Characteristics of a centralized economy. World economy

The essence of this system is state monopoly, that is, the all-powerful state (through its powerful bureaucratic apparatus) absolutely dominates the economy. Government officials from the center command all economic resources and unanimously decide what, how, for whom and how much to produce, and most importantly, how to distribute what is produced. Therefore, such a system based on coercion is often called a command, order, distribution economy. Characterizing it, we highlight the following main features.

Table 1. Characteristics of a centralized economy

Firstly, state ownership of the means of production reigns supreme in the economy. Land, plants, factories, transport, trade and other enterprises - everything belongs to the state. The property of individual citizens is usually limited to personal property and small household plots.

Secondly, all production, exchange and distribution of products are carried out according to state plans, which determine thousands of complex relationships in the national economy. Errors inevitable in such comprehensive planning give rise to numerous inconsistencies, failures and deficits in the economy. And a huge bureaucratic apparatus works to draw up and ensure the implementation of such detailed plans.

At the same time, thirdly, instead of economic levers stimulating production (attractive taxes, orders, loans), purely administrative management methods are used (dictation of the bureaucracy, orders, control, punishment, encouragement). And the main goal of enterprises is not working for the consumer, but fulfilling the plan (no matter how unreasonable it may be).

Fourthly, the financial dictatorship of the state also works to strictly centralize the economy. The lion's share of all Money economic entities is centrally redistributed through the state budget. High taxes and contributions flow into a single center in huge financial flows, on which officials then arbitrarily allocate budgetary allocations to those who, from their point of view, need it.

Prices, salaries, investments, profits and losses - everything is “scheduled” in advance and guaranteed by the state at a planned level. That's why financial situation producers are practically independent of their initiative, creativity, labor results and consumer reactions. Moreover, initiative is even punishable: “independent activity” and “unaccounted for” innovation (even if very effective) can knock an enterprise out of its planned rut, worsen its financial position and lead to the replacement of the director.

The disadvantages of total centralization can be seen in the example former USSR. The main one is the unsatisfactory performance of state property. It was poorly used and was taken apart; The equipment had not been updated for decades, resource productivity was low, and costs were high. The public sector was dominated by mismanagement, irresponsibility and passivity of workers, and indifference to any innovations.

At the same time, state-monopoly systems have their advantages. They, subject to skillful, unselfish and non-anti-people leadership, can be more stable and give people greater confidence in the future; ensure a more equal distribution in society life's blessings and the minimum required for everyone. Planned management of all labor resources makes it possible to avoid open unemployment in society (although, as a rule, this is achieved by artificially restraining the growth of labor productivity: where one person could work, two or more people work).

The state paternalism characteristic of these systems (all-encompassing guardianship of the people by the state) is especially convenient for the dependent and passive part of society. They prefer, although modest and unfree, a quiet existence without special concerns, believing that it is the state that must “feed the people.”

That's why such systems are tenacious: they have many fans. And yet, “management” alone cannot feed anyone. First you need to produce what you can dispose of. Therefore, all modern economies aimed at efficient production operate not on administrative-command principles, but on market principles.

Centrally managed government agencies, on the basis of directive plans and programs, direct subordination of lower bodies to higher ones, with state ownership of.

Economics and law: dictionary-reference book. - M.: University and school. L. P. Kurakov, V. L. Kurakov, A. L. Kurakov. 2004 .

See what "CENTRALIZED ECONOMY" is in other dictionaries:

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At all historical stages of human development, society faces the same question: what, for whom and in what quantities to produce, taking into account limited resources. The economic system and types of economic systems are precisely designed to solve this problem. Moreover, each of these systems does this in its own way, each of them has its own advantages and disadvantages.

Concept of economic system

An economic system is a system of all economic processes and production relations that has developed in a particular society. This concept refers to an algorithm, a way of organizing the production life of society, which presupposes the presence of stable connections between producers on the one hand and consumers on the other.

The following processes are the main ones in any economic system:

Production in any of the existing economic systems is carried out on the basis of appropriate resources. Some elements still differ in different systems. We are talking about the nature of management mechanisms, motivation of producers, etc.

Economic system and types of economic systems

An important point in the analysis of any phenomenon or concept is its typology.

Characteristics of types of economic systems, in general, comes down to the analysis of five main parameters for comparison. This:

• technical and economic parameters;
• the ratio of the share of state planning and market regulation of the system;
• property relations;
• social parameters (real income, amount of free time, labor protection, etc.);
• mechanisms of system functioning.

Based on this, modern economists distinguish four main types of economic systems:

1. Traditional
2. Command-planned
3. Market (capitalism)
4. Mixed

Let's take a closer look at how all these types differ from each other.

Traditional economic system

This economic system is characterized by gathering, hunting and low-productivity farming based on extensive methods, manual labor and primitive technologies. Trade is poorly developed or not developed at all.

Perhaps the only advantage of such an economic system is the weak (almost zero) and minimal anthropogenic load on nature.

Command-plan economic system

A planned (or centralized) economy is a historical type of economic management. These days it is not found anywhere in pure form. Previously it was typical for Soviet Union, as well as some countries in Europe and Asia.

Today they talk more often about the shortcomings of this economic system, among which it is worth mentioning:

• lack of freedom for producers (commands to produce “what and in what quantities” were sent from above);
• dissatisfaction large quantity economic needs of consumers;
• chronic shortages of some goods;
• emergence (as a natural reaction to the previous point);
• the inability to quickly and effectively implement the latest achievements of scientific and technological progress (due to which the planned economy always remains one step behind other competitors in the global market).

However, this economic system also had its advantages. One of them was the possibility of ensuring social stability for everyone.

Market economic system

The market is a complex and multifaceted economic system that is typical for most countries modern world. Also known by another name: capitalism. The fundamental principles of this system are the principles of individualism, free enterprise and healthy market competition based on the relationship between supply and demand. Private property dominates here, and the main incentive for production activity is the thirst for profit.

However, such an economy is far from ideal. The market type of economic system also has its disadvantages:

• uneven distribution of income;
• social inequality and social vulnerability of certain categories of citizens;
• instability of the system, which manifests itself in the form of periodic acute crises in the economy;
• predatory, barbaric use of natural resources;
• weak funding for education, science and other non-profit programs.

In addition, there is also a fourth type - a mixed type of economic system, in which both the state and the private sector have equal weight. In such systems, the functions of the state in the country’s economy are reduced to supporting important (but unprofitable) enterprises, financing science and culture, controlling unemployment, etc.

Economic system and systems: examples of countries

It remains to consider examples that are characterized by one or another economic system. For this purpose, a special table is presented below. The types of economic systems are presented in it taking into account the geography of their distribution. It is worth noting that this table is very subjective, since for many modern states it can be difficult to unambiguously assess which system they belong to.

What type of economic system is in Russia? In particular, Moscow State University professor A. Buzgalin described the modern Russian economy as a “mutation of late capitalism.” In general, today the country’s economic system is considered to be transitional, with an actively developing market.

Finally

Each economic system responds differently to the three “what, how and for whom to produce?” Modern economists distinguish four main types: traditional, command-planned, market, and mixed systems.

Speaking about Russia, we can say that in this state a specific type of economic system has not yet been established. The country is in a transitional stage between a command economy and a modern market economy.

PAGE_BREAK--Figure 1.1. General points of any economic system

Human society has used and continues to use various economic systems in its development. They differ in their approach and methods of solving basic economic problems.

In the last one and a half to two centuries of the development of human society, various economic systems have operated in the world. Among them, two market systems clearly stand out - the free competition market (pure capitalism) and the modern market economy (modern capitalism) and two non-market systems - centralized and traditional. And yet, in general, we can distinguish two main ways of organizing production and, accordingly, two types of economic systems: centralized and market. Let us dwell on these types of economic systems and consider the advantages and disadvantages of each of them.
§ 1.2 Centralized economic system
The essence of this system is state monopoly, that is, the all-powerful state (through its powerful bureaucratic apparatus) absolutely dominates the economy. Government officials from the center command all economic resources and unanimously decide what, how, for whom and how much to produce, and most importantly, how to distribute what is produced. Therefore, such a system based on coercion is often called a command, order, distribution economy1. Characterizing it, we highlight the following main features (Fig. 1.2).

Main features

Q Dominance of state ownership

Q Dictatorship of the state plan in the economy

Q Administrative methods of economic management

Q Financial dictatorship of the state

Main advantages

V More stable economy

V More confidence in the future

V Less inequality in society

V Guarantee of minimum life support for everyone

V No problem of employment

V State paternalism, convenient for many

Main disadvantages

Ø Unsatisfactory performance of state property

Ø No incentive to work hard

Ø Lack of initiative and irresponsibility of employees

Ø Economic inefficiency and general deficits

Ø Diktat of producers over consumers

Ø Low standard of living of people
Figure 1.2. Characteristics of a centralized economy

Firstly, state ownership of the means of production reigns supreme in the economy. Land, plants, factories, transport, trade and other enterprises - everything belongs to the state. The property of individual citizens is usually limited to personal property and small household plots.

Secondly, all production, exchange and distribution of products are carried out according to state plans, which determine thousands of complex relationships in the national economy. Errors inevitable in such comprehensive planning give rise to numerous inconsistencies, failures and deficits in the economy. And a huge bureaucratic apparatus works to draw up and ensure the implementation of such detailed plans.

At the same time, thirdly, instead of economic levers stimulating production (attractive taxes, orders, loans), purely administrative management methods are used (the dictates of the bureaucracy, orders, control, punishment, encouragement), and the main goal of enterprises becomes not work for the consumer, but carrying out the plan (no matter how unreasonable it may be).

Fourthly, the financial dictatorship of the state also works to strictly centralize the economy. The lion's share of all funds of economic entities is centrally redistributed through the state budget. High taxes and contributions flow into a single center in huge financial flows, on which officials then arbitrarily allocate budgetary allocations to those who, from their point of view, need it.

Prices, salaries, investments, profits and losses - everything is “scheduled” in advance and guaranteed by the state at a planned level. Therefore, the financial situation of producers practically does not depend on their initiative, creativity, labor results and consumer reaction. Moreover, initiative is even punishable: “independent activity” and “unaccounted for” innovation (even if very effective) can knock an enterprise out of its planned rut, worsen its financial position and lead to the replacement of the director.

The disadvantages of total centralization can be seen in the example of the former USSR. The main one is the unsatisfactory performance of state property. It was poorly used and was taken apart; The equipment had not been updated for decades, resource productivity was low, and costs were high. The public sector was dominated by mismanagement, irresponsibility and passivity of workers, and indifference to any innovations.

At the same time, state-monopoly systems have their advantages. They, subject to skillful, unselfish and non-anti-people leadership, can be more stable and give people greater confidence in the future; ensure a more equal distribution of life goods in society and the minimum necessary for everyone. Planned management of all labor resources makes it possible to avoid open unemployment in society (although, as a rule, this is achieved by artificially restraining the growth of labor productivity: where one person could work, two or more people work).

The state paternalism characteristic of these systems (all-encompassing guardianship of the people by the state) is especially convenient for the dependent and passive part of society. They prefer, although modest and not free, a quiet existence without any special worries, believing that it is the state that must “feed the people.”

That's why such systems are tenacious: they have many fans. And yet, “management” alone cannot feed anyone. First you need to produce what you can dispose of. Therefore, all modern economies aimed at efficient production operate not on administrative-command principles, but on market principles1.
§ 1.3 Market economy and its benefits
A market economy is an economic system based on the voluntary cooperation of individuals, on direct connections between independent producers (sellers) and consumers through the free purchase and sale of goods2. This natural exchange “gives people what they want,” Friedman emphasizes, “not what some group says they should want.” The most important features of a free economy can be reduced to the following six points (Fig. 1.3).

Thus, the socio-economic basis of a market economy is private ownership of land and other means of production. It is on its basis that the main actors in the economy are individual, partnership, joint-stock and mixed enterprises.

The same private property serves as the material basis for free enterprise, in which each person can engage in any legal entrepreneurial activity, decides for himself what, how, and for whom and how much to produce, and “forges his own happiness.” At the same time, each entrepreneur is not only free, but also personally financially responsible for the results of his economic activities: if there is no sales of products, he suffers losses, otherwise he goes bankrupt; damage is caused to partners, consumers, society or the natural environment - pays fines, penalties, compensation.

Let us recall, for example, the recent multimillion-dollar payments from American tobacco companies to victims of smoking. Firms paid for not sufficiently warning consumers about the deadly danger of their products, about high probability damage to smokers by diseases such as lung cancer, stomach cancer, blockage of blood vessels in the legs, gangrene, etc.

Main features

Ø The basis of the economy is private ownership of resources

Ø Freedom and financial responsibility of entrepreneurs

Ø Freedom to choose economic partners

Ø Personal benefit of participants in economic relations

Ø Self-regulation of the economy by market factors

Ø Minimum government intervention in the economy

Main advantages

Q Stimulates high entrepreneurship and efficiency

Q Rejects inefficient and unnecessary production

Q Distributes income fairly based on labor results

Q Empowers consumers

Q Does not require large control apparatus

Main disadvantages

¨ Increases inequality in society

¨ Causes greater instability in the economy

¨ Does not care about the benefits needed by society, but are not profitable

¨ Indifferent to the damage that business can cause to people and nature
continuation
--PAGE_BREAK--Figure 1.3. Characteristics of a market economy

Freedom of choice by consumers, entrepreneurs and employees of their economic partners and purchased goods and services. Moreover, thanks to the wide variety of products, the consumer has the final say. It is his free choice that ultimately determines what and how much the economy should produce. In Friedman’s figurative expression, “everyone can vote for the color of their tie”: just take out your wallet and pay for the purchase you like.

Personal benefit of each participant in economic relations. It is the best stimulator of human initiative, ingenuity, and activity. In addition, when pursuing personal gain, a person often unwittingly “works” for the interests of others. Thus, manufacturers, in pursuit of profit, better satisfy consumer needs. Factory owners also benefit from workers’ desire for high wages: labor productivity increases.

Self-regulation of the economy under the influence of market factors: freely developing prices, free play of supply and demand, competition. This mechanism is sensitive " nervous system» self-adjusting economy. That’s why “there is nothing higher and smarter than the market,” as they like to say on Wall Street.

And in fact, if, say, the demand for a product increases, then its price will increase. This will make the production of the product more profitable, and its manufacturers will increase output. And the same market will certainly punish for unjustified interference in its regulatory mechanism. For example, if the state, taking care of the poor, by order of command lowers the price of some product, the latter will immediately disappear from the shelves and its sale will have to be rationed.

A minimum of dirigisme, that is, control and management of the economy by the state. The less the state intervenes in the economy, the less interference there is for market self-regulation, the smaller the public sector with its very likely unprofitability, the less bureaucracy and abuse of officials, corruption and tax evasion, less paternalism, which means less passivity and dependency of people, more incentives for creativity search, innovation and energetic work.

In this regard, the thoughts of Yegor Gaidar are interesting, he believes that the level of crime in society depends on the balance of forces between the state and business in the economy. The “trick” is that the weakening of state positions makes the businessman the main figure in the country, and the strengthening of statehood puts the entire official at the center. The latter “is always potentially more criminal than a businessman.” Why? “A businessman can get rich honestly, as long as they don’t interfere. An official can enrich himself only dishonestly.”1

The main advantages of the market system are that it stimulates high entrepreneurship, work and fruitful management; economically rejects production that is ineffective and/or unnecessary to society; ensures the most equitable distribution of income between participants in social production - based on the final results of their activities; gives more rights and choices to consumers; finally, the market system does not require a large management apparatus2.

The efficiency of the market is confirmed by the historical experience of many countries, but the most obvious example is Lithuania and Finland, which experienced different economic systems. At the end of the 1920s, the first was even ahead of the second in a number of positions. After Lithuania's forced annexation into the USSR, it was forced to adopt the Soviet model with tightly screwed centralization. Free Finland continued its market path. And here is the result: by the time of the collapse of the Soviet empire (1991), Lithuania turned out to be just a beggar against the bright background of Finnish prosperity.

Even more convincing is the experience of those countries where different economic systems divided the same people: German, Chinese, Korean. Where the command system and socialism dominated - in the GDR, China and North Korea, - economic inefficiency, low prestige of hard and creative work, undemocratic conditions, and lack of freedom reigned there. And vice versa, Germany, Hong Kong and Taiwan, South Korea increasingly progressed economically and democratically. Thus, the border between wealth and poverty in countries runs along the line dividing the free market and centralization, capitalism and socialism1.


§ 1.4 Disadvantages of the market and the problem of externalities
In our diverse world, nothing is perfect, and the market model is not without its shortcomings (Fig. 1.3). First, it increases inequality in society: private ownership of land and capital allows successful businessmen to accumulate enormous wealth. In addition, such wealth can be obtained not by one’s own labor, but by inheritance.

Secondly, a market economy is characterized by instability, it is characterized by ups and downs, and therefore periodic exacerbations of the problems of unemployment, inflation, and a decline in people's living standards. Thirdly, the market system is not interested in the non-profit production of such goods that society needs, such as life support for the disabled and unemployed, universal health care and education, public libraries, public order and national security, street lighting, etc.

Finally, fourthly, the market is “deaf” to the adverse environmental and social consequences that are possible as a result of business activities (harmful effects on people, destruction of the external environment, unemployment). These consequences give rise to the problem of so-called externalities, which it is appropriate to dwell on here at least briefly.

Externalities are side effects of economic activity that befall people not associated with it. Let's say, car factories produce and willingly sell their products to satisfied car enthusiasts, while those around them suffer from toxic exhaust, noise, dirt, and dangers on the roads.

There are many similar negative external effects (costs) - industrial wastewater, smoke, vibration, overpowering odors, food poisoning. However, there are also positive effects (benefits) - for example, educational services to specific individuals simultaneously increase the spiritual level of the entire society, reducing alcoholism, drug addiction, and crime; bees from the farm of a beekeeper pollinate neighboring gardens; the TV tower serves as a good landmark for nearby residents, etc.

The problem of external effects is how to eliminate or compensate for their negative manifestations? The proposals come down to two main ways: public (prohibitions, inspections, fines, additional taxes from the perpetrators and payments to victims, the introduction of strict standards) and private - through a direct agreement between the interested parties themselves.

Thus, the Anglo-American economist Ronald Coase prefers the latter. According to his findings, known as the Coase theorem, in cases where property rights are clearly defined, the number of stakeholders is small and the cost of the transaction is negligible, the problem of externalities is better solved through private agreements. And the state’s task here is to facilitate such agreements.

And in fact, let’s take a specific example of a large residential building with a courtyard that is usually cluttered with cars. The pleasures of car owners here hurt the interests of the non-motorized part of the population (privatization of a piece of common land; poisoning of air, soil, vegetation; noise, displacement of recreation areas). How to mitigate this problem?

State route of reimbursement side effects comes down to taxes and the “spreading” of the collected amounts into general programs for the improvement of the area (at best), and at worst – into the pockets of officials (additional payments, bonuses). The residents of this house get little from this.

The private route provides compensation in a more targeted and complete manner. Here, all the inhabitants of the yard and house (their owners) form a so-called condominium with equal rights to common areas and unpoisoned environment. Car owners buy from the partnership the right to additional space and involuntary harm to the external environment. The money collected is used to improve the given yard (even planting a garden), to seal the windows of apartments, install air conditioners in them, to pay for vitamins that mitigate the harm from car poisons, etc.

On the private route, there is another advantage: homeowners can rent out the premises on the ground floor and basement themselves, earning funds for the condominium, rather than giving them to housing office officials1.
§ 1.5 Comparative characteristics of centralized and market economies
In conclusion, let's try to provide a brief comparative characteristics command and market economies (Table 1.1). The first four rows in the table have already been discussed above and therefore do not require additional explanation. The last, fifth line reveals another very significant difference between the systems: if a centralized, command economy appears mainly as a distribution economy, then a market economy as a producing one.

For clarity, it is appropriate to recall the parable of the fish and the fishing rod: you can regularly give a fish to feed a person, or you can once and for all give him a fishing rod so that he feeds himself. The first option resembles a centralized system, the second - a market system (where the “fishing rod” is state guarantees of private property and freedom of enterprise, “light taxes” (Smith) and certain business rules).

Comparing centralized (socialism) and market (capitalism) systems, the Austro-Anglo-American economist Friedrich von Hayek (1899-1992) emphasizes that they operate on different principles. Namely. The “command economy” is based on “conscious orders” - organizations and institutions such as factories, the army, strict regulations, created with a predetermined goal and operating according to a plan, in a regime specified “from above.”

Continuation
--PAGE_BREAK--

1) Traditional , is present in countries with a subsistence economy and income distribution not according to labor, but according to national traditions or customs.

2) Centralized (administrative - command), the essence of which is state monopoly.

Main features of a centralized system.

Dominance of state ownership;

Dictatorship of the state plan;

Administrative management methods;

Financial dictatorship.

Pros:

Stable economy;

Less inequality in society;

No problems with employment;

More stable prices.

Minuses:

There is no incentive to work;

General deficits and economic inefficiency;

Diktat of producers over consumers;

Lack of initiative of people and dissatisfied performance of state property.

3) Market economy is a system based on direct connections between buyers and sellers.

Character traits:

Private ownership of resources and means of production;

Self-regulation of the economy by market factors;

Freedom to choose economic partners;

Minimum government intervention in the economy.

Pros:

Stimulates profitable entrepreneurship among employees;

Rejects inefficient production;

Does not require a large control apparatus;

Gives more rights and opportunities to consumers.

Minuses:

Increases inequality in society;

Economic instability;

Inflation;

Unemployment;

Lack of government regulation.

4)Mixed , which uses all the advantages of state and market economies and eliminates their disadvantages.

Comparative characteristics of centralized and market economies.

Monopoly and competition.

Monopoly - this is the dominance in a market segment of one manufacturer, seller or association of enterprises in order to raise prices and increase monopoly high profits.

Economic competition involves competition between various manufacturers on the market for the most favorable conditions for the production and sale of a product.