What is business activity?

Human life is an endless succession of «wants». From the day of our ruin to the day of our death we «want» things. The new-born baby wants to be sashed, fed every few hours, kept warm and sheltered, etc. Everyone needs warmth, food, clothing, shelter and medical care. These are just the basic — requirements to keep us alive and well. There are millions more things we all «want» which, while they are not essential, are part of the way of life we have born into.

How do all these things that we want, both goods and services, become available? The answer is — by business activity. It is business that produces the food, clothing, shelter, furniture, etc., that we all need. It supplies us with all our means of transport, from the simple bicycle to the airliner. It provides all our entertainment, from children’s comics to the television programmes.

Business activity may be defined as any activity that creates goods or services to satisfy human «wants».

Business activity is sometimes described as «wealth-creating» activity. The «wealth» we are talking about is an abundance of goods and services. When cars led off the production line every thirty seconds, or batches of bread come piping hot and golden brown from the ovens of some huge bakery — that is wealth. All nations have to overcome problems of transport, distribution, warehousing and marketing to bring the goods that have been produced to the consumers who «want» them. When we think of services it is often the other way round. We have to move the people to the services. We need ambulances to take them to hospital, air or road transport to get them to the dentist, or to college or university, etc.

Finally, note that business activity never ceases. We engage in business activity so that we can satisfy human «wants». When we do satisfy these «wants» the very act of satisfaction consumes the useful good or service created and we must start again to supply a further batch.

Economists say that “consumption” destroys production, and we must go back to the beginning again and start another cycle of production. It goes from «wants» through «enterprise», «production», «distribution» and «marketing» to «consumption and satisfaction», and back to «wants» again, as consumption destroys production.