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The main features of a market economy: the basis of the economy is private ownership of the means of production; variety of forms of ownership and management; free competition; market pricing mechanism; self-regulation of the market economy; contractual relations between business entities; minimum government intervention in the economy |
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Main advantages: |
Main disadvantages: |
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1) stimulates high production efficiency; 2) fairly distributes income according to the results of work; 3) does not require a large control apparatus, etc. |
reinforces social inequality in society; causes instability in the economy; indifferent to the damage that business can cause to people and nature, etc. |
Market economy of free competition formed in the 18th century, but a significant part of its elements entered the modern market economy.
The main features of the market economy of free competition:
private ownership of economic resources;
market mechanism economic regulation based on free competition;
a large number of independent sellers and buyers of each product.
Modern market economy (modern capi talism) turned out to be the most flexible, it is able to rebuild, adapt to changing internal and external conditions. Its main features:
variety of forms of ownership;
development of scientific and technological progress;
active influence of the state on the development of the national economy.
Traditional economy - this is an economic system into which scientific and technological progress penetrates with great difficulty, because. conflicts with tradition. It is based on backward technology, widespread manual labor, and a mixed economy. All economic problems are solved in accordance with customs and traditions.
The main features of the traditional economy:
private ownership of the means of production and the personal labor of their owners;
extremely primitive technology associated with the primary processing of natural resources;
communal farming, natural exchange;
dominance of manual labor
Administrative command economy (centrally planned economy) is an economic system in which the main economic decisions are made by the state, which assumes the functions of organizing the economic activity of society. All economic and natural resources are owned by the state. The administrative-command economy is characterized by centralized directive planning, enterprises act in accordance with the plan assignments brought to them from the “center” of management.
The main features of the administrative-command economymiki:
basis - state property;
absolutization state property on economic and natural resources;
tight centralization in distribution economic resources and results economic activity;
4) significant restrictions or prohibitions on private entrepreneurship.
Positive aspects of administrative-command economics
By concentrating resources, it can ensure the achievement of the most advanced positions in science and technology (the achievements of the USSR in the field of astronautics, nuclear weapons, etc.).
The administrative-command economy is able to ensure economic and social stability. Every person is guaranteed a job, stable and constantly increasing wage, free education and medical services, people's confidence in the future, etc.
The administrative-command economy has proved its viability in critical periods of human history (war, liquidation of devastation, etc.).
Negative aspects of the administrative-commandeconomy
Excludes private ownership of economic resources.
Leaves a very narrow framework for free economic initiative, excludes free enterprise.
The state completely controls the production and distribution of products, as a result of which free market relationships between individual enterprises are excluded.
mixed economy organically combines the advantages of a market, administrative-command, and even traditional economy and thereby, to a certain extent, eliminates the shortcomings of each of them or mitigate their negative consequences.
Russia was practically the first in the world to apply the experience of an administrative-command economy in the form of state socialism. On the present stage Russia is beginning to use the basic elements of a mixed economy.
mixed economy- the type of modern socio-economic system that is taking shape in the developed countries of the West and some developing countries at the stage of transition to a post-industrial society. The mixed economy is of a multistructural nature, it is based on private property interacting with state property (20-25%) On the basis of various forms of ownership, various types of economy and entrepreneurship function (large, medium, small and individual entrepreneurship; state and municipal institutions)). A mixed economy "is a market system with its inherent social orientation of the economy and society as a whole. The interests of the individual with its multilateral needs are put forward at the center of the country's socio-economic development. A mixed economy has its own characteristics in different countries and at different stages of development Thus, the mixed economy in the United States is characterized by the fact that state regulation is represented here to a much lesser extent than in other countries, because the size of state property is small.The main position in the US economy is occupied by private capital, the development of which with stimulated and regulated by state structures, legal norms, tax system. Therefore, here, to a lesser extent than in Europe, mixed enterprises are common. Nevertheless, a certain form of public-private enterprise has developed in the United States through a system of government laws.
For each economic system characterized by their national models of economic organization. Let's consider some of the most famous national models of economic systems.
American model is built on a system of encouragement, entrepreneurial activity, development of education and culture, enrichment of the most active part of the population. Low-income segments of the population are provided with various benefits and allowances to maintain a minimum standard of living. This model is based on a high level of labor productivity and a mass orientation towards achieving personal success. The problem of social equality does not stand here at all.
Swedish model is characterized by a strong social orientation, focused on reducing wealth inequality through the redistribution of national income in favor of the poorest segments of the population. This model means that the function of production falls on private enterprises operating on a competitive market basis, and the function of ensuring a high standard of living (including employment, education, social insurance) and many elements of infrastructure (transport, R&D) - on the state.
The main thing for the Swedish model is the social orientation due to high taxation (more than 50% of GNP). The advantage of the Swedish model is the combination of relatively high rates economic growth with a high level of full employment, ensuring the well-being of the population. Unemployment has been reduced to a minimum in the country, differences in the incomes of the population are small, and the level of social security of citizens is high.
Japanese model is characterized by a certain lag in the standard of living of the population (including the level of wages) from the growth of labor productivity. Due to this, they achieve a reduction in the cost of production and a sharp increase in its competitiveness in the world market. Such a model is possible only with an exceptionally high development of national self-consciousness, the priority of the interests of society to the detriment of the interests of a particular person, the readiness of the population to make certain sacrifices for the sake of the country's prosperity. Another feature of the Japanese development model is associated with the active role of the state in the modernization of the economy.
The Japanese economic model is characterized by advanced planning and coordination between the government and the private sector. The economic planning of the state is advisory in nature. Plans are government programs that orient and mobilize individual parts of the economy to fulfill national tasks. The Japanese model is characterized by the preservation of its traditions and at the same time actively borrowing from other countries everything that is needed for the development of the country.
Russian model of transitional economy. After the long domination of the administrative-command system in the Russian economy in the late 1980s - early 1990s. began the transition to a market economy. The main task of the Russian model of transitional economy is the formation of an effective market economy with a social orientation.
The conditions for the transition to a market economy were notfavorable for Russia. Among them:
a high degree of nationalization of the economy;
the almost complete absence of a legal private sector with an increase in the shadow economy;
the long existence of a non-market economy, which weakened the economic initiative of the majority of the population;
distorted structure national economy, where the military-industrial complex played the leading role, and the role of other industries National economy has been reduced;
non-competitiveness of industries and agriculture.
Basic conditions for the formation of a market economyin Russia:
development of private entrepreneurship based on private property;
creation of a competitive environment for all business entities;
an effective state that provides reliable protection of property rights and creates conditions for effective growth;
Any society, no matter how rich or poor it is, decides three basic questions of the economy: what goods and services should be produced, how and for whom. These three fundamental questions of economics are crucial (Figure 1.1).
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Which of the possible goods and services should beproduced in the region and at the present time ? |
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What combination of production resourceswhat technology should be used to produce selected of the possible optionsproducts and service ? |
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Who will buy the selected goods and services,pay for them while benefiting? How should gross income be distributed?society from the production of these goods and services? For whom? |
Basic questions of economics
Which of the goods and services should be produced and in whichhow many? An individual can provide himself with the necessary goods and services in various ways: produce them on his own, exchange them for other goods, receive them as a gift. Society as a whole cannot have everything immediately. Because of this, it must decide what it would like to have immediately, what it would be possible to wait to receive, and what to refuse altogether. What needs to be produced at the moment: ice cream or shirts? A small number of expensive quality shirts or a lot of cheap ones? Is it necessary to produce less consumer goods, or is it necessary to produce more industrial goods (machinery, machine tools, equipment, etc.), which will increase production and consumption in the future?
Sometimes the choice can be quite difficult. There are underdeveloped countries that are so poor that the efforts of most of the labor force are spent only to feed and clothe the population. In such countries, in order to raise the standard of living of the population, it is necessary to increase production volumes, but this requires the restructuring of the national economy, the modernization of production.
How should goods and services be produced? There are various options for the production of the entire set of goods, as well as each economic good separately. By whom, from what resources, with the help of what technology should they be produced? Through what organization of production? There is far from one option for building a specific house, school, college, car. The building can be both multi-storey and single-storey, the car can be assembled on a conveyor or manually. Some buildings are built by private individuals, others by the state. The decision on the production of cars in one country is made by a state body, in another by private firms.
For whom should the product be produced? Who canuse the goods and services producedin the country? Since the quantity of goods and services produced is limited, the problem of their distribution arises. To satisfy all needs, it is necessary to understand the mechanism of product distribution. Who should use these products and services, benefit? Should all members of society receive the same share or not? What should be given priority to intelligence or physical strength? Will the sick and the old eat their fill, or will they be left to fend for themselves? Solutions to these problems determine the goals of society, the incentives for its development.
The main economic problems in different socio-economic systems are solved in different ways. For example, in a market economy, all answers to basic economic questions (what, how, for whom) are determined by the market: demand, supply, price, profit, competition.
“What” is decided by solvent demand, by the vote of money. The consumer decides for himself what he is willing to pay money for. The manufacturer himself will strive to satisfy the desires of the consumer.
The "how" is decided by the manufacturer, who seeks to make a big profit. Since price fixing does not depend on him alone, in order to achieve his goal in a competitive environment, the producer must produce and sell as many goods as possible and at a lower price than his competitors.
"For whom" is decided in favor of different groups of consumers, taking into account their incomes.
The market economy has the following features:
· private property;
Various types of forms of private property make it possible to ensure economic self-sufficiency and independence of economic entities.
· free enterprise;
economic freedom gives the manufacturer the opportunity to choose the types and forms of activity, and the consumer the opportunity to buy any product. The market economy is distinguished by consumer sovereignty - the consumer decides what should be produced.
· pricing based on the mechanism of supply and demand;
Thus, the market self-regulatory function. Provides a rationally efficient way of production. Prices in a market system are not set by anyone, but are the result of the interaction of supply and demand.
· competition;
The competition generated by freedom of enterprise and freedom of choice forces producers to produce exactly the goods that buyers need, and to produce them in the most efficient way.
the limited role of the state. The state only monitors the economic responsibility of the subjects of market relations - it makes enterprises liable for obligations with their property.
A set of macroeconomic indicators of a healthy market-type economic system:
・High pace GDP growth(GNP), within 2-3% per year;
· Low, no more than 4-5% annual inflation growth;
· State budget deficit not higher than 9.5% of GDP;
The unemployment rate is not higher than 4-6% of the economic active population countries;
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Non-negative balance of payments of the country.
The core of the market system is the market mechanism, the interaction of the elements of which was discussed above. There is plenty of evidence that this is the most effective way to regulate today. economic processes.
The main elements of the market infrastructure: financial market; the market of production factors; market for goods and consumer services.
All these elements are interconnected, and if they are normally balanced, then the economy functions without failures.
Modern market- this is a complex system of relationships between producers and consumers, sellers and buyers, their economic relations, including direct direct multi-link contacts with the participation of intermediaries.
Its advantages include:
1. economic democracy - freedom of choice and actions of consumers and buyers (they are independent in making their decisions, concluding transactions);
2. efficient allocation of resources;
3. flexibility, high adaptability to changing conditions, the ability to meet a variety of needs, improve the quality of goods and services, and quickly correct imbalances.
4. the ability to meet a variety of needs, improve the quality of goods and services.
5. initiation of the implementation of the achievements of the developing scientific and technological progress.
6. the ability to function in uncomfortable conditions of limited information.
Imperfections, or, as they are often called, market failures, manifest themselves in:
1. The market is not capable of resisting monopolistic tendencies. In the conditions of the market elements inevitably arise monopoly structures limiting freedom of competition. When out of control market environment monopolies are formed and strengthened. Unjustified privileges are being created for a limited circle of market participants. In order to maintain extremely high prices, monopolists artificially reduce production. This makes it necessary to regulate prices, say, for the products of raw material monopolies, electricity, and transport.
2. The market is not interested in and unable to produce public goods (“public goods”). These goods are either not produced by the market at all, or supplied to them in insufficient quantities. The peculiarity of public goods is that everyone can use them, but is not obliged to pay for them. In addition, it is usually impossible to limit their use.
3. The market mechanism is not suitable for eliminating external (side) effects (externalities). Economic activity in the conditions of the market affects the interests of not only its direct participants, but also other people. Its consequences are often negative. As social wealth grows, the problem of externalities becomes more acute. The increase in the number of cars in use is accompanied by air pollution. The market itself is unable to eliminate or compensate for the damage caused by externalities. An agreement between the parties concerned without external interference can be achieved in rare cases where the negative effect is negligible. In practice, when serious problems arise, state intervention is necessary. It introduces strict standards, restrictions, uses a system of fines, defines the boundaries that economic activity participants are not entitled to cross.
4. The market does not have the ability to provide social guarantees, to neutralize excessive differentiation in the distribution of income. The market by its very nature ignores social and ethical criteria, i.e. equity in the distribution of resources and income. It does not provide stable employment for the able-bodied population. Everyone must independently take care of their place and society, which inevitably leads to social stratification and increases social tension.
5. The modern market is fraught with the danger of unemployment. The reality of unemployment in a market economy is confirmed by many historical facts. There is no doubt that it arose in mass form precisely in countries with developed commodity production, primarily in England. Moreover, the largest relative overpopulation is closely related to economic crises.
6. The market mechanism generates incomplete and asymmetric information. Only in a fully competitive economy do all market participants have sufficiently comprehensive information about prices and prospects for the development of production. But competition itself forces firms to hide the real data on the state of affairs. Information costs money, and economic agents - producers and consumers - possess it to varying degrees.
7. The functioning of market relations is associated with significant moral costs. AT modern Russia the spread of market relations is accompanied by a sharp decline in morality. Vagrancy, prostitution, drug addiction, child homelessness, contract killings have become commonplace. Thus, the market (even in its developed, civilized form) cannot be understood as something uniquely positive, as a kind of miracle cure for economic and social disasters. On the contrary, it is a very complex, contradictory, one might say, double-edged phenomenon.
Integrating function consists in connecting the sphere of production (producers) and the sphere of consumption (consumers), as well as intermediary traders, including them in the general process of active exchange of products of labor and services. Without a market, production cannot serve consumption, and the consumer cannot satisfy his needs. The market contributes to the deepening of the social division of labor and the growth of integration processes in the economy. This function is relevant now for Russia and can serve as an important argument in favor of concluding an economic agreement between the republics and regions to create conditions for the functioning of a single all-Russian market.
Regulating function involves the impact of the market on all spheres of the economy, ensures the coordination of production and consumption in the assortment structure, the balance of supply and demand in terms of price, volume and structure, proportionality in production and exchange between regions, spheres of the national economy. Constant fluctuations in prices not only inform about the state of affairs, but also regulate economic activity. Rising price is a signal to expand production; falling price - a signal to reduce it. Information provided by the market forces manufacturers to reduce costs and improve product quality. Figuratively speaking, there is a regulating “invisible hand” on the market, about which Adam Smith wrote: “The entrepreneur has in mind only his own interest, pursues his own benefit, and in this case he is guided by an invisible hand to a goal that was not at all part of his intentions. . In pursuing his own interests, he is often more in an efficient way serves the interests of society than when it consciously seeks to serve them.
Stimulating function consists in encouraging producers to create new products, necessary goods at the lowest cost and obtaining sufficient profit; in stimulating scientific and technological progress and on its basis - the intensification of production and the efficiency of the functioning of the entire economy. The fulfillment by the market of a stimulating function is very important for the development of the economy: without market pressure, the employees of an enterprise will elect directors not of the best specialists, but of the most popular and less demanding people. As a result, there is a drop in production volumes and the level of individual material well-being.
Pricing (equivalent) function- this is the establishment of value equivalents for the exchange of products. At the same time, the market compares the individual labor costs for the production of goods with the social standard, i.e. compares costs and results, reveals the value of a product by determining not only the amount of labor expended, but also its benefits. Unlike the administrative-command system in a market economy, this assessment occurs not before the exchange, but during it. The market price is a kind of total, a balance of comparing the costs of producers and the utility (value) of this good for consumers.
Supervisory function market plays the role of the main controller of the final results of production. The market reveals to what extent the needs of buyers correspond not only to the quantity, but also to the quality of goods and services.
Intermediary function. The market acts as an intermediary between producers and consumers, allowing them to find the most profitable options purchase and sale. In a developed market economy, the consumer has the opportunity to choose the best supplier. The seller, from his position, seeks to find and conclude a deal with the most suitable buyer.
Information function. Constantly changing prices for products and resources provide objective information about the required quantity, assortment, quality of goods supplied to the markets. The price that develops in each of the markets contains rich information necessary for all participants in economic (economic) activities. High prices indicate insufficient supply, low prices indicate an excess of goods compared to effective demand. Spontaneously flowing operations turn the market into a giant computer that collects and processes colossal volumes of point information, providing generalized data for the entire economic space that it covers. Market-concentrated information allows each business participant to verify own position with market conditions, adapting their calculations to the demands of the market.
Economy function implies a reduction in distribution costs in the sphere of consumption (costs of buyers for the purchase of goods) and proportionality of demand of the population with wages.
The function of realizing the interests of market entities ensures the interconnection of these interests according to the principle formulated by A. Smith: "Give me what I need, and you will get what you need ...". The economic interest of sellers is to obtain a large income, and the buyer - to meet the needs at the lowest cost. The combination of these interests presupposes the equivalence of a market transaction.
Market structure - this is the internal structure of individual elements of the market; a set of interconnected quantitative and qualitative relationships between the individual elements of the market, characterizing its stable certainty and ensuring the functioning of the market system as a whole.
market system in general, it is characterized by a rich and complex structure, for which a variety of criteria are used to characterize the market system.
Market structure is classified according to different criteria , the most important of which are the following.
1. By economic purpose - market for goods and services, means of production, labor, investment, valuable papers, financial.
2. By geographic location - local, regional, national and global.
3. By degree of restriction of competition- monopolistic, oligopolistic, free, mixed.
4. By industries- automotive, grain, etc.
5. By nature of sales- wholesale and retail.
6. By the specifics of the functioning of the market mechanism and the completeness of the implementation of its regulatory functions: undeveloped, free (perfect), adjustable, deformed .
Undeveloped market characterized by the fact that market relations in it are random; exchange of goods and services - commodity (barter); the functions of the market mechanism are reduced to the differentiation of members of society and the creation of a system of incentives.
Free (perfect) market implies an unlimited number of participants in market relations, free competition between them; the ability to carry out any economic activity; absolute mobility of factors of production; unlimited freedom of movement of capital; availability of complete information about the market for each participant; production of homogeneous goods; the inability to influence the decisions of competitors by non-economic methods; inability to influence prices. In a free market, the market mechanism is the only regulator of economic and social processes.
In conditions regulated market along with the market mechanism, regulatory functions are performed by the state. The regulated market is the result of the humanization of society. The state seeks to soften the blows of the market to the interests of individual members of society, but in such a way as to preserve the motivation for creativity, initiative work and risk in economic activity. At the same time, unjustified state intervention in market relations leads to their deformation.
Deformed Market exists in the conditions of the command-administrative system of the economy. The most important features of market deformation are: the absence of diverse forms of management based on various forms of ownership; natural distribution of factors of production; monopoly of the manufacturer and trader; imbalance of supply and demand; hidden inflation; the flourishing of the shadow economy, etc. The regulation of the economy in a deformed market is carried out by the state through centralized, directive planning.
The market can exist only when its individual parts perform all the necessary functions that ensure the process of social reproduction. That's why the functional structure necessarily implies the presence of its three main segments: the market for goods and services, the capital market and the labor market.
Each of these markets has its own specific structure. So, market for goods and services breaks up into many specialized markets (the market for shoes, food, tourism services, etc.); capital market- to the money capital market and the securities market; labor market- to the market for skilled and unskilled labor, markets for individual specialties.
The modern market is impossible without a developed infrastructure, that is, auxiliary industries and organizations.
Market infrastructure - a set of institutions, systems, institutions, services, enterprises that serve the market and ensure its normal functioning.
The market infrastructure performs the following functions:
makes it easier for market participants to buy or sell goods;
increases the efficiency and efficiency of the work of market entities;
organizes the registration of market relations;
facilitates economic and legal control.
It is customary to distinguish infrastructure of three markets: commodity, financial and labor market.
commodity market infrastructure It is represented by commodity exchanges, wholesale and retail trade enterprises, auctions, fairs, non-exchange intermediary firms.
Financial market infrastructure includes stock and currency exchanges, banks, Insurance companies and funds.
Labor market infrastructure includes labor exchanges, employment and retraining services, regulation of labor migration, etc.
In this way, the main elements of the classical market infrastructure are: trading network, exchanges and banks.
Market economy is an economy in which decisions regarding investment, production and distribution are based on supply and demand, and the prices of goods and services are determined in a free price system. The main defining characteristic of a market economy is that decisions on investment and distribution of means of production are mainly made through markets. This contrasts with a planned economy, where investment and production decisions are embodied in the production plan.
A market economy can range from hypothetical laissez-faire and free markets to regulated markets and interventionists. In fact, this or that model of a market economy does not exist in its pure form, since society and government regulate the economy to different degrees. Most existing market economies include some element of economic planning or government intervention, and thus are classified as mixed economies. The term free market economy is sometimes used interchangeably with market economy, but it can also refer to a laissez-faire or anarchic free market model.
The market economy does not logically presuppose the existence of private ownership of the means of production; a market economy may consist of various kinds of cooperatives, collectives, or autonomous government institutions that purchase and exchange capital goods with each other in a system of free prices. There are many variants of market socialism, some of which include self-governing enterprises (employee-owned); as well as models that include public ownership of the means of production, where the means of production are allocated through markets.
The term market economy, used by itself, can be somewhat misleading. For example, the United States is a mixed economy (a significant share of regulated markets, subsidies Agriculture, large amounts of government funding for research and development, governmental support medicine), but at the same time it is based on the conditions of a market economy. There are different perspectives on how strong the role of the government should be both in relation to the market economy and in addressing the inequality problems that the market brings.
Capitalism generally refers to an economic system where the means of production are largely or wholly privately owned and managed at a profit, and is built on the process of capital accumulation. In general, investment, distribution, income and prices are determined by the markets.
There are different varieties of capitalism with different attitudes towards markets. In the case of laissez faire and free market capitalism, markets are used most widely with little or no government intervention and regulation over prices and the supply of goods and services. In interventionist capitalism, welfare capitalism, and mixed economies, markets continue to play a dominant role, but are regulated to some extent by the government in order to correct market failures or promote growth. social welfare. In state-capitalist systems, markets are heavily regulated by the state, rely on any kind of indirect economic planning, and/or use state-owned enterprises to accumulate capital.
Capitalism has been dominant in the Western world since the end of feudalism, yet most economists believe that modern economy more accurately describes the term "mixed economy", due to the fact that it contains both private and state-owned enterprises. Under capitalism, prices determine the scale of supply and demand. For example, an increased demand for certain goods and services leads to higher prices, and a decrease in demand for certain goods leads to lower prices.
Anglo-Saxon capitalism refers to the form of capitalism predominant in English-speaking countries and is characteristic of the US economy. It contrasts with European models of capitalism such as continental social market model and the Scandinavian model.
Anglo-Saxon capitalism refers to the macroeconomic political regime and capital market structure common to all English-speaking countries. Its main characteristics are low tax rates, more open financial markets, low protection in the labor market, and a less socially responsible state that eschews the collective bargaining (trade union) schemes that are present in continental and northern European models of capitalism.
The East Asian model of capitalism is based on the strong role of public investment and, in some cases, state-owned enterprises. The state takes an active part in promoting economic development through subsidies, promotion of "national champions" and an export-oriented model of economic growth.
Laissez-faire is synonymous with what was called a strictly capitalist free market economy in the early and mid-19th century, which classical liberalism (right-wing liberalism) is ideally suited to achieve. It is generally understood that the necessary components for the functioning of an idealized free market system include the complete absence of state regulation government-provided monopolies (usually classified as coercive monopolies by advocates of the free market), and no taxes or tariffs other than those necessary for the government to provide protection against crime, keep the peace, and property rights and the provision of basic public goods.
Right-liberal proponents of anarcho-capitalism see the state as morally illegitimate and economically unnecessary and destructive.
This model was implemented by Alfred Müller-Armack and Ludwig Erhard after World War II in West Germany. The social market economic model is based on the idea of realizing the benefits of a free market economy, especially economic efficiency and high volumes of goods supply, while avoiding disadvantages such as market failures, disruptive competition, concentration economic power and anti-social consequences of market processes. The goal of the social market economy is to realize the highest prosperity combined with the best social security.
One of the differences from a free market economy is that the state is not passive, but takes active regulatory measures. Social policy objectives include employment, housing, and education policies, as well as a socio-politically motivated balancing of the distribution of income growth. The characteristics of a social market economy are strong competition policies and monetary policy. The philosophical basis for constructing such a model was neoliberalism or ordoliberalism.
Market socialism refers to various types of economic systems where the means of production and dominant economic institutions are either state-owned or jointly owned by private and state entities, but operated according to the rules of supply and demand. This type of market economy has its roots in classical economics in the work of Adam Smith, Ricardo and other socialists and philosophers.
The distinguishing feature between non-market socialism and market socialism is the existence of a market for factors of production and profitability criteria for enterprises. Profits generated from state-owned enterprises can be used in various ways to reinvest in further production, directly fund government and social services, or be distributed to the general public through social dividends or basic system income.
In the models of market socialism by Oscar Lange and Abba Lerner, Lange's theorem states that government agency(called the Central Planning Board) can set prices based on a trial and error approach until they equal the marginal cost of production so as to achieve perfect competition and Pareto optimality. In this model of socialism, firms are state-owned and run by their employees, and profits are distributed to the public in the form of social dividends.
More modern model market socialism, proposed by the American economist John Roemer, is called economic democracy. In this model, socialization is achieved through public ownership of capital in a market economy. The model assumes that the public property bureau will own controlling stakes in public companies, and the resulting profits will be used to public funding and providing a basic income.
Libertarian socialists and leftist anarchists often propose a form of market socialism in which businesses are owned and operated jointly by their employees so that the employee-owners are paid directly from the profits. These joint ventures will compete with each other in the same way that private companies compete in the capitalist market. An example of such economic model there will be mutualism.
Self-governed market socialism was introduced in Yugoslavia by the economists Branko Horvath and Jaroslav Vanek. In the self-managed model of socialism, firms are directly owned by their employees and the board is elected from among the employees. These cooperative firms compete with each other in the market, both in terms of capital goods and sales of consumer goods.
After the reforms of 1978, the People's Republic of China announced the construction of a "socialist market economy", in which most of the economy is state-owned, but state-owned enterprises are reorganized into joint-stock companies, and various state institutions own controlling stakes through the shareholder system. Prices are set largely through a free price system, and state-owned enterprises are not subject to close micro-management by the government's planning agency. A similar "socialist-oriented market economy" system was implemented in Vietnam as a result of reforms in 1986.
However, this system is usually characterized as state capitalism rather than market socialism because it does not have a significant role for employee self-management in firms, and state-owned enterprises keep their profits instead of distributing them to employees or transferring them to the government, and largely function for de facto as private enterprises. The benefits of the entire population as a whole are financed from profits, but they do not go to their employees.
market competition gross unemployment inflation
A market economy is a social system based on the principle of division of labor, when the means of production themselves are in private hands. From the very beginning, in this system, each person works for himself, but in general, these efforts of people are needed to meet the needs of other people, as well as to meet their own needs. On the one hand, each person works to meet the needs of others, and on the other hand, everyone else works to meet the needs of an individual.
It turns out that each means of production and the goal of the same production, you can say a person is the meaning of activity and a way to achieve the goals of other people. All of this is controlled by the market. The market rationally directs people's activities to where they will be most needed for other people.
With all this, the market manages, according to the will of man, without forcing him to anything. Thus, the state and the mechanism of social coercion do not interfere in the affairs of the market and in the affairs of people working in this area. Of course, such force can be used to exercise power over people, but only in exceptional cases, when their work threatens the established work of the market economy, or even its existence. Such a force, as it were, gives a guarantee of human life, human health, and the protection of private property. As from physical strength and fraud. So it is from an external ill-wisher. In general, it turns out a kind of environment in which the economy can live and develop normally.
The market economy is characterized as a system based on private property, freedom of choice and competition, freedom of choice and competition, it relies on personal interests, limits the role of government.
The market economy guarantees, first of all, the freedom of the consumer, which is expressed in the freedom of consumer choice in the market of goods and services. The freedom of entrepreneurship is expressed in the fact that each member of society independently distributes its resources in accordance with its interests and, if desired, can independently organize the process of production of goods and services. The individual himself determines what, how and for whom to produce, where, how, to whom, how much and at what price to sell the produced products, how and on what to spend the received proceeds.
Freedom of choice becomes the basis of competition.
The basis of a market economy is private property. It is a guarantee of compliance with the concluded contracts and non-interference of third parties. Economic freedom is the foundation and component freedoms of civil society.
The market economy has the following features:
Private property;
Various types of forms of private property make it possible to ensure economic self-sufficiency and independence of economic entities.
Free enterprise;
Economic freedom gives the producer the opportunity to choose the types and forms of activity, and the consumer the opportunity to buy any product. The market economy is distinguished by consumer sovereignty - the consumer decides what should be produced.
Pricing based on the mechanism of supply and demand;
Thus, the market performs a self-regulatory function. Provides a rationally efficient way of production. Prices in a market system are not set by anyone, but are the result of the interaction of supply and demand.
Competition;
The competition generated by freedom of enterprise and freedom of choice forces producers to produce exactly the goods that buyers need, and to produce them in the most efficient way.
limited role of the state. The state only monitors the economic responsibility of the subjects of market relations - it forces enterprises to answer for their obligations with their property.
A set of macroeconomic indicators of a healthy market-type economic system:
The development of the economy is not a variable development of production from year to year, in some years the growth of production can significantly jump up in others, fall down and then the market economy develops in one year with a large percentage, in another with a smaller one. Cyclicity consists in moving from crisis to crisis. Since crises quite often occur in our country, this is development, since the proportionality between individual independent enterprises is violated. After each crisis, development, although slowly, but upwards, is restored to a certain level. During a crisis, so that the enterprise does not go bankrupt, the government helps by introducing its government funds into its budget - this is such contemporary politics market economy in Russia and abroad. As can be seen from the above, the state significantly helps the market economy during a crisis.
Let us turn to the Marxist definition of “anarchist production”, it quite accurately shows the social structure, the economic system in which there is no subordination to the chief director, who is like a king who expects unquestioning obedience and respect from ordinary workers. Which tells everyone his task and requires its obligatory fulfillment. Here every person is free to choose, he is freed from strict control. Everyone, of his own free will and to the best of his ability, enters the cooperative system. The market takes him exactly where he can fully reveal all his talent and the talent of other people. The market is the most important thing in our life. It is he who governs the entire social structure.
The market is not a place, or a thing, or a property. The market is a variety of processes that rests on the activities of individuals who are united by the division of labor system. At the same time, that assessment of the market is the very force that moves the market and changes it. The market changes due to changes in market prices. For example, because of the number of people who want to buy and who want to sell, the proportion of the exchange is determined. In this market there is nothing paranormal, contradictory to our idea, human nature. In fact, this market process is the result of human work. All market changes can be tracked.
The market process is the sum of all the manipulations of all the participating markets. Market prices say, as if they write the rules, what is better to produce today, what is better not to produce, and how to produce. The market is also a center where all the efforts of its participants meet. And also where efforts diverge in different directions.
But also, the market economy should not be confused with another system, which has been mentioned many times in world history. But which has not been fully put on its feet. It is a system of social interaction based on the division of labor. This system goes by various names such as: planned economy, socialism, state capitalism, capitalism.
Socialism, capitalism or the market economy are mutually exclusive. It is impossible to imagine their paired form. All production can be regulated either by the king or by the market economy.
If a society is built on private property, and suddenly there is public property in it, then immediately there is an agency or municipality of the state that manages this public property. This cannot mean that such an order of the economy is mixed with the socialist economy. The fact that the state manages public property cannot change the economic order.
Thus, the state can pay the losses of the enterprise that are under its wing by taking funds from public funds. By this, funds are mixed into other sectors. Also, the government can apply one of the methods, such as increasing taxes, which can lead to changes in the market. It is the market, and not the government that collects taxes, who decides who will suffer after this, and who will survive. A system in which there is a market cannot possibly be socialist. Even the very concept of socialism is based on the complete absence of the market.
If you look at the economy of the USSR, which depends far and wide on buying and selling (the circulation of money in a market economy), this suggests that the USSR is connected with the capitalist world. It turns out that those who live in the socialist world actively use capitalist methods, although they themselves criticize the capitalist system
The basis of a market economy is a monetary economy, which is based on the division of labor and cannot survive without economic settlement processes. The market economy relies on money prices, and as a result, the market economy continues to exist. Because she's calculable.
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The main features of a market economy: the basis of the economy is private ownership of the means of production; variety of forms of ownership and management; free competition; market pricing mechanism; self-regulation of the market economy; contractual relations between business entities; minimum government intervention in the economy |
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Main advantages: |
Main disadvantages: |
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1) stimulates high production efficiency; 2) fairly distributes income according to the results of work; 3) does not require a large control apparatus, etc. |
reinforces social inequality in society; causes instability in the economy; indifferent to the damage that business can cause to people and nature, etc. |
Market economy of free competition formed in the 18th century, but a significant part of its elements entered the modern market economy.
The main features of the market economy of free competition:
private ownership of economic resources;
a market mechanism for regulating the economy based on free competition;
a large number of independent sellers and buyers of each product.
Modern market economy (modern capi talism) turned out to be the most flexible, it is able to rebuild, adapt to changing internal and external conditions. Its main features:
variety of forms of ownership;
development of scientific and technological progress;
active influence of the state on the development of the national economy.
Traditional economy - this is an economic system into which scientific and technological progress penetrates with great difficulty, because. conflicts with tradition. It is based on backward technology, widespread manual labor, and a mixed economy. All economic problems are solved in accordance with customs and traditions.
The main features of the traditional economy:
private ownership of the means of production and the personal labor of their owners;
extremely primitive technology associated with the primary processing of natural resources;
communal farming, natural exchange;
dominance of manual labor
Administrative command economy (centrally planned economy) is an economic system in which the main economic decisions are made by the state, which assumes the functions of organizing the economic activity of society. All economic and natural resources are owned by the state. The administrative-command economy is characterized by centralized directive planning, enterprises act in accordance with the plan assignments brought to them from the “center” of management.
The main features of the administrative-command economymiki:
basis - state property;
absolutization of state ownership of economic and natural resources;
rigid centralization in the distribution of economic resources and results of economic activity;
4) significant restrictions or prohibitions on private entrepreneurship.
Positive aspects of administrative-command economics
By concentrating resources, it can ensure the achievement of the most advanced positions in science and technology (the achievements of the USSR in the field of astronautics, nuclear weapons, etc.).
The administrative-command economy is able to ensure economic and social stability. Every person is guaranteed a job, stable and constantly increasing wages, free education and medical services, people's confidence in the future, and so on.
The administrative-command economy has proved its viability in critical periods of human history (war, liquidation of devastation, etc.).
Negative aspects of the administrative-commandeconomy
Excludes private ownership of economic resources.
Leaves a very narrow framework for free economic initiative, excludes free enterprise.
The state completely controls the production and distribution of products, as a result of which free market relationships between individual enterprises are excluded.
mixed economy organically combines the advantages of a market, administrative-command, and even traditional economy and thereby, to a certain extent, eliminates the shortcomings of each of them or mitigate their negative consequences.
Russia was practically the first in the world to apply the experience of an administrative-command economy in the form of state socialism. At the present stage, Russia is beginning to use the basic elements of a mixed economy.
mixed economy- a type of modern socio-economic system, emerging in the developed countries of the West and some developing countries at the stage of transition to a post-industrial society. The mixed economy is of a multistructural nature, it is based on private property interacting with state property (20-25%) On the basis of various forms of ownership, various types of economy and entrepreneurship function (large, medium, small and individual entrepreneurship; state and municipal institutions)). A mixed economy "is a market system with its inherent social orientation of the economy and society as a whole. The interests of the individual with its multilateral needs are put forward at the center of the country's socio-economic development. A mixed economy has its own characteristics in different countries and at different stages of development Thus, the mixed economy in the United States is characterized by the fact that state regulation is represented here to a much lesser extent than in other countries, because the size of state property is small.The main position in the US economy is occupied by private capital, the development of which with stimulated and regulated by state structures, legal norms, tax system. Therefore, here, to a lesser extent than in Europe, mixed enterprises are common. Nevertheless, a certain form of public-private enterprise has developed in the United States through a system of government laws.
Each economic system has its own national models of economic organization. Let's consider some of the most famous national models of economic systems.
American model is built on a system of encouragement, entrepreneurial activity, development of education and culture, enrichment of the most active part of the population. Low-income segments of the population are provided with various benefits and allowances to maintain a minimum standard of living. This model is based on a high level of labor productivity and a mass orientation towards achieving personal success. The problem of social equality does not stand here at all.
Swedish model is characterized by a strong social orientation, focused on reducing wealth inequality through the redistribution of national income in favor of the poorest segments of the population. This model means that the function of production falls on private enterprises operating on a competitive market basis, and the function of ensuring a high standard of living (including employment, education, social insurance) and many elements of infrastructure (transport, R&D) - on the state.
The main thing for the Swedish model is the social orientation due to high taxation (more than 50% of GNP). The advantage of the Swedish model is the combination of relatively high rates of economic growth with a high level of full employment, ensuring the well-being of the population. Unemployment has been reduced to a minimum in the country, differences in the incomes of the population are small, and the level of social security of citizens is high.
Japanese model is characterized by a certain lag in the standard of living of the population (including the level of wages) from the growth of labor productivity. Due to this, they achieve a reduction in the cost of production and a sharp increase in its competitiveness in the world market. Such a model is possible only with an exceptionally high development of national self-consciousness, the priority of the interests of society to the detriment of the interests of a particular person, the readiness of the population to make certain sacrifices for the sake of the country's prosperity. Another feature of the Japanese development model is associated with the active role of the state in the modernization of the economy.
The Japanese economic model is characterized by advanced planning and coordination between the government and the private sector. The economic planning of the state is advisory in nature. Plans are government programs that orient and mobilize individual parts of the economy to fulfill national tasks. The Japanese model is characterized by the preservation of its traditions and at the same time actively borrowing from other countries everything that is needed for the development of the country.
Russian model of transitional economy. After the long domination of the administrative-command system in the Russian economy in the late 1980s - early 1990s. began the transition to a market economy. The main task of the Russian model of transitional economy is the formation of an effective market economy with a social orientation.
The conditions for the transition to a market economy were notfavorable for Russia. Among them:
a high degree of nationalization of the economy;
the almost complete absence of a legal private sector with an increase in the shadow economy;
the long existence of a non-market economy, which weakened the economic initiative of the majority of the population;
distorted structure of the national economy, where the military-industrial complex played a leading role, and the role of other sectors of the national economy was reduced;
non-competitiveness of industries and agriculture.
Basic conditions for the formation of a market economyin Russia:
development of private entrepreneurship based on private property;
creation of a competitive environment for all business entities;
an effective state that provides reliable protection of property rights and creates conditions for effective growth;
Any society, no matter how rich or poor it is, decides three basic questions of the economy: what goods and services should be produced, how and for whom. These three fundamental questions of economics are crucial (Figure 1.1).
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Which of the possible goods and services should beproduced in the region and at the present time ? |
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What combination of production resourceswhat technology should be used to produce selected of the possible optionsproducts and service ? |
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Who will buy the selected goods and services,pay for them while benefiting? How should gross income be distributed?society from the production of these goods and services? For whom? |
Basic questions of economics
Which of the goods and services should be produced and in whichhow many? An individual can provide himself with the necessary goods and services in various ways: produce them on his own, exchange them for other goods, receive them as a gift. Society as a whole cannot have everything immediately. Because of this, it must decide what it would like to have immediately, what it would be possible to wait to receive, and what to refuse altogether. What needs to be produced at the moment: ice cream or shirts? A small number of expensive quality shirts or a lot of cheap ones? Is it necessary to produce less consumer goods, or is it necessary to produce more industrial goods (machinery, machine tools, equipment, etc.), which will increase production and consumption in the future?
Sometimes the choice can be quite difficult. There are underdeveloped countries that are so poor that the efforts of most of the labor force are spent only to feed and clothe the population. In such countries, in order to raise the standard of living of the population, it is necessary to increase production volumes, but this requires the restructuring of the national economy, the modernization of production.
How should goods and services be produced? There are various options for the production of the entire set of goods, as well as each economic good separately. By whom, from what resources, with the help of what technology should they be produced? Through what organization of production? There is far from one option for building a specific house, school, college, car. The building can be both multi-storey and single-storey, the car can be assembled on a conveyor or manually. Some buildings are built by private individuals, others by the state. The decision on the production of cars in one country is made by a state body, in another by private firms.
For whom should the product be produced? Who canuse the goods and services producedin the country? Since the quantity of goods and services produced is limited, the problem of their distribution arises. To satisfy all needs, it is necessary to understand the mechanism of product distribution. Who should use these products and services, benefit? Should all members of society receive the same share or not? What should be given priority to intelligence or physical strength? Will the sick and the old eat their fill, or will they be left to fend for themselves? Solutions to these problems determine the goals of society, the incentives for its development.
The main economic problems in different socio-economic systems are solved in different ways. For example, in a market economy, all answers to basic economic questions (what, how, for whom) are determined by the market: demand, supply, price, profit, competition.
“What” is decided by solvent demand, by the vote of money. The consumer decides for himself what he is willing to pay money for. The manufacturer himself will strive to satisfy the desires of the consumer.
The "how" is decided by the manufacturer, who seeks to make a big profit. Since price fixing does not depend on him alone, in order to achieve his goal in a competitive environment, the producer must produce and sell as many goods as possible and at a lower price than his competitors.
"For whom" is decided in favor of different groups of consumers, taking into account their incomes.
