What Is Tertiary Productivity?

by Walter Johnson
Explaining the business cycle keeps many economists busy.

Explaining the business cycle keeps many economists busy.

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Economic theory tends to divide the economic world into three sectors: extraction, manufacturing and service. Tertiary production, therefore, is the production of services. This implies that all tertiary production does not produce any physical thing, but produces services that assist in the selling or use of the manufactured goods themselves. The phrase “tertiary production” is equivocal, since what is being produced is the “human element” in the economy, not the production of any physical thing.


The three sectors of the economy are generally called the first, or primary sector, which refers to agriculture and all extractive industries such as mining. These are the “raw materials” of the economy. The second sector is how these raw materials are used. They are created into things the public wants. The third, or tertiary sector, deals with the communication of these manufactured goods to the public. It is often called the “service” sector.


Definitions of the tertiary sector differ. In general, they have revolved around the idea that they add value to a good, but they do not change its physical form. They add value only to the extent they represent the ability of that sector to transport, sell or analyze these goods. Examples include the legal, sales, maintenance, politics, intellectual, media, banking or transportation professions. The tertiary sector defines the relation of the society as a whole to the mechanized and industrialized economic order.


The service sector does not “produce” in the traditional sense. It makes no physical thing. Tertiary production is the creation of intangible goods. These service and sell physical goods or otherwise connect the general public to them. They relate the consuming public to physical objects within the economy legally, financially, politically or functionally. Primary production sets the foundation and infrastructure for physical goods, manufacturing crafts them from raw materials, and the tertiary sector organizes relations among them. In this sense the service sector is the most advanced and modern of all economic sectors. Tertiary workers do not become important until the economy becomes modern, diversified and complex.


The service sector has traditionally been the main sector of later modernity. Once manufacturing enterprises have created an advanced economy, the service sector comes into its own. A traditional economy focusing entirely on primary production has a tiny service sector, usually money lenders, layers or bureaucrats. A manufacturing economy creates a growth in this sector, and as the economy adjusts to functioning as a manufacturing-oriented and technical economy, the service sector grows. The service sector produces in that it assists the society as a whole in adjusting to the mass production, advanced and technical way of life. As larger manufacturing enterprises are relocated to areas where labor is cheaper, post-modern economies focus more intensely on the “knowledge-based” part of economy life, or the tertiary sector.

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