the stock exchange, the currency exchange, and the raw-materials market. The outstanding abstract market are BEI.

4. International Market
International market is a market which sells consumer goods from all over the world. The selling goods consist of raw materials and minerals,

International market is an abstract market. For example, rubber market in New York (USA), tobacco market in Bremen (Germany), coffee market in Sao Paulo (Brasil), and petroleum market in Middle-East countries.

Monday, July 3, 2017

How to preserve natural resource and use it efficiently?

preserve natural resource and use it efficiently

Nonrenewable Natural Resources

Using nonrenewable resources, particularly minerals, in an effective way and exploring many ither possible mineral resources.

Renewable Natural Resources

A preservation of renewable natural resources is conducted as follows.
  1. Avoiding soil from erosion and lack of soil fertilizer and soil water by fertilizing, reforestation (planting trees in forest), and terracering. Terracering is a land in a mountain which is made in terraced.
  2. Renewing some old plants of agriculture and plantation.
  3. Conducting reforestation when lumbers of forest are mass used.
  4. Preserving some scarce plants in a natural preservation.
  5. Limiting animals hunting, particularly for scarce animals such as jalak bali, tiger, or rhinoceros. Scarce animals should be protected and preserved in a wild life conservation.
  6. Preventing rivers, swamps, lakes, dams, and seas from water pollution to protect many kinds of fish from extinction.
  7. Renewing fisheries and farmlands.

Energy Resources

A preservation of energy resources can be hold in many ways as follows.
  1. Avoiding water pollution and economizing the use of water. Soil and forest conservation is increased because soil water conservation depends on soil and forest conservation.
  2. Economizing the use of electricity.
  3. Economizing the use of petroleum, natural gas, and coals. An exploration to obtain new source of energy have to conduct. Conducting a research for other possible use of fuel, for example bio diesel.

Human resources

Recently, human resources are not only viewed as its production cost, but also as a significant company asset. Therefore, the use of human resources grows equally with the increase of people's prosperity.

Capital Resources

Capital resources have also to be used economically because it is considered as one of important resources.

It has been examined above how to preserve the resources and to make the use of it efficiently. What is your comment about it? Does your attitude and action represent your concern on the availability of limited resources and the efficiency of the resources use? What is your attitude and action when you see people destroy the resources and use the resources not in efficient way?

a. by streaking school walls;
b. by throwing the trash away into a ditch lies in front of school;
c. your classmate turns on the lamp while the day is much bright enough;
d. your friend goes around the town by motorcycle without a purpose;

As the representation of your concern on the limited availability resources and efficiency of the resources use. You can practice these following applicable actions.

a. to spend your money economically;
b. to take care your own properties, such as bicycles, clothes, shoes, texts, books, and stationery;
c. to maintain school and classroom's cleanliness and preciousness;
d. to be efficient to use electricity;
e. to talk on phone as needed;
f. to maintain bedroom and studying table cleanliness and tidiness;
g. to do productive activities, for example growing some fruits in a house yard.

Company and Cooperative as the Agent of Economy

Company and Cooperative as the Agent of Economy

Company as the Agent of Economy

As you know, a company refers to a site where the process of production carries out. A company can be a factory, a store, a plantation, a shrimp embankment, or machine shops.

The main company's activity is to produce goods and services to fulfill family households or society's necessities. In other word, a company has a role as a producer. In running the process of production, a company requires some factors of production from a family household or other companies. For example, labour and raw materials supply. Thus, there is cooperation between a company and a family household. As a work partner, a company should notice the interest of a family household. For example, a company should produce qualified goods and service to make a family household satisfied as a consumer. Besides, a company should humanize its employee by taking notice of their prosperity. An employee is a factor of labour production supplied by a family household.

As a critical student, you may ask a question. For example, "Is a company's role only as a producer? Doesn't a company utilize also labour and other factors of production which means also play roles as a consumer? It has a following answer.

Consuming goods and service run by a company is not a direct and last consumption. Goods and service are utilized for the following production. The use of goods and service for the following production is called investation. So, the main role of a company is as a producer. Therefore, a family household is called also a household production. Furthermore, a company runs distribution as production and distribution cannot be separated.

Cooperation as the Agent of Economy

A cooperation is a corporation that manages a company. For examples, a shopping complex, saving and loan cooperation, goods production, and transportation service.

The Relationship between the Agents of Society's Economic Activity

The agents of society's economic activity comprise a household, internal country and foreign society, companies, cooperation, and the government. All the agents of economy have a reciprocal relationship as a producer and consumer. The reciprocal relationship raises the flow of goods and services or the flow of service and money between producers and consumers.

A reciprocal relationship of between the agents of economy can be represented in a scheme in the form of circle called Circular Flow of Economic Activity. In this part, the foreign society is combined with a company because both have a similarity. Learn the following Circular Flow of Economic Activity!

The Circular Flow of Economic Activity

As the agent of economic activity, society can be divided into four; those are household, company, the government, and foreign society.

The Circular Flow of Economic Activity

1. The household is a group of society that serves the factor of production for a company. By transferring the factor of production, a household obtains recompense in the form of money. Money is spent to buy goods or to pay service produced by a company.

2. The company and cooperation produce goods and services needed by households and provides recompense for a factor of production they accept.

3. The government purchase and equip goods and services needed by society.

4. The foreign society buys the exported goods and sells the imported goods.

Market in Economic Activity

Market in Economic Activity
A market is very significant part in economic activity. Most of economic activity occurs in the market. People get their consumption goods in the market. A production, particularly a trade production, is hold in the market. Furthermore, market is a place where a distribution activity is underway. Before discussing the types of market, it is necessary for you to learn first the definition of market.

The Definition of Market

In the prehistoric era, each person tries to fulfill their necessities with their own production. A market had come up when people get interaction with the function of money. When people used money, the third subject had come up as a contract person between a producer and a consumer. Person who runs a contact between a producer or a consumer is called a trader. A trader does not break off the relationship between the producer and the consumer. Sometimes, there is still the producer sells his product directly to its consumers.

By the relationship between the producers and the consumers, either in direct or by a trader, a market has come up. In the market, the producers and the traders act as sellers, while the consumers act as goods buyers. In the following development, a market does not sell the consumers goods only, but also bargain the services. Thus, the goods producers and the consumers meet in the market. A producer runs the supplying activity of goods and services, while a consumer runs demanding activity activity for goods and services.

Types of Market

Market can be divided into two types; those are concrete markets and abstract markets. To get more understand about concrete markets and abstract markets, read this following elaboration!

Concrete Markets

You have ever gone to market, haven't you? A meet is occurred between a would be producer and a would be consumer. This kind of market is a market under public's definition. In a popular definition, a market is called a concrete market because it sells many different consumers goods. Actually, the concrete market and the abstract market have similarities and differences. Based on the characteristics, both types have some similarities and differences.

The characteristics of the concrete market are follows.
  1. The place where a producer and a consumer meet.
  2. The agents of economy in a concrete market refers to society, either producers or consumers.
  3. It sells consumers daily basic requirements.
  4. The selling goods are available in a location who producers and consumers meet.
  5. The concrete market is widespread markets, either in cities, town, or villages.
Does your town where you live have concrete markets? It probably spreads in every places; our capital, capitals of province, capitals of residence, capital of sub district, and villages in Indonesia. Generally, the concrete market has a specific name. For example, Pasar Johar (Semarang) and Pasar Klewer (Solo).

Mention any other concrete markets in your town or village! Are there any supermarkets in your town? What is a supermarket included to, a concrete market or an abstract market?

Abstract Markets

Besides a concrete market, we have a abstract market or called by unreal market. There are not some trading goods in the abstract market. The producers do not bring with them the trading goods into a location of transaction where they meet each other. When they meet each other, the producers will describe only the kinds and quality of their trading products. Even, the producers and the consumers do not meet each other in a certain location. They get interaction by email, internet, phones, or other means of communication.

The producers describe only the kinds or the quality of their products by those means of communication and do not perform their product directly.

Based the definition, you can find the characteristics of the abstract market as follows.
  1. A contact between the producers and the consumers, either direct or indirect, to hold goods and services transaction.
  2. The agent of economy in the abstract market is a specific subject, for example, the businessmen or the letter of value traders.
  3. Selling specific item of product, for example, share, obligation, foreign currency, and world sell well commodities.
  4. The selling goods are not available at the market. Commonly, the producers perform only the product minster (sample).
  5. The abstract market exist in a certain place, for example, certain banks or certain cities, such as Jakarta, Surabaya, Bremen, Sao Paulo, and New York.
The abstract market has little numbers because it occupies a certain place licensed by the government.
1. Money market is occupied only at a certain bank. The money market is a place of activity of letter of value trade.
  • Call money. It is a proof of money loan in the range of some couple days.
  • Bank of Indonesia Certificate. It is a letter of value released by government (Bank of Indonesia) to collect funds of business effort with the range of a month, two months, or three months.
2. Capital market (stock exchange). It includes stock exchange of Indonesia stock exchange (Bursa Efek Indonesia). The capital market is a place of the transaction of long term letter of value (more than a year).

The types of the selling letter of value are follows.
  • Stock, it is a letter of proof of capital investment.
  • Obligation, it a letter of formal obligation admission from government or a certain company in the range of more than a year.
The capital market is managed by the organization or the organizer of capital market. They are the executive committee of the capital market now known as supervisor committee of the capital market (Bapepam) and PT Danareksa. Bapepam is a committee under the Monetary Department which function to develop and to supervise the capital market. PT Danareksa has a function to purchase stocks from some companies and to resell the stocks to a stock exchange.

3. Foreign currency. It is a place to take a trade of foreign currency, such as the foreign exchange banks. In running a trade with foreign buyers, some traders need foreign currency to make a payment. Some traders are able to buy foreign money in the foreign currency exchange.

4. Indonesian Commodity Exchange (Bursa Komoditas Indonesia/BKI). It is abstract market to sell world well-sell commodity. For example, rubbers, coffee, cottons, soybeans, and textiles.

5. Commodity exchange in abroad, such as rubber exchange in New York (USA), tobacco exchange Bremen (Germany), coffee exchange in Sao Paulo (Brasil), and petroleum in the Middle East countries.

6. Labour market. It is a demand and a bargaining activity of the labour. The labour market is managed by the Department of Labour or man power distribution bureau.

Family Household as the Agent of Economy

Family Household as the Agent of Economy
In the modern society even in the globalization era, economic activity has some complex subjects. It involves many different agents of economic activity. The subjects that contribute in society's economic activity as the agents of economy include family households, companies, cooperation, and government.

How many member of family do you have? You have father, mother, or sister and brother. Do you still have any other members of family? Mention them!

All the members of family have their own needs to fulfill. They needs foods, houses, health, televisions, phones as means of communication, transportation, and many more. Even, savings for the future needs is an important matter, isn't it? Thus, a family is a consumer of goods and services.

To get goods and services, human needs some money as the expense. A father is a family leader who has to work to earn some money. He works as a government or private employee. Besides, he saves his money in a bank to get some interests in order to have more earnings. He possibly possesses a land for rent to a sugar company as his other additional funds. Furthermore, his growing family members make livelihood to have any other additional earnings. For example, elder brother works as an employee in a certain company. Thus, a family household plays a role in a process of production.

The above analysis can be concluded that a family household as the agent of economy has the following roles.
a. Consumer if Goods and Services
The previous example points out that all family members are the consumers of goods and services.

b. Supplier of Production Factor
The continuity of factor of production needs factor of natural production, factor of labour, factor of capital, and factor of entrepreneurship. From the example, it is clear that a family supplies factor of labour and factor of capital.

1) Labour. It can be viewed that a father works as a government or private employee and his son works as an employee of he pharmacy company.
2) Capital. It can be released in the form of
  • father saves his money in a bank and then it is borrowed by a certain company to finance the process of production;
  • a land rent by a company of the sugar cane plantation.
All the elaboration is the examples of the factors of production. It obvious that factors of production supplied by a household to another are different. It depends on the family ability and condition. Basic activity of economy by a family household is an activity of consumption. Therefore, a family household is called also as household of consumption.