Characteristics of the economic system

After the separation of man from the world of wild nature, he began to form as a social being. The development of consciousness took place in the process of labor activity. It was thanks to work that a person was able to satisfy his most important vital needs.

At first, human needs were quite simple - the need for food, clothing, shelter. And labor activity was primitive - gathering, hunting, fishing. But over time, human needs increased. Labor activity became more and more difficult. More and more resources were involved in it, more and more people were involved. The man was forced to coordinate his actions with other people.

On the basis of labor activity, the foundations of the economic system were formed. And the economic system, in turn, determined the features of social relations, social system.

Definition 1

The economic system is called the system of relationships that arise in the process of production activities between business entities in connection with the use of various resources, taking into account the regulatory framework of society, based on ownership and participation in production management and distribution of the produced product, the profit of immaterial goods.

Today, scientists tend to distinguish the following types of economic systems:

• traditional economic system;
• market economic system;
• administrative-command or planned economic system;
• mixed economic system.

The key issues of their identification are precisely the relationship between property rights and economic management. The traditional economic system is understood as a system that emerged under communal ownership. It has survived to this day. Management and distribution of material wealth in it is carried out on the basis of the customs and traditions that have developed in society.

The planned economy is based on state ownership and the monopoly of the state in the management and distribution of material goods and the produced product. It arose as a result of social conflicts that arose due to the exacerbation of crisis phenomena in the market economy. It was distinguished by a high degree of social guarantees for citizens and directive planning of economic activities. state regulation of prices.

Features of the market economic system

Definition 2

A market economy (economic system) is an economic system that is based on private ownership of the means of production and is governed by market mechanisms.

This system was born in the depths of the traditional economic system. The main incentive for its development was the desire of entrepreneurs to increase personal profits (benefits). To this end, entrepreneurs took the initiative, set up the production of products for sale (commercial production). The market saturation took place taking into account the interaction of supply and demand.

Theorists of a market economy at the initial stage of its development denied the need for management and regulation of production. They saw the market economy as a self-regulating system. But the unevenness of economic development and the spontaneous nature of market relations led to the emergence of crisis situations in the economy. Crises have become systematic and encompassed, in addition to production, also social life. social contradictions intensified.

In order to mitigate the consequences of crises or to avoid them, in the 20th century, in various leading countries of the world, national models of a market economy were developed and implemented, which allowed the state to actively intervene in the management of the economy. Perspective long-term plans for economic development were adopted. This economic system was called a mixed economy. It was a combination of the advantages of the market and planned economies. But many scholars regard it as a modernized version of the market economy. After all, this system functions in the conditions of the predominance of private property and market mechanisms for regulating production.

Objects of the market economic system

Like any economic system, the market economy has its own structure. Its components are:

• economic objects;
• economic entities;
• basic economic relations.

Definition 3

Definition 4

Resources are objects and items that can be used to produce material goods or provide services to consumers.

Resources are divided into human (labor), natural (natural resources and natural conditions), capital, financial. According to the degree of exhaustion and recovery, natural resources are divided into inexhaustible (energy from the sun, wind, flowing waters, geothermal energy) and exhaustible. The latter, in turn, are divided into renewable (biological) and non-renewable (mineral) resources.

Subjects of the market economic system

Definition 5

The subjects of a market economy are participants in market relations for the production, distribution and sale of manufactured products and material goods.

Numerous actors are involved in economic relations. They can be private (individuals), legal entities (enterprises and organizations of various forms of ownership). States and their associations (political, economic interstate formations) are an active participant in economic life in the modern world.

The state, on the one hand, can act as a legal entity. This manifests itself in the form of enterprises in the public sector of the economy. On the other hand, the state takes part in the management of production. It regulates economic activity through the adoption of various laws, pursuing tax and credit and financial policies of a certain direction.

According to the modern classification, the subjects of the market are households, private entrepreneurship (business) and the state, which is often referred to as the government in Western economic literature.

The household is the main economic unit that performs the function of processing goods and services purchased on the market for its own consumption and ensures the reproduction of the main factor of social production - labor.

Private entrepreneurs (business) - organizers and managers of non-state enterprises operating for profit.

State (government) - a set of mainly budgetary institutions and organizations that perform the functions of government and non-commercial social services.

The main economic entities in the market are both individual entrepreneurs (individuals) and enterprises (legal entities).

Business entities of a market economy provide:

• -implementation of the needs, forming in society, in high-quality consumer goods;
• -carrying out research work requiring significant investment in order to organize the serial production of goods:
• -organization and organization of large-scale production of goods as a result of the full-scale application of technological, organizational and technical innovations;
• -implementation of the role of the main source of financial revenues to the country's budget through the payment of taxes;
• -implementation of the role of the main source of financial resources for the development of new industries on the scale of the national and international economy.

An indispensable condition for the functioning of a modern economic system is entrepreneurial, economic activity, the participants of which are entrepreneurs, organize production at the expense of their own or borrowed funds and are ready, in case of failure, to risk their capital.

Entrepreneurial activity involves proactive activities aimed at obtaining profit or personal income, carried out at their own risk and their own property responsibility. Entrepreneurship involves the organization of production activities aimed at the production of goods and the provision of services.

The basis of entrepreneurial activity is formed by various forms of ownership, and the subjects of this activity are individuals. private firms, government agencies. In a modern economy, their functioning is impossible without a favorable socio-economic climate. An entrepreneur in such conditions will think not only about maximizing profits, but also about the prospective development of his business.

In the modern economy, two types of entrepreneurial activity are distinguished: individual and collective. The individual is associated with the receipt of personal income, and its peculiarity, according to P. Samuelson, lies in the great freedom of the individual, who should not take any permission from anyone for his activities. Collective business management is carried out by a collective entity.

From the point of view of the economic certainty of entrepreneurship, modern science distinguishes three aspects. The first of these views entrepreneurship as an economic category. In this case, the central problem is the identification of subjects and objects of entrepreneurship.

The second aspect of the economic certainty of entrepreneurship is its consideration as a method of management.

In this case, the main condition for entrepreneurship is the independence of the subjects, the presence of a certain set of rights and freedoms.

Third aspect. Entrepreneurship acts as a type of economic thinking. As such, it is characterized by a set of original views and approaches to decision-making. As J. Schumpeter notes, entrepreneurship is not an occupation, but a mindset.

R. Cantillon was the first to tackle the problem of entrepreneurship. He found that the mismatch between supply and demand in the market creates the ability to buy low and sell high. The people who use the opportunity to profit from this, he called "entrepreneurs."

A. Smith and D. Ricardo interpreted the entrepreneur as a comprehensively developed capitalist. D. Mill adhered to the same approach.

J. Sey also had his own point of view on the functions of an entrepreneur. He considered the entrepreneur to be a figure who takes at his own expense and risk to produce a certain product or provide any service.

J. Schumpeter offered a different view of the problem of entrepreneurship. In his opinion, only innovations, by which he understood technical knowledge, new technologies and products, new forms of production organization, lead to economic growth. J. Schumpeter identified the innovator with the entrepreneur.

In the modern world, entrepreneurial activity is income, earnings, a means of livelihood. But this activity is not limited to this alone. She is also an individual's self-expression, an attempt to establish herself in life, to show herself and others her abilities, intelligence, skill, luck.

The main actors of the market economy

There are a lot of subjects of the market economy. These are producers and consumers, entrepreneurs and employees, industrialists, bankers, merchants, owners of loan capital and securities, etc. In the most general form, the subjects of a market economy are grouped into three large groups (Fig. 7.4).

Each of these aggregated entities performs its own functions (Table 7.2).

Table 7.2. Functions of the main subjects of a market economy

The state as a subject of a market economy

The real model of the economic structure presupposes the use of both a market mechanism that ensures the effective functioning of the economy and a state regulatory mechanism to solve a number of problems that the market refuses to fulfill or the market solution of which is too expensive for society (Figure 7.5.)

The main tasks of the state in conditions of market economic systems:

• - legal support for the functioning of the market mechanism;
• - organization and regulation of money circulation;
• - protection and promotion of competition development;
• - production of public goods;
• - minimization of transaction costs;
• - compensation of external effects (externalities);
• - minimization of macroeconomic fluctuations;
• - redistribution of income through fiscal policy;
• - realization of national interests in the world economy.

External effects (externalities)- costs and benefits associated with the production and consumption of economic benefits by entities that do not participate in the market agreement. Externalities can be negative or positive.

Positive effects arise when the production or consumption of a good brings unpaid benefits to third parties.

Example. The costs of limiting the spread and liquidation of the cholera epidemic (isolating patients, providing them with medical care, keeping those who have been in contact with patients during the incubation period, etc.) give a positive effect to those who could get sick, but escaped this fate, without paying directly for the health care services noted above.

Negative effects arise in cases where the production or consumption of a good causes uncompensated costs of third parties.

Example... Polluting the environment, the enterprise shifts part of the costs (for the introduction of treatment facilities, waste-free technologies, etc.) that it should have carried out on the population, forcing them to spend part of their income on treatment, live in discomfort, etc. etc.) "without compensating him (the population) for these costs.

The consequence of positive externalities is the excess of social utility of goods over individual utility. This excess is not compensated by the market, because the market only pays for individual utility. Therefore, the market directs insufficient resources to the production of such goods.

The consequence of negative externalities is a reduction in the actual costs of the entrepreneur, which leads to an expansion of the supply of these goods above the equilibrium level and a decrease in prices relative to the optimal level. Therefore, the market directs resources to the production of economic benefits with a negative effect in excess of their optimal volume.

The English economist Arthur Pigou, as a result of his study of the nature of externalities, proposed the introduction by the state of a certain tax to eliminate external effects, which is known in the scientific literature as the Pigou tax.

The American economist Robert Coase, based on the study of external effects, came to the following conclusions, which are opposite to those of A. Pigou.

• 1. If property rights are clearly defined by law and people adhere to them carefully, then no external effects arise, "market failures" do not exist, and the state does not need to intervene in economic life.
• 2. Externalities arise only where property rights are blurred. Where they are clearly defined, external effects turn into internal ones.
• 3. Transaction costs (costs of using the market mechanism) are of paramount importance for the successful functioning of the market.
• 4. Government regulation is justified only when the costs of government intervention are less than the costs of “market failures”.

Thus, if the existing external effects distort the monetary valuation of costs and benefits, which leads to inefficient allocation of resources, then the market system of public goods does not produce or produces quasi-public goods significantly less than society needs them.

Unlike ordinary private goods, the use of which implies their mandatory purchase for money (purchase), public goods (national defense, public administration, environmental protection, street lighting, etc.) are consumed because they are produced. Benefits from the use of public goods are received not only by those who incurred the costs of their creation or paid for their consumption, but also those who did not spend anything on it. The costs of producing public goods are carried out through tax exemptions.

Market economy is an economy based on commodity-money relations, domination of private property and free competition between producers and consumers. Currently, the market economy is one of the main types of economic systems. The main economic decisions are made independently by producers and consumers. The former decide at their own peril and risk what products to produce, in what quantities, by means of what technique and for whom. The latter make their own choice about which products to purchase and from which manufacturers. The choice is made under the influence of factors such as price, quality, etc. The balance of the economy is achieved through a market mechanism. Its main elements are supply and demand. Taking into account their compliance, the price of products is formed. The price level is a signal to increase or decrease their productivity. The market economy was formed in the 18th century. and is the most flexible economic system, which, under the influence of internal and external factors, tends to transform and change.

Market economy entities:

1) household - an economic unit consisting of one or more persons;

2) enterprise - an economic unit that: uses the factors of production for the manufacture of any product; makes decisions independently; strives for maximum profit;

3) bank - a financial and credit institution that regulates the movement of money supply, which is necessary for the normal functioning of the economy;

4) the state - represented by legal institutions, exercises political and legal power in order to control the market in order to meet public needs.

TO economic resources of a market economy include:

1) labor in the form of a conscious activity of people aimed at creating a product that they or other people need;

2) natural resources in the form of land, water, air, minerals, flora and fauna, natural energy sources involved in economic circulation by people;

3) means of production in the form of fixed and circulating assets used in economic activity;

4) monetary funds for which and with the help of which material and material and labor resources are acquired;

5) information resources in the form of scientific scientific and technical, design and engineering, technological, statistical, management information and other types of spiritual and intellectual values ​​necessary to create an economic product used in the process of its creation.

3. Market: essence, classification, functions. Market Mechanism Effectiveness

Market is a set of economic relations based on mutual agreement between market participants on the transfer of ownership of goods or the possibility of obtaining services. Usually occurs in the form of an equivalent exchange for money (trade) or other goods (barter). With free access to the market, both producers and consumers, exchange takes place in a competitive environment.

Hence, the market as an economic category is a set of specific economic relations and connections between buyers and sellers, as well as trade intermediaries regarding the movement of goods and money, reflecting the economic interests of the subjects of market relations and ensuring the exchange of labor products. The unity of all the above categories is that they express a single essence- economic ties between people in the process of movement of goods.

Market classification:

1. On a territorial basis: local, regional, national, world.

By subjects entering into exchange: the market of consumers, producers, intermediate sellers, government agencies.

2. By objects of exchange: markets for means of production, market for goods and services, financial, intellectual property market.

3. Taking into account the assortment: closed, saturated, mixed.

4. By the degree of compliance with the law: legal (official), illegal (shadow).

5. By the degree of saturation: equilibrium (demand = supply), scarce (demand> supply), excess (demand< предложение)

6. By the degree of development of economic freedom: free, regulated.

Market functions are determined by the tasks facing him:

1) pricing (equivalent) - the price is formed in the market based on the interaction of supply and demand, taking into account competition;

2) informational - the market provides its participants with information about the required quantity of goods and services, their range and quality;

3) stimulating - the market encourages producers to create economic benefits that society needs at the lowest cost and receive sufficient profit.

4) pay-as-you-go - the incomes received by market entities are mainly payments for the factors of production that they possess.

5) intermediary - the market acts as an intermediary between the producer and the consumer.

Most efficiently market mechanism acts in conditions of free, or perfect competition, that is, when the market situation is characterized by a multitude of buyers and sellers, the homogeneity of the products sold, and the free access of firms to the market. In perfect competition, none of the sellers or buyers by themselves is able to influence the market price.

Market mechanism with a high degree of efficiency solves the problem of producing goods and services necessary for consumers. Through the market, there is a spontaneous adaptation of the volumes and structure of production to the volume and structure of social needs, the distribution of factors of production between different sectors, that is, the question of what and in what quantity to produce is being resolved. The market economy, in principle (with some very rare exceptions), does not know such phenomena traditional for the command-administrative system as shortages, commodity shortages, queues, etc.

Resource potential of economic growth.

Workshop plan 2

1. Commodity production and its features.

2. Conditions for the existence of the Market economy. Market failure.

3. Economic institutions as a mechanism for organizing economic activity.

4. Property as a system of economic relations.

2. Restructuring of the Russian economy through the redistribution of property

3. Post-industrial economy and the main contradiction of socialism.

4. Results of privatization in the Russian Federation and the main directions of its further development.

The main economic agents are consumers (households), firms, the state and its institutions. Modern economic theory is based on the premise of the rational behavior of agents (subjects). This means that the goal is to maximize results for a given cost, or minimize costs for a given result.

Households have a demand for consumer goods and services, being at the same time suppliers of economic resources. Firms demand resources, offering in turn consumer goods and services. The behavior of the main economic agents is expressed by the circulation of goods and money.

Households supply the necessary resources (labor, capital, natural resources, entrepreneurial ability) and receive cash income (wages, rent, interest, profit).

Complementing and refining a simple model of economic circulation, we note that it can include: financial markets (credit system), state functions and international trade.

A firm is an economic entity that is engaged in entrepreneurial activity and has economic independence (in making decisions about what, how and in what size to produce, where, to whom and at what price to sell its products). The firm combines resources to produce certain economic goods in order to maximize profits.

Market economies are characterized by the following main forms of entrepreneurial activity: private firms and corporations, regulated and state-owned firms, consumer cooperatives and self-governing firms. In terms of the scale of their activities, enterprises are subdivided into small, medium, and large. Large enterprises form the basis of social production. Usually they have high technical equipment, are distinguished by higher labor productivity, allow saving on costs, and have other advantages characteristic of highly concentrated production.

Small businesses also have advantages: greater adaptability to changing market conditions and a closer connection with consumers. Production requires a rational combination of large, medium and small enterprises.

Joint-stock enterprises are becoming the most widespread form of management. If the cooperatives unite the labor of its members, then the joint-stock company unites the owners of capital. Distinguish between open and closed joint stock companies.

The imperfection of the market mechanism, its inability to independently cope with the problems of monopoly, external effects and costs, problems of the production of "public goods" require active government intervention in the economy.

Government regulation refers to the rules and laws issued to control the operations of economic organizations. There are two forms of regulation - economic and social. In the sphere of economic regulation, there are control over prices, types of goods, conditions of entry and exit from an industry, or service standards in a particular industry. Social regulation is the adjustment of a wide range of side or external effects. The processes of production and consumption of certain types and services are accompanied by beneficial or harmful effects experienced by persons who are not directly involved in these processes.

The imperfection of the market mechanism is also manifested in solving the problem of optimal production of public goods, which are usually produced with the participation of the state through compulsory taxation of consumers.

Public choice theory is a branch of the economy that studies the decision-making process of the state. She analyzes: what? as? and for whom? in relation to non-market relations, in the same way as the theory of supply and demand analyzes the impact of pricing on the allocation of resources.

The economic activity of the state is manifested in various forms. One of them is state entrepreneurship based on state ownership. The state has industrial enterprises, railways and other transport arteries, communication facilities, a significant part of the fixed assets of health care and education.

Questions for self-test:

1. Name the main subjects of a market economy.

2. What explains the model of the circulation of resources, products and income?

3. What is entrepreneurship?

4. In what forms is entrepreneurship carried out?

5. What are the signs of open and closed joint stock companies.

6. What are the reasons for government intervention in the economy?

7. What is the economic role of the state?

8. What are the forms of participation of the state in economic life.

9. How is government regulation carried out?

10. In what direction is the renewal of the state system in Russia going?