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Lecture:
Main economic issues
Economic science, guided by the principle of rational use of limited resources to satisfy the unlimited needs of people, seeks answers to the questions: what, how and for whom to produce?
What to produce? This means deciding what, in what quantity and of what quality economic goods (goods and services) need to be created.
How to produce? This means deciding what resources and technologies will be used in the production of certain economic goods.
For whom to produce? This means determining for which categories of people (market segment) the goods produced will be intended, for example, toys for children, cosmetics for women.
Economic system is a set of principles and rules of economic relations that arise in the process of production, distribution, exchange and consumption of goods.
Scientists distinguish traditional, planned (command), market and mixed economic systems. Let's consider their characteristic features.
Traditional economic system
The oldest type is the traditional economic system. It is characteristic of primitive society, but also exists in modern countries of South America, Asia and Africa, where resources are very limited.
Signs:
- resolving issues of what, how and for whom to produce is based on traditions (continuity);
- the basis of the economy is agriculture;
- communal form of ownership;
- universal manual labor and primitive production technologies that hinder the growth of labor productivity;
- subsistence farming, production aimed at satisfying one’s own needs and not for sale;
- low trade turnover, correspondingly low level of commodity-money relations;
- closed society, the existence of caste or class divisions that do not allow people to move from one social group to another, as a result of which socio-economic progress is hampered.
The traditional economic system has its advantages and disadvantages. The advantages are continuity, ease of organization of production, and minor environmental pollution. The disadvantages are low incomes, shortages of consumer goods, and limited economic growth.
Planned economic system
A planned (command) economic system is one of the signs of a totalitarian political regime. This type dominated during the Soviet era, but also functions in modern states, for example, North Korea and Cuba.
Signs:
- the decision of the main economic issues belongs to a centralized state body, which carries out directive planning of production;
- the basis of the economy is agriculture and foreign trade;
- the means of production are owned by the state, and only property intended for running a household can be privately owned;
- the emergence of a social division of labor;
- administrative regulation of prices;
- market monopolization.
Market economic system
A market economy presupposes freedom of entrepreneurial activity, which is guaranteed by the state. The basis of the relationship between producers and consumers is individual interest and personal benefit.
Signs:
- the decision on what, how and for whom to produce belongs to the owner, producer, consumer;
- the basis of the economy is the service sector;
- a variety of forms of ownership is recognized, but private ownership predominates;
- deepening the social division of labor;
- trade relations are developing widely;
- pricing is free and regulated by market laws;
- competition;
- Scientific and technological progress achievements are being widely introduced into production.
The main advantage of a market economy is competition, which is necessary for producers to strive to create quality products and for consumers to have a wide choice of a particular product or service (assortment). Another advantage is the interest of producers in using resources efficiently and meeting the maximum needs of people at minimum costs. This system also has disadvantages. This is income inequality, a significant social gap between the poor and the rich, unemployment, and periodic economic crises. The problem of negative external (side) effects is acute. For example, the operation of a pulp and paper mill causes water pollution (release of waste into water); Increased use of cars by people leads to air pollution. The state is forced to intervene in solving such problems, eliminating market imperfections.
Mixed economic system
This type of economic system combines the features of command and market systems with the predominance of the latter. Therefore, one of the important features of a mixed economy is multi-sector, when the role of both the state and private individuals is significant in production. But this system may also contain features of a traditional economy. For example, perfume production in France is traditional. The role of the state in a mixed economy is great and consists in:
- preventing a monopoly on the production of economic goods (with the exception of strategically important goods, for example, military equipment and weapons, space equipment);
- preventing shortages of goods and services;
- price stabilization;
- ensuring employment of the able-bodied population and providing assistance to disabled citizens (for example, disabled people, pensioners);
- production of public goods (for example, health care and education);
- protection from unscrupulous market participants;
- in the fight against negative externalities of production.
The concept of types of economic systems
In the modern economic space there is a general globalization of processes. The economy has undergone great changes over the past few years, which has led to a new round in the development of world progress. This process is quite complex for the domestic and foreign economy, which causes serious difficulties in changing it. Circumstances indicate that a scientific understanding of the development of the world economic system is necessary.
Definition 1
An economic system is a set of interconnected economic elements that form a certain integrity, the economic structure of society; the unity of relations arising regarding the production, distribution, exchange and consumption of economic goods.
Main characteristics of economic systems
Typically, the following types of economic systems are distinguished:
- traditional,
- market,
- mixed,
- team
The traditional economic system is based on subsistence production. This system has existed for a long time. The main features of the traditional economic system are communalism, caste, and division into classes. Hand tools are used in production. Generations tend to make decisions of the previous generation. This system is characterized by tradition and low productivity with conservatism regarding production.
A market economic system is formed from a system of commodity production. This system is dominated by private property and free pricing. The state is assigned the role of observer in regulating the economic situation through laws. If “distortions” occur, they are corrected by the so-called “invisible hand of the market”. What, for whom and how to produce is determined by the market.
A command economic system is the opposite of a market system. Its main characteristic is centralization in the questions: what, how and for whom to produce. Demand for goods is estimated based on statistical data and the state plan. A distinctive feature of a command economic system is monopoly and high concentration of production. Private property does not develop, since there are significant obstacles to its existence. The main disadvantage of this system is the shortage of quality goods, since there is practically no competition, so the manufacturer does not increase the requirements for its own production. The positive aspects are resources - human resources and quick response to any external threats.
A mixed economic system is present in almost all countries. This system combines elements of all systems and assumes economic freedom and the regulatory role of the state. The implementation of entrepreneurship in this system shifts from one economic system to another, being somewhere between the poles (market and command systems). The function of the state is antimonopoly, tax and social regulation, which in its own way contributes to the growth of the country’s economy and improves the quality of life.
Note 1
At the moment, the economies of the world's countries contain elements of all economic systems - both market and command, as well as remnants of the traditional one. The most important industries from the point of view of the state are characterized by elements of a planned economy. Private companies own the consumer sector entirely. But at the present stage, there are still certain goods that cannot be created without the traditional economic system, for example, folk costumes. Therefore, elements of this system still exist in many countries.
At all historical stages of human development, society faces the same question: what, for whom and in what quantities to produce, taking into account limited resources. The economic system and types of economic systems are precisely designed to solve this problem. Moreover, each of these systems does this in its own way, each of them has its own advantages and disadvantages.
Concept of economic system
An economic system is a system of all economic processes and production relations that has developed in a particular society. This concept refers to an algorithm, a way of organizing the production life of society, which presupposes the presence of stable connections between producers on the one hand and consumers on the other.
The following processes are the main ones in any economic system:
Production in any of the existing economic systems is carried out on the basis of appropriate resources. Some elements still differ in different systems. We are talking about the nature of management mechanisms, motivation of producers, etc.
Economic system and types of economic systems
An important point in the analysis of any phenomenon or concept is its typology.
Characteristics of types of economic systems, in general, comes down to the analysis of five main parameters for comparison. This:
- technical and economic parameters;
- the ratio of the share of state planning and market regulation of the system;
- property relations;
- social parameters (real income, amount of free time, labor protection, etc.);
- mechanisms of system functioning.
Based on this, modern economists distinguish four main types of economic systems:
- Traditional
- Command-planned
- Market (capitalism)
- Mixed
Let's take a closer look at how all these types differ from each other.
Traditional economic system
This economic system is characterized by gathering, hunting and low-productivity farming based on extensive methods, manual labor and primitive technologies. Trade is poorly developed or not developed at all.
Perhaps the only advantage of such an economic system is the weak (almost zero) and minimal anthropogenic load on nature.
Command-plan economic system
A planned (or centralized) economy is a historical type of economic management. Nowadays it is not found anywhere in its pure form. Previously, it was typical for the Soviet Union, as well as some countries in Europe and Asia.
Today they talk more often about the shortcomings of this economic system, among which it is worth mentioning:
- lack of freedom for producers (commands to produce “what and in what quantities” were sent from above);
- dissatisfaction with a large number of economic needs of consumers;
- chronic shortages of some goods;
- emergence (as a natural reaction to the previous point);
- the inability to quickly and effectively implement the latest achievements of scientific and technological progress (due to which the planned economy always remains one step behind other competitors in the global market).
However, this economic system also had its advantages. One of them was the possibility of ensuring social stability for everyone.
Market economic system
The market is a complex and multifaceted economic system that is typical for most countries of the modern world. Also known by another name: capitalism. The fundamental principles of this system are the principles of individualism, free enterprise and healthy market competition based on the relationship between supply and demand. Private property dominates here, and the main incentive for production activity is the thirst for profit.
However, such an economy is far from ideal. The market type of economic system also has its disadvantages:
- uneven distribution of income;
- social inequality and social vulnerability of certain categories of citizens;
- instability of the system, which manifests itself in the form of periodic acute crises in the economy;
- predatory, barbaric use of natural resources;
- weak funding for education, science and other non-profit programs.
In addition, there is also a fourth type - a mixed type of economic system, in which both the state and the private sector have equal weight. In such systems, the functions of the state in the country’s economy are reduced to supporting important (but unprofitable) enterprises, financing science and culture, controlling unemployment, etc.
Economic system and systems: examples of countries
It remains to consider examples that are characterized by one or another economic system. For this purpose, a special table is presented below. The types of economic systems are presented in it taking into account the geography of their distribution. It is worth noting that this table is very subjective, since for many modern states it can be difficult to unambiguously assess which system they belong to.
What type of economic system is in Russia? In particular, Moscow State University professor A. Buzgalin described the modern Russian economy as a “mutation of late capitalism.” In general, today the country’s economic system is considered to be transitional, with an actively developing market.
Finally
Each economic system responds differently to the three “what, how and for whom to produce?” Modern economists distinguish four main types: traditional, command-planned, market, and mixed systems.
Speaking about Russia, we can say that in this state a specific type of economic system has not yet been established. The country is in a transitional stage between a command economy and a modern market economy.
When talking about a planned-command or market economic system, it should be remembered that in their pure form they can only be found on the pages of scientific works. Real economic life, on the contrary, is always a mixed economic system.
The modern economic system of most developed countries of the world is of a mixed nature. Many national and regional economic problems are solved here by the state.
As a rule, today the state participates in the economic life of society for two reasons:
- Some needs of society due to their specificity (maintaining the army, developing laws, organizing street traffic, fighting epidemics, etc.) can be satisfied better than is possible on the basis of market mechanisms alone;
- it can mitigate the negative consequences of market mechanisms (too large differences in the wealth of citizens, damage to the environment from the activities of commercial firms, etc.).
Therefore, for the civilization of the late 20th century. The mixed economic system became predominant.
A mixed economic system is based on private ownership of economic resources, although in some countries (France, Germany, Great Britain, etc.) there is a fairly large public sector. It includes enterprises whose capital is wholly or partly owned by the state (for example, the German airline Lufthansa), but which:
- do not receive plans from the state;
- work according to market laws;
- forced to compete on equal terms with private firms.
In these countries, major economic issues are largely decided by markets. They also distribute the predominant part of economic resources. At the same time, part of these resources is centralized and distributed by the state through command mechanisms in order to compensate for some of the weaknesses of market mechanisms.
In Fig. Figure 2.3 shows a scale that roughly represents which economic systems various states belong to today.
Rice. 2.3. Types of economic systems: 1 - USA; 2 - Japan; 3 - India; 4 - Sweden, England; 5 - Cuba, North Korea; 6 - some countries of Latin America and Africa; 7 - Russia
A mixed economic system is a way of organizing economic life in which land and capital are privately owned, and the distribution of limited resources is carried out both by markets and with significant government participation.
Here, the arrangement of numbers symbolizes the degree of proximity of the economic systems of various countries to one type or another. The pure market system is most fully implemented in some countries of Latin America and Africa. Factors of production there are already predominantly privately owned, and government intervention in resolving economic issues is minimal.
In countries such as the USA and Japan, private ownership of factors of production dominates, but the role of the state in economic life is so great that we can talk about a mixed economic system. At the same time, the Japanese economy has retained more elements of the traditional economic system than the United States. This is why the number 2 (Japanese economy) is slightly closer to the top of the triangle, symbolizing the traditional system, than the number 1 (US economy).
In the economies of Sweden and Great Britain, the role of the state in the distribution of limited resources is even greater than in the USA and Japan, and therefore the number 4, which symbolizes them, is to the left of the numbers 1 and 2.
The command system has now been preserved in its most complete form in Cuba and North Korea. Here private property is eliminated, and the state distributes all limited resources.
The existence of significant elements of the traditional economic system in the economy of India and similar countries in Asia and Africa (although the market system predominates here too) determines the placement of the corresponding number 3.
Where is the place of modern Russia on such a conventional scale?
The location of the number 7 symbolizing it is determined by the fact that:
- the foundations of the command system in our country have already been destroyed, but the role of the state in the economy is still very large;
- the mechanisms of the market system are still being formed (and are still less developed than even in India);
- factors of production have not yet completely passed into private ownership, and such an important factor of production as land is actually in the collective ownership of members of former collective and state farms, which were only formally transformed into joint-stock companies.
What kind of economic system is Russia's future path towards?
The economic system represents a special mechanism created to solve the two-sided problems of rarity and release. Since economic resources are limited compared to society's needs for goods and services, certain ways of allocating them between alternative uses are necessary.
Economic system- an ordered set of socio-economic and organizational relations between producers and consumers of goods and services.
The identification of economic systems may be based on various criteria:
The economic state of society at a certain stage of development (Russia during the era of Peter I, Nazi Germany);
- stages of socio-economic development (socio-economic formations in Marxism);
- economic systems characterized by three groups of elements: spirit (the main motives of economic activity), structure and substance in the German historical school;
Types of organization associated with ways of coordinating the actions of economic entities in ordoliberalism;
A socio-economic system based on two characteristics: the form of ownership of economic resources and the method of coordinating economic activities.
In modern scientific and educational literature, classification according to the last of the identified criteria is most widespread. Based on this, traditional, command, market and mixed economies are distinguished.
Traditional economics based on the dominance of traditions and customs in economic activity. Technical, scientific and social development in such countries is very limited, because it comes into conflict with the economic structure, religious and cultural values. This model of the economy was characteristic of ancient and medieval society, but persists in modern underdeveloped states.
Command economy due to the fact that most enterprises are state owned. They carry out their activities on the basis of state directives; all decisions on the production, distribution, exchange and consumption of material goods and services in society are made by the state. This includes the USSR, Albania, etc.
Market economy determined by private ownership of resources, the use of a system of markets and prices to coordinate and manage economic activity. In a free market economy, the state does not play any role in the distribution of resources; all decisions are made by market entities independently, at their own peril and risk. Hong Kong was usually included here.
In today's real life there are no examples of a purely command or purely market economy, completely free from the state. Most countries strive to organically and flexibly combine market efficiency with government regulation of the economy. Such an association forms a mixed economy.
Mixed economy represents an economic system where both the state and the private sector play an important role in the production, distribution, exchange and consumption of all resources and material goods in the country. At the same time, the regulatory role of the market is complemented by the mechanism of state regulation, and private property coexists with public-state property. The mixed economy arose in the interwar period and to this day represents the most effective form of management. There are five main problems solved by a mixed economy:
q provision of employment;
q full use of production capacity;
q price stabilization;
q parallel growth of wages and labor productivity;
q balance of payments equilibrium.
Their achievement was carried out by states in different periods in different ways, taking into account mutual experience. Conventionally, three models of a mixed economy can be distinguished.
Neostatist(France, England, Italy, Japan) is characterized by a developed nationalized sector, active countercyclical and structural policies carried out in accordance with indicative plans, and a developed system of transfer payments.
Neoliberal model(Germany, USA) also involves counter-cyclical measures, but the main emphasis is on the state providing conditions for the normal functioning of the market. It is considered as the most effective regulatory system. The government essentially intervenes only to protect competition.
At the core models of concerted action(Sweden, Holland, Austria, Belgium) is based on the principle of consent of representatives of social parties (government, trade unions, employers). Through special taxes on investments, the government prevents the “overheating” of the economy and regulates the labor market. Special laws affect the relationship between wage growth and labor productivity, and progressive taxation helps equalize income. In the countries of this model, a powerful social security system has been created and an active structural policy is being pursued.
Currently, Russia has an eclectic economic system consisting of elements of an administrative-command system, a market economy of free competition and a modern market system. In the former Soviet Asian republics, elements of the traditional system are also added to this conglomerate. Therefore, it is quite arbitrary to call the property relations and organizational forms existing in our country an economic system (even an eclectic one). An important feature of the system is missing - its relative stability. After all, in domestic economic life everything is in motion and has a transitional character. This transition, apparently, stretches over decades, and from this point of view, a transition economy can also be called a system.
Transition economy- an economy that is in a state of change, transition from one state to another, both within one type of economy and from one type of economy to another, occupies a special place in the development of society.
It should be distinguished from a transition economy transition period in the development of society, during which there is a change from one type of economic relations to another.
For the transition economies of the countries of the former “socialist camp” today there is a wide range of prospects: from degradation to a dependent, increasingly lagging economic system of developing countries to transformation into new industrial states; from economies like the Chinese that retain “socialist” attributes and are based on public property to right-wing liberal systems based on private property that began with the implementation of the principles of “shock therapy.” At the same time, three fundamental trends intersect in the transition economy of each country. The first of them is the gradual dying (both natural and artificial) of “mutant socialism”, which received its name in comparison not with a theoretical ideal, but with a real trend of socialization existing in world practice. The second trend is associated with the genesis of the relations of the post-classical world capitalist economy (modern market economy based on private-corporate property). The third trend is the strengthening of the process of socialization - the increasing role of public (group, national and international) values in economic development and the humanization of public life as a prerequisite for any modern transformations. It is obvious that in such conditions the final choice of the economic system in Russia will ultimately depend on the balance of political forces in the country, the nature of the ongoing reforms, the scale and effectiveness of the ongoing reforms in all spheres of public life, as well as on the adaptation of society to changes.
To summarize, we note that economic systems are multidimensional. They can be formalized: ES = f (A 1, A 2, A 3 ... An). In other words, the economic system (ES) is determined by its properties (A), where there are n such properties. This means that an economic system cannot be defined in terms of a single characteristic.
