The role of economic schools in the management of economic crises. The concept of state regulation of the economy, its main goal and objectives
The role of the state in economic regulation has been, to one degree or another, the subject of economics throughout history. In any territorial entity, the state not only carried out normative activities for the legal regulation of public life, but also redistributed income, forming budgets for the implementation of general functions. However, the role and boundaries of state economic activity have always been a subject of debate. Depending on the general conceptual orientation, economic scientific schools assess the essence and significance of the tools for state regulation of the economy and directions of economic policy in different ways. The main provisions of modern economic theories about the role of the state in the economy are presented in Figure 1.1.
One of the first scientific schools that determined the economic functions of the state was mercantilism(XVI-XVII centuries), the largest representatives of which are T. Man, J. Stewart, J.-B. Colbert. Proceeding from the fact that the source of wealth is foreign trade, the results of which increase the amount of gold and silver in the country, the mercantilists justified the need for the existence of tough measures of state administration aimed at preventing the outflow of money from the country and supporting exports.
The economic policy of supporting national producers and traders, restricting imports was called protectionism. Elements of such a policy are often used today. Developed countries in certain situations apply measures to support exporters and protect the domestic market from imports, strive to balance the trade and balance of payments. One form of obstacle to protectionism is the World Trade Organization (WTO), created to remove economic and administrative barriers that restrain international competition.
Scheme 1.1.Basic theories of state regulation of the economy
A significant increase in scientific knowledge about the role of macroeconomic regulation was made physiocratic theory(XVII century), representatives of which are F. Quesnay, A. R. Turgot. Speaking for freedom of trade, representatives of this school considered agricultural production, labor in agriculture, as the source of the state's wealth, since only in this area a pure product is created. The merit of this school is the exit of the research to the macroeconomic level, the analysis of reproduction, the circulation of the social product and monetary income. At the same time, it was concluded that it is necessary to observe intersectoral proportions between agriculture and industry. The amount of money in circulation is determined by the needs of the relationship between the branches of production.
The theory of physiocrats raised the question of developing sectoral priorities in economic policy (agriculture), supporting these priorities with instruments of state regulation (taxes, duties).
The theoretical basis for non-interference of the state in the economy, shared by most economists to this day, is defining the principles of a self-regulating market A. Smith, outlined in the work "Investigation of the nature and causes of the wealth of nations" (1776). According to A. Smith's theory, the market mechanism moves due to rational decisions of its participants, constant adjustment is carried out due to free competition, signals of which are given by prices. Market movement is guided by the “invisible hand” of supply and demand, where there is no place for government regulation. In various versions, this market model is reproduced in the later liberal models of the market economy.
However, proceeding from the practice of the real functioning of the state, A. Smith examines the most important functions and instruments of state functioning, such as the budget and taxes. Among the tasks of the state (monarch) A. Smith names the creation and support of public enterprises and institutions, which, for reasons of lack of profitability, will not create private individuals, but are necessary for the whole society. In modern economic terms, this provision is developed into a function of producing public goods and creating positive externalities. A. Smith identified the main national expenditures, which included the state's expenditures on defense, justice, infrastructure (roads, bridges, ports) necessary for the development of trade, as well as the costs of training and educating the younger generation.
A. Smith paid much attention to the study of the tax system, defining its main principles: equality of all before taxes, reliability, convenience. A. Smith considered a balance of income and expenditure to be an indispensable condition for the functioning of the state: an increase in public debt can lead to the ruin of the state.
The general evolution of economic theories, denying the active role of the state in the economy, was violated by the theory of J. M. Keynes ("General theory of employment, interest and money", 1936).
Unlike the positions of other scientific schools Keynesianism when considering the movement of the market, he considers not supply, but aggregate demand to be primary, and denies the possibility of complete self-organization of the economy with the help of prices, wages, and interest rates. The expression of market imbalance is unemployment, a decline in production. Analyzing aggregate demand, J.M. Keynes showed the circumstances of insufficient investment in the economy and the need for government intervention to achieve efficient use of available resources and economic growth. The main problems of a market economy are unemployment and reduced investment. The state from its sources must invest financial resources in the economy, stimulate demand and thereby maintain an effective balance. The source of additional investment in the economy is the state budget. Therefore, fiscal instruments of government regulation are dominant, and the budget deficit acts as one of the ways to stimulate demand.
Until the early 70s. XX century. Keynesianism was the most popular theory on which the economic policies of developed countries were based. However, later on, other economic theories came to the fore, which substantiated the possibility of self-regulation of the market. In the 1970s. in the wake of a serious global energy crisis, two circumstances emerged: a decline in production and inflation, which received a generalized name stagflation.
According to critics of Keynesianism, this theory could not sufficiently explain the new phenomena of economic development, and their conclusions for economic policy in practice deepened the negative consequences.
Among such theories, the most significant is monetarism(M. Friedman "Inflation and Monetary Circulation", 1969). Monetarism as a basis for the economic policy of developed countries turned out to be in demand as the crisis of the Keynesian concept deepened, in the conditions of new phenomena of economic life - inflation and periodic recessions.
Monetarism, based on the recognition of the possibility of self-regulation of the market economy without government intervention, pays special attention to the study of money circulation, the financial sphere, analysis of the causes and methods of combating inflation. The course of the economic cycle according to monetarism is determined by the cyclical nature of the money supply in circulation, which determines the business cycle. Government investments and one of their sources - the budget deficit - only intensify inflationary processes. Therefore, the main object of regulation should be the money supply, the constancy of its growth rate depending on the magnitude of the growth rate of the gross domestic product. Note that the regulation of the money supply is not a function of the executive branch, nevertheless it belongs to the sphere of national institutions of macroregulation - central banks (the Federal Reserve System in the United States). Macro regulation of the economy by targeting the money supply, varying interest rates, reserve requirements and other financial means indicates the need for macro regulation of the financial sector.
However, as the world economic crisis that began in 2008 has shown, monetary methods of regulating the economy by themselves do not produce crisis-free results - the complication of economic relations in the global economy, apparently, requires adjusting these methods. In almost all countries, the way out of the crisis was budget financing and an increase in the state budget deficit.
Among the scientific schools that deny the active role of the state in regulating the economy, there are also different branches of modern theories of neoinstitutionalism(R. Coase, J. Buchanan, D. North and others). However, based on the position of the need to determine property rights, contractual relations and regulatory activity of the state in this area, the representatives of the theory of public choice highlight the "market failures" that the state must fill, i.e. question the self-regulation mechanism of the market itself. These “failures” include monopolies, information asymmetries, the need to produce public goods, and externalities. In turn, according to this theory, the state has its own “failures” (lack of reliable information, peculiarities of the political cycle, bureaucracy and corruption), so the problem lies in the optimization and efficiency of the economic functions of the state.
The practice of economic development has shown that government influence on market relations cannot be limited exclusively to regulatory activities to establish and implement property rights. Recent history, starting from the 60s. XX century, testifies to the active role of the state in the economy.
The role of the state in the financial sphere has increased, its influence on the stability of the financial system is carried out, first of all, through the macro-regulation of interest rates, the implementation of credit policy measures, exchange rates of the national currency. The state, carrying out purchases of goods and services for national needs, has become a subject of entrepreneurial activity, influences market prices, volumes of supply and demand. Budgetary, tax and financial-credit instruments are real factors influencing economic development, stimulating and supporting stability and dynamics. State transfers to unprotected segments of the population and investments in human capital in general have increased. According to the World Bank, over three and a half decades (from 1960 to 1995), the scale of the state presence in the economies of industrialized countries has doubled.
In these conditions, the modern economy is characterized as mixed. Its dynamics and mechanism are based on the actions of the market and the state.
In modern economic science, despite the ongoing discussions and contradictions, there is a general approach that recognizes the following areas of state activity in the economic sphere:
- - coordination of macroeconomic policy (taxes, budget, financial regulation);
- - entrepreneurial activity on a certain scale (government procurement);
- - regulation of the activities of monopolies;
- - impact on economic growth (investment in human capital, efficiency of state institutions);
- - provision of benefits to vulnerable groups of the population (pensioners, unemployed, disabled people).
The key tasks of theory and practice include determining the boundaries of state participation in economic processes, assessing the effectiveness of government regulation, searching for forms and methods that do not undermine the foundations of the market mechanism.
The emergence of certain views and concepts is always associated with the objective conditions for the development of society, its economic system. The attitude to government intervention in the market economy was different at different stages of its formation and development.
This can be seen in various schools of economics.
The economic policy of the state during the period of initial capital accumulation and the formation of market relations from the 15th century. until the middle of the 17th century. reflected the interests of commercial capital and industry (then they were combined).
The views on the need for state regulation for the development of trade and industry in the country were then developed by the economic school - mercantilism (fr. Mercantilisme; it.mercante - merchant, merchant). Mercantilism as an economic school developed in England, Italy and France. The most prominent representative of this school is A. Montchretien (fr.). He was the first to introduce the term "political economy". The main work was called "Treatise on Political Economy" (1615).
Mercantilists considered the main source of wealth to be money, more precisely, trade, and therefore the accumulation of monetary wealth can be achieved with the help of state power, the support of artisans and the protectionism of trade in the foreign market.
In the middle of the XVIII century. as a reaction to mercantilism in France, a new direction of economic thought arose - physiocratism (rp.philsis - nature + kratos - power, strength, domination). Founder Fr. Quesnay - "Economic table" (1758).
The physiocrats believed that the government's attention should be paid not to the development of trade and the accumulation of money, but to agriculture, where, in their opinion, the wealth of society was created.
In practical conclusions, the physiocrats sought the implementation of an economic policy by the state aimed at the development of large-scale agriculture.
With the development of market relations, the growing class of entrepreneurs began to view government intervention and related restrictions as an obstacle in their activities. The changed situation has confirmed the need to create a new system of economic knowledge, which found its expression in the formation of the classical school. Outstanding representatives of this direction of economic thought: V. Petti, A. Smith, D. Ricardo.
For the first time, the main ideas of the classical school were most fully substantiated by A. Smith in his "Research on the nature and causes of the wealth of peoples" - (1776). According to his interpretation, the market system is capable of self-regulation, which is based on the "invisible hand" - personal interest based on private property and associated with the desire to make a profit. Personal interest acts as the main driving force behind economic development. One of the central ideas of A. Smith's teachings was the idea that the economy would function more efficiently if it was excluded from government regulation.
The best option for the state is to adhere to a laisser faire policy (French expression: let everyone go their own way) - non-intervention of the state. The English version of this expression: let it be - let everything go as it goes. Since the main regulator of the economy, according to A. Smith, is the market, therefore, it (the market) should be given complete freedom.
The classical direction prevailed for quite a long time, until the crisis phenomena of 1929-1933. did not question many of its provisions. Representatives of this trend believed that the mechanism of market competition automatically ensures equality of supply and demand, and any long-term violation of this equilibrium and deep economic crises are excluded. This was argued by the fact that in market conditions, prices, wages, interest rates are quite flexible and change rapidly under the influence of supply and demand, adapting to the new market situation.
An important stage in the theoretical understanding of the role of the state in a market economy was associated with the name of the outstanding English economist J. Keynes. The ideas that revolutionized the classical views on the market economy were set forth in the book. "General theory of employment, interest and money" - (1936). This means the emergence of a new trend in views on GRE - Keynesianism. The influence of Keynesian ideas on economic thought and economic practice can hardly be overestimated. Economic policies reflecting Keynes's ideas were pursued by most of the developed countries of the world after the Second World War. It is believed that it was she who largely contributed to the mitigation of cyclical fluctuations in the economies of these countries.
Keynesian theory, relying on the actual facts of the first half of the 20th century, proceeded from the fact that prices, interest rates, and, in general, wages are not quite flexible in the market and change slowly in the short term, rather than quickly - as in the classical version ... Therefore, they are moving towards the equilibrium point of aggregate supply and demand in a slow mode.
Keynes believed that the classical theory could not explain in what ways to reduce unemployment, which, becoming widespread, requires more and more public funds and creates an unfavorable social situation. He explained that the essence of macroeconomic regulation is to manage costs when income changes, which change much faster than rigid prices and wages.
Unlike classical theory, Keynes believed that the state can regulate the development of the economy by influencing aggregate demand. Aggregate demand is the real amount of national production of goods that consumers, businesses and government are willing to buy at a given price level. It was in the lack of "effective" demand that Keynesian theory saw the main reason for the crisis in the market economy.
In a purely market economy, there are no levers, Keynes believed, that would automatically contribute to the growth of GNP. Therefore, "... our ultimate goal," he wrote, "may be the selection of such variable quantities that are amenable to conscious control or management by the central authorities within the framework of the economic system in which we live." Keynesians believed that the economic policy of the state can contribute to the growth of GNP and increase employment. Thus, an increase in government spending will contribute to an increase in GNP and thereby increase employment. In addition, the state must stimulate for these purposes the growth of investment by increasing money circulation and reducing the rate of interest.
Keynes also referred to investment regulation tools: increasing public investment and their efficiency, expanding public spending and procurement of goods. As a result, production will expand, additional workers will be attracted, and employment will increase.
Considering the economic instruments for regulating aggregate demand - monetary and budgetary, preference was given to the budgetary one.
Monetarism (English money - money; monetari - money). From the second half of the 70s - early 80s. there was an intensive search for new approaches to GRE. If employment was the central issue in the development of Keynesian theory, then the situation changed. The main problem was inflation with a simultaneous decline in production (stagflation). Keynesian recommendations to increase budget expenditures and thereby pursue a policy of deficit financing in the changed conditions turned out to be unsuitable. Budgetary injections into the economy could only increase inflation, which was actually happening.
As a school in economics, monetarism puts monetary relations at the basis of market relations. In the postwar period, the role of monetarism was revived by the famous American scientist, Nobel Prize winner Milton Friedman (Chicago School) "Counterrevolution in Monetary Theory" - 1970, "Money and Economic Growth" - 1973.
Unlike Keynesians, who view money as a secondary role in determining economic activity, monetarists believe that the money supply is the single most important factor affecting production, employment, and prices. Keynesians advocate widespread government intervention to stabilize the economy, while monetarists advocate a free market with limited government regulation.
Proponents of the monetarist trend focus on "stable demand for money", i.e. on the constancy of the growth rate of the money supply. When the mutual connection between the amount of money in circulation and the aggregate demand is achieved, the constant growth of the money supply allows the aggregate demand to synchronously respond to the growth of the natural level of the real volume of production. In this case, full employment and price stability will be achieved in the long term. At the same time, monetarists assign an important role to the Central Bank in maintaining stable and predictable growth rates of bank reserves and money supply.
Consideration of two alternative variants of the mechanism of monetary policy by monetarists and Keynesians shows:
1) monetarists believe that a change in the money supply, i.e. money supply, directly affects the aggregate demand and then - on the volume of production in the country;
2) Keynesians, in their mechanism for conducting monetary policy, assign a special role to interest rates and investment costs in influencing the volume of production in the country.
It should be borne in mind that the specific monetary policy of a country is not based in its pure form on the provisions of one economic school. But at the same time, it may give greater priority at this stage of development of one specific concept. For example, in the United States, despite the predominant influence of monetarism in monetary policy, it also contains the tools promoted by Keynesians - compulsory regulation of the interest rate and investment spending.
The priority role of monetarism in the development and implementation of monetary policy over the past decades in Western countries has led to a reduction in government intervention in the banking and credit sphere. In almost all Western countries, the main responsibility for monetary policy is borne by the Central Bank, which seeks to influence macroeconomic processes in more flexible (indirect) methods:
Regulation of the amount of money in circulation;
Regulation of bank reserves;
Regulation of the size of loans and credits provided to commercial banks;
Interest rate regulation, etc.
The essence of monetarism can be reduced to two fundamental theses:
1. Money plays a major role in macroeconomics.
2. The Central Bank can influence the money supply, i.e. on the amount of money in circulation (growth no more than 3-5% per year).
The monetarist approach is that markets are sufficiently competitive and that the system of market competition provides a high degree of macroeconomic stability. The ideological roots of monetarism go back to classical economic theory. Monetarists, like representatives of the classical school, are ardent supporters of the free market.
In the history of the development of world civilization, different approaches to assessing the role of the state in the economy are known. Among them are mercantilism, classical approach, Marxism, Keynesianism, monetarism.
All modern schools can be conditionally divided into two groups: schools that advocated active state intervention in the economy, and schools that assigned a very minor role to the state.
Mercantilism. The main economic school in the late Middle Ages was the school of mercantilism. Mercantilism is a view that took place among English economists in the 16th century, the essence of which was that the state should play an active role in the economic life of the country in order to promote the wealth of the country and the king. They stand for supporting trade and crafts. Foreign trade serves as a source of wealth inflow, a means of multiplying money.
The classical theory of laissez-faire in economics. An important stage in the development of ideas about the role of the state was the work of A. Smith "A Study on the Nature and Causes of the Wealth of Nations", in which he argued that "the free play of market forces creates a harmonious structure." One of Smith's main ideas is the idea of an "invisible hand" that guides the course of economic development in the right direction.
In accordance with the classical approach, the state should only deal with ensuring the safety of a person's life and protecting his property, resolve disputes, in other words, do what an individual is either unable to do on his own or does it ineffectively. In his description of the market economy system, A. Smith argued that it is the entrepreneur's desire to achieve his private interests that is the main driving force of economic development, ultimately increasing the well-being of both himself and society as a whole.
The main thing, according to the classics, was that basic economic freedoms should be guaranteed for all business entities, namely, freedom to choose a field of activity, freedom of competition and freedom of trade.
Marxism- an economic theory based in part on the ideas of the classics and solving the problem of a radical reorganization of the system of economic relations of capitalism on the way:
· Elimination of private ownership of the means of production;
· Introduction of a new system of distribution of products in accordance with the labor theory of value;
· Implementation of the system of state regulation in the form of directive planning of economic development based on the goals and objectives formulated in advance.
Karl Marx was the first to pose the problem of achieving general economic equilibrium in the economy on the way of constructing reproduction schemes, in which the conditions for balance in simple and extended reproduction are clarified. Marx created a basic diagram of the relationships between industries, which can be seen as a prototype of the ideas of intersectoral balance.
Neoclassical school does not deny the need for state regulation of the economy (this is one of the differences from the classics), but believes that it should be limited and selective. The state is called upon to create conditions for effective economic activity. The market mechanism itself is capable of ensuring balanced economic growth (this is the similarity in views with the classics).
The basis monetarist approach , existing within the framework of neoclassical theory, the postulate of a rigid connection between the supply of money and the speed of their circulation with the volume of production and the level of prices is put. When analyzing economic ties, supporters of the monetary approach believe that the velocity of money circulation is stable. This statement directly contradicts Keynesian postulates about the direct proportional dependence of the velocity of circulation of money on the interest rate and inversely proportional dependence on the supply of money.
The principle of economic equilibrium is one of the defining provisions of the neoclassicists. The equilibrium in the economy is diverse. This is the balance of supply and demand, this is the balance of production resources, this is the balance of financial indicators.
The theory of general economic equilibrium is used to study the dynamics of economic growth, develop the concept of the well-being of the population, and build a system of intersectoral relations.
Keynesian concept became widespread in the 30s of the 20th century. After the deepest recession of the US economy, J. Keynes put forward a theory in which he refuted the views of the classics on the role of the state. The theory of J. Keynes can be called "crisis" because he considers the economy in a state of depression. According to his theory, the state should actively intervene in the economy due to the lack of mechanisms in the free market that would really ensure the economy's exit from the crisis.
The merit of J. Keynes is that he developed a new theory of regulation of production and employment. He proposed ways of adjusting the market mechanism with the help of state macroeconomic regulation, introduced new methodological approaches to the arsenal of economic science: he substantiated the role of the multiplier effect and credit policy. At the same time, J. Keynes believed that the state should influence the market in order to increase demand, since the cause of capitalist crises is the overproduction of goods.
Keynes proposed several instruments of influence. These are flexible monetary policy, active fiscal policy, and direct government job creation.
The model of state regulation, proposed by J. Keynes, allowed to weaken cyclical fluctuations for more than two post-war decades. However, from about the beginning of the 70s. the discrepancy between the possibilities of state regulation and objective economic conditions began to appear. The Keynesian model could be sustainable only under conditions of high growth rates, which created the possibility of redistribution without prejudice to capital accumulation.
In the 70s, the conditions for reproduction deteriorated sharply. Keynesian ways out of the crisis only unleashed the inflationary spiral. Under the influence of this crisis, a radical restructuring of the system of state regulation took place and a new, neo-conservative model of regulation was formed.
Neo-Keynesians- supporters of the economic theory of J. Keynes, who believe that cyclical fluctuations and inflation are caused by changes in total spending and the supply of money. Neo-Keynesians advocate an active stabilization policy with the preferred use of instruments not only on the demand side, but also fiscal regulation.
The plurality of theoretical concepts regarding the role of the state in the economy is primarily due to the lack of a holistic conceptual understanding of the phenomena occurring in economic life, the prevalence of an empirical approach to the development of scientific generalizations about the processes occurring in the economy.
The absence of a unified and holistic theory of economics does not allow a reasonable approach to assessing the role and forecasting of actually observed phenomena and processes.
The application of methods of state regulation of the economy should be based on the entire system of economic theories, since each of them was caused by some important problem (phenomenon) and retains its relevance to this day.
2 Economic schools on state regulation of the economy
State regulation of the economy has a long history and dates back to the end of the Middle Ages. The attitude to government intervention in the economy at different stages of its formation was different.
The merit of the first representatives of economic schools is not that they found an exhaustive answer to the question posed, but that they identified it. To pose a problem means to outline the direction in which the search should be conducted, feeling, albeit somewhat in a general, vague form, the sphere of social relations that economic theory should deal with.
The first stones in the foundation of a new branch of public knowledge were laid by the mercantilists. Mercantilists - from the Italian mercante - merchant, trader - supporters of a strong government, advocated state support for trade (especially exports). The condition for the growth of the wealth of the nation was considered not only the benefit of foreign trade relations with other countries, but also the development of their own industry, handicraft and manufacturing production, shipping, the cultivation of vacant land, and the involvement of the population in productive labor. Mercantilists argued that the main indicator of a country's wealth is the amount of gold. In this regard, they called for encouraging exports and curbing imports, maintaining an active trade balance (that is, spending less than earning). Mercantilists emphasized the exceptional role of the state in the economy, as the main institution capable of managing all economic processes.
The next stage in the development of economic thought was the classical school. The beginning of its formation was laid by William Petit. He believed that the state plays a major role in regulating economic processes. All his actions should be aimed at increasing the welfare of the country's citizens, since the richer they are, the more taxes can be collected from them.
As you know, Adam Smith is called the founder of the classical school. The fact is that it was he who developed and presented the economic picture of society as a system, and not as separate theses. In his famous work "Investigation of the nature and causes of the wealth of nations" Smith argued that the economy is not controlled from a single center, does not obey the general plan, nevertheless, it functions according to certain rules. In accordance with the classical approach, the state should:
1. Ensure the military security of the country, people and their property;
2. Provide justice;
3. Create and maintain public institutions.
In his description of the system of a market economy, Adam Smith argued that it is the entrepreneur's desire to achieve his private interests that is the main driving force behind economic development, ultimately increasing the welfare of both himself and society as a whole. This is achieved, as Smith wrote, through the “invisible hand” of market laws. The pursuit of personal gain leads to common gain, production development and progress. Each individually takes care of himself, and society wins. Smith showed the power and importance of personal interest as an internal spring of competition and an economic mechanism. Thus, the representatives of the classical school did not see the state's great importance in regulating economic processes, since they believed that the market itself is capable of regulating itself through competition.
In the 30s of the last century, after the deepest recession in the US economy, John Keynes, in his book "The General Theory of Employment, Interest and Money", put forward his theory, in which he refuted the views of the classics on the role of the state. The concept put forward and defended by Keynes provides for the active intervention of the state in economic life. He did not believe in a self-regulating market mechanism and believed that external intervention in the process of economic development was necessary to ensure normal growth and achieve equilibrium. But Keynesian government regulation was aimed at preserving the market economy (competition and free pricing), that is, it did not break with the classical tradition.
In the mid 70s. and this theory turned out to be untenable, the reason was excessive government intervention in the economy. Now a new concept was required, which, while preserving the regulated character of a market economy, would help the state find an "economic" mechanism for its intervention, rather than an "administrative" one. It was this task that Milton Friedman's well-known monetarist concept accomplished today. His theory, without denying the need for government intervention in the economy, reduced this intervention to "indirect" - through the regulation of the monetary sphere. Friedman, continuing the thoughts of the mercantilists, believed that the most powerful factor influencing economic activity is the change in the money supply. There is a direct relationship between the amount of money and the level of prices, prices are determined by the amount of money in circulation, and the purchasing power of money is determined by the level of prices. The money supply increases - prices rise, and vice versa, the money supply decreases - prices go down, i.e. other things being equal, commodity prices vary in proportion to the amount of money.
The need for state regulation of the market economy was most profoundly outlined by Marx in his works on the capitalist mode of production. Marxism reasonably and consistently leads to the conclusion about the limitations of the capitalist mode of production in its pure form and the need to replace it with another more progressive system with the priority of the social aspect. The main drawback of the Marxist theory from the standpoint of modern domestic political economy is precisely the conclusion about the need for a revolutionary way to change the mode of reproduction and the socio-economic system.
The attitude to state regulation of the economy at different stages of its formation was different: some scientists believed that only the state was able to ensure the stability and prosperity of the economy, some took the opposite point of view, believing that the market itself is able to regulate itself. In the general mass of modern economic doctrines, the prevailing belief is the need for government intervention in the operation of the market mechanism. For the most part, schools of economics disagree only on the methods and extent of such intervention.
Society is structured in such a way that coercion is, to a certain extent, a condition of freedom. A market free from any government intervention can only be a theoretical abstraction. The economic reality is that the state is an active participant in market relations. Already in the period of free competition, a significant part of the productive forces outgrew the framework of classical private property, and the state was forced to take over the maintenance of large economic structures: railways, post offices, telegraphs, etc. In the conditions of monopolistic competition, when production became characterized by great complexity, capital and energy intensity, the monopolies themselves turned out to be interested in strengthening the regulatory role of the state, in constant support from it on the domestic and foreign markets. Today's effort of interstate integration leads to the fact that general economic processes are crossing national borders, forming new socio-economic tasks related to defense, science, ecology, and labor force reproduction.
economic provisions on which we can rely in long-term socio-economic development. Therefore, conducting scientific research and developing a comprehensive system of state regulation of the Russian economy as a fundamental, strategic basis for the development of society in the transition to market relations is an important, extremely relevant scientific and practical ...
The economic strategy of the state, but also coordinates the efforts of ministries and departments, based on the laws of the Russian Federation, decrees and orders of the President of the Russian Federation, decrees of the Government of the Russian Federation. State regulation of the economy is carried out through administrative and economic methods. Administrative methods provide for the creation of a legal framework, economic legislation regulating ...
Strictly defined purpose and usually form extra-budgetary trust funds, accumulated or not accumulated in the budget. state budget tax 1.3 Concept and types of tax policy Tax policy reflects the type, degree and purpose of state intervention (regulation) in the economy and changes depending on the situation in it. It is a system of events ...
And impact. This is justified. It has been proved that complete disregard for the regulatory role of the state in managing the economy is an idea that is alien to modern economic conditions. 1.2. Goals and forms of state regulation. As French entrepreneurs who arrived in Moscow in the fall of I991 at the invitation of the Scientific and Industrial Union of the USSR noted, “the belief that the main feature of the market ...
School of State Regulation of Economics
The role of state regulation of the economy has been studied and analyzed by various schools since the 18th century. The main ones are such theoretical schools as: mercantilism, classics of the theory of non-interference in economics, Keynesian, representatives of the neoclassical theory of monetarists, neo-Keynesian. Representatives of these schools interpreted the role of the state in the formation and development of economic relations in different ways.
In world practice, there are three main approaches to the question of the role of the state in the regulation of the economy: the first, based on the concept of non-interference of the state in economic processes, the second, limits the role of the state in managing the economy, while the degree of state intervention in the economy depends on the level of its development and specific economic conditions; the third approach involves active government intervention in the development and implementation of economic policy.
Mercantilism
The basis of the economic school in the late Middle Ages was the school of mercantilism. Mercantilism is the teaching of the French economists of the 18th century, the essence of which was that the state should play an active role in the economic life of the country in order to contribute to the enrichment of the country and the king. Supporters of mercantilism (T. Maine, A. Montchretien) proclaimed the need for active state intervention in the economy in order to replenish the state treasury. Considering the specifics of economic development during that period (the main indicator of the country's wealth is the amount of gold), the mercantilists called for encouraging exports and curbing imports.
The classical theory of laissez-faire
In A. Smith's work “A Study on the Nature and Causes of the Wealth of Nations” it was argued that “the free play of market forces (the principle of the“ invisible hand ”) creates a harmonious structure.” According to the classical approach, the state should ensure the safety of human life and resolve disputes, in other words, do what an individual is either unable to do on his own or does it ineffectively In his description of the system of a market economy, A. Smith argued that it is the entrepreneur's desire to satisfy his private interests that is the main driving force of economic development, ultimately increasing welfare, both himself and society as a whole.The essence of this theory was that for all business entities basic economic freedoms should be guaranteed, in particular: freedom to choose a field of activity, freedom of competition and freedom of trade.
Keynesian concept
It became widespread in the 30s of the XX century. after a deep downturn in US economic development. J. Keynes put forward a theory in which he refuted the views of the classics on the role of the state. The theory of J. Keynes can be called "crisis" because he considered the economy in a state of depression. According to his theory, the state should actively intervene in the economy due to the lack of mechanisms in the free market that would really ensure the economy's exit from the crisis. At the same time, J. Keynes believed that the state should influence the market in order to increase demand, since the cause of capitalist crises is the overproduction of goods. He offered several tools: flexible monetary policy, active fiscal policy, and direct government job creation. The model of state regulation proposed by J. Keynes made it possible to weaken cyclical fluctuations during the two post-war decades. However, approximately from the beginning of the 70s, there was a discrepancy between the possibilities of state regulation and objective economic conditions. The Keynesian model could only be sustainable under conditions of high growth rates. High rates of growth of national income created the possibility of redistribution without prejudice to the accumulated capital. However, in the 70s, the conditions for reproduction deteriorated sharply. The Keynesian way out of the crisis only unleashed the inflationary spiral. Under the influence of this crisis, a radical restructuring of the state regulation system took place and a new, neo-conservative model of regulation took shape.
Neoclassical theory of monetarism
The theoretical basis of the neoconservative model was the concept of the neoclassical direction of economic thought (I. Fisher, M. Friedman). The transformation of the government regulation model consisted in the abandonment of the impact on reproduction through demand and the use of indirect measures of influence on supply instead. Supporters of the theory of supply economics consider it necessary to recreate the classical mechanism of accumulation and to revive the freedom of private enterprise. Economic growth is considered as a function of capital accumulation, which is carried out from two sources: at the expense of own funds, that is, capitalization of a part of income, at the expense of borrowed funds (loans). According to this theory, the state must provide conditions for the process of capital accumulation and increasing production productivity. The main obstacles on this path are high taxes and inflation. High taxes restrict the growth of capital investment, while inflation increases the cost of credit and thus makes it difficult to use borrowed funds for accumulation. Therefore, supporters of non-interference in the economy proposed the implementation of anti-inflationary measures (based on the recommendations of monetarists) and the provision of tax incentives to entrepreneurs. According to neoclassical theory, the state can only indirectly influence the economy. Market forces play the main role in realizing the country's economic development. The basis of the monetarist approach in the framework of the neoclassical theory is the postulate of a rigid connection between the supply of money and the rate of their turnover with the volume of production and the level of prices. Analyzing economic ties, supporters of the monetary approach believe that the velocity of money circulation is stable. This statement directly contradicts Keynesian postulates about the direct proportional dependence of the rate of turnover of money on the interest rate and inversely proportional dependence on the supply of money.
Neo-Keynesians - argue that cyclical fluctuations and inflation cause changes in total spending and money supply (J. Robinson, R. Harrod, B. Domara). Neo-Keynesians advocate an active stabilization policy with the predominant use of fiscal regulation instruments.
Such a number of theories about the role of the state in the economy is primarily due to the lack of integral conceptual ideas about the phenomena that arise in economic life, the predominance of an empirical approach to the development of scientific generalizations about economic processes. Thus, both Keynesian approaches to overcoming stagflation by intensifying state intervention and monetarist recommendations on limiting state intervention in economic processes only by methods of monetary policy turned out to be able to. The lack of a holistic theory does not allow neo-Keynesians to reasonably approach the assessment of the role and forecasting of the phenomena that actually occur. The modern theory of state regulation of the economy is based on a rational combination of basic approaches, which allows directing public efforts to achieve certain goals of economic development and social security.
The concept of state regulation of the economy, its main goal and objectives
State regulation of the economy is the intervention of state authorities using various methods and tools for the development of basic economic processes in order to ensure positive socio-economic results.
The objective necessity of such intervention is the inability of the market, characterized by spontaneous development, to ensure the implementation of the state's economic policy, which provides, first, the creation of a solid material basis for the growth of the people's well-being; secondly, ensuring social reproduction in the required proportions and scales; thirdly, maintaining the balance of socio-economic interests of various segments of the population and, fourthly, preserving the integrity of the country's territorial space. The main goal of state regulation of the economy is the need to provide appropriate conditions for sustainable economic development and, on this basis, increase the level and quality of life of the population. According to this goal, the main tasks of state regulation of the economy can be formulated: ensuring the planned economic growth and development; achieving productive employment of labor resources; creation of a transparent and fair redistribution of incomes of the population; achieving economic efficiency in the country; ensuring the country's foreign trade balance.
The subject of state regulation is a person (citizen), which is concretized in state authorities, namely: the President, the Verkhovna Rada, the Council of Ministers, representatives of local administrations (in Ukraine - regional state administrations).
The objects of state regulation of the economy include:
Economic subsystems: the economy of regions and sectors of the economy;
Economic spheres: social production; monetary; budgetary and financial; investment and innovation; foreign economic, etc .;
Real sector of the economy;
Pricing process and inflation;
Activities of enterprises and organizations, as well as entrepreneurial activities.
State regulation of the economy is one of the functions of economic management. The main functions of economic management include strategic planning of economic development (development of a strategy for the development of the national economy); programming (development of national programs for economic development); organization of management of the national economy; motivation for the activities of public authorities; control and regulation of economic development.
Despite the fact that state regulation of the economy is one of the main functions of public administration, in practice, to ensure national economic development, an integrated approach is used to implement all functions, since they are interrelated.
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