Economic function. The subject and functions of the economic system

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:41

The economic system is a concept that can be interpreted by researchers when considered in a variety of contexts. What scientific approaches can be used in the analysis of its main functions? What is the role of the state as the bearer of institutions that are necessary for the functioning of the economic system?

What functions does the economic system perform?

Let's start with the nuances of terminology regarding the topic under consideration. The concept of "economic function" can be considered, as we noted above, in different contexts. In particular - as corresponding to the characteristics of the economy of the state as a whole. What could this mean?

First of all, we will talk about the functions of the economic system, the appearance of which in it is natural for the reason that it is an independent social institution. What exactly are the functions of the economic system that modern experts single out? These include:

- reproductive;

- regulatory;

- technological;

- investment;

- protectionist.

Let's considertheir specifics in more detail.

Reproductive function of the economic system

The first economic function at the level of the state's economic management system is reproduction. Its essence is to ensure the regular renewal of various economic resources, the presence of which is necessary for the socio-economic development of the state, as well as the operation of those mechanisms through which the production, distribution, exchange, and consumption of various goods and services by citizens.

The reproductive economic function of the state affects the types of activities that certain categories of citizens are engaged in, which sectors of the economy will be the most developed in the country and which, accordingly, types of professions will be the most popular. The formation of the considered function depends on the level of socio-economic development of the state, the specifics of its interaction with other countries at the level of foreign economic and political communications, on the system of values and cultural characteristics of citizens.

Regulatory function of the economic system

The main economic functions also include regulatory. Its essence lies in the development of norms that determine how society should produce, distribute, exchange, and also consume certain goods and services. Corresponding norms are also formed taking into account the socio-economic development of society, its traditions, culture, foreign economic and political factors. However, this process takes into account the objective patterns that characterize the work of the nationaleconomy. It is quite possible that the norms established by the economic function in question may conflict with the established traditions and priorities of society.

The state can, if the difficult situation at the level of the economy as a whole or in foreign policy contributes to this, initiate the introduction of legal provisions that require economic entities to act in a certain way, even if this contradicts their traditional attitudes - since failure to adopt the relevant norms can lead to serious social problems. The task of the state is to implement these norms in such a way as to maintain a balance of interests of various social groups and organizations.

Technological function of the economic system

The main economic functions include technological - the one that involves the creation, first of all, of infrastructural conditions for the implementation of economic activities of citizens and organizations. In this case, it is fair to talk about the distribution of this function among the areas of responsibility of the state and various private entities. If we consider those tasks in terms of the implementation of the technological function that the state decides, then it is legitimate to attribute to them:

- facilitating the construction of transport infrastructure - primarily in the form of roads, pipelines, which are usually beyond the power of private companies to build;

- providing resources for communication - in particular, satellite, which are based on technologies,formed, as a rule, within the framework of state space programs;

- facilitating the transfer of technology from abroad, as well as the import of necessary resources.

Thus, the function under consideration is among those in which the leading role belongs to the state. At the same time, in this case, one can also observe the economic functions of society - in the face of commercial enterprises, other specialized organizations, and individuals. These include:

- development of new technologies, management methods, decision-making, economic models;

- formation of feedback channels between interested individuals and government bodies;

- agency function related to the implementation of various government initiatives within the framework of the considered area of activity of political structures in the country.

Investment function

Another important function of the economic system is investment. What is its essence?

In this case, there is, first of all, the economic function of finance issued by the state, attracted from abroad or formed from domestic resources. The national economy requires capital for its reproduction and development. The state is probably the key player that influences the formation of resources for obtaining capital by certain business entities. The main tools of the country's authorities in terms of the implementation of the function in question:

- implementation of various budget allocations;

- creating a legal framework for creditrelations;

- direct lending.

The first tool can be applied at many different levels.

Thus, the functions of economic development and, accordingly, the powers in terms of the distribution of capital can be received by institutions directly accountable to the authorities of the country. In this case, the capital is transferred to them mainly on a gratuitous basis, but subject to strictly programmatic investment in certain costs. At the expense of the budget, various funds, research organizations can operate, solving certain problems within the framework of the economic development strategy determined by the state.

Creating a legal framework for credit relations is one of the areas of lawmaking by the country's authorities. Various regulations are being adopted and put into circulation, according to which a certain carrier of capital - for example, the same state or a private investor, can provide cash loans to interested economic entities. For example - business loans.

The central bank of the state - as the main financial regulator, sets the key rate for the economy. In accordance with it, private financial institutions are credited, which, in turn, issue loans to individuals. By controlling the key rate, the state influences the intensity of credit relations and contributes to the performance of the considered function of the economic system.

Protectionist function of the economic system

The next function of the economicsystems are protectionist. Its essence is to provide competent state, and in some cases private structures, protection of the interests of economic entities in the framework of their foreign economic activity. Firms and entrepreneurs, working in foreign markets, may face dumping, various tariff restrictions. The state, performing its socio-economic functions, should be interested in the fact that the enterprises that represent it in foreign markets can do business in conditions of equal partnership. If necessary, the authorities can implement certain protectionist measures aimed at ensuring the protection of national companies.

The state's interest in solving such problems may be due to various factors. Apart from the reasonable priority associated with protecting the interests of an economic entity, in principle, which is part of the country, such circumstances as play a role here:

- the need to maintain stability in a company for which the external market is the main one, and which is a major employer in Russia;

- the need to maintain the competitiveness of the economy in the world market, if the presence of national enterprises in a particular business segment is significant.

In a number of cases, the state contributes to the implementation of protectionist measures in order to protect the economic entities of friendly countries that are partners in various economic and politicalassociations.

Economic functions as a resource for the development of the national economy

There is another interpretation of the concept of "economic function", which involves its consideration in the context of the state's implementation of the policy of economic development as a whole - as a resource for the development of the country. This area of activity can be multifaceted. In this case, the economic essence of the function in question is traced, its implementation at the level of existing state institutions.

An appropriate understanding of the term under consideration is reflected in the views of researchers representing different economic schools. It will be useful to study how the assessment of the corresponding function in the research environment can be carried out, in more detail.

Implementation of the economic function by the state: nuances

Among researchers, 2 rather dissimilar points of view regarding the implementation of the state of its economic function have become widespread. Thus, according to one version, the authorities of the country should have a minimal impact on economic processes: it is assumed that their participation will be limited to the publication of fundamental sources of law, in which basic macroeconomic indicators will be established. Such as, for example, the key rate at which loans should be issued. This position is close to experts representing the liberal school, who argue this point of view by the fact that in a market economy between economicthe subjects of the relationship should be built as freely as possible. Significant government intervention can thus lead to inequality between them, monopolization of markets.

Another point of view is that the key economic functions of the economy - albeit a market one, should be primarily assigned to the state. Similar views are held by representatives of the Keynesian school. The main argument here is the lack of efficiency in the distribution of capital between different sectors of the economy in a free market. In addition, if legal relations between business entities are built without proper supervision by the state, this can also lead to monopolization of the market - with the participation of cartels, within the framework of mergers and acquisitions, as a result of which certain business entities may receive a preferential position on the market.

In practice, the points of view we have considered can be supplemented by other views of economists - for example, those formed on the basis of the results of economic management by national governments in a given period of time. The subject and functions of economic science in different countries of the world can therefore differ significantly based on the different experience of the state in implementing certain mechanisms for managing the national economy.

At the same time, not only concepts can differ, but also the institutions within which the achievements of researchers are implemented. In one state in terms of managementIn the national economy, key functions are performed by the economic bloc of the government; in others, the leading role belongs to parliamentary structures. Thus, the transfer of experience in the implementation of certain mechanisms for managing the national economy from one country to another should be carried out taking into account the peculiarities of the political institutions of states.

Let's consider what advantages and disadvantages each of the noted approaches to managing economic processes can have.

Liberal model of state participation in economic management: nuances

So, this model assumes minimal interference of the country's authorities in economic processes. The main advantages of this approach:

- freedom of entrepreneurship, building market relations;

- relative ease of access to capital;

- investment attractiveness of the economy.

Disadvantages of the liberal model of state participation in economic management:

- sensitivity of the national economy to crises;

- potential to monopolize markets through mergers and acquisitions;

- reduction in the level of protection of the interests of companies by the state in the framework of foreign economic activity.

and the terms of foreign trade are so comfortablethat businesses do not need to turn to the state for help, counting on its protectionism. Which, at the same time, can still be realized due to the need to maintain the competitiveness of the national economy.

Keynesian economic management model

The opposite of the liberal approach to managing the economy - based on the principles of Keynesianism, in turn, involves significant state intervention in the processes at the level of interaction between economic entities within the national market. The main advantages of this approach:

- a guarantee of the implementation of timely protectionist measures against businesses engaged in foreign trade;

- control over the monopolization of the market in terms of mergers and acquisitions;

- protecting businesses in times of crisis.

However, the considered model of economic management also has disadvantages:

- not high enough in many cases the investment attractiveness of the economy - due to the presence of possible bureaucratic barriers to investment in business, transactions, profit withdrawal;

- the slow development of many industries that could develop faster without government intervention - for example, through the rapid introduction of new technologies;

- possible difficulties in access to capital by interested business entities - for example, due to emission restrictions by the Central Bank.

In addition, as we noted above, the emergence of administrative monopolies is possible - due toacquisition by individual business entities of a predominant position in the market with the participation of interested state structures. Obviously, the functions of economic management should be performed by the state, taking into account the current situation on the market. Liberalization or, conversely, excessive interference may be required based on the objective conditions prevailing in the environment of communications between business entities. Thus, it is fair to speak not so much about the commitment of the authorities to a particular model, but about the ability of the country's government to apply the practical methods provided for by each of them, depending on specific factors affecting the development of the economy.