What to produce a table. The main economic problems of society: what to produce? How to produce? for whom to produce?; Their solution in various economic systems. Methods of distribution of resources in a closed economy

The main task of the economy is to use economic resources in order to obtain an economic product (material benefits, works, services). The economic product is the goal of meeting the needs of all economic entities.

Only a few benefits are available in such large quantities that they do not require choosing from subjects.

Such characteristic properties of needs, as unlimited, unsaturated, continuous growth in quantitative and qualitative terms, indicate the impossibility of establishing a reasonable limit of their satisfaction.

Of course, some of the needs of a separate individual can be fully satisfied completely. Even if it is fully satisfied that this particular need for this period is fully satisfied, then in this case it is obvious that all the other needs at the same time existing in the subject remained unsatisfied. Especially this applies to the collection, public, state needs, the con-cret limits and the levels of complete satisfaction of which are unattainable.

The choice is necessary as we live in the world of rarity. The rarity means that human needs are infinite, and the resources available to their satisfaction are limited. But is it right to talk about unlimited human needs? A person may seem to seem that at the moment he wants to have only a few things: a car, a new CD player and a well-maintained apartment. However, imagine that next week he will win 100 million rubles. As an individual with selfish interests, lucky will hurry to buy a car, CD player, etc. But now he can afford to rest on an expensive resort, make gifts to relatives and friends, postpone savings for many years to live for annual interest. Some amount of money he can spend on charity.

So, although the list of needs for most people is unlimited, they could be a reasonable long list of desired goods and services of all types of better quality, as well as include some needs that are not personal or selfish.

Subjects would like to consume a practically unlimited amount of the final economic product in the form of consumer goods and services. For their production, an even greater number and structural diversity of intermediate products (production factors) are needed, the receipt of which requires the use of economic resources.

The funds that a person has to meet their needs is either insufficient at the moment, or is irrationally distributed in economic space. Even if a person had excessive material resources, then he would have been limited in consumption of such an important resource as time. In addition, the subject cannot use all the benefits at the same time, since many of them are mutually exclusive. People must distribute their cash due to the limbs and the limitedness of the latter. Money can be spent by a variety of ways.

On the one hand, the volume and degree of replenishness of stocks of various goods characterizes their relativity relat to each other and is expressed in the concept of rarity. On the other hand, the limited benefits regarding the needs of them is expressed by the concept of insufficiency. We are talking about two sides of the limitedness. And the limitations of consumer goods, resources and technologies acts as a universal proportion of economic benefits.

To achieve any purpose, the subject (individual or collective) is forced to sacrifice others with its goals or use limited means and scarce time. Therefore, any economic choice is accompanied by the victim, the price of which the French economist R. Barr called the price of the device. It is the real value of the victim, brought by an economic entity, choosing between several possible actions.

Firms face the problems of distribution of profits, hiring employees, acquisition of equipment, procurement of raw materials, etc. On the scale of the national economy, society is facing the need for the distribution of national income to different purposes (investments, social security, etc.) -

Thus, any economic entity invariably makes one of the mutually exclusive solutions. The need for this is due to the limited benefit and the impossibility of their simultaneous consumption and use. All the above-established forms of limited benefits involve the emergence of the problem of choice.

The problem of choice is universal, it does not depend on the type of economic system. Economy, or Economic TEO, in the most general form there is a science on how people make a choice in the world of rarity. Everything that has value is edible - money, goods, time, human ability.

At the same time, human desires are almost unlimited. Since the resources necessary to meet endless needs in products and services, have the limit, the choice is not theoretical assumption, but the reality of life.

At the level of the economy as a whole, society should decide what to produce, how to produce and for whom (we have already talked about it in chapter 1). Each society answers these questions in its own way. The difference in the approach to allocating resources in different economic systems, nevertheless, demonstrates the overall mechanism for solving the problem of choosing and overcoming the rarity resources. Under allocation of resources in economic theory, their placement is understood by finding the optimal method of distribution of limited goods.

Under the conditions of primitive-free production, the individual has made the necessary products necessary for consumption, independently deciding the question of the distribution of natural resources, tools of labor and time, which were required for hunting, fishing, etc. As part of the natural economy, the peasant produced as much as it was necessary to meet their own needs and family requests.

In modern conditions, isolated activity in the "Nature Man" plane is impossible. Even in the simplest production there is a separation of functions. The emergence of division of labor (specialization of individuals on the implementation of certain operations) led to the separation of manufacturers and consumers. An objective need for economic coordination appeared, i.e. Coordination of activities of economic entities, plans and actions of various individuals. Moreover, the change in the economic behavior of one individual may require changes in the behavior of others. The economy is social, and its functioning is determined by the needs, plans and deeds of many of the subjects, each of which depends on the needs, plans and actions of others.

Deciding on what to produce, indirectly depends on the desires of the end user. Individuals, specializing in the production of one good, receive other necessary benefits by exchanging.

Modern society consists of households, i.e. Subjects that, on the one hand, consume goods and services, and on the other, offer resources and factors for the production of economic benefits. In addition to them, society is represented by firms - organizations decisive, which products and services to produce. Based on the decisions made, they use the resources offered by households.

Resources are limited, but society wants with their help to take the highest possible satisfaction of needs. The presence of a choice problem means that certain relationships should be between home their homes and firms. Social relationship through which the coordination of household needs and firms is carried out, discloses the content of the mechanism for the coordination of economic behavior, or coordination mechanism.

One way to determine economic behavior is the price change. Growing or reducing the price of a particular product may occur under the action of supply and demand or be the result of policy planning.

The coordination mechanism of economic behavior includes a solution to previously formulated problems: what, how and for whom to produce?

"What to produce" is the problem of determining the nomenclature and volume of products produced by firms during a certain period of time.

"How to produce" - the problem of methods of organizing production and the choice of technology.

"For whom to produce" - the problem of identifying subjects that will buy selected goods and services will become consumers of products.

Coordination mechanisms in any economic system should solve these issues to avoid internal contradictions and instability in its development.

In the modern economy, two coordination mechanisms can be distinguished: hierarchy and spontaneous order.

On hierarchical submission, the management is founded within the company, any economic organization, the state office and the entire national economy (administrative and command system).

Spontaneous order corresponds to the market organization of economic activity. Economic entities, making decisions, are guided by market signals. Focusing on the movement of prices, consumers and manufacturers seek personal benefit. At the same time, complete coordination of actions and the growth of social welfare are achieved. The said corresponds to the idea of \u200b\u200bA. Smith on the "invisible hand's hand": the actions of a person who seeks to personal benefit, as if the invisible hand is sent in such a way that they are fully guided by the interests of society than if a person would consciously sought to serve them.

The author of this statement affects the problem of limited resources. P. Samuelson believes that the main issues of the economy would not be problematic if unlimited resources were. We are talking about resources that are used by mankind for the production of material goods. I fully agree with the author's statement.

The idea lies in the fact that all the problems of the economy are in limited resources.

Now people depart gradually from agriculture and natural resources. The information and ability of the mind of people is becoming increasingly important. Since they do not require high costs and renewable. So, you can talk about the fact that the economy develops in parallel to society. Since they are interrelated.

From the social studies course, we know that resources are carrying material and intangible opportunities to meet the needs. And also we know that these possibilities are limited. Therefore, the economy was created to solve these issues. The economy is such a sphere of activity of people in which wealth is created to meet their diverse needs.

Probably, all women wanted mink fur coats, but there is no such number of minks in the world.

Therefore, mink coats are produced in small quantities and have a high price.

Another example is the forest industry. Humanity needs wood for various production, but the forest is also limited. Therefore, if humanity will use resources unreasonable, it will turn into an ecological catastrophe that will lead to the death of all living things.

Thus, that the economy does not give a second chance. It is important to immediately understand how? what? And for whom? produce. Otherwise, this stern world will absorb you.

Updated: 2018-06-08

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Useful material on the topic

Questions: "What?", "How?" And "for whom?" It would not be necessary to make problems if resources were not limited (P. Samuelson)

What, how and for whom to produce? Answers to these three questions should find each country and society that wish to effectively use all resources available at their disposal. The complexity of decision-making on these issues is associated with objective restrictions and the need to make a choice: because resources are limited and there are alternative costs. This applies to all societies, regardless of their political system and development level. Differences between countries are concluded only in distribution methods.

Fundamental economic issues "What, how, for whom to produce" are solved on micro and macro levels. Arise in society with any type of economy. The explanation of the need is endless, and resources are limited, rare. Hence the problems of choice arise: what, as for whom to produce

The society always seeks to effectively use all resources available at its disposal. To do this, he needs to find answers to the questions that, as for whom to produce.
The question is "what to produce?" There is due to the fact that resources are limited, there is an opportunity to choose and there are alternative costs. The question of is to produce is the main thing for any society.
The second question "how to produce?" It arises because each country, regardless of which technological level, it is, has at its disposal relatively cheap and relatively expensive resources. For example, India is experiencing an excess of labor (therefore, the work is cheap) and the lack of capital (capital expensive). In the US, there are relatively cheap capital and expensive work. The company is always interested in creating the desired set of goods and services at minimal costs.
The third question "For whom to produce?", Of course, the most difficult, since it reflects the attitude of society to justice and economic equality. All society should somehow decide that it considers fair distribution, and then choose a way to achieve such a distribution. In practice, movement to a fair distribution can mean a partial refusal to efficiency. The society must decide which part of the effectiveness it is ready to sacrifice in the name of a more equitable distribution.
The difficulty of making decisions on these issues (which, as for whom) is related to objective restrictions and the need to make a choice. This applies to all societies, regardless of their political system and development level. Differences between countries are concluded only in distribution methods.

So a reflection of this problem is the formulation of three main issues of the economy:
what to produce which of the possible goods and services should be manufactured in this economic space and at this time;
How to produce, with which combination of production resources, using what technologies should be made selected products and services;
And since the number of goods and services created is limited, then the problem of their distribution or the third question arises - for whom to produce, who will consume produced goods?
These three questions are usually simply formulated as: "What, like for whom."
Answers to these questions depend on the existing economic system in society. The economic system is a combination of organizational mechanisms, with the help of which the distribution of limited resources of the Company takes place to meet the needs of people. The nature of the economic system depends on the form of ownership of the factors of production and from the mechanism for coordinating the actions of economic entities.
Different economic systems are different in different ways to major economic issues.
Traditional economy is an economic system based on private property, in which traditions, customs, experience determine what to produce, how to use production resources. The traditional economy was characteristic of medieval Western Europe, today such an economic system exists in some underdeveloped countries. Structure, technique of production are sediments. Technical progress with great difficulty penetrates such systems, as it comes into conflict with traditions.
Command (planned) economy - the answers to all major issues of the economy gives the state. All resources are owned by the state, and it is it that distributes resources between sectors and enterprises, determining that and in what ways to produce, how to distribute produced goods. All these decisions are made on the basis of predetermined, long-term production plans. The inflexibility of such a system under mobility of needs leads to a constant separation of production from needs.
The market economy is an economic system based on private ownership of production factors and on decisions taken by individual business entities - individuals and firms - independently, independently of each other. Independent decisions of individual economic entities are coordinated by the market. The market also gives answers to the main economic issues.
Mixed economy. It should be noted that in pure form a market system does not exist. In each even the most "rational" economy, the state performs certain regulatory functions, taking part in solving the main economic problems. In modern conditions, the state often assumes the production of products unfavorable to private businesses, but necessary to society; in every possible way stimulating scientific and technological progress, it affects the choice of production methods; Solving social problems, it adjusts the market distribution of income. Thus, the majority of developed countries today is characterized by a mixed economy, which is regulated by the market mechanism and the state.
Along with established, established economic systems today in the world there are countries with transition economies - economic systems that are characterized by the presence and old economic forms, and elements of new, as well as mixed (transitional) forms and relations. A visual example of the transition economy is the economy of the former socialist countries, including Russia, carrying out the transition from a planned mixed economy.

The society always seeks to effectively use all resources available at its disposal. To do this, he needs to find answers to the questions that, as for whom to produce.

Question "What to produce?" There is due to the fact that resources are limited, there is an opportunity to choose and there are alternative costs. The question of is to produce is the main thing for any society.
Second question "How to produce?" It arises because each country, regardless of which technological level, it is, has at its disposal relatively cheap and relatively expensive resources. For example, India is experiencing an excess of labor (therefore, the work is cheap) and the lack of capital (capital expensive). In the US, there are relatively cheap capital and expensive work. The company is always interested in creating the desired set of goods and services at minimal costs.
Third question "For whom to produce?"Of course, the most complicated because it reflects the attitude of society to justice and economic equality. All society should somehow decide that it considers fair distribution, and then choose a way to achieve such a distribution. In practice, movement to a fair distribution can mean a partial refusal to efficiency. The society must decide which part of the effectiveness it is ready to sacrifice in the name of a more equitable distribution.

The difficulty of making decisions on these issues (which, as for whom) is related to objective restrictions and the need to make a choice. This applies to all societies, regardless of their political system and development level. Differences between countries are only in distribution methods.

Methods of distribution of resources in a closed economy

A closed is the economy in which the country does not conduct international trade. In the modern world there are no such countries, but the existence of international trade changes a little changes the logic of resource allocation. We will use a closed economy model to simplify the explanation. Consider three methods of distribution:

Distribution in the case when prices manage only the market - a purely market economy.
Distribution in the case when the prices affect the prices, and government solutions - a mixed economy.
Distribution in the case when prices are appointed by the Government - the Command Economy,

1. Distribution with a purely market economy. In the presence of free market relations, the decision that, as for whom to produce, is not taken consciously by consumers or firms. The central authority, which would establish prices or release plans, does not exist. Both are determined as a result of the interaction of demand for demand and suggestions. Firms offer goods and services, guided by their desire to make a profit, and consumers impose such a demand for these goods and services in which they receive maximum utility.

Under these conditions, the answer to the question is to produce, follows from those preferences that consumers freely express in the market. Consumers bring their preferences to manufacturers through money. In the markets, there is a general vote daily, in which consumers give "votes" of their money for millions of various goods and services.

Solving the issue of how to produce, occurs during competitions between firms for affordable production factors. Depending on the prices of the company choose the most profitable combinations of production factors. The company can achieve maximum profit by minimizing the costs and applying the most effective production methods.

Finally, the solution to the question of which to produce also takes place in the markets. Firms produce For those who are able to pay, i.e. for those who have income. Revenues receive households selling firms production factors. The distribution of income depends on how property is distributed to factors and from prices of factors. Most families receive income by selling their work to firms. Sale of production factors occurs on the free markets of factors. Sellers in these markets are both people for whom firms produce.

We considered the case when the price mechanism works without external intervention, or, in the language of economists, is under perfect conditions.

2. Distribution of resources in a mixed economy. The mixed economy occupies an intermediate position between purely market and team. In the conditions of this particular economy, most countries of the world live. It all depends on to what extent is the government participates in the economy.

The most large-scale government intervention takes place in the countries that elected socialist way of development. They usually all the factors of production are distributed to the government, and consumption products are issued to the market, but market prices are again controlled by the government.

In countries that are customary called capitalistThe government also interferes with the economy and thus puts obstacles to the development of market relations. Government intervention is the policy constraints on some prices and in controlling a number of industries.

In addition to the government intervention, there are other factors in these countries that prevent the market to be in perfect conditions:

Costs for information. In real life, perfect knowledge about goods prices and resources themselves are not free of product. Requires significant costs for this information and the research related to it. For the average consumer and a small firm, such costs may be unbearable. Many consumers lack knowledge about the technical characteristics of complex products (for example, about cars, computers, televisions), which are on sale, and sellers are often insufficiently competent in these issues. The same problems exist in the resource market: workers are rarely aware of the level of salary and growth prospects on competing firms. For these reasons, a decision on the purchase of goods or the sale of factors of production is often taken at all are not optimal. This is reflected in the allocation of resources.
Power of monopolies. This is understood by the possibility of firms to manage the prices of their products on the market. In the desire for maximum profits, monopolies tend to establish prices higher than when free competition, and this leads to the redistribution of resources in favor of monopolies. Monopolies' profit control is one of the reasons why the state interferes with the price mechanism using legislation and nationalization.
External factors. Economic activity of any society is accompanied by social costs(pollution, noises) which are not taken into account by firms when determining the price level. The presence of such social costs means that prices do not fully comply with the real utility that consumers receive. For this reason, consumers spend their income in an optimal way, respectively, and resources are not optimal. In a mixed economy, external factors are governed by the state through the adoption of laws, the establishment of taxes and subsidies.
Public benefits. The price mechanism on its very nature does not apply to public benefits, such as roads, police, defense. Such benefits are consumed to all or most of the population, and their users cannot pay through the price system. In a mixed economy, the decision of these tasks is also engaged in the state.

3. Distribution of resources in the command economy. Team is called such an economy, in which decisions on production volumes and, the distribution of resources are accepted by the government. For this purpose, it is usually created in the country central Planned Organ (CPO). This authority is a large administrative apparatus, which develops long-term state economic development plans and based on them issues directive to managers on issues: a) to produce; b) where to receive resources; c) what technique of production to use; d) where to supply produced goods.

Distribution methods through solutions of CPO were used in all socialist countries. The distribution was subject to factors of production, residential premises, educational services and even personal income. As for such consumption items, like food, clothing, household appliances, there was a market for them, but market prices were regulated by the government.

There are countries in which all resources are directly distributed, including consumer goods and services. So, for example, economic life is organized in the DPRK.

Advantages and disadvantages of various methods of resource allocation

And market mechanism, and command governance have their advantages and disadvantages. Consider the main features of each of the distribution methods.

1. The advantages of the market mechanism. In industrialized countries, approximately two thirds of resources are distributed in the markets under the influence of the price mechanism. Let's call the advantages of this distribution method:

Efficiency of the economy. Supporters of the market system believe that consumers are the best judges of their interests. Each of them seeks to dispose of their money in such a way as to get maximum benefit. Supporters of centralized management believe that the market is mainly the interests of well-secured people, and the economy can be considered effective only when it reflects the interests of all members of society. In their opinion, only at the level of the government can organize the study of the interests of the entire population and find the optimal allocation of resources.
Great freedom of choice. In the markets, consumers communicating with manufacturers give them their wishes according to the characteristics of the goods and services they would like to purchase. Firms based on these wishes create products that, in their opinion, will be in demand. Since there are many firms and they compete with each other, a large number of products are appeared on the market, but with different capabilities and various manufacturing quality. Consumers have the ability to freely choose from a much wider list of goods and services than it could be with a centrally planned economy.
Fast reaction to changes in the economic situation. The market economy reacts faster than command, to change the conditions. This is due to the fact that on the scale of the company such factors as the rise in prices for raw materials or fuel, the fall in demand for goods or the service, have a much more acute impact on the budget than in the scale of the state. In addition, the administrative apparatus of the firm is incomparable less than the CPO state and time to make a decision is also required to be incommensurable.
Stronger stimuli risk. The desire of firms win competition prompts them to risky investments with the hope of holding or expanding their market share. Since firms directly interact with consumers, they usually know their market well, and in most cases their risky investments lead to success. If attachments are aimed at developing technology, then they lead to acceleration of economic growth.

2. Disadvantages of the market mechanism. Critics of free market relations see them a number of flaws. Let's call the most frequently mentioned ones:

Inequality in income and wealth. It is expressed that the price system leads to utmost inequality in income and wealth. In the production of goods and services in accordance with the "voting" of money, scarce resources are sent to the production of luxury for the rich, which have more money "votes", and not on the production of goods for the poor. This opinion has a real basis. An example is the construction of residential buildings in Moscow. Most buildings under construction are intended for people who have a lot of money, and is almost disabilities for people with income below average. The price system ignores the concept of justice.
Unemployment. Some economists believe that a free market mechanism will enrades the economy into cyclic unemployment, since there are no rigid communication between the solutions of manufacturers and intentions of consumers. Experience shows that in the absence of state intervention, the overall demand for goods periodically turns out to be less than the total volume of their production. As a result, the supply of non-sold goods is accumulated, it forces manufacturers to reduce production and dismiss workers. The small mobility of labor resources does not allow to satisfy demand, and reserves remain unused.
Inflation. In the 70s and 80s of the last century, most industrialized countries and many less developed countries experienced a rapid increase in prices. This, in turn, caused a serious tension in public and political life. The experience of those years prompted many economists to argue that periodic inflation bursts are organic property of a market economy. In the case of centralized management, such phenomena can be excluded.
Inflated demand. In the desire to attract consumers and keep sales at the existing level or increase its company widely use powerful advertising tools. The main goal of advertising is to cause a consumer to buy a product. Therefore, advertisers strive to appeal to show the benefit that the consumer can get from the product. Sometimes the advertised product is not needed to the consumer, but under the action of advertising it buys it. It turns out that the consumer loses its independence on the market.
Market imperfections. Market prices in some cases do not correspond to the real benefits that the consumer receives. They are subject to strong influence from monopolies, do not take into account the losses associated with environmental pollution, often include unreasonably large administrative costs. If there are such imperfections to fulfill the conditions for the effective development of the economy permanently possible.

3. The advantages of the command economy. Some disadvantages in the distribution that brought by the market mechanism disappear when the decisions are made by CPOs. It is believed that the centralized distribution has the following advantages.

Full-time. CPO creates conditions for the full use of labor resources. If in some region there is not enough jobs, it decides on the construction of a new plant or creating a new enterprise, even if the activities of newly created organizations do not bring profit.
Low inflation. Since under the command economy, the entire range of prices for goods and services is established administratively, the inflation rate can be held at a lower level than under the action of the price mechanism. If the CPO does not understand to ensure that the demand is compliance with demand, then the lack of goods will rather lead to the formation of queues, a black market and, possibly, public unrest than to price increases.
Minimum loss of resources. Under the command economy, the CPO plans to all plants and the production and distribution of finished products, so the manufacturer is not at risk to spend water resources. State enterprises do not earn profits. All the money obtained by them from the sale of products is again returned to production. Thus, the losses associated with the formation of profits are also absent. Of course, there are always losses caused by CPO errors, but these losses are usually small.
Great ability to adapt to external effects. All types of harmful effects of production and consumption on the environment are under the control of state bodies, and the CPO includes the plans of enterprises to neutralize these effects. In cases where it is not possible to neutralize the impact, the CPO, guided by the interests of society, prohibits production.
Minimum inequality in income and wealth. Since the CPO determines the prices of all production factors, it is able to minimize inequalities in the distribution of income and wealth. With command economy, people are not able to accumulate a large amount of capital, since all major enterprises belong to the state. In addition, the state has the ability to establish the desired housing standards, medical care and education for all members of society. Usually it seeks to ensure that there was no excessive difference in life.

4. Disadvantages of the command economy. The command economy from economists comes much more criticism than the market economy. According to the majority of economists, the command economy has a defect in its basis. She does not have consumers themselves or manufacturers, but their representatives in the authorities. For this reason, it has a number of serious shortcomings. Consider those of them that most often call critics.

Costs for information. For the work of the CPO, the amount of information is much larger than for a private firm. Information should be collected from the territory of the whole country; Highly qualified merchandise specialists in various industrial sectors, in economics, on the processing of statistical data, planning and other issues should be attracted to the analysis of information. The cost of collecting and processing information is very high. With a market economy, firms need only the information that relates to its activities, and the bulk of this information is brought by "votes" of money.
The complexity of the assessment of demand. In the absence of free prices, it is extremely difficult to assess the existing and future demand for goods and services. Sometimes demand is assessed by the size of the queues for scarce products or by the number of unprepared goods, sometimes by the population survey method, but such assessments are always less accurate than counting the real number of purchases on the free market.
Delays in production planning. Under the command economy, after the necessary information is collected and decisions are accepted, much time goes to drawing up plans for the country's enterprises. During the planning of the preferences of consumers and the needs of manufacturers in resources can change significantly. As a result, the volume of issuance may not comply with real demand and technology may be retained.
Loss of incentives. It is known that with a market economy, the price mechanism creates incentives to develop a business and even pushes to risky investments. In the command economy, where prices and level of salary are governed by the state, these incentives are very weakened. Opportunities to increase the earnings are low, it is not required to preserve the existing earnings of great effort. Due to these circumstances, the productivity of many workers is low.
Limited selection of goods and services. In the command economy there is a tendency to standardize products and individual tastes are practically not taken into account. The choice of goods and services is significantly higher than in a competitive market. Since the demand for goods and services is formed depending on the products that are available on the market, consumers express their wishes in a very limited range. For this reason, the expansion of the range is slow.

Leoin Evgenevich shop - Doctor of Economic Sciences, Prof CCOP, which welcomes the Department of Management of the Faculty of Economic Activity of the Faculty of International Relations of the Upail Faith University (UPFU)

The main economic task is to choose the most effective option for the distribution of factors of production in order to solve the problem of limiting opportunities, which is due to the boundless needs of the Company and the limited resources. Having information about its production opportunities, any society should find answers to the following three questions.

- What of the goods and services should be produced in and in what quantity?

- How do these products and services need to be produced?

- Who will buy and can consume (use) these products and services?

- What to produce?

A separate person can provide himself with the right goods in various ways: make them on their own "exchange to other benefits, get them as a gift. Society as a whole can not get everything and immediately. By virtue of this, it should decide what would be wanted to have immediately, with obtaining what can be waited, and from what to refuse.

Developed countries, for example, make a lot of effort to improve the production of a limited circle of goods to achieve some success in competition with other countries. It can be cars, computers or other goods.

Sometimes the choice can be very difficult. The so-called "underdeveloped countries" are so poor that the efforts of most of the workforce are spent on the fact that only feed and dress the population of the country. In such countries, it is possible to raise a living area by increasing production. But since the workforce is done completely, it is not easy to increase the level of social production. You can, of course, carry out the modernization of the equipment in order to increase production. But this requires the restructuring of the national economy. Part of the resources will be switched from the production of consumer goods on the production of capital goods, construction of industrial buildings, production of machinery and equipment. Such a restructuring of production will reduce the standard of living in the name of its future increase. However, in countries with low vital levels, even a minor reduction in mass consumption goods can put a large number of people on the edge of poverty.

How should goods and services be produced?

There are various options for the production of the entire set of benefits, as well as each good separately. Who, from what resources, with which technology they should be produced? Through what organization of production? In different projects, you can build a production and residential building, in different projects you can produce cars, use the land plot. The building can be a multi-storey, and one-story, the car can be collected on the conveyor or manually, the land plot can be seeded with corn or wheat.

Some buildings are building individuals, others - the state (for example, school). The decision on the construction of cars in one country is adopted by the state body, in another private firms. The use of land can be carried out either at the request of farmers, or with the participation or decision of state bodies.

Who produced a product?

Since the number of goods and services created is limited, the problem of their distribution arises. Who should use these products and services, extract utility? Should all members of society get the same share or should be poor and rich, what should be the proportion of those and others? What should priority be given - intelligence or physical strength? The solution of this problem defines the goals of society, the incentives of its development.

As you know, the economic system is a set of interrelated and certainly ordered elements of the economy.

Outside the systemic nature of the economy, they could not be reproduced (constantly renewing) economic relations and institutions, could not exist economic patterns, it could not be a theoretical understanding of economic phenomena and processes, could not be coordinated and efficient economic policy.

Real practice constantly confirms the systemic nature of the economy. Objectively existing economic systems find their scientific reflection in theoretical (scientific) economic systems.

as the history of economic science shows, the classification of economic systems can be carried out on the basis of various criteria (signs). This multiplicity is based on an objective manifold of the properties of economic systems.

In the enlarged form, the criteria for economic systems can be divided into three groups: structure-forming criteria; socio-economic (meaningful) criteria; Volumetric and dynamic criteria.

It is the combination of all economic processes committed in society on the basis of property relations and organizational forms operating in it, represents economic system of this society.

Human society in its development used and uses various economic systems. They differ in the approach and methods of solving the main economic problems.

Traditional systems

In some so-called "underdeveloped countries" there are traditional economic systems based on customs. Traditions transmitted from generation to generation determine which goods and services, as for whom to produce. The list of goods, production technology and distribution are based on customs, consecrated time. Economic needs of individuals are determined by heredity and custom affiliation. Technical progress penetrates these systems with great difficulties, as it confesses with traditions and threatens the stability of the existing system.

The presence of specific resources also determines the traditional in solving economic tasks. For example, if Brazil grown in the main coffee last year, then this year it will grow coffee, and the same technological techniques, and for the same importing consumers.

Command economy

All decisions on the main economic problems takes the state. All resources here are the ownership of the state. Central economic planning covers all levels - from household to state. The distribution of resources is carried out on the basis of long-term priorities. Because of this, the production of benefits is constantly breaking away from social needs. The progress of society is braked.

Market economy

In a market economy, all the answers to the main economic issues: what? as? And for whom? - Determines the market: prices, profits and losses.

"What" is solved by paying demand, voting money. The consumer decides himself, for which he is willing to pay money. The manufacturer will also seek to satisfy the desire of the consumer to give money for the goods they need.

"How" is solved by the manufacturer seeking to get a big profit. Since the price setting depends not only on it, then to achieve its goal in the context of competition, the manufacturer must produce and sell as many products as possible and at a lower price than its competitors.

"For whom" is solved in favor of various groups of consumers, taking into account their income.

Mixed economy

The modern market system is a combination of forms of entrepreneurial activity and the role of the state. We will illustrate this on the example of the economy of some developed countries.

The Swedish system is characterized by the energetic participation of the state in ensuring economic stability and in the redistribution of income. The core of the Swedish system is social policy. To successfully conduct it a high level of taxation is established, which is more than 50% of the gross national product. As a result, unemployment is reduced to a minimum, relatively small differences in the income of various groups of the population, high level of social security of citizens. The export ability of the Swedish companies is high. The main advantage of the Swedish model is that it combines the relatively high rates of economic growth with a high level of complete employment and well-being of the population.

The Japanese economy model is characterized by developed planning and coordination of the activities of the government and the private sector. Economic planning of the state is a letter of recommendation (indicative). Plans are government programs that focus and mobilizing individual units of the economy for the implementation of nationwide tasks. For the Japanese economy, the preservation of national traditions is characterized by borrowing from other countries all that is needed to develop the country. This allows you to create such management systems and organization of production, which in Japan's conditions give a big effect. The borrowing of Japanese experience by other countries does not always give the expected result (for example, quality mugs), since these countries have no Japanese traditions.

In the American economy, the state plays an important role in the development and compliance of the rules of the economic game, ensuring R & D, freedom of entrepreneurship, the development of education, culture.

Mixed economy dictates the most efficient use of resources, contributes to the development and use of perfect technologies. An important non-economic argument in favor of a mixed economy is its bid for personal freedom. Entrepreneurs and workers move from the industry to the industry in their own decision, and not according to government directives.

Society with various historical and cultural heritage, various customs and traditions use unequal approaches and methods for efficient use of their own resources.

2. Socio-economic consequences of inflation. Anti-inflation policy of the state

As an economic phenomenon, inflation has existed for a long time. It is believed that its appearance is connected almost with the first period of money. The very concept of "inflation" (from the lat. Inflatio - bloody) for the first time began to be used in North America in 1861-1865. It meant it a kind of process leading to an increase in paper-money circulation. Soon this concept began to be used in the UK and France, and mainly in the environment of financiers and bankers. In economic literature, it appeared at the beginning of the XX century.

Inflation is a socio-economic phenomenon that is generated by imbalances in various spheres of the country's market economy, it is still not fully covered in a scientific plan. Inflation is the most acute problem of the modern development of the economy, so it requires first of all clarification as a socio-economic concept.

The disorder of the laws of money circulation is most often explained by the action of external factors. As a rule, in most cases of the manifestation of inflation, there is a confrontation between the monetary side of the factors in the field of production. The violation of a number of national economic proportions in the field of production and circulation leads to a violation of the exchange conditions. The essence of contradictory and violation of the exchange conditions is that for each subsequent buyer, the same monetary value exchanges on an increasingly less commodity equivalent.

Inflation can be considered as a manifestation of contradictions that occur due to the increase in prices and impairment of monetary units, on the one hand, between valid and monetary, and, on the other, between real and fictitious capital. In other words, the emerging structural disproportions in the reproduction of public capital lead in the end to higher prices.

In the domestic literature, the word "inflation" is most often identified with the establishment of a new equilibrium of supply and demand in changing conditions. Often, when determining inflation, it is concluded on the interpretation of such economic categories as demand, proposal, equilibrium. In particular, inflation is considered to be exemption of the amount of money in circulation, with respect to the value of goods and services (at this rate of money turnover), leading to their impairment.

In the conditions of totalitarian regime, in the socialist economy, the phenomenon of inflation was not "noticed." It was believed that since the amount of money in circulation is established systematically in accordance with the needs of retail turnover, then inflation cannot occur. At the same time, it was not taken into account that inflation may be hidden, manifested in a commodity deficit. It is this reason that the reduction in production volume exacerbated in 1990 inflation processes. A feature of the economic crisis of Russia was that he was not accompanied by a fall in the income of enterprises and the population, which aggravated inflation.

Do not bring anything new and such explanations of the occurrence of inflation as:

the fall in the purchasing power and the meaning of money, their values \u200b\u200bfor the subjects of the economic process;

reducing the real "weight" of money income and expenses;

For the Western economy, the formula "Inflation - Rising prices" turned out to be unacceptable, because "there" inflation means rise in prices while maintaining the balance of demand and proposals. In the most popular textbook in the West, K. Makkonella and S. Bergo "Economics" indicates that "inflation is an increase in the overall price level." Said, of course, does not mean that all prices are raised. Even in periods of fairly rapid growth of inflation, some prices may remain relatively stable, while others fall are one of the patients of inflation that prices tend to rise very unevenly. Some jump, others rise with a more moderate pace, and others do not rise at all.

So, for the West, the main price is in this issue, their overall level. In Russia, the concept of inflation is also associated with prices, but already in another perspective: there is money from the population, and there is nothing to buy money - it was the result of price liberalization. The concept of inflation in Russia has its own property and does not fit into the framework of the classical presentation. The concept of the inflationary situation when effective demand exceeds the supply of goods and services applies not only to the consumer market, but also to the market for product and technical products. Hence the popular definition of inflation: overflowing money circulation with paper monetary signs and their impairment, i.e. Exceeding the number of monetary signs over in handling commodity support.

In all cases, inflation should be considered as: violation of the actions of the laws of money circulation, which causes a disorder of the state credit and monetary system; explicit or hidden price increase; Naturalization of exchange processes (barter transactions); Reducing the living standards of the population.

The effects of inflation are diverse, contradictory and concluded in the following.

Firstly, it leads to the redistribution of national income and wealth between various groups of society, economic and social institutions arbitrary and unnecessary forecasting.

Secondly, high inflation rates and sharp changes in the price structure complicate planning (especially long-term) firms and households. As a result, the uncertainty and risk of doing business increase. A pay for this is the increase in interest rate and profits. Investments are beginning to be short-term, the share of capital construction in the total investment is reduced and the proportion of speculative operations increases. In the future, this can lead to a decrease in the welfare of the nation and employment.

Thirdly, the political stability of society decreases, social tensions increase. High inflation facilitates the transition to the new structure of society.

Fourth, the relatively higher rates of rising prices in the "open" sector of the economy lead to a decrease in the competitiveness of national goods. The result will be an increase in imports and a decrease in exports, the growth of unemployment and the ruin of commodity producers.

Fifth, the demand for more stable foreign currency increases. Capital leakage increases abroad, speculation in the foreign exchange market, which in turn accelerates the rise in prices.

Sixth, the real cost of savings accumulated in monetary form is reduced, the demand for real assets increases. As a result, the prices of these goods are growing faster than the overall price level changes. Acceleration of inflation spures the growth in demand in the economy, leads to flight from money. Firms and households have to exercise additional costs for the purchase of real assets.

Seventh, the structure changes and the real revenues of the state budget decrease. The possibilities of the state for expansionist fiscal and monetary policy are narrowed. Budget deficit and public debt increase. The mechanism of their reproduction is launched.

In the eighth, in the economy operating in terms of incomplete employment, moderate inflation, slightly reducing the real incomes of the population, forces it more and better work. As a result, creeping inflation is at the same time "fee" for economic growth and an incentive for him. Deflation, on the contrary, leads to a decrease in employment and loading of production capacity.

V-ninth, in blocks of structures, the high level of inflation is combined with great unemployment. Significant inflation does not make it possible to increase employment. However, the direct relationship between inflation, on the one hand, the volume of production and unemployment - on the other, does not exist.

In-tenths, there is a multidirectional movement of relative prices and production volumes of various goods.

According to the theory of "acceleration of inflation" at long-term time intervals, an increase in inflation rates from year to year helps to maintain the real volume of production above its natural level.

Two types of economic policies are used for anti-inflation regulation:

policies aimed at reducing the budget deficit, restriction of credit expansion, determine the monetary emission. At the same time, a monetarist approach is applied - regulation of the growth rate of money supply under certain limits (in accordance with the growth of GDP);

pricing and revenue management policy, aimed at linking earnings with increasing prices. One of the means is the indexation of income, determined by the level of the subsistence minimum or standard consumer basket and is consistent with the dynamics of the price index. To curb undesirable phenomena, the limits of increased or freezing wages can be limited to the issuance of loans.

The active struggle of inflation, called deflation policy, usually leads to a fall in GDP growth rates and even its reduction (deflation).