Pros and cons of command and control system. Pros and cons of the command-administrative and market systems A positive feature of the command economy

2.1. Types of economic systems: market economy, traditional economy, administrative-command economy, mixed economy.

2.2. Models of economic systems: American, Swedish, Japanese, Russian models of transition economy.

2.3. The main economic problems of society: what to produce? How to produce? For whom to produce?

2.1. Types of economic systems: market economy, traditional economy, administrative-command economy, mixed economy.

In the last 150-200 years, various types of economic systems have operated in the world: two market systems (the market economy of free competition (pure capitalism) and the modern market economy (modern capitalism)) and two non-market systems (traditional and administrative-command).

A market economy is an economic system based on the principles of free enterprise, a variety of forms of ownership of the means of production, market pricing, contractual relations between economic entities, and limited state intervention in economic activity. It is inherent in socio-economic systems where there are commodity-money relations. Having emerged many centuries ago, the market economy has reached a high level of development, has become civilized and socially limited.

The market economy of free competition developed in the 18th century, but a significant part of its elements entered the modern market economy.

The main features of the market economy of free competition:

1) private ownership of economic resources;

2) a market mechanism for regulating the economy based

on free competition;

3) a large number of independent sellers and buyers of each product.

The modern market economy (modern capitalism) turned out to be the most flexible, it is able to rebuild, adapt to changing internal and external conditions. Its main features:

1) variety of forms of ownership;

2) development of scientific and technological progress;

3) the active influence of the state on the development of the national economy.

Traditional economy - this is an economic system into which scientific and technological progress penetrates with great difficulty, because. conflicts with tradition. It is based on backward technology, widespread manual labor, and a mixed economy. All economic problems are solved in accordance with customs and traditions.

The main features of the traditional economy:

1) private ownership of the means of production and personal

the labor of their owners;

2) extremely primitive technology associated with the primary processing of natural resources;

3) community management, natural exchange;

4) the predominance of manual labor.

Administrative command economy (centrally planned economy) is an economic system in which the main economic decisions are made by the state, which assumes the functions of organizing the economic activity of society. All economic and natural resources are owned by the state. The administrative-command economy is characterized by centralized directive planning, enterprises act in accordance with the plan assignments brought to them from the “center” of management.

The main features of the administrative-command economy:

1) basis - state property;

2) absolutization of state ownership of economic and natural resources;

3) strict centralization in the distribution of economic resources and results of economic activity;

4) significant restrictions or prohibitions on private entrepreneurship.

Positive aspects of the administrative-command economy.

1. By concentrating resources, it can ensure the achievement of the most advanced positions in science and technology (achievements

USSR in the field of cosmonautics, nuclear weapons, etc.).

2. The administrative-command economy is able to ensure economic and social stability. Every person is guaranteed a job, stable and constantly increasing wages, free education and medical services, people's confidence in the future, and so on.

3. The administrative-command economy has proved its vitality in critical periods of human history (war, liquidation of devastation, etc.).

Negative aspects of the administrative-command economy.

1. Excludes private ownership of economic resources.

2. Leaves a very narrow framework for free economic initiative, excludes free enterprise.

3. The state fully controls the production and distribution of products, as a result of which free market relationships between individual enterprises are excluded.

mixed economy organically combines the advantages of a market, administrative-command, and even traditional economy and thereby, to a certain extent, eliminates the shortcomings of each of them or mitigate their negative consequences.

mixed economy- a type of modern socio-economic system that is taking shape in the developed countries of the West and some developing countries at the stage of transition to a post-industrial society. The mixed economy has a multistructural character; it is based on private property interacting with state property (20-25%).

On the basis of various forms of ownership, various types of economy and entrepreneurship function (large, medium, small and individual entrepreneurship; state and municipal enterprises (organizations, institutions)).

A mixed economy is a market system with its inherent social orientation of the economy and society as a whole. The interests of the individual with his multilateral needs are put forward in the center of the country's socio-economic development.

A mixed economy has its own characteristics in different countries and at different stages of development. Thus, the mixed economy in the United States is characterized by the fact that government regulation is represented here to a much lesser extent than in other countries, because. the size of state property is small. The main position in the US economy is occupied by private capital, the development of which is stimulated and regulated by government agencies, legal norms, and the tax system. Therefore, here, to a lesser extent than in Europe, mixed enterprises are common.

Nevertheless, a certain form of public-private enterprise has developed in the United States through a system of government laws. Russia was practically the first in the world to apply the experience of an administrative-command economy in the form of state socialism. At the present stage, Russia is beginning to use the basic elements of a mixed economy.

Command-administrative management system (KASU) is a rigid state administration based on the centralization of power in one single center, it obliges everyone to carry out planned tasks with the help of orders, directives and other various methods and ways to achieve the plans of the state and its leaders.

During such control, the following occurs:

1. Direct control from the central, higher echelon of administrative power, in which there will be neither independence, nor democracy, nor self-government.
2. Everything passes under the control of the state, including the process of distribution of products, which subsequently excludes free market relations between farms.
3. The state nomenclature exercises direct control with the help of administrative documents.
4. Destruction of market relations that act in a decentralized manner on the economy.

This excludes the entrepreneurial spirit of the personnel and their material remuneration for their work. There is a process in which the state crushes the economy under itself and manages it with the help of orders.

This method of management will be indispensable under extreme conditions (war, economic devastation, famine). Such management can quickly concentrate material and human resources in strategic areas of the economy, which contributes to the successful implementation of simple production tasks.

pros

The benefits of such management would be:

• Ease of management from the point of view of the state, the possibility of total administrative control.
• Significant reduction or absence of certain types of costs (transaction costs, information search, search for the most favorable conditions, costs, according to the consumer's assessment of the properties of goods, violation of the terms of the contract and control of its execution).
• Filtering the assortment during the planned release of products excludes those goods and services that have a detrimental effect on the physical and moral state of society.
• Uniform distribution of material resources and leveling policy at enterprises.

Minuses

The disadvantages of such management are:

• Lack of flexibility, bureaucracy, slowness in adapting to new conditions, stereotyped decision-making and inability to adapt to local conditions.
• Creating the illusion of material and social equality, in solving the social problems of society.
• It is not possible to objectively reflect the needs of society, this happens through the absence of a mechanism for price fluctuations associated with the consumption market.

The most recent model that can be analyzed and presented at your discretion is Soviet Union model where the planned economy was taken as a basis. By creating plans for "five-year plans" aimed at lifting only one specific industry, it was possible to gradually raise the economy from its knees in all sectors.

Focusing the attention of officials on a particular problem made it possible to provide the vast country with the necessary resources. The mobilization of human and material resources in certain areas of the national economy has yielded positive results. But the economy could not stand up to its full height in this management system for a long time because of the stereotyped decision-making. The tasks of the same type from Brest to Vladivostok and from Vorkuta to Samarkand, without taking into account climatic and resource conditions, and most importantly, the lack of competitiveness in production, knocked it down.


And the experience of the capitalist countries has shown that the development of the economy occurs when there are market relations and there is no monopoly on production.

Drawing a conclusion, we can say that a certain management system is good in its period, which is taking place in the country, and gradually move from command-administrative to market. And at the same time, it is necessary to create optimal conditions for the transition between them in order to avoid the negative insistence of society on the new order and the absence, in the opinion of society, of caring for them.

What will be the state of the economy in the country depends on many factors. One of them is the economic system chosen by the government. A command economy is beneficial for the state. We propose to find out what characterizes a command economy.

What is a command economy?

This type of economy is the opposite of a market economy, where production, pricing, investment are taken by the owners of the means of production on the basis of their own interests, and not in relation to general planning. A command economy is an economic system in which the state controls the economy. In the system with it, the government makes all decisions regarding the production and use of goods and services.

Signs of a command economy

The government of each country must understand what is characteristic of a command economy:

1. Excessive influence of the government on the economy. The state is rigidly involved in the regulation of production, distribution and exchange of products.
2. Specific plans for the production of certain products are established.
3. Excessive centralization of production (more than 90% of enterprises are state property).
4. Producer dictatorship.
5. bureaucracy in the administration.
6. Direction of a significant part of scarce resources to the needs of the military-industrial complex.
7. Low product quality.
8. The use of administrative methods of orders, commodity requirements.

Where does the command economy exist?

It is known that the command economy exists in the Democratic People's Republic of Korea. The country is a sovereign socialist state representing the interests of the entire people. The power here belongs to the workers and the intelligentsia. For the reason that the country does not maintain its own economic statistics, all data on the state of the economy are expert estimates from other countries. After the reforms in agriculture, family businesses began to appear here. The area suitable for agricultural use is more than 20%.

How is a market economy different from a command economy?

Economists say that a command economy and a market economy have many differences:

1. Production. If the command economy imposes its own will and specifies how much and for whom to produce, then the market economy seeks stability through dialogue between all participants in the process.
2. Capital. In a command economy, fixed assets are under the control of the state, while in a market economy they are in the hands of private business.
3. Incentives to develop. The command system is designed to realize the will of the ruling power, and the market economy generates competition.
4. Making decisions. The command system does not consider it necessary to reckon with others, and the market economy takes responsible steps through a dialogue between the authorities and society.
5. Pricing. The market economy provides for the free formation of prices based on supply and demand. As for the administrative model, it can be formed at the expense of goods prohibited for circulation. The command system independently forms prices.

Pros and Cons of a Command Economy

It is known that the command nature of the economy has not only disadvantages, but also advantages. Among the positive aspects of this type of economy is the possible creation of confidence in the future and the social security of the population. Among the shortcomings is low labor productivity, as a result of hindering the development of economic initiative.

Command economy - pluses

It is customary to highlight the following advantages of a command economy:

1. Very convenient management - the possibility of total administrative control. This type of economy is impeccable from the point of view of power.
2. The command economy creates illusions of stability and social security of the population, confidence in the future.
3. A very high level of morality is brought up and maintained.
4. Funds and resources are concentrated in the most significant areas.
5. Guaranteed employment of the population - there is no need to worry about your future and the future of children.

Command economy - cons

This type of economy has many disadvantages. The following are the disadvantages of a command economy:

1. The inflexibility of the command-administrative system - it can very slowly adapt to any changes, it is hardly able to respond to the peculiarities of local conditions. The result is the same type of template approaches to solving economic problems.
2. Imperfect labor relations.
3. Low labor productivity due to obstacles to the development of economic initiative and lack of productive labor.
4. Constant shortage of food and consumer goods.
5. The fall in the pace of economic development, the generation of stagnation in production and an acute political crisis. As a result, the existence of the state itself may be in jeopardy.

Method of pricing in a command economy

The method of pricing in this type of economy is the setting of prices for many goods in a centralized manner by state authorities. This is the essence of a command economy. One of its advantages of this method is the absence of crises and the stable development of the economy. The disadvantages of the command economy are the disinterest of producers in the efficiency of their work, the decrease in the manageability of the national economy. In addition, one of the disadvantages is the constant shortage of goods and immunity to scientific and technological progress.

Essence and features of a command economy

Definition 1

A command economy (centralized, administrative) is an economic system in which decisions are made at the state level, while the state assumes the functions of the organizer of social and economic life.

Natural and economic resources in this economic system are state property, and economic entities act in accordance with the planned targets communicated to them by the control center.

The main features of a command economy are:

1. State property as the basis for the existence of society;
2. Absolutization of state ownership of economic and natural resources;
3. Rigid centralization in the process of distribution of economic resources, as well as the result of economic activity;
4. Prohibition or restriction of private business activities.

In a command economy, the state determines which goods, in what quantity, will be produced (for whom and how). This economic system was based on state ownership of all the main means of production, in which the bulk of economic resources were owned by society. The state, on behalf of society, controlled the process of distribution and use of all major economic resources.

Remark 1

The market in the command economy has been replaced by central planning, distribution and supply. All products produced in the country are considered goods, while prices for it are set by the state. As in the market, in the command economy there was a system of trading institutions that acted as intermediaries.

Benefits of a command economy

The advantages of a command economy are:

• Ensuring the achievements of an advanced position in technology and science through the concentration of resources (cosmonautics in the Soviet Union, nuclear weapons, etc.);
• Setting socio-economic goals for the economy and their effective solution;
• Ensuring socio-economic stability (a guaranteed job for all citizens and a high level of employment of the population, stability in the payment of wages, free medical care and education, a person's confidence in the future);
• Absence of differences in the income of society, uniform development of various social groups;
• Minimal uncertainty in case of changes in the economic situation in the near future, stability of economic development;
• Viability in critical periods of the history of society (wars, liquidation of devastation, etc.).

Cons of a command economy

The downsides of a command economy are:

• Exclusion of private ownership of economic resources;
• Narrow limits in the implementation of free economic initiative, the exclusion of free enterprise;
• Full control of production and distribution of products by the state, as a result of which free market interconnections of individual enterprises were excluded;
• Lack of freedom to choose products that are pre-distributed and scheduled for release;
• Large and complex state structure of economic management, which often interfered with fast and efficient decision-making;
• Subjective management of the economy, leading to an unbalanced and disproportionate development of sectors of the national economy.

In the last 150-200 years different types of economic systems operated in the world: two market(market economy of free competition (pure capitalism) and the modern market economy (modern capitalism)) and two non-market systems(traditional and administrative-command).

Market economy— this is an economic system based on the principles of free enterprise, a variety of forms of ownership of the means of production, market pricing, contractual relations between economic entities, and limited state intervention in economic activity. It is inherent in socio-economic systems where there are commodity-money relations.

Originating many centuries ago, the market economy has reached a high level of development, has become civilized and socially limited. The main features of a market economy are presented in table 2.1.

Table 2. Characteristics of a market economy

Market economy of free competition developed in the 18th century, but a significant part of its elements entered the modern market economy. The main features of the market economy of free competition:

1) private ownership of economic resources;

2) a market mechanism for regulating the economy based on free competition ;

3) a large number of independent sellers and buyers of each product.

Modern market economy (modern capitalism) turned out to be the most flexible, it is able to rebuild, adapt to changing internal and external conditions.

Its main features:

1) variety of forms of ownership;

2) development of scientific and technological progress;

3) the active influence of the state on the development of the national economy.

Traditional economy— this is an economic system into which scientific and technological progress penetrates with great difficulty, because conflicts with tradition. It is based on backward technology, widespread manual labor, and a mixed economy. All economic problems are solved in accordance with customs and traditions.

The main features of the traditional economy:

1) private ownership of the means of production and the personal labor of their owners;

2) extremely primitive technology associated with the primary processing of natural resources;

3) community management, natural exchange;

4) the predominance of manual labor.

Administrative command economy (centrally planned economy) is an economic system in which the main economic decisions are made
the state, which assumes the functions of the organizer of the economic activity of the society. All economic and natural resources are owned by the state. The administrative-command economy is characterized by centralized directive planning, enterprise
The tia act in accordance with the planned tasks brought to them from the "center" of management.

The main features of the administrative-command economy:

1) the basis is state property;

2) absolutization of state ownership of economic and natural resources;

3) rigid centralization in the distribution of economic resources and results of economic activity;

4) significant restrictions or prohibitions on private entrepreneurship.

Positive aspects of administrative-command economics.

1. By concentrating resources it can ensure the achievement of the most advanced positions in science and technology (the achievements of the USSR in the field of astronautics, nuclear weapons etc.).

2. Administrative-command economy able to provide economic and social stability. Every person is guaranteed a job, stable and constantly increasing wages, free education and medical services, people's confidence in the future, and so on.

3. Administrative-command economy proved its vitality in critical periods of human history (war, liquidation of devastation, etc.).

Negative aspects of the administrative-command economy.

1. Excludes private ownership of economic resources.

2. Leaves a very narrow framework for free economic initiative, excludes free enterprise.

3. The state fully controls the production and distribution of products, as a result of which free market relationships between individual enterprises are excluded.

mixed economy organically combines the advantages of a market, administrative-command, and even traditional economy, and thus, to a certain extent, eliminates the shortcomings of each of them or mitigate their negative consequences.

mixed economy - a type of modern socio-economic system that is taking shape in the developed countries of the West and some developing countries at the stage of transition to post-industrial society. Mixed economy but-sit multi-structural character; it is based on private property interacting with state property (20-25%).

Based on various forms property, various types of economy and entrepreneurship function (large, medium, small and individual entrepreneurship; state and municipal enterprises (organizations, institutions)).

The mixed economy is a market system with its inherent social orientation of the economy and society as a whole. The interests of the individual with its multilateral needs are put forward in the center of the country's socio-economic development.

The mixed economy has their own characteristics in different countries and at different stages of development. Thus, the mixed economy in the United States is characterized by the fact that state regulation is represented here to a much lesser extent than in other countries, because the size of state property is small.

The main position in the US economy is occupied by private capital, the development of which is stimulated and regulated by state structures, legal norms, and the tax system. Therefore, here, to a lesser extent than in Europe, mixed enterprises are common. Nevertheless, a certain form of public-private enterprise has developed in the United States through a system of government laws.

Russia is practically the first in the world applied the experience of the administrative-command economy in the form of a state socialism. At the present stage, Russia begins to use the basic elements of a mixed economy.

2.2. Models of economic systems:

American, Swedish, Japanese. Russian model of transitional economy.

For every economic system characterized by their national models of economic organization. Consider some of the most well-known national models of economic systems.

American model built on a system of encouraging entrepreneurial activity, development of education and culture, enrichment of the most active part of the population. Low-income strata of the population are provided with various benefits and allowances to maintain a minimum standard of living. This model is based on a high level of labor productivity and a mass orientation towards achieving personal success. The problem of social equality does not stand here at all.

The Swedish model is different a strong social orientation focused on reducing wealth inequality through the redistribution of national income in favor of the poorest segments of the population. This model means that the function of production falls on private enterprises operating on a competitive market basis, and the function of ensuring a high standard of living (including employment, education, social insurance) and many elements of infrastructure (transport, R&D) - on state.

The main thing for the Swedish model is social orientation due to high taxation (more than 50% of GNP). The advantage of the Swedish model is a combination of relatively high rates of economic growth with a high level of full employment, ensuring the well-being of the population. Unemployment has been reduced to a minimum in the country, differences in the incomes of the population are small, and the level of social security of citizens is high.

The Japanese model is characterized some lag in the standard of living of the population (including the level of wages) from the growth of labor productivity. Due to this, a reduction in the cost of production and a sharp increase in its competitiveness in the world market are achieved. Such a model is possible only with an exceptionally high development of national self-consciousness, the priority of the interests of society to the detriment of the interests of a particular person, the readiness of the population to make certain sacrifices for the sake of the country's prosperity. Another feature of the Japanese development model is associated with the active role of the state in the modernization of the economy.

The Japanese economic model is different developed planning and coordination of the activities of the government and the private sector. The economic planning of the state is advisory in nature. Plans are state programs that orient and mobilize individual parts of the economy to fulfill national tasks. The Japanese model is characterized by the preservation of its traditions and, at the same time, active borrowing from other countries of everything that is needed for the development of the country.

Russian model of transitional economy. After the long-term domination of the administrative-command system in the Russian economy in the late 1980s - early 1990s. began the transition to a market economy. The main task of the Russian model of the transitional economy is the formation of an efficient market economy with a social orientation.

The conditions for the transition to a market economy were unfavorable for Russia. Among them:

1) a high degree of nationalization of the economy;

2) the almost complete absence of a legal private sector with an increase shadow economy;

3) the long existence of a non-market economy, which weakened the economic initiative of the majority of the population;

4) the distorted structure of the national economy, where the military-industrial complex played the leading role, and the role of other sectors of the national economy was reduced;

5) non-competitiveness of industries and agriculture.

The main conditions for the formation of a market economy in Russia:

1) development of private entrepreneurship based on private property;

2) creation of a competitive environment for all business entities;

3) an effective state that provides reliable protection of property rights and creates conditions for effective growth;

4) an effective system of social protection of the population;

5) open, competitive in the world market economy

2.3. The main economic problems of society. What to produce? How to produce? For whom to produce?

Any society, regardless of how rich or poor it is, solves three basic questions of the economy: what goods and services should be produced, how and for whom. These three fundamental questions of economics are decisive (Fig. 2.1).

Which of the goods and services should be produced and in what quantity? An individual can provide himself with the necessary goods and services in various ways: produce them on his own, exchange them for other goods, receive them as a gift. Society as a whole cannot have everything immediately. Because of this, it must decide what it would like to have immediately, what it would be possible to wait for, and what to refuse altogether. What needs to be produced at the moment: ice cream or shirts? A small number of expensive quality shirts or a lot of cheap ones? Is it necessary to produce less consumer goods, or is it necessary to produce more industrial goods (machinery, machine tools, equipment, etc.), which in the future will raise production and consumption?

Sometimes the choice can be quite difficult. There are underdeveloped countries so poor that the efforts of most of the labor force are spent just to feed AND clothe the population. In such countries, in order to raise the living standards of the population, it is necessary to increase the volume of production, but this requires the restructuring of the national economy, the modernization of production.

How should goods and services be produced? There are various options for the production of the entire set of goods, as well as each economic good separately. By whom, from what resources, with the help of what technology should they be produced? Through what organization of production? There is far more than one option for building a particular house, school, college, car. The building can be both multi-storey and single-storey, the car can be assembled on a conveyor or manually. Some buildings are built by private individuals, others by the state. The decision to produce cars in one country is made by a state body, in another - by private firms.

For whom should the product be produced? Who will be able to use the goods and services produced in country? Since the quantity of goods and services produced is limited, the problem of their distribution arises. To satisfy all needs, it is necessary to understand the mechanism of product distribution. Who should use these products and services, benefit? Should all members of the society receive the same share or not? What should be given priority - intellect or physical strength? Will the sick and the old eat their fill, or will they be left to fend for themselves? Solutions to these problems determine the goals of society, the incentives for its development.

Main economic problems in different socio-economic systems are solved differently. For example, in a market economy, all answers to basic economic questions (what, how, for whom) are determined by the market: demand, supply, price, profit, competition.

“What” is decided by effective demand, voting money. The consumer decides for himself what he is willing to pay money for. The producer will himself strive to satisfy the desires of the consumer.

« How" is decided by the manufacturer, who seeks to get a big profit. Since price setting does not depend on him alone, in order to achieve his goal in a competitive environment, the manufacturer must produce and sell as many goods as possible and at a lower price than his competitors.

"For whom" is decided in favor of various consumer groups, taking into account their incomes.

Brief conclusions

1. In the last one and a half to two centuries the following systems operated in the world: the market economy of free competition, the modern market economy, the administrative-command and traditional economies. In the last one and a half to two decades, a mixed economy has emerged.

2. Every system has their national models of the organization of economic development, tk. countries differ in the level of economic development, social and national conditions.

3. Russian model The transitional economy has the following characteristic features: a powerful public sector, a small share of small and medium-sized businesses, an uneven transition to market relations in various sectors and regions of the country, and a high criminalization of the economy.

4. Basic questions of economics(what, how, for whom) are solved in different socio-economic systems in different ways, depending on the socio-economic development of the country.

Economic training

Key terms and concepts

economic system; types of economic systems: traditional economy, market economy, administrative-command (centrally planned) economy, mixed economy; models of economic systems: Japanese, South Korean, American, Swedish; Russian transitional economics; basic economic questions: what, how, for what.

Control questions and tasks

1. What types of economic systems do you know and what is their essence?

2. Expand the essence of models of economic systems.

3. What are the features of the Russian model of transitional economy (as opposed to administrative-command to market)?

4. What is the difference between the Japanese model and the South Korean one? What elements of these models can be used in Russia to create a market economy?

5. What are the three main questions of economics that economic theory constantly strives to answer, and what is their content?

6. How are the three main economic issues (what, how, for whom) solved in a market economy and an administrative-command economy?

7. What are the features of the development of economic systems at the present stage?

Exercise. Compile an economic crossword puzzle using the following terms: types, systems, tradition, customs, community, entrepreneurship, property, diversity, self-regulation, inequality, plan, planning, administration, centralization, concentration, state, models.