Three questions of economics and ways of their solutions. economic system
The basic problem of economics can also be presented as a problem of choice. Indeed, if each factor used to satisfy various needs is limited, then there is always the problem of alternative use of it and the search for the best combination of factors of production, that is, the problem of choice. This problem is reflected in the statement three main questions economy.
The three main economic questions are:
What? – goal setting problem. – Which of the possible goods and services should be produced in a given economic space and at a given time?
How? – production problem.- With what combination of production resources, using what technology should the goods and services selected from the possible options be produced?
For whom? – distribution problem.– Who will buy the selected goods and pay, benefiting from them? How should the gross income of society from the production of these goods and services be distributed?
The fourth question, which also inevitably confronts every society, is the question: How? How to get rid of waste generated in the process of life, how, without reducing the level of consumption, to maintain the ecological balance in nature. This recycling problem.
5. Production possibilities in the economic system and the problem of choice.
The production possibilities of an economic system are limited by the rarity of the resources used. Moreover, the limited nature of all economic resources remains and even increases as society develops. This is due not only to the depletion of irreplaceable natural resources but also by the fact that consumption constantly gives impetus to the development of production, that is, new goods and services are created, their qualitative characteristics change, which causes an increase in demand for consumer and investment goods. And every time society is forced to decide which of these goods to produce with available resources and on what scale.
The problem of choice in any economic system (be it a family, a firm, a state) can be illustrated using economic model "Production Possibility Frontier". And also, this model allows you to visually demonstrate such fundamental economic concepts as limited resources, opportunity costs.
To build a model, we will plot the number of commodities (X) along the abscissa, and the number of means of production (Y) along the ordinate (see Fig.).
Means of production (Y)
Consumables (X)
O X B X S
The ABCD curve is called production possibilities frontier, characterizes the maximum possible volumes of production of means of production and consumer goods with the full use of all available resources. Each point on this curve represents a specific combination of these two types of goods (for example, point B represents a combination of X B units of commodities and Y B units of capital goods.
The production possibility frontier graph illustrates the fact that an economy that is fully utilizing productive resources cannot increase the production of any good without sacrificing another good. The functioning of the economy at the frontier of its production possibilities testifies to its efficiency.
Based on this, the choice of a combination corresponding to point F is regarded as unsuccessful for a given society, since it does not allow it to effectively use production resources. Having chosen such a point, we would resign ourselves either to the presence of unused resources (for example, unemployment), or to the low efficiency of their use (for example, with large losses, including working hours). Production on the basis of the choice of point E is generally not feasible, since this point lies beyond the border of the production possibilities of this economic system.
Compare points B and C. By choosing point B, we prefer to produce fewer commodities (X B) and more capital goods (Y B) than choosing point C (X C, Y C). More precisely, when moving from point B to point C, we will receive additional Δ X = OX C - OX B units of consumer goods, sacrificing for this ΔY = OY B - OY C units of means of production. The amount of one good that must be sacrificed to increase the production of another good by one is called opportunity cost or cost of missed opportunities.
Curve ABCD is convex. This is due to the fact that one resource can be used more productively in the production of commodities, others - the means of production.
If new technology, new technological processes are introduced simultaneously and evenly in all industries, then the production possibility frontier AD will shift to the position of the dotted line A 1 D 1 , the production possibilities of both means of production and consumer goods with the same resources will increase approximately equally ( see fig.).
If, on the other hand, innovations are carried out mainly in industries that produce means of production, the increase in the area of production possibilities will be skewed to the right (see Fig.).
economic system
economic system(English) economic system) - the totality of all economic processes taking place in society on the basis of property relations that have developed in it and economic mechanism. In any economic system, the primary role is played by production in conjunction with distribution, exchange, and consumption. In all economic systems, production requires economic resources, and the results economic activity distributed, exchanged and consumed. At the same time, there are also elements in economic systems that distinguish them from each other:
- socio-economic relations;
- organizational and legal forms of economic activity;
- economic mechanism;
- system of incentives and motivations for participants;
- economic relations between enterprises and organizations.
The main types of economic systems are listed below.
The economic system in different scientific schools
The concept of an economic system (its content, elements and structure) depends on economic school. In the neoclassical paradigm, the description of the economic system is revealed through micro- and macroeconomic concepts. The subject of the neoclassical is defined as the study of the behavior of people who maximize their utility in the environment. limited resources for unlimited needs. The main elements are: firms, households, state.
Economic systems are also studied from the point of view of other theoretical schools directly related to economic theory. From the point of view of researchers of the modern post-industrial society, the post-industrial economy (neo-economics, "information society" or "knowledge society") is born as a special technological order that significantly modifies economic and social systems as a whole. In the “development economics” paradigm, a special group of “third world” countries is singled out, where there are a number of important patterns: institutional structure, macroeconomic dynamics, and a special model. Thus, development economics considers a class of special economic systems. In contrast to the dominant concepts of neoclassicism and neoinstitutionalism, the historical school emphasizes the historically established differences in national economic systems.
Parameters for comparing economic systems
Technical-economic and post-economic parameters
Economic systems are studied from the point of view of technological structures. In terms of structure, these are: pre-industrial economic systems, industrial and post-industrial economic systems. An important parameter for post-industrial systems is the degree of development of creative activity and its role in the economy. To measure it, measurable parameters of the level of education are usually used, for example, the proportion of people with higher education, the structure of professional employment, etc. The most important characteristic is the assessment in the economic system of a measure to solve environmental problems. Demographic parameters allow answering questions related to the approach of the economic system to a post-industrial society, and these parameters are directly related to: life expectancy, infant mortality, morbidity, and other parameters of the health of the nation. Specific gravity post-industrial technologies is usually calculated by the share of people employed in the production of various industries in the total GDP.
The ratio of the plan and the market (resource allocation)
These parameters are especially relevant for countries with economies in transition. A description is given of the mechanisms of state planning of the economy, the development of commodity-money relations, measures for the development of natural economy, a measure of the development of the shadow economy. Characteristics of market development: a measure of the development of market institutions, a measure of market self-organization (competition), market saturation (no shortage), market structure. Regulatory development measures: antimonopoly regulation; a measure of the development of state regulation (selective regulation, countercyclical regulation, programming); a measure of the development of regulation by public associations. A more detailed study of the role of the state in the economy is carried out in the theory of public choice, which considers the decision-making process of the government, the system of social contract (constitutional economics), and so on. .
Ownership comparison options
When analyzing economic systems, a characteristic is given of the ratio of the shares of state, cooperative and private enterprises. However, this characterization is formal; for a deeper characterization of the economic system, qualitative and quantitative characteristics are used to describe the essence of the forms and methods of controlling property and its appropriation. For example, for countries with economies in transition, such a characteristic can be given by answering the following questions:
- a measure of the concentration of power in the hands of the bureaucratic party-state apparatus and the isolation of the state from society (workers do not participate in the appropriation of social wealth);
- degree of centralization/decentralization of state property (“transfer” of some management functions to the enterprise level) and, for example, nationalization of cooperative property;
- a measure of the decomposition of the state-bureaucratic pyramid of economic power and the formation of "closed departmental systems", the strengthening of power on the ground, in the regions.
Over time, the economic system can democratize, with more ownership and appropriation given to businesses and individuals.
An important characteristic of property relations is the form of ownership, what is the share of enterprises: wholly owned by the state; joint-stock enterprises, the controlling stake of which is in the hands of the state; cooperatives and collective enterprises; joint-stock enterprises, the controlling stake of which is in the hands of employees; joint-stock enterprises, where the controlling stake is owned by individuals and private corporations; private personal enterprises using hired labor; based on the personal labor of owners; enterprises owned by foreigners; own public organizations; various types of joint ventures.
Comparative analysis of social parameters
Level and dynamics of real incomes . The "price" of the real income received (duration of the working week, family working time fund, labor intensity). The quality of consumption (market saturation, time spent in the sphere of consumption). Share of free time, directions of its use. The quality and content of work. The development of the socio-cultural sphere, the availability of its services. Development of the scientific and educational sphere and its accessibility.
Comparative study of the mechanism of functioning of economic systems
Modern market economic system
The market is a complex economic system of social relations in the sphere of economic reproduction. It is due to several principles that determine its essence and distinguish it from other economic systems. These principles are based on the freedom of man, his entrepreneurial talents and on the fair treatment of them by the state. Indeed, there are few of these principles - they can be counted on the fingers of one hand, but their importance for the concept itself market economy hard to overestimate. Moreover, these foundations, namely: the freedom of the individual and fair competition, are very closely connected with the concept of the rule of law. Guarantees of freedom and fair competition can only be given in the conditions of civil society and the rule of law. But the very essence of the rights acquired by a person under the rule of law is the right to freedom of consumption: every citizen has the right to arrange his life the way he imagines, within the framework of his financial capabilities. It is necessary for a person that the rights to property be inviolable, and in this protection of his rights he himself plays the main role, and the state assumes the role of protecting other citizens from illegal encroachments on the property of a citizen. This alignment of forces keeps a person within the law, since ideally the state is on his side. A law that is beginning to be respected, whatever it may be, becomes fair at least for the one who respects it. But, protecting the rights of citizens, the state should not cross the border, both totalitarianism and chaos. In the first case, the initiative of citizens will be restrained or manifested in a perverted form, and in the second, the state and its laws can be swept away by violence. However, the "distance" between totalitarianism and chaos is quite large, and in any case the state must play its "own" role. This role lies in the effective regulation of the economy. Regulation should be understood as a very wide range of measures, and the more effective its use, the higher the credibility of the state.
Distinctive features:
- a variety of forms of ownership, among which the leading place is still occupied by private property in various forms;
- the deployment of the scientific and technological revolution, which accelerated the creation of a powerful industrial and social infrastructure;
- limited state intervention in the economy, but the role of the government in the social sphere is still great;
- changing the structure of production and consumption (increasing role of services);
- growth in the level of education (after school);
- new attitude to work (creative);
- increasing attention to the environment (limiting the reckless use of natural resources);
- humanization of the economy (“human potential”);
- informatization of society (increase in the number of knowledge producers);
- small business renaissance (rapid renewal and high product differentiation);
- globalization of economic activity (the world has become a single market).
Traditional economic system
In economically weak developed countries ah there is a traditional economic system. This type of economic system is based on backward technology, widespread manual labor, and a multistructural economy.
The multistructural nature of the economy means the existence of various forms of management under a given economic system. In a number of countries natural-communal forms are preserved, based on communal management and natural forms of distribution of the created product. Small-scale production is of great importance. It is based on private property on production resources and personal labor of their owner. In countries with a traditional system, small-scale production is represented by numerous peasant and handicraft farms that dominate the economy.
In conditions of relatively underdeveloped national entrepreneurship, foreign capital often plays a huge role in the economies of the countries under consideration.
Traditions and customs illuminated by centuries, religious cultural values, caste and class divisions prevail in the life of society, holding back socio-economic progress.
The solution of key economic problems has specific features within the framework of various structures. The traditional system is characterized by such a feature - the active role of the state. By redistributing a significant part of the national income through the budget, the state allocates funds for the development of infrastructure and the provision of social support to the poorest segments of the population. The traditional economy is based on traditions passed down from generation to generation. These traditions determine whether goods and services are produced, for whom, and how. The list of benefits, production technology and distribution are based on the customs of the country. Economic roles members of society are determined by heredity and caste. This type of economy is preserved today in a number of so-called underdeveloped countries, into which technical progress penetrates with great difficulty, because, as a rule, it undermines the customs and traditions established in these systems.
Benefits of the traditional economy
- stability;
- predictability;
- goodness and a lot of benefits.
Disadvantages of the traditional economy
- defenselessness against external influences;
- inability to self-improvement, to progress.
Distinctive features:
- extremely primitive technologies;
- the predominance of manual labor;
- all key economic problems are decided in accordance with age-old customs;
- organization and management economic life carried out on the basis of council decisions.
Traditional economic system: Burkina Faso, Burundi, Bangladesh, Afghanistan, Benin. These are the least developed countries in the world. The economy is focused on Agriculture. In most countries, the fragmentation of the population in the form of national (folk) groups prevails. GNP per capita does not exceed $400. The economies of the countries are represented mainly by agriculture, rarely by the mining industry. Everything that is produced and extracted is not able to feed and provide for the population of these countries. In contrast to these states, there are countries with a higher income, but also focused on agriculture - Azerbaijan, Côte d'Ivoire, Pakistan.
Administrative-command system (planned)
This system dominated earlier in the USSR, the countries of Eastern Europe, and a number of Asian states.
The characteristic features of the ACN are public (and in reality - state) ownership of almost all economic resources, monopolization and bureaucratization of the economy in specific forms, centralized economic planning as the basis of the economic mechanism.
The economic mechanism of the AKC has a number of features. It assumes, firstly, the direct management of all enterprises from a single center - the highest echelons of state power, which nullifies the independence of economic entities. Secondly, the state completely controls the production and distribution of products, as a result of which free market relationships between individual farms are excluded. Thirdly, the state apparatus manages economic activity with the help of mainly administrative and administrative (command) methods, which undermines the material interest in the results of labor.
The complete nationalization of the economy causes the monopolization of production and marketing of products, unprecedented in its scale. Giant monopolies established in all areas National economy and supported by ministries and departments, in the absence of competition, do not care about the introduction of new equipment and technology. The scarce economy generated by the monopoly is characterized by the absence of normal material and human reserves in case the balance of the economy is disturbed.
In countries with ACN, the solution of general economic problems had its own specific features. In accordance with the prevailing ideological guidelines, the task of determining the volume and structure of products was considered too serious and responsible to transfer its decision to the direct producers themselves - industrial enterprises, state farms and collective farms.
Central distribution wealth, labor and financial resources was carried out without the participation of direct producers and consumers, in accordance with pre-selected public goals and criteria, based on central planning. A significant part of the resources, in accordance with the prevailing ideological guidelines, was directed to the development of the military-industrial complex.
The distribution of created products between production participants was strictly regulated central authorities by means of a universally applied tariff system, as well as centrally approved norms of funds to the fund wages. This led to the prevalence of an egalitarian approach to wages.
Main features:
- state property virtually all economic resources;
- strong monopolization and bureaucratization of the economy;
- centralized, directive economic planning as the basis of the economic mechanism.
The main features of the economic mechanism:
- direct management of all enterprises from a single center;
- the state has full control over the production and distribution of products;
- the state apparatus manages economic activity with the help of predominantly administrative-command methods.
This type of economic system is typical for: Cuba, Vietnam, North Korea. Centralized economy with an overwhelming share of the public sector is more dependent on agriculture and foreign trade. GNP per capita is slightly over $1,000.
mixed system
A mixed economy is 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 supplemented by the mechanism of state regulation, and private property coexists with public and 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 tasks solved by a mixed economy:
- providing employment;
- full use of production capacities;
- price stabilization;
- parallel growth of wages and labor productivity;
- equilibrium of the balance of payments.
Distinctive features:
- priority of the market organization of the economy;
- multi-sector economy;
- state MANAGING entrepreneurship is combined with private business with its comprehensive support;
- orientation of financial, credit and tax policy to the economic growth and social stability;
- social protection population.
This type of economic system is typical for Russia, China, Sweden, France, Japan, Great Britain, USA.
Literature
- Kolganov A.I., Buzgalin A.V. Economic comparative studies: Comparative analysis economic systems: Textbook. - M .: INFRA-M, 2009. - ISBN 5-16-002023-3
- Nureev R.M. Essays on the history of institutionalism. - Rostov n/a: "Assistance - XXI century"; Humanitarian Perspectives, 2010. - ISBN 978-5-91423-018-7
- Vidyapin V.I., Zhuravleva G.P., Petrakov N.Ya. and etc. Economic systems: cybernetic nature of development, market methods of management, coordination of economic activities of corporations / Translated with the general editor - N.Ya. Petrakov; Vidyapina V.I.; Zhuravleva G.P. - M .: INFRA-M, 2008. - ISBN 978-5-16-003402-7
- Dynkin A.A., Korolev I.S., Khesin E.S. and etc. World economy: forecast until 2020 / Ed. - A.A. Dynkina, I.S. Koroleva, G.I. Machavariani. - M .: Master, 2008. - ISBN 978-5-9776-0013-2
Notes
Links
- Website Inozemtseva VL Modern post-industrial society: nature, contradictions.
- Erokhina EA Theory of economic development system-synergetic approach.
- Liiv E. H. Infodynamics generalized entropy and negentropy 1997
The basic problem of economics can also be presented as a problem of choice. Indeed, if each factor used to satisfy various needs is limited, then there is always the problem of alternative use of it and the search for the best combination of factors of production, that is, the problem of choice. This problem is reflected in the statement three main questions economy.
The three main economic questions are:
What? – goal setting problem. – Which of the possible goods and services should be produced in a given economic space and at a given time?
How? – production problem.- With what combination of production resources, using what technology should the goods and services selected from the possible options be produced?
For whom? – distribution problem.– Who will buy the selected goods and pay, benefiting from them? How should the gross income of society from the production of these goods and services be distributed?
The fourth question, which also inevitably confronts every society, is the question: How? How to get rid of waste generated in the process of life, how, without reducing the level of consumption, to maintain the ecological balance in nature. This recycling problem.
5. Production possibilities in the economic system and the problem of choice.
The production possibilities of an economic system are limited by the rarity of the resources used. Moreover, the limited nature of all economic resources remains and even increases as society develops. This is due not only to the depletion of irreplaceable natural resources, but also to the fact that consumption constantly gives impetus to the development of production, that is, new goods and services are created, their qualitative characteristics change, which causes an increase in demand for consumer and investment goods. And every time society is forced to decide which of these goods to produce with available resources and on what scale.
The problem of choice in any economic system (be it a family, a firm, a state) can be illustrated using economic model "Production Possibility Frontier". And also, this model allows you to visually demonstrate such fundamental economic concepts as limited resources, opportunity costs.
To build a model, we will plot the number of commodities (X) along the abscissa, and the number of means of production (Y) along the ordinate (see Fig.).
Means of production (Y)
Consumables (X)
O X B X S
The ABCD curve is called production possibilities frontier, characterizes the maximum possible volumes of production of means of production and consumer goods with the full use of all available resources. Each point on this curve represents a specific combination of these two types of goods (for example, point B represents a combination of X B units of commodities and Y B units of capital goods.
The production possibility frontier graph illustrates the fact that an economy that is fully utilizing productive resources cannot increase the production of any good without sacrificing another good. The functioning of the economy at the frontier of its production possibilities testifies to its efficiency.
Based on this, the choice of a combination corresponding to point F is regarded as unsuccessful for a given society, since it does not allow it to effectively use production resources. Having chosen such a point, we would resign ourselves either to the presence of unused resources (for example, unemployment), or to the low efficiency of their use (for example, with large losses, including working hours). Production on the basis of the choice of point E is generally not feasible, since this point lies beyond the border of the production possibilities of this economic system.
Compare points B and C. By choosing point B, we prefer to produce fewer commodities (X B) and more capital goods (Y B) than choosing point C (X C, Y C). More precisely, when moving from point B to point C, we will receive additional Δ X = OX C - OX B units of consumer goods, sacrificing for this ΔY = OY B - OY C units of means of production. The amount of one good that must be sacrificed to increase the production of another good by one is called opportunity cost or cost of missed opportunities.
Curve ABCD is convex. This is due to the fact that one resource can be used more productively in the production of commodities, others - the means of production.
If new technology, new technological processes are introduced simultaneously and evenly in all industries, then the production possibility frontier AD will shift to the position of the dotted line A 1 D 1 , the production possibilities of both means of production and consumer goods with the same resources will increase approximately equally ( see fig.).
If, on the other hand, innovations are carried out mainly in industries that produce means of production, the increase in the area of production possibilities will be skewed to the right (see Fig.).
The economic system is a form of organization of the economic life of society.
Elements of the economic system:
Socio-economic relations. They are based on the forms of ownership of economic resources that have developed in each economic system.
Organizational forms of economic activity ( natural economy, commodity economy, etc.).
The economic mechanism is a way of regulating economic activity at the macroeconomic level, as well as a system of incentives and motivations that guide the participants in economic life.
Specific economic ties between enterprises and organizations.
In any economic system, the economy solves 3 main questions:
What to produce?(That is, what goods and services, in what quantity, by what date).
How to produce?(What resources to use, in what enterprises, with the help of what technology, etc.).
For whom to produce?(That is, the target group of consumers).
Question 4. The main types of economic systems and their characteristics.
Economic systems differ in:
The way to solve the main economic issues.
By type of ownership of the most important types of resources.
In terms of these criteria, the following types of economic systems are distinguished:
traditional system.
These economic systems existed mainly in the early periods of human history. The main economic questions were decided on the basis of instinct. Now these systems are much less common (in the most remote areas of the world, in economically underdeveloped countries).
Traditions, customs, heredity, class, rituals determine what, how and for whom to produce. Consequently, this economic system is based on backward technology, widespread manual labor. Small-scale production is of great importance. It is based on private ownership of productive resources and the personal labor of their owner. Small-scale production is represented by numerous peasant and handicraft farms that dominate the economy. The role of the state is active - providing social support to the poorest segments of the population. The natural-communal form of management prevails.
Administrative command system.
The state plays the main role in this system. It is it that decides what, how and for whom to produce with the help of central planning and management.
Character traits:
Public ownership of all economic resources, monopolization of the economy.
The coordination of economic activity is carried out on the basis of a hierarchy, that is, an administrative method of subordination to a higher authority.
The economy is managed from a single center with the help of orders, direct commands.
From the center, instructions are given: what, how and for whom to produce, where to supply products, in what quantity, at what price. Consequently, the center must know in advance and determine all needs, all resources. On this basis, a directive plan for the development of the economy for a certain period of time is drawn up. Each employee is given specific tasks, and their implementation is strictly controlled.
Giant monopolies do not care about the introduction of new equipment and technology.
A significant part of the resources is directed to the development of the military-industrial complex.
Country examples: USSR, countries of Eastern Europe.
Practice has shown that such a system can be effective in extreme conditions, in emergency circumstances (war). However, in the long run, in a normal socio-political and economic environment, it cannot be effective. Consequences: the loss of moral and material incentives to work, the loss of a person's sense of the owner, equalization in pay, therefore, a decline in production. The economy becomes inefficient.
Market system.
The market is a mechanism of interaction between sellers and producers, the balance of supply and demand.
Question "what to produce?" the consumer decides.
Question "how to produce?" decided by the manufacturer. Under the pressure of competition, manufacturers are trying to innovate so as not to go broke in order to reduce their costs.
Question "for whom to produce?"- V market systems Yes, for those who have money.
Thus, in a market system, the main means of coordinating economic activity is commodity-money relations and competition. The predominant property is private property. This is a very rigid system. You have to pay for mistakes with a "ruble", since miscalculations lead to losses, ruin, bankruptcies. This system is based on the principle of economic feasibility, that is, on the desire to achieve maximum results at minimum cost. In a competitive environment, every entrepreneur is trying to produce a better product, which means he is striving to introduce new equipment and technologies. All this contributes to the NTP.
However, this is not a perfect system and it has many shortcomings. As a result of competition, some are ruined and others are enriched, therefore, the property stratification of society is growing. Social guarantees are minimal, since the state plays a small role, being only an arbitrator who monitors the implementation of laws. Thus, high efficiency is combined with a violation of the principles of equality and social justice.
mixed system.
It should be borne in mind that in real life there is no market economy in its pure form. It exists only in theory. In real life, the modern economic systems of most developed countries are mixed.
The main feature of a mixed economy is that both the state and the private sector play an important role in answering the questions: What? How? For whom to produce?
Planned methods are quite widespread in it: plans for the development of individual firms based on marketing research, specific government intervention. Plans of different economic levels influence the structure and quantity of products produced, ensuring their greater compliance with social needs.
The task of using resources is solved within the framework of large companies also on the basis of an analysis of promising industries.
Thus, the state in a mixed economy acts in many areas (including the financing of new, low-profit industries, retraining of personnel, the development of medicine, social protection), exerting an impact on the economy, which increases sharply during periods of crisis.
However, the market mechanism continues to play the main role in answering the classic trio of questions.
Farm organization models:
American model- This is a liberal market-capitalist model, which assumes the priority role of private property, a market-competitive mechanism, as well as a high level of social differentiation.
German model- a model of a social market economy, which links the expansion of competitive principles with the creation of a special social infrastructure that alleviates the shortcomings of the market and capital.
Swedish model is a social model characterized by high level social guarantees based on a broad redistribution of income.
Japanese model- a model of regulated corporate capitalism, in which favorable opportunities for capital accumulation are combined with the active role of state regulation in the areas of programming economic development, investment and foreign economic policy, and with a special social significance of the in-house principle.
More lessons for the exam on the YouTube channel
Lecture:
Major economic issues
Economic science, guided by the principle of rational use of limited resources to meet limitless needs people looking for answers to questions: what, how and for whom to produce?
What to produce? It means to decide what, in what quantity and what quality of economic benefits (goods and services) need to be created.
How to produce? It means to decide what resources, technologies will be used in the production of certain economic benefits.
For whom to produce? It means to determine for which categories of people (market segment) the produced goods will be intended, for example, toys for children, cosmetics for women.
economic system is a set of principles and rules economic relations arising in the process of production, distribution, exchange and consumption of goods.
Scientists distinguish traditional, planned (command), market and mixed economic systems. Consider their characteristic features.
Traditional economic system
The most ancient 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:
- the solution of questions 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 hold back the growth of labor productivity;
- natural economy, production is aimed at satisfying one's own needs, and not for sale;
- low turnover, respectively, low level of commodity-money relations;
- the closed society, the existence of caste or estate division, which does not allow people to move from one social group to another, as a result of which socio-economic progress is hindered.
The traditional economic system has its advantages and disadvantages. The advantages are continuity, ease of organization of production, low environmental pollution. The disadvantages are low income, shortage of consumer goods, limited economic growth.
planned economic system
A planned (command) economic system is one of the signs of a totalitarian political regime. This type dominated in the days of the USSR, but it also functions in modern states, for example, in North Korea, Cuba.
Signs:
- the decision of the main economic issues belongs to the centralized state body, which carries out the directive planning of production;
- the basis of the economy is agriculture and foreign trade;
- the means of production are owned by the state, and private property can only be property intended for housekeeping;
- appearance public division labor;
- administrative regulation of prices;
- market monopolization.
Market economic system
The market economy presupposes the freedom of entrepreneurial activity, which is guaranteed by the state. The basis of relations between producers and consumers is individual interest and self-interest.
Signs:
- the solution of questions of what, how and for whom to produce belongs to the owner, producer, consumer;
- the basis of the economy is the service sector;
- the diversity of forms of ownership is recognized, but private ownership prevails;
- deepening the social division of labor;
- trade relations are widely developed;
- pricing is free and regulated by the laws of the market;
- competition;
- Achievements of scientific and technological revolution are being widely introduced into production.
The main advantage of a market economy is competition, which is necessary for manufacturers to strive to create high-quality products, and for consumers to have a wide choice of a particular product or service (range). Another advantage is the interest of producers in using resources efficiently and satisfying the maximum needs of people at the minimum cost. This system also has disadvantages. These are the income inequality of the population, a significant social gap between the poor and the rich, unemployment, periodic economic crises. The problem of negative external (side) effects is acute. For example, the activities of a pulp and paper mill cause water pollution (the release of waste into the water); Increased car use 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 prevalence of the latter. Therefore, one of the important features of a mixed economy is multisectorality, when the role of both the state and private individuals is significant in production. But there may be features of the traditional economy in this system. For example, the production of perfume in France is traditional. The role of the state in mixed economy large and is:
- non-admission of 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;
- providing employment for the able-bodied population and providing assistance to disabled citizens (for example, the disabled, pensioners);
- the production of public goods (eg health care and education);
- protection from dishonest market participants;
- in the fight against negative externalities of production.