COURSE WORK

On the topic: Command-administrative system: its definition, features and models

INTRODUCTION……………………………………………………………..	3
1 ESSENCE AND FEATURES OF THE COMMAND-ADMINISTRATIVE SYSTEM…………………………………….
1.1 Concept and definition of a command-administrative system..	4
1.2 Advantages and disadvantages of the command-administrative system………………………………………………………………………………….
1.3 Principles of the command-administrative system……………….	12
2 MAIN FEATURES AND MODELS OF THE COMMAND-ADMINISTRATIVE SYSTEM
2.1 Main features of the command-administrative system	19
2.2. Models of the command-administrative system	20
3 OBJECTIVE NECESSITY OF TRANSITION TO MODERN ECONOMIC SYSTEMS AND WAYS OF ITS IMPLEMENTATION ………………………………………………………………..
CONCLUSION …………………………………………………………	35
LIST OF REFERENCES……………………	36

INTRODUCTION

In ensuring the normal functioning of any modern economic system, an important role belongs to the state. Throughout the history of its existence, the state, along with the tasks of maintaining order, legality, and organizing national defense, performed certain functions in the economic sphere.

A dilemma arises - on the one hand, uncontrolled market processes are destructive for the economy and society, therefore a market economy, more than any other, needs government regulation, on the other hand, the inevitability of regulation of a market economy constantly gives rise to the temptation of directive solutions to many economic problems. However, most often the result of such an “administrative” decision turns into only the appearance of overcoming crisis economic situations.

Consequently, the task is to find the optimal measure and the most effective forms of state regulation of the economy, which, without destroying its market nature, at the same time ensure maximum efficiency.

At the beginning of the twentieth century. the economic role of the state became so significant that the first half of the last century went down in history as the era of “state-monopoly capitalism” (SMC). Her practice prompted the idea of ​​“state socialism” - an attempt to use the economic power of the state to accelerate the socialist transformation of society. The development of this idea led to the emergence of an “administrative command economy.”

The purpose of the course work is to study the essence of the command-administrative system, consider the main features and contradictions of the command-administrative system. Based on the formulated goal, the following tasks were set:

Consider the concept of a command-administrative system and the basic principles of its functioning;

Analyze its advantages and disadvantages;

Study the fundamental principles of the command-administrative system;

Study models of the command-administrative system.

1 ESSENCE AND FEATURES OF THE COMMAND-ADMINISTRATIVE SYSTEM

1.1 Concept and definition of a command-administrative system

Economic science, as noted, studies the economic relations of people in society.

Economic relations in society are a complex concept. On the one hand, they show the relationship of people to nature, the interaction of man with nature. This is a relationship regarding the rational use of these natural resources. They can be defined as technical and economic relations. On the other hand, economic relations are relations between people themselves, which are determined by the ownership of factors of production (production relations). These are socio-economic relations.

Technical, economic and socio-economic relations form the unity of the two sides of the economy, which is inherent in the very essence of production as a process of simultaneous interaction between humans and nature and with each other. This unity is secured by organizational and economic relations, that is, as a system of organization and management of the entire economy and its individual parts. Consequently, the unity and interaction of technical-economic and socio-economic relations forms an economic one.

The totality of all economic processes occurring in a society on the basis of property relations and organizational forms operating in it represents the economic system of this society. Having understood the essence of the system, one can understand many of the laws of the economic life of society.

The development and functioning of the economic system is influenced by natural-climatic (location on the planet, water supply, degree of land fertility), socio-cultural (spiritually conscious human activity) and production and economic factors. The determining factors in characterizing the state of the economic system are production and economic factors (means of labor, objects of labor, production technology, the state of the human worker, forms of organization of labor and production, nature and forms of ownership, level of efficiency, etc.). The main elements of the economic system are socio-economic relations based on the forms of ownership of economic resources and results of economic activity that have developed in each economic system; organizational forms of economic activity; economic mechanism, i.e. a way to regulate economic activity at the macroeconomic level; specific economic ties between economic entities.

In the last one and a half to two centuries, different types of economic systems have operated in the world: two market systems in which the market economy dominates - the market economy of free competition (pure capitalism) and the modern market economy (modern capitalism) and two non-market systems - traditional and administrative-command . Within the framework of a particular economic system, there are diverse models of economic development of individual countries and regions.

Let us consider the characteristic features of the main types of economic systems.

Modern market economy (modern capitalism). Compared to all previous ones, the market system turned out to be the most flexible: it is capable of restructuring and adapting to changing internal and external conditions.

In the second half of this century, when the scientific and technological revolution began to develop widely and the production and social infrastructure began to develop especially rapidly, the state began to influence the development of the national economy much more actively. In this regard, the economic mechanism, organizational forms of economic activity and economic relations between economic entities have changed.

In a developed market economy, the economic mechanism undergoes significant changes. Planned management methods are further developed within individual firms in the form of a marketing management system. At the same time, at the macro level, the development of planning methods is associated with state regulation of the economy.

Planfulness acts as a means of active adaptation to market requirements. As a result, the key tasks of economic development receive a new solution. Thus, the issue of the volume and structure of manufactured products is resolved on the basis of marketing research within firms, as well as an analysis of priority areas of scientific and technical progress, and a forecast for the development of social needs at the macro level. A market forecast allows you to reduce the production of obsolete goods in advance and move to qualitatively new models and types of products. The marketing production management system creates the opportunity, even before the start of production, to bring the individual costs of companies producing the bulk of goods of this type into line with socially necessary costs.

State sectoral and national programs (plans) also have a significant impact on the volume and structure of goods and services produced, ensuring their greater compliance with changing social needs.

The problem of using resources is solved within large companies on the basis of strategic planning, taking into account the most promising industries. At the same time, the redistribution of resources for the development of new industries occurs through budgetary allocations, state national and interstate programs, and R&D in priority areas of scientific and technological progress.

Finally, the task of distributing the created gross national product is solved not only on the basis of traditionally established forms, but is also complemented by the allocation of increasing resources by both large companies and the state for investments in the development of the “human factor”: financing of education systems, including retraining of workers in various qualifications, improvement of medical care for the population, social needs.

At least 30-40% of all government budget allocations in developed countries with market economies are currently allocated to social security and the implementation of numerous “poverty alleviation” programs.

At the same time, large firms take care of their employees, trying to intensify the work of staff, increase labor productivity, reduce the loss of working time and thereby strengthen the competitiveness of the company.

Traditional system. In economically underdeveloped countries, there is a traditional economic system. This type of economic system is based on backward technology, widespread manual labor, and a multi-structured economy.

A multi-structured economy means the existence of various forms of economic management in a given economic system. Natural community forms based on communal collective farming and natural forms of distribution of the created product are preserved in a number of countries. Small-scale production is of great importance. It is based on private ownership of productive resources and the personal labor of their owner. In countries with a traditional system, small-scale commodity production is represented by numerous peasant and craft farms that dominate the economy.

In conditions of relatively poorly developed national entrepreneurship, foreign capital often plays a huge role in the economy of the countries under consideration.

The life of society is dominated by time-honored traditions and customs, religious and cultural values, caste and class divisions, holding back socio-economic progress.

Solving key economic problems has specific features within different structures. The traditional system is characterized by such a feature - the active role of the state. By redistributing a significant part of the national income through the budget, the state allocates funds to develop infrastructure and provide social support to the poorest segments of the population.

Administrative command system (centrally planned, communist). This system previously dominated in the USSR, Eastern European countries and a number of Asian states. In recent years, many domestic and foreign economists have tried to give a generalized description of it in their works.

The command-administrative system is a type of economic system and a method of organizing social relations, which is characterized by: strict centralism of economic life based on state ownership; the use of non-economic, ideological management methods; the dominance of the party-state bureaucracy in the absence of real freedom and genuine democracy.

A command economy is a system dominated by public (state) ownership of the means of production, collective economic decision-making, and centralized management of the economy through state planning. All decisions on major economic issues are made by the state. All resources are the property of the state. Central planning covers all levels - from household to state. The distribution of resources is carried out on the basis of long-term priorities, due to which the production of goods is constantly divorced from social needs. In practice, this means complete nationalization of the economy. Monopoly in production slows down scientific and technological progress. Government price regulation creates shortages and a black market. The vertical, center-dependent form of distribution is embodied in the nomenclature levels of distribution and monopsony of the state as the only consumer representing the interests of the entire population. Income in society depends on status, rank, position, which is expressed in the uneven distribution of income in society, not only nominal, but also, most importantly, real.

The economic mechanism of the administrative-command system has a number of features. It assumes, firstly, direct management of all enterprises from a single center - the highest echelons of state power, which negates the independence of economic entities. Secondly, the state completely controls the production and distribution of products, as a result of which free market relationships between individual farms are excluded. Thirdly, the state apparatus manages economic activities using predominantly administrative and administrative methods, which undermines material interest in the results of labor.

With excessive centralization of executive power, bureaucratization of the economic mechanism and economic relations develops. By its nature, bureaucratic centralism is not capable of ensuring an increase in the efficiency of economic activity. The point here, first of all, is that complete nationalization of the economy causes monopolization of production and sales of products on an unprecedented scale. Giant monopolies, established in all areas of the national economy and supported by ministries and departments, in the absence of competition, do not care about the introduction of new equipment and technology. A deficit economy generated by monopoly is characterized by the absence of normal material and human reserves in case of an imbalance in the national economy.

In countries with an administrative-command system, solving general economic problems had its own specific characteristics. In accordance with the prevailing ideological guidelines, the task of determining the volume and structure of production was considered too serious and responsible to transfer its decision to the direct producers themselves - industrial enterprises, collective farms and state farms.

Therefore, the structure of social needs was determined directly by the central planning authorities. However, since it is fundamentally impossible to detail and anticipate changes in social needs on such a scale, these bodies were guided primarily by the task of satisfying minimal needs.

The centralized distribution of material goods, labor and financial resources was carried out without the participation of direct producers and consumers, in accordance with pre-selected “public” goals and criteria, on the basis of centralized planning. A significant part of the resources, in accordance with the prevailing ideological guidelines, was directed to the development of the military-industrial complex.

The distribution of created products among production participants was strictly regulated by central authorities through a universally applied tariff system, as well as centrally approved standards for funds in the wage fund. This led to the predominance of an equal approach to wages.

A distinctive feature of the distribution of products in the administrative-command system was the privileged position of the party and state elite.

The unviability of this system, its insusceptibility to the achievements of scientific and technological revolution and the inability to ensure the transition to an intensive type of economic development made radical socio-economic transformations inevitable in all former socialist countries. The strategy of economic reforms in these countries is determined by the laws of development of world civilization.

1.2 Principles of the command-administrative system

The principles of the command-administrative system (if we consider the ideal model of socialism) can also include the fact that it involves the destruction of the market mechanism as a decentralized communication system based on price signals and the elimination of the monetary system. This leads to the following principle of a planned economy - the determination of the share of each participant in the production process is carried out on the basis of labor costs, which is certified by receipts, “labor checks” or other similar documents. Such an order, according to the theorists of socialism, eliminates social injustice and exploitation. There was a direct accounting of labor costs for the production of a particular product directly in working time, which was the primary basis for the monetary form of accounting. When setting the price of a product, pricing authorities proceeded from the labor intensity of its production, and then multiplied it by the “price” in rubles of one standardized hour.

If we consider the political sphere, here as a principle of the command-administrative system we can highlight the monopoly of state power, its one-party system and strict political control on its part, which “excludes any unauthorized forms of mass activity.”

Separately, it is necessary to say about the mechanism for adopting economic plans in the command-administrative system. The plan is adopted at the highest forum of the ruling political party and in the highest legislative body of the country, which sanctifies the merging of the political, executive and legislative structures of society and is one of the main signs of totalitarianism. After this, control over the implementation of the plan, which has taken the form of a law, can be carried out on the basis of administrative, criminal and party responsibility.

The directive assignment of the plan is accompanied by the allocation of free resources for the production unit and wage funds determined by the administrative center of the country. The common center determines not only the volume of allocated resources and wage funds, but also the range of goods. Elementary analysis shows that it is impossible to do this even approximately, at least for a small group of manufacturers. And if a country has great production potential, then the very thought of directive planning makes one think about the absurdity of such plans.

The management center is the undivided, i.e., absolutely monopoly owner of any product manufactured at the enterprises. Such economic practice in the absence of competition leads to only one result - producers can work, regardless of the quality of the product.

Manufacturers and wholesale consumers of industrial products are economically and administratively connected with each other. Consumers are deprived of the right to choose; they receive, but do not buy (although they pay money), only what is allocated to them by the manufacturer at the will of the center (see Fig. 2). The principle of matching supply and demand has been replaced by the will of the center, which materializes the adopted political and ideological decisions.

In a market economy, factor incomes (wages, interest, profit, land rent) serve as incentives that contribute to the most efficient allocation of resources.

In a command system, wages are not a lever for the effective distribution of labor due to its strict decree by the state, regardless of the quality and quantity of products produced. The result is a lack of incentive for productive work (the mechanism for setting wages will be discussed further in connection with labor motivation and coercion).

The interest rate cannot serve in a command economy as a means of efficient allocation of investment. In conditions of preferential lending and chronic debt write-offs for unprofitable enterprises, there is no talk of any efficiency. Investments are made based on the ideological and political priorities of the ruling center.

Resources are given to producers either for free (land) or at a low price, and, therefore, their wasteful use is inevitable.

Under the conditions of a state monopoly on labor resources, investments and land, wages, interest and rent cannot be equilibrium prices, since there are no markets for labor, capital and land at all.

In a directive economy, in principle, the existence of such a category as opportunity costs is impossible, and, consequently, there is no distinction between economic and accounting profits. And the director of an industrial enterprise, and the director of a store, and the head of a bank - they are all deprived of an alternative to using free funds, because all these enterprises are owned by the state.

In the practice of a non-competitive economic system, there is no state of a marginal firm and there is also no enterprise receiving quasi-rent or a bankrupt firm. As a result, unprofitable enterprises receive subsidies, while profitable enterprises transfer funds to the budget, and there is no objective mechanism for determining efficiently operating enterprises. The absence of the stimulating role of profit and the threat of bankruptcy due to losses deprives enterprises of the need to operate effectively. The main goal is to implement the plan directive.

Enterprises in any economic system strive to soften the hard budget constraint. This can be done partly in a market economy; monopoly power in the market allows the firm to dictate prices to one degree or another; turning to a loan allows you to soften the conditions of paragraph 4, etc., but note that even in these circumstances, the budget constraint of a market firm remains almost rigid: a loan is always provided under strict conditions and only if there are guarantees of its return, and in the field of pricing, monopolies are always limited by the effective demand of buyers.

It is important to note that enterprises, trying to fulfill the planning directive, are faced with a budget constraint. The meaning of the concept of a budget constraint is that the amount of cash income of an enterprise and its cash funds should potentially be equal to the amount of expenses of the enterprise for a certain period. There are several factors that make the budget constraint in a market economy strict:

1. Exogenous prices. This means that the enterprise is not a “price seeker,” but a “price taker,” i.e., the price is set by the market and an individual firm is not able to influence purchase prices or the prices at which products are sold.

2. Strict taxation system. This means not just high taxes, but the fact that the enterprise cannot influence taxation standards and does not receive benefits when paying taxes that are collected without fail.

3. Lack of free government assistance. This means that the state does not subsidize current production and does not cover capital investment costs free of charge.

4. Inability to obtain a loan. All resource purchases are paid for in cash. Intercompany lending is not permitted.

5. Impossibility of external financial investments. What is meant here is that the owners can withdraw profits, but they do not have the right to invest them again in the development of the enterprise.

In a command economy, an enterprise operates under a soft budget constraint. It is enough to refer to these five points and see that, firstly, a socialist enterprise can shift part of its resources to consumers - after all, in such a system monopoly firms dominate, or, as they say, the supplier dictates prices. Secondly, enterprises systematically receive tax breaks and deferrals in paying taxes. Thirdly, gratuitous government assistance (grants, subsidies, debt write-off, etc.) is widely practiced. Fourthly, loans are issued even when there are no guarantees of their repayment. Fifthly, external financial investments are often made not to develop production, but to cover emerging financial difficulties, and all this is at the expense of the state treasury. It is impossible to use borrowed funds using the securities market due to its absence under socialism.

In the administrative system, the rigidity of patriarchal society is partly overcome by breaking the unambiguous connection between the economic subject and the norms of his behavior, although the role of ideological pressure is still very large. The rules and parameters of economic behavior, and the corresponding distribution of goods, are determined by the influence of the commanding (managing) subsystem, which is, first of all, the state, no matter what various forms it takes. The compliance of the behavior of an economic entity with control influences is ensured primarily by non-economic means, which, in addition to ideology, include the apparatus of coercion. Such coordination of economic activity provides opportunities for significant development through corresponding changes in the norms of economic behavior, as well as the concentration of resources under the control of the management subsystem. Its weak point is the lack of internal incentives for economic activity among economic entities subordinate to external commands and limited by them in their actions. Therefore, periods of rapid but short-lived development alternate in such systems with states of stagnation and decline.

So, having defined the principles of the command-administrative system, let us now move on to consider the advantages that this economic system has.

1.3 Advantages and disadvantages of the command-administrative system

A planned economy has a number of advantages. Thus, a centralized economy allows you to quickly concentrate all the resources of society on the “direction of the main attack.” This is very important during wars, major natural disasters, and also allows you to move forward in your chosen field. Therefore, for example, during the years of the first five-year plans (in just 10 years, which by historical standards is a very short period of time) the Soviet Union “transformed from a peasant country into a powerful industrial power”, won the Great Patriotic War, and was the first to implement a space exploration program.

Another advantage of the command-administrative system is that it significantly reduces or completely eliminates some types of transaction costs (at the same time, however, a new type of transaction costs appears in a planned economy - the costs of drawing up and coordinating between authorities at different levels of plan targets; about These costs will be discussed when considering the shortcomings of the hierarchical system).

Thus, in a centralized economy, there are no costs of searching for information (primarily, the costs of searching for counterparties to business transactions and searching for the most favorable terms of purchase and sale), since producers are attached to stores and resource suppliers in a directive manner, and end consumers of goods do not have to make efforts to search the best conditions for purchase and sale, since each type of product is produced by one manufacturer and its price and quality are the same everywhere (in Soviet times, the price was indicated directly on the product).

It should be noted that it was the directive method of attaching manufacturers to stores that allowed the centralized organization of trade to be “the most economical in the world,” since it did not imply the existence of hundreds of thousands of trade organizations, each of which would have “its own accountants, supply and sales authorities, assistants, vaults, bank accounts..."

The ideal model of a command-administrative system also assumes that there are practically no costs of concluding a business contract, since, as mentioned above, resource suppliers, goods producers and stores are attached to each other in a directive manner. However, this type of costs also includes the costs of direct acquisition of goods by end consumers (the purchase of goods by the buyer is also a business contract). In principle, the significance of these costs is small, so they are usually not mentioned, but during the Soviet era they sometimes became quite noticeable (for many, the main association with the Soviet era is gigantic queues in which people stood for many hours, and sometimes even spent the night; of course , there are queues even in a market economy, but they are not of such a large-scale nature as was sometimes the case under the USSR, when some types of goods were in short supply).

With a hierarchical system, measurement costs (costs associated with the consumer’s assessment of the properties of goods) are significantly reduced, since each type of product is produced by one manufacturer, and therefore the buyer does not need to waste time measuring and comparing the properties of goods from different companies and choosing the most preferable manufacturer for himself.

In a planned economy, there are also no costs associated with violating the terms of the contract and monitoring its implementation: no one can violate the planned task - either under pain of moral or physical punishment, or simply because the task itself fully takes into account the resources and capabilities of enterprises, therefore, fulfillment it becomes a natural and expedient activity.

In addition to transaction costs, a command-administrative system also eliminates certain types of production costs. First of all, these are costs associated with advertising and marketing research. In addition, under a hierarchical system, there are much fewer professions that are not directly related to the production of material goods and the provision of services to end consumers.

Another advantage of the command-administrative system is that it can largely eliminate cyclical fluctuations, can ensure full employment and, very importantly, smooth out inequalities in income distribution.

The advantages of the command-administrative system also include large-scale production, but this point is quite controversial. To show its ambiguity, it is necessary to reveal such a concept as “scale effect”. Economies of scale (economies of scale) are an economic pattern according to which the total costs of producing a unit of output over a long period of time fall as production volume increases.

This saving is due to the following. First, as production volume increases, fixed costs are spread over an increasing number of products, therefore, their share in a unit of output falls. Secondly, as the size of the enterprise increases, the possibility of specialization of labor arises: by concentrating on performing one operation, the worker works much more productively (Adam Smith wrote about this in relation to the manufacture of pins), and moreover, loss of time is eliminated when the worker moves from one operation to another. Thirdly, larger manufacturers can afford to purchase and effectively use the best equipment, as well as develop and implement new technologies - for small volumes of product production this does not make sense, since the development of new technologies requires very large capital investments.

But there is also such a concept as “negative economies of scale” (“negative economies of scale”), which manifests itself in the fact that, starting from a certain point, an increase in the size of an enterprise causes an increase in average production costs. The reason for this is usually seen in the fact that the controllability of a large organization is reduced: the management apparatus becomes more and more numerous and moves further and further away from the actual production process, problems of information exchange and bureaucratic red tape are created.

In addition, as the size of a company grows, the incentives for staff activities may become eroded, as employees begin to feel more alienated from the leadership center. In principle, diseconomies of scale have no practical justification, in addition to this, the question arises: how to determine whether an enterprise has reached its optimal size (assuming the existence of diseconomies of scale).

The advantages of the command-administrative system also include the fact that planned production largely filters the range of goods and services produced, excluding from it those goods and services that have a detrimental effect on the physical and moral state of society, but are in demand in a market economy . Such goods and services include, for example, fast food restaurants, American-style action films, countless talk shows, sexually oriented products, and much more.

In addition to the above advantages, the command-administrative system also has a number of serious disadvantages, because of which, many believe, the very idea of ​​​​building a socialist state is utopian in nature. So let's look at these disadvantages.

The main disadvantage of the command-administrative system is the inability of planned targets to objectively reflect the needs of society for certain goods. Indeed, in order to determine how many units of each product society needs, the Center must have information about people’s needs, their tastes and preferences. F. Hayek called this information “scattered knowledge,” indicating that it is dispersed among people and cannot be concentrated in a single Center. In a market economy, this information is reflected through the mechanism of price fluctuations (changes in relative prices and marginal rates of substitution are the guideline that tells producers what to produce and consumers what to buy); in a planned economy, there is no such mechanism, which means, many believe , a planned economy, in principle, cannot accurately determine how many of which goods society needs.

There is, however, an opinion that progress in the field of computing technology will eliminate the limitations of collecting and processing information by the planning authority, and therefore “with the development of information technology it will be possible to model the entire process of production and consumption for all of humanity as a whole.” But opponents of this opinion cite the following argument: economic life is characterized by uncertainty, and therefore even the most powerful computer technology will not be able to plan with absolute accuracy the required volume and range of output, since it is not possible to foresee all changes in economic life.

In other words, even if it is possible to collect all the information about available resources and needs for certain goods at a particular moment, then after a certain time this information will not objectively reflect reality due to changes in economic life, these changes are unpredictable, therefore they cannot be taken into account by the plan target. Thus, the Austrian economist Ludwig von Mises considers six large groups of factors that, in his opinion, lead the economy into constant motion: changes in the natural environment, in the size of the population, in the size and distribution of capital, in production technology, in the social organization of labor, as well as changes in the structure of consumer demand. Of course, not all of these factors are completely unpredictable. For example, population dynamics can not only be predicted quite accurately, but also directly influenced by demographic policy instruments, and changes in production technology under a command-administrative system are taken into account by the planning target, so there is no need to predict them.

However, accurately predicting, for example, changes in the natural environment is truly an almost impossible task. After all, it is impossible to say in a few years which year will be productive and which will not, when and where natural disasters will occur and what the scale of destruction they will bring will be.

It is difficult to disagree that the “scattered” nature of information about consumer preferences, as well as the uncertainty factor present in economic life, do not allow planning targets (even when using the most modern computer technology) to determine with absolute accuracy in what volume and what goods need to be produced to fully meet the needs of society. However, it should be noted that even in a market economy the volume and range of goods that one hundred percent meets the needs of the population is not produced.

In an ideal model of a market economy, capital instantly moves from less profitable industries to more profitable ones (that is, from those industries where demand becomes lower than supply to those industries where demand, on the contrary, begins to exceed supply). In practice, things are more complicated. The development of stock exchanges does make it possible to quickly move financial assets from one industry to another, but these financial flows are not instantly converted into production assets - this takes time.

Therefore, when the demand for a product changes, supply does not respond immediately (provided, of course, that there are not enough stocks in warehouses to fully satisfy the increased demand). In addition, manufacturers do not immediately begin to expand production, but first conduct marketing research to find out whether the reasons for the increase in demand are temporary or not, and this further increases the delay in the response of supply to increased demand.

A similar situation occurs if the demand for a certain product falls: enterprises do not immediately reduce production volumes, but continue to operate as before for some time, producing excess products. The question arises whether theoretically (for example, with the development of electronic computers) a planned economy can ensure the production of such a volume and range of goods that, although not 100 percent will meet the needs of the population (after all, a market economy does not provide 100 percent compliance), but will close to the real needs of society? Or were serious discrepancies between planned targets and the true needs of the population during the USSR quite natural? Probably, theoretical research cannot answer this question; this requires expensive practical research that is beyond the means of independent researchers.

As a disadvantage of the command-administrative system, many also highlight the fact that the Center, “striving to describe the range of products in physical terms right down to the nail,” must maintain a huge bureaucratic apparatus that absorbs significant labor and material resources.” It is impossible to name the exact size of the bureaucratic apparatus under the USSR, since the lists of nomenklatura were secret and nothing was officially reported about it. Therefore, the data of different researchers varies, but in general the order of numbers for most of them remains similar.

Thus, we have every reason to question the statement that “the operation of the complex mechanism of a centralized economy requires a huge number of managers, planning, calculating and checking officials.” However, in addition to its large numbers, the bureaucratic apparatus of the USSR is also reproached for its corruption. Indeed, there was corruption in the nomenklatura, but it should be noted that the corruption of officials after the collapse of the Union increased many times.

The disadvantages of the command-administrative system include the fact that manufacturers have no incentive to improve the quality of consumer goods and introduce more efficient production technologies. The reason for this is the lack of competition. After all, in the absence of an alternative, buyers have no choice but to buy goods from a single manufacturer. In addition, soft budget constraints (which will be discussed in the next chapter) allow the enterprise to function inefficiently, since in principle it cannot go bankrupt.

Among the important disadvantages of the socialist system, there is also the lack of high incentives to work, since there is no motive for personal gain. Thus, the income of a producer in this economic system does not directly depend on how much and what kind of products he produced - it is fixed and determined solely by the position he holds. Many believe that the very nature of human nature is such that when farming collectively, he will never work as conscientiously as if he worked for himself, and this property of human nature cannot be eradicated by anything.

Many authors also criticize socialism for the concept of determining the share of each participant in the production process based on labor costs. They argue that there is a different quality of work, different labor productivity and, most importantly, many of its varieties (from highly intellectual to purely physical), and therefore it is quite difficult to objectively assess its value.

The socialist system is also actively criticized for the fact that it contributes to the concentration of great power in the hands of one person (group of persons), which can lead to the establishment of a totalitarian regime in the country and the pursuit of an aggressive foreign policy by the state. Indeed, the era of “Stalinism,” for example, was accompanied by massive repressions, and as for aggressive foreign policy, examples include the USSR’s attack on Finland (1939), the entry of troops into Hungary (1956), Czechoslovakia (1968), Afghanistan (1979).

The disadvantages of the command-administrative system also include the large size of the shadow sector. Thus, by the beginning of the 70s, 3-4% of the USSR's GDP was produced in the shadow sector, and in the period from the early 60s to the end of the 80s, on average, the scale of the shadow sector increased 30 times (in construction - 60 times, in the field of transport and communications - 40 times, in agriculture and industry - 30 times). However, it should be noted that after the collapse of the USSR, the size of the shadow sector did not decrease.

It should also be noted that the origins of the shadow sector in a market economy and in a socialist economy are different. If for a market system the growth of the shadow sector is associated with lower costs of underground production, the presence of demand for goods and services prohibited by law, as well as tax evasion, then for a command economy the main reason is deficit. We have already touched upon in this paragraph the problem of objective reflection by planned targets of the needs of the population and the needs of enterprises for various resources. If the planning target does not objectively take into account the needs of the population and enterprises, then a deficit arises.

2 MAIN FEATURES AND MODELS OF THE COMMAND-ADMINISTRATIVE SYSTEM

2.1 Main features of the command-administrative system

The characteristic features of the administrative-command system are public (and in reality state) ownership of almost all economic resources, monopolization and bureaucratization of the economy in specific forms, centralized economic planning as the basis of the economic mechanism.

The fundamental feature of the command-administrative system is that all property rights belong to the state, and private property is liquidated and transferred to the state. Thus, the establishment of Soviet power in the USSR was immediately accompanied by a number of laws on the expropriation of property, the nationalization of banks, the “Law on the Socialization of the Land” (February 1918), the “Decree on the Nationalization of Foreign Trade” (April 1918), the introduction of food detachments and committees, engaged in the confiscation of property and agricultural surpluses from the “kulaks,” etc.

The next feature of the command-administrative system is that all management of the national economy is carried out from a single Center. The center takes responsibility for solving the main economic problems of society: what to produce, how to produce and for whom to produce. Consequently, in relation to the manufacturer, the Center must be a large information generator of its kind; it must have information about which enterprise needs which resources and which consumer needs which goods and in what quantity. Here the state plan appears, which represents mandatory orders of the Center, directed to specific economic entities - enterprises, national economic organizations. That is why a centralized economy is also called a planned economy. In general, the concept of a centralized economy has a number of synonyms - command-administrative system, hierarchical system, directive system, command economy.

In a simplified way, the planning process can be described as follows: at the very top of the state pyramid, it is determined how much of a given product, say cars, should be produced throughout the country in a year. Then a special planning body (in the USSR it was the State Planning Committee) calculates how much steel, plastics, rubber and other materials will be needed to produce the planned volume of cars. The next stage is calculating the needs for electricity, coal, oil and other raw materials for the production of starting materials. This procedure is repeated with each type of product. Then it is calculated how much, say, steel must be produced to produce all the products, and this figure is reported to the Ministry of Iron and Steel. The same thing happens with all other resources. Then the planning process descends from the State Planning Committee to the line ministries. Suppose the Ministry of Ferrous Metallurgy receives a task to produce a certain amount of cast iron, steel, and rolled products of various types per year. The ministry, in turn, sets out production targets for all factories subordinate to it, indicating how much of which product each factory should supply in each quarter of the next year. The plant director distributes his plan among workshops, the workshop among sections, and so on down to the steel worker.

2.2. Models of the command-administrative system

Each system has its own national models of economic organization, since countries differ in history, level of economic development, social and national conditions. Thus, in the administrative-command system there were the Soviet model, the Chinese model, etc. The most striking examples of a command economy are the economy of the former USSR and the economy of Nazi Germany.

Statements about the unviability of a command economy, often heard in Russian and Western economic literature and journalism, are based on data on the inefficient use of material and labor resources in the pre-war period and the continuous decline in the rate of economic growth and efficient use of resources in the 60-80s.

However, there is one very long period in the Soviet economy when it experienced genuine prosperity - this was 50 years. Subsequent events in the Soviet economy displaced, to a large extent, this period from the sphere of historical and economic study. Such turning points as the NEP, the 1930s, and the degradation of the command economy in the 1960s and 1980s attracted more attention. A certain role in such attention to these periods was dictated by ideological considerations. History, as often happens with it, has come to serve, not always consciously, the interests of political struggle.

An analysis of the reasons for the flourishing of the Soviet economy in the 50s and the transition in the subsequent period to a slowdown in economic development deserves much more attention from historians and economists than is currently the case. .

The period of the 1930s does little to reveal the potential of a command economy, since it was characterized only by the formation of the foundations of a command economy. In addition, it was extremely complicated by severe domestic and foreign policy crises and problems that negatively affected the nature of economic development. The low efficiency of the Soviet economy during this period was also affected by the low level of qualifications of management, engineering and technical personnel, and workers, due to the general low cultural level of the country during this period and the rapidity of structural changes. On the other hand, in the 60-80s, as will be shown by the example of the late 50s, the dismantling of the command economy was already actually taking place.

Both numerous Western and alternative Soviet (including mine) assessments of Soviet economic growth show that in the 50s the USSR was among the countries with the highest rates of economic growth along with Germany, Japan, France and some other countries, significantly outpacing the rate of economic growth in the USA and Great Britain and many other countries of the world.

Naturally, I’ll start comparing the dynamics of economic development of the largest developed countries in the world with the dynamics of GDP. The biggest problems with the estimates relate to data for the USSR. Available calculations for this period give very contradictory results. For example, according to CIA calculations for 1951-1955. The USSR's GDP grew 1.3 times, while according to A. Bergson's calculations it increased 1.5 times1.

The calculations below apply to the entire period 1951-1960. The most accurate results from our point of view were the use of two methods: the change in the ratio between the GDP of the USSR and the USA, produced by the Central Statistical Office of the USSR, and fuel consumption in the Soviet economy for this period. With a certain overestimation of the absolute values ​​of the estimates of the Central Statistical Office of the USSR, they provide reliable results of the dynamics of the USSR GDP, because the overestimation of this level was the same in all periods due to the use of the same calculation methodology. The results obtained, which, of course, do not claim to be absolutely accurate, are still somewhat lower than the estimates of the USSR Central Statistical Office of the dynamics of Soviet economic growth, the distortion of which was the least distorted by the Central Statistical Office during this period.

The calculation, based on the ratios of the GDP of the USSR and the USA, gave a growth index of 2.48, based on fuel production (foreign trade in fuel was small during this period) 2.23, on average - 2.35. This indicator was transferred to data on the dynamics of fuel production according to the ratio between this dynamics and the dynamics of fuel production for the entire period (1.05). The resulting value significantly exceeds my previous estimates, which apparently did not sufficiently take into account the growth rate of military spending and did not take into account the service sector, which grew especially rapidly in the 50s (my calculation related to national income in the Soviet interpretation, excluding the service sector). For the period 1951-1955 it is close to the calculations of A. Bergson. Most likely, the above estimate is somewhat exaggerated, but it still gives a fairly good idea of ​​the dynamics of the process.

The comparison results are presented in Table 1.

As can be seen from the data in Table 1, GDP growth in the USSR as a whole for the entire period of the 50s was many times higher than growth in countries such as the USA and Great Britain, significantly exceeded economic growth in France, was higher than in Germany and was only slightly inferior to economic growth. growth in Japan (the magnitude of which was undoubtedly affected by the fact that by 1950 Japan's GDP had not yet reached its pre-war level and Japan at the beginning of this period had high growth rates characteristic of the recovery period). At the same time, in 1951-1955, economic growth in the USSR was higher than in all other countries and only in the next five-year period it lost first place in terms of economic growth to Japan.

Table 1 - GDP dynamics in developed countries of the world for 1950-1960 (in% of the beginning of the period, taken as 100)

The exceptionally high rates of economic growth in the USSR during this period are also visible when comparing the growth dynamics of the most important sector of the economy - industry. In this case, we will use previous calculations to determine the dynamics of industry in the USSR. The comparison is presented in Table 2.

Table 2 - Dynamics of industrial development in the largest countries of the world in 1950-1960. (relative to the beginning of the period taken as 100)

Most likely, the calculated data are somewhat underestimated, because for this period (unlike 1965-1975), it was impossible to include in the calculation the dynamics of the military industry, which, of course, grew much faster than the civilian one. Nevertheless, from these data it is clear that the growth rate of Soviet industry was much higher than that of the industry of the USA, Great Britain and France, and was only slightly inferior to the growth rate of West German industry and, especially, Japanese industry. The same advance compared to the industry of these countries (including Germany, but without Japan) shows the relationship between the production of such key products for that time as electricity production, steel smelting, cement production, production of all types of fabrics, and finally, and especially important, electricity consumption in industry, where the ratio with Germany increased from 210% in 1950 to 249% in 1960. The advance was observed not only in traditional industries, but also in such a fast-growing industry as the production of artificial and synthetic fibers, which emerged on a massive scale only during and after the Second World War, compared to the USA, France and Germany.

A fundamentally new circumstance for this period in the development of the Soviet economy was that, unlike the previous period, intensive factors became the main ones in the development of the economy. Thus, while GDP grew by more than 100%, the number of employed people grew by only 22% in the 50s. Thus, more than 80% of GDP growth was ensured by increased labor productivity, while before the war it was less than half. GDP growth in the 50s occurred much faster than the growth of fixed assets, which grew, according to my calculations, only by 70% (all fixed assets grew even less), while in the pre-war period GDP grew much slower than the growth of fixed assets. Finally, the material intensity of national economic products has noticeably decreased, while before the war and in the 40s it increased significantly.

In a number of indicators of changes in the efficiency of the economy, the USSR during this period also surpassed the main capitalist countries. As an example, I will give these changes in labor productivity in industry (Table 3).

Table 3 - Changes in labor productivity in industry in 1951-1960. (as a percentage of the beginning of the period, taken as 100)

As can be seen from the data in Table 3, the growth rate of labor productivity in the 50s in the USSR significantly exceeded the growth rate of labor productivity in the USA and Great Britain, and was only slightly inferior to the growth rate of labor productivity in France and Germany. Taking into account the underestimation in Table 2 dynamics of industrial production in the USSR, this difference should have narrowed even further. Only in comparison with Japan, the difference in labor productivity was huge. What has been said for the entire period also applies to the subperiods, with the exception that in 1956-1960, labor productivity in USSR industry was equal in rate to West German industry. Thus, in terms of the rate of growth of labor productivity, the USSR during this period was among the world leaders.

Due to the absence of a single measure of the pace of scientific and technological progress, it is impossible to quantify the relative pace of scientific and technological progress in the USSR and the largest capitalist countries during this period. If we talk about the novelty of scientific and technical solutions, then the USSR during this period undoubtedly lagged very far behind the United States. Scientific and technological progress in the USSR during this period was predominantly borrowed. A major role in the acquisition of the latest scientific and technical knowledge was played by samples of products received during the war under Lend-Lease; scientific and technical documentation acquired through reparations and captured in eastern Germany; scientific and technical espionage during the war and in the post-war period. There were a number of original discoveries and inventions, but they covered only a relatively small part of the equipment being introduced into production (with the exception of military equipment, where their share was much higher). What has been said about the novelty of scientific and technical solutions in the USSR, however, apparently also applies to some other countries, which then also did not have a serious and effective basis for independent scientific and technical solutions (except, perhaps, Great Britain).

If we talk about the introduction of new technology into production, it happened quite quickly in many industries and in transport. An indicator of such growth (albeit not entirely accurate) is the increase in the number of new types of machines and equipment created (accepted for production) from 650 items in 1950 to 3089 in 1960.3. An important evidence of successful scientific and technological progress in the USSR during this period, there were high rates of growth in labor productivity, which were already mentioned above. The high rates of scientific and technological progress during this period were ensured by exceptionally high growth rates of allocations for science, although a significant part of them was used for military purposes.

Evidence of the high pace of scientific and technological progress during this period was such major events as the flight of the Soviet Earth satellite, the launch of a nuclear power plant, the first flight of a supersonic passenger aircraft and a number of other technical achievements in which the USSR was ahead of the United States. It is important to note that in such an important industry as the creation of electronic computer technology, Soviet machines at that time did not lag behind the computers created in the USA in terms of their technical data. Apparently, the technical level of such industries as electric power, ferrous metallurgy, coal industry, and some branches of non-ferrous metallurgy did not lag significantly behind the level of the United States during this period.

Major achievements of Soviet industry during this period were the development of continuous casting of steel, the creation of hydrofoil ships, a unified electric power system for the European part of the country, and some others.

The 1950s were characterized by exceptionally rapid structural changes in the economy. The country's urbanization is rapidly growing, the development of new sectors of the economy (production of electronic computer technology, many branches of instrument making, the chemical industry, radical technical reconstruction of railway transport, development of air transport, the emergence and development of the production of rare metals, systems of scientific institutions in various fields of science and technology) .

Based on high rates of economic development, and increasing attention to improving the standard of living of the population since 1953, in the 50s there was a qualitative improvement in the standard of living of the population. If at the beginning of the 50s the level of consumption of basic food products was more typical for a developing country, then as a result of an increase in per capita consumption of such high-quality food products as meat, milk, sugar, vegetables and melons by 1.5-2 or more times, it has reached the level of a number of developed countries in the world. Malnutrition, which was still very widespread in the early 50s, has been practically eliminated.

During this period, per capita consumption of the most expensive types of fabrics (woolen and silk), outer and underwear knitwear, hosiery, and leather shoes increased twofold or more. Sales of cultural and household goods increased several times, reaching for some of them quite high level (watches, radios and radios, bicycles and motorbikes, sewing machines). For the first time, relatively complex household products such as televisions, refrigerators and washing machines began to be produced in large quantities, although their production volume remained small. The supply of living space has increased two and a half times, reaching the per capita level of highly developed countries. For the first time, many millions of people received independent housing. The barracks were practically finished.

The concentrated expression of these and other measures to improve the standard of living of the population (for example, improving health care) was a huge increase in the life expectancy of the population, up to 69 years - the level of the most highly developed countries in the world at that time. Without exaggeration, we can say that during the 50s, from the point of view of the standard of living of the population, a new country emerged, free from poverty and, by world standards, prosperous, although not rich, for the bulk of its citizens. There has been a reduction in working hours. All these achievements in the field of living standards of the population occurred simultaneously with enormous changes in the socio-political atmosphere: mass rehabilitation, the cessation of mass political repression, and the revival of cultural life.

In the 50s, despite a slight reduction in the intensity of capital construction at the end of the period, a huge amount of capital investment was carried out in the production and non-production spheres.

The high growth rates of the Soviet economy made it possible during this period to equip the armed forces with the most modern military equipment in large quantities and also provide them with the armed forces of the USSR's allies. During this period, mass production of nuclear weapons and missile technology for various purposes was established, powerful jet aircraft, modern a highly complex air defense system, a huge submarine fleet based on modern diesel and nuclear submarines. The facts about the enormous military buildup during this period are too well known to go into detail. It is only important here to emphasize not only the enormous scale, but also the high technical level of this equipment, often not inferior to the level of the United States, which was impossible without a highly developed military industry and related industries, a developed scientific base for defense research.

During this period, the USSR provided very significant financial, credit, scientific and technical assistance to its allies in Eastern Europe and China (until 1960), and began to provide significant assistance in economic development to a number of developing countries, the most noticeable manifestations of which were high-tech construction projects. level and quickly at sites such as the Bhilai Steel Plant in India and the Aswan Dam in Egypt.

The intensive expansion of investments in the development of education, health care and science continued, which assumed enormous proportions already in the pre-war period. The best indication of the size of this increase is the increase in expenditures for these purposes from the state budget, which, due to a slight increase in prices, practically coincided with real investments in these industries. Thus, budget expenditures on education increased from 5.7 billion rubles. in 1950 to 10.3 billion rubles. in 1960, for the needs of healthcare and physical culture with 2.1 billion rubles. in 1950 to 4.8 billion rubles, i.e. in both sectors by 2-2.5 times. In terms of the share of expenditures on education, health care and science in GDP during this period, the USSR, as is known, occupied one of the highest places in the world.

The most serious economic achievement of the 50s was financial stabilization, unprecedented for the USSR and rarely seen in the 20th century, which was expressed in a surplus budget and a minimal increase in retail and wholesale prices, and even their reduction in the early 50s. Retail prices, as you know, decreased during the fifth five-year plan (even taking into account some of their growth in collective farm trade), while wholesale prices, according to my calculations, did not change. In the sixth five-year plan, there was a slight increase in retail prices, and wholesale prices throughout the national economy, according to my initial calculations, increased slightly (by 13%).

Such the highest financial and economic stability was ensured not only by a sharp increase in production efficiency during this period, but also by the skillful management of the monetary and financial spheres, and the high degree of efficiency of these spheres in ensuring monetary and financial stability at very high, it must be emphasized, absolute and relative growth rates of the budget and credit investments in the national economy.

These enormous economic and social achievements allow us to call the 50s a “Soviet economic miracle.” As was shown, these achievements were not inferior to the achievements of, say, Germany, economic development, which in the same period was called the German economic miracle.

Considering the socio-economic backwardness of pre-revolutionary Russia from advanced countries and the enormous human and material losses as a result of three severe wars and social upheavals, this result should be assessed as a unique socio-economic achievement.

The economic achievements of the 50s were so significant that many Soviet economists and the overwhelming majority of Western economists known to me who were involved in the Soviet economy, and statesmen of Western countries, by the end of the 50s, had the opinion that the USSR would inevitably outstrip the US economy in the future. The differences came down only to when this would happen - in the 70s, as the Soviet leadership believed, or in the 80s-90s, as many Western economists counted on.

The analysis shows that the sources of the largest economic achievements of the 50s were as follows. The command economy during this period showed its viability and macroeconomic efficiency. The Soviet economy, being, in essence, the world's largest corporation, skillfully used the strengths of any large corporation: plan and implement long-term plans, use enormous financial resources to develop priority areas, make large investments in a short time, spend large amounts of money on research and development and etc.

The achievements of the 50s were based on the powerful potential of heavy industry and transport created in the 30s and 40s, which then, due to its focus primarily on military purposes and low efficiency of use, gave little return for expanding the production of consumer goods. The USSR skillfully used its limited resources to develop sectors that determined long-term economic progress: education, including higher education, healthcare, and science. At the same time, the enormous capabilities of a totalitarian state capable of sacrificing the short-term interests of the population were used. In itself, the rapid development of education and health care as a factor of economic growth was not a Soviet discovery.

There are known successes in this direction, for example, the USA and Germany in the 19th - early 20th centuries. However, the speed and scale of shifts in the development of these industries were unprecedented and set a model for many countries around the world in the second half of the 20th century. Almost unique was the high share of industrial accumulation in the gross domestic product, which made it possible to quickly increase the volume of production assets at a high technical level for that time, making extensive use of foreign technical experience and equipment. Thanks to enormous geological exploration work, a powerful raw material base was prepared for the development of all sectors of the economy.

In the fourth and early fifth five-year plans, in connection with the complication of economic development and to strengthen control over the use of material resources, the number of indicators of the production plan, material and technical supply and directive standards for the consumption of materials was significantly expanded, which had a positive effect on enhancing the balance of production plans, supply and reduction standards for the consumption of material resources, which during this period were exceptionally high. At the same time, these measures to strengthen centralization complicated the planning and management process and the burden on central economic bodies. Instead of intellectualizing the planning process (for example, using computer technology), after the death of Stalin, the Soviet leadership, under the slogan of expanding the independence of lower economic bodies, for which the necessary economic prerequisites were not created, went for a predominantly unjustified reduction in the number of indicators of the national economic plan. Having increased from 4744 in 1940 to 9490 in 1953, they then continuously decreased to 6308 in 1954, 3390 in 1957 and 1780(!) in 1958.

Unfortunately, we do not know exactly how this reduction occurred. But imagining the composition of the national economic plan at that time, we can assume that we are talking primarily about a sharp reduction in the number of natural indicators due to their consolidation and reduction and directive standards for the consumption of material and labor resources. The consolidation and reduction of directive natural indicators gave ministries a free hand to relatively reduce the production of products that were unprofitable for them in terms of profitability or complexity of production, without taking into account the needs of consumers and the national economy. Reducing the approved standards for the consumption of materials made it possible to “ensure” a reduction in the cost of production by reducing its quality and manipulating the nomenclature and range of products. In general, these measures led to increased imbalances in economic development, a slowdown in scientific and technological progress that was not provided by the necessary materials and equipment, and production efficiency. But they made life significantly easier for senior economic managers by weakening control over their activities.

Ultimately, the analysis shows that the main economic reason for the continuous decline in economic growth in the 60-80s was the gradual dismantling of the command economy and the deterioration of the level of economic management.

The analysis shows that the decline in economic growth that began in the late 50s was not an inevitable consequence of the vices of the command economy as an economic system, but was the result of its gradual dismantling and unskilled actions of the political and economic leadership during this period.

In the conditions of the deepest crisis of the 90s in Russia, the choice of a command economy as a tool for overcoming the economic crisis is a real prospect with some chances of success. At the same time, it will be necessary to create prerequisites that are extremely difficult to implement, otherwise such an attempt will turn into an expensive farce. It should also be borne in mind that the greatest successes of the command economy were achieved at the stage of the industrial economy. They may turn out to be incomparably smaller in an economy dominated not by traditional industries, but by more complex, knowledge-intensive industries, such as electronics and others.

3 OBJECTIVE NECESSITY FOR A TRANSITION TO MARKET RELATIONS AND WAYS FOR ITS IMPLEMENTATION

The need for a transition from a command-administrative economy to a modern market economy is due to its inflexibility, slow adaptation to change, extremely low productivity due to the total suppression of economic initiative, and the growing incapacity of the economy as extensive factors of economic growth are exhausted.

During the transition from a command to a market economy, there are three main directions in the formation of the market with the necessary state regulation of this process:

Economic liberalization;

Structural transformations;

Institutional transformations.

Economic liberalization is a system of measures aimed at creating conditions for the free movement of prices, market circulation of goods and services, entrepreneurship and openness of the economy.

Structural transformations are a change in the structure of the economy through its demonopolization and conversion, the formation of enterprises of various forms of ownership.

Institutional transformations are the creation of conditions for the operation of the market system by transforming legal institutions; the formation of a system of new organizations and institutions of a market type, the creation of a new system of management of the national economy, etc. State regulation of economic life should be based on economic methods.

Each transition economy, due to the special historical conditions of transformation, the relationship of political forces, prevailing economic ideas and other factors, has its own specific characteristics. They are expressed in the degree of radicalization and the choice of methods of transformation, in its speed, in the choice of options and methods of stabilization policy, in the nature of the implementation of monetary, fiscal and other forms of state policy.

Among the countries that are moving from a command-administrative economic system to market relations, several groups have been identified according to the specifics of the transition paths.

The first group is characterized by the creation in the depths of the old command-administrative system of new socially oriented market relations. The most typical example is China, where this process was distinguished by a long struggle among the ruling circles over development paths, which ended with the victory of pro-market forces in the leadership of the country. Firstly, in China the transition process was carefully theoretically comprehended, developed and defined as long-term and gradual, with its development through socio-economic experiments (in relation to forms of privatization, adaptation of the old bureaucracy to new economic conditions, solving employment problems, attracting foreign capital , entrepreneurship development, etc.).

Secondly, the transition is made through the command-administrative system itself, taking into account the specific historical experience of the country’s development. This system is not being destroyed, but is being reformed in accordance with the tasks that are set for it to implement the transition to the market. Thirdly, the transition to market relations began with the leading sector of the country's economy - agriculture, which employs the bulk of the population. The listed measures have produced positive results worthy of careful study by other countries. Vietnam, Mongolia and some other countries have chosen a similar development path.

The second group of countries is distinguished by a gradual, evolutionary beginning of the transition to market relations through various experiments and transformations, which also begin in the depths of the command-administrative system. Based on the prepared socio-economic environment and the beginning of the development of a market economy, the destruction of the command-administrative system and a further transition to market relations occur. The most typical example is Hungary, which began such transformations in the second half of the 50s.

The gradual accumulation of market elements makes it possible for the country to move to modern forms of economic management without major social upheavals and mass impoverishment of the population, bypassing the historical period of wild, predatory, primitive accumulation of capital. This period in today's developed market economies lasted for several centuries in the past. Its main historical task, on the one hand, was to separate the direct worker from the means of production and turn him into a legally free seller of his labor power, and on the other hand, to concentrate the means of production and funds with a small layer of large entrepreneurs. Today, this method of accumulation threatens acute social confrontation with all possible consequences in the era of nuclear weapons.

The third group of countries chose the path of shock therapy, which consisted of using methods of short-term shake-up of society. This path was chosen, for example, by Poland, where there were certain prerequisites for such a ruthless experiment, namely: market psychology was widespread in the country, private property was significant (over 4/5 of arable land belonged to individual owners), the state was headed by forces that trusted and supported by the majority of the population. However, despite all this, after a short shock the country was forced to abandon it. Those who resorted to this method resigned, giving way to those who take into account the long-term nature of the development of economic processes.

The former Czechoslovakia invented its own transition path, where the so-called Velvet Revolution took place in the late 1980s. Relying on the traditions of market development, new and old methods of state regulation of the economy, cooperation, etc., the country is returning to market relations in a civilized manner. Its division since 1993 into two independent countries - the Czech Republic and Slovakia - occurred in the same civilized manner as the distribution of state property among the population. The bulk of medium and large enterprises have been transformed into corporations through their corporatization. Small businesses can become individually owned. Each citizen received the right to his equal share of state property in the form of special coupons, with which he would purchase shares of privatized enterprises. To prevent coupons from becoming the subject of purchase and sale, speculation, etc., a special protection mechanism was developed. Foreign capital is attracted to the Czech Republic and Slovakia on a developed mutually beneficial legal basis, and companies in common with it are created in third countries.

A special feature of the transition to the market of East Germany is that it became part of the Federal Republic of Germany, one of the most developed countries in the modern world. However, based on their practice, many years are allocated for it, with huge assistance of hundreds of billions of marks annually.

In general, the practice of countries that were previously part of the command-administrative system demonstrates two main options for transforming this system into a market economy. The first is the evolutionary path of the gradual creation of market institutions (China and, to a certain extent, Hungary). The second is shock therapy, which was used with varying degrees of intensity in most countries of Eastern Europe, where this process takes place in conditions of wild primitive accumulation, when the regulator is not the state, acting in the interests of all segments of society, but mafia-clan structures representing the interests According to various estimates, from 5 to 10% of the country's population..

Theoretically and practically proven means of transition from a command-administrative economic system to a socially oriented market economy are denationalization and privatization aimed at developing a multi-structured economy and entrepreneurship. The problems of optimal boundaries and capabilities of the public sector of the economy at the present stage require a priority solution; creating a mechanism for promoting entrepreneurship that produces products, developing market infrastructures, etc. Extremely important is the problem of actively including working people in the implementation of market reforms as one of the sides of the triangle: state - labor - entrepreneurship.

Denationalization and privatization, the development of entrepreneurship should influence changes in the structure of production; promote the development of market competition and new, non-voluntaristic pricing; determine the strict financial policy of the state.

All these measures, along with the creation of a state system for regulating the economy, ensuring social protection of the population in the conditions of the establishment of market relations, should create not only legal, but also socio-economic foundations for limiting international financial and speculative capital, trade and mafia structures, and stop destructive processes in the state economy . The process of transforming command-administrative methods of regulation into market ones is complex and lengthy, requiring a radical change in ownership, the creation of a market infrastructure, and a change in people’s psychology.

Economic analysis of the command-administrative system model did not give a clear answer to the question of whether, in principle, a centralized economic management system can be more effective than a capitalist one. After all, we have seen that a planned economy has both advantages and disadvantages. Almost all shortcomings can theoretically be eliminated, but is this feasible in practice? Could, for example, the development of computer technology eliminate the limitations of the planning authority in collecting and processing information? Can a state with a planned economy control the efficiency of enterprises' use of resources and constantly maintain high incentives for workers to work? Theoretical research does not make it possible to answer these questions with complete confidence.

Economic analysis of the command-administrative system model did not give a clear answer to the question of whether, in principle, a centralized economic management system can be more effective than a capitalist one. After all, we have seen that a planned economy has both advantages and disadvantages. Almost all shortcomings can theoretically be eliminated, but is this feasible in practice? Could, for example, the development of computer technology eliminate the limitations of the planning authority in collecting and processing information? Can a state with a planned economy control the efficiency of enterprises’ use of resources and constantly maintain high incentives for workers to work? Theoretical research does not make it possible to answer these questions with complete confidence.

The analysis of the model of the command-administrative system did not give a clear answer to the question of why the socialist system collapsed in our country. Firstly, the difficulty lies in the fact that there are no reliable statistical data regarding the economy of the USSR. Secondly, we are faced with a paradox: despite obvious shortcomings, the USSR economy developed at a very high pace in certain periods. Even ardent opponents of the socialist idea admit this. For example, Yegor Gaidar wrote the following: “One cannot help but admit that for several decades in a row socialism, primarily in the USSR, seemed both unshakable and durable. Moreover, year after year it spread throughout the world, expanding its influence on the course of the history of all mankind. The picture of rapid industrial transformation and the growth of the industrial power of the USSR in those years was too obvious to be explained by playing with numbers, as some domestic and foreign economists believe today.” This leads many to believe that the shortcomings of the command-administrative system could not themselves be the cause of its collapse. That is why some say that the USSR collapsed due to the decay of the economy, while others believe that it was a “stab in the back”, a betrayal of those who were in power. Of course, if everything on this issue were clear and unambiguous, then such differences of opinion could not exist in principle. Just a theoretical analysis of the principles of the command-administrative system is not enough to admit its inconsistency and draw conclusions that the collapse of the USSR economy was inevitable - a detailed historical analysis is needed here, which, naturally, is beyond the scope of this work

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7. History of economic teachings (current stage): Textbook/Under general. ed. A.G. Khudokormova. - M.: INFRA-M, 2002. - 733 p.

8. http://www.forbes.ru/forbes/issue/2009-03/7290-anatomiya-“sovetskogo-chuda”

9. http://www.situation.ru/app/j_artp_236.htm

Topic 1. Economic systems.

Traditional economic system

A traditional economy is an economic system in which the main economic problems of society - what, how and for whom to produce - are solved mainly on the basis of traditional patriarchal, tribal, semi-feudal hierarchical ties between people. At its core, the traditional economy is a set of subsistence farms in which the bulk of products are produced for own consumption and not for sale. As the most important economic units The traditional economy consists of small family farms within the rural community and larger farms of the tribal aristocracy. Within the traditional economy there is a natural and rudimentary social division of labor, primitive traditional technology for cultivating land, raising livestock, and crafts.

The volumes and structure of needs and production in a traditional economy are determined by traditions, habits, beliefs, family relationships, hierarchical relationships within the clan and community and change little over time. These traditions, passed on from generation to generation, determine both the labor motivation of producers and the mechanism for distributing the products of labor. Along with equal distribution taking into account gender and age, there are elements of unequal distribution depending on the place occupied in the social hierarchy and depending on the results of labor.

The most important resource of a traditional economy is people. Technology in such a society was poorly developed; technologies associated with high labor costs were used. In such an economic system, people were divided into classes, social ranks, castes, which existed in ancient and medieval societies. No one could choose a profession at will; people were obliged to inherit the occupation of their father, who belonged to one class or another.

Thus, the distribution of labor resources occurred automatically and was repeated from generation to generation. It's the same with technology. The young do everything the same way as the generations of their ancestors did - each young artisan copied the work methods of their teachers, without introducing improvements to the work. Every detail of the manufactured products was standardized and secured by certain rules that prohibited certain improvements.

Customs change very slowly, so the production process and the list of products produced in the traditional economy changed slowly. At the same time, centuries-old traditions allowed the artisans of the past to achieve a high level of skill. And in those countries where traditions are still strong today (for example, in India), this level is maintained to this day. At the same time, production methods remain the same as hundreds of years ago. Products and services produced in such societies, as a rule, do not change for tens or hundreds of years. Issues of distribution and exchange of production products are resolved in the same way, following custom. For example, all the best is given to the chief or owner of the land, and the rest is distributed among the members of the society.

In the socio-economic structure of the traditional economy, the following types of property can be distinguished:

· collective (community) ownership of the means of production,

· private family property,

· semi-feudal property of the tribal aristocracy.

In the modern world, traditional economics plays a significant role only in the developing countries of Tropical Africa, South and Southeast Asia. The existence of a traditional economy next to a rapidly developing market economy leads to its degeneration and transformation into a market economy.

Administrative command economy

Administrative command (planned) economy - an economy in which the state form of ownership predominates and major, as well as less significant, economic decisions are made at the highest level of management and administratively, in the form of commands that are mandatory for execution, are communicated to each economic unit. A centralized bureaucratic management system uses mainly non-market levers to carry out directive tasks and decisions.

The purpose of a planned economic system is to:uh The economy of any state, as well as the state apparatus itself, are created to meet the needs that underlie any economic system, but, at the same time, each such system offers its own specific mechanisms for implementing this principle, and also has its own focus - goal or target function. As for the planned economic system, it proclaims the following target function: the economy and production, in particular, are focused on satisfying public and personal needs. Production in the interests of improving the well-being and development of the entire community of workers and each of its members is the main proclaimed motive for the establishment of a planned economic system.

Features of an administrative-command economy include the following provisions:

· The role of the state in a planned economy is quite large: The state is an apparatus for managing and coordinating the socio-political and economic life of society. In the interpretation of a planned economy, the state acquires another important function - it becomes an economic center and a direct control link of the entire economic system. This is expressed in the protection of the socialist (state) form of ownership, strict coordination of production and control over consumption. The state, representing the community of workers, becomes a subject of public property, which ensures control and the leading role of the state in all spheres of activity and at all its stages. Although in this case the state is not responsible for the obligations of other property entities, just as they are not responsible for the obligations of the state.

· The main feature of a command economy is its systematic nature., as the main instrument of the state in economic management. Planfulness- this is consistency, coordination of economic processes aimed at forming the proportions of social production in connection with its goals. In fact, it was expressed in the formulation of plans that were mandatory for implementation and did not always reflect real capabilities and needs. It was one of the main characteristic features of the command economic system.

· A characteristic feature of the administrative-command economy in practice was an extensive way to expand production, which did not ensure the qualitative side of economic growth. Theoretically, the so-called “new quality of economic growth” was proclaimed, which included the constant updating of production capacities, improving product quality and structural restructuring of the economy.

· Unlike a market economy, in the planned economy the most important component of the state’s economy was considered not to be the service sector, but the production sector.

Based on the role of the state in the spheres of production and consumption, as well as taking into account the main goal of the entire economic system, we can imagine distribution in society as follows: the totality of all produced goods (social product) was accumulated by the state, which, in turn, established the shares of various spheres of activity, industries, enterprises, social groups, work collectives, families and their members in consumption, and only after that the goods went on sale. Thus, a relatively uniform level of consumption was ensured among all members of society, with a relatively uniform level of income for each. This satisfies the needs of both producers and consumers.

The most characteristic feature of a planned economic system is state (public) form of ownership, being the most important pillar of state power. The idea of ​​the nationwide nature of state ownership was that every worker should also be the owner of the means of production, that is, the owner of his workplace. To achieve this, it was supposed to include every worker through the work collective in the production management process. In practice, the worker did not have full property rights: to own, use, dispose of - he could only use the state means of production, and only within the framework established by the plan, or the desire to exceed it.

The economic system of farming, chosen by society, has as its goal the effective satisfaction of its needs. The most important criterion for the effectiveness of a planned economy is the complete satisfaction of public and personal needs with the most rational use of public resources. At the same time, the final result of the development of production should be the person himself, therefore efficiency in a planned economy is considered precisely in social economic aspect. In general, economic efficiency is the ratio of the final result of production to the costs of production factors.

Remuneration in a planned economy is considered as the main form of manifestation of the law of distribution In terms of labor, at the same time, it remains the main and only source of income generation for the population. The planned economy declares a direct dependence of the amount of wages on the complexity of the labor involved, which is the principle of wage differentiation. However, the level of such differentiation remains generally quite low.

Supply and demand in a planned economy: The most important lever of influence on both demand and supply is prices. At the same time, the state has a monopoly on setting prices for all types of products. Depending on various circumstances, the established state price may differ from the actual price of the product, which may negatively affect its producers.

Advantages of a planned economy:

1. Despite the fact that business management bodies are guided primarily by the task of satisfying minimal needs, such needs are satisfied for absolutely everyone. This eliminates the problem of poverty, especially characteristic of a market economy, as well as the problem of subsidized unprofitable regions of the state. This is considered the main advantage of this economic system, and it was this that at one time led to its establishment as dominant in the vastness of Eastern and Central Europe, Asia and in some regions of Africa and Central America.

2. It should also be noted that the comparative similarity of income levels of the entire population completely eliminates the possibility of class stratification of society and the superiority of the richer strata of the population over the poor. This is also explained by the presence of a distribution function in a state with an administrative-command economic system. It consists in the distribution and redistribution of the total product produced in the state in order to most fully satisfy the needs of society and people.

3. The existence of centralized planning formally greatly facilitated the work of the production sector of the economy: the manufacturer does not need to think about what, how and for whom to produce; answers to these questions are given by a directive from the relevant governing authority.

4. The declaration of public ownership provides a theoretical opportunity and creates a real impression for each member of society of involvement in the management of resources and means of production, to which it applies. This plays an important role in motivating staff, which is not always easy to achieve when using market mechanisms.

5. All goods are sold and purchased at prices established by special government bodies. This does not allow the market to dictate its terms in setting the price of a product, which, in turn, provides some price stability for a much longer period, than is possible in a market economy.

A planned economy is theoretically aimed at satisfying social and personal needs. There are two main aspects to this provision. The first consists of giving greater importance to social needs and is not entirely positive. The second is that the socialist economic system presupposes a different approach to the classification of needs, different from Maslow’s pyramid of needs, which is actively used in the market economic system.

Market economy

The modern market economy is a complex organism, consisting of a huge number of diverse production, commercial, financial and information structures, interacting against the backdrop of an extensive system of business legal norms, and united by a single concept - the market. The most simplified definition market is a place where people as sellers and buyers find each other.

It guarantees, first of all, consumer freedom, which is expressed in freedom of consumer choice in the market for goods and services. Freedom of entrepreneurship is expressed in the fact that each member of society independently distributes its resources in accordance with its interests and, if desired, can independently organize the process of production of goods and services. The individual himself determines what, how and for whom to produce, where, how, to whom, how much and at what price to sell the produced products, how and on what to spend the proceeds. Freedom of choice becomes the basis of competition.

A market economy has the following features:

· private property – it forms the basis of a market economy. Various types of forms of private property make it possible to ensure the economic independence of economic entities. It is a guarantee of compliance with concluded contracts and non-interference of third parties. Economic freedom is the foundation and integral part of the freedoms of civil society.

· free enterprise - economic freedom gives the manufacturer the opportunity to choose types and forms of activity, and the consumer the opportunity to buy any product. A market economy is characterized by consumer sovereignty - the consumer decides what should be produced.

· pricing based on the mechanism of supply and demand - thereby the market performs a self-regulating function. Provides a rationally efficient way of production. Prices in a market system are not set by anyone, but are the result of the interaction of supply and demand.

· Competition generated by free enterprise and freedom of choice forces producers to produce exactly those goods that customers need, and to produce them in the most efficient way.

· limited role of the state - the state only monitors the economic responsibility of subjects of market relations - forces enterprises to answer for their obligations with the property they own.

The advantages of the market include:

· Efficient resource allocation- the market directs resources to the production of goods necessary for society. The main economic argument for a market economy is that it promotes efficient allocation of resources. According to this thesis, a competitive market system directs resources to produce those goods and services that society needs most. It dictates the use of the most effective methods for combining resources for production and promotes the development and implementation of new efficient production technologies. The "invisible hand" of the market thus controls the production of the greatest quantity of necessary goods from available resources. This therefore implies maximum market efficiency.

· Freedom of choice and action for consumers and entrepreneurs. The market system makes clear the meaning of freedom of enterprise and choice. Consumers are free to buy what they prefer; enterprises - produce and sell what they consider appropriate; Resource providers can choose to use their material and human resources at their own discretion. However, consumer demand decisions, which make some products profitable and others unprofitable, limit firms' free choice in deciding what to produce. Businesses must align their choice of product to produce with the choice of consumers.

· The ability to satisfy diverse needs, improve the quality of goods and services, and the tendency to reduce prices. In order to maintain high profitability and competitiveness of their products, companies strive to expand their range and improve the quality of their products. Along with attracting attention to updated product models, manufacturers have several other very effective levers in attracting consumer votes. First of all, this is an increase in quality and a reduction in the price of goods. It is quite natural that from a number of similar products offered by competing companies, the consumer strives to choose the highest quality and most affordable option. The downward trend in prices is based on the constant desire of producers to use available resources more efficiently. As technology improves and production costs decrease, it becomes possible to reduce the price of a product.

· Flexibility, high adaptability to changing conditions. The ability of the market system to signal changes in such a basic area as consumer tastes and to cause appropriate reactions on the part of enterprises and resource suppliers is called the guiding or guiding function of prices. By affecting product prices and profits, changes in consumer tastes dictate the expansion of some industries and the contraction of others. These adjustments are realized through the resource market, as expanding industries place greater demand on resources, and contracting industries reduce their demand for them. The resulting changes in resource prices redirect resources from shrinking to expanding industries.

· Initiation and optimal use of the results of scientific and technological progress. A competitive market system contains incentives for technological progress. The use of advanced technologies provides an innovative company with a temporary advantage over its competitors. Reducing production costs means for the pioneer firm obtaining economic profit. Moreover, a competitive market system certainly creates an environment conducive to the rapid diffusion of new technology. Competitors must follow the example of the most progressive company, otherwise they will immediately be overwhelmed by a wave of losses, threatening bankruptcy.

Market disadvantages include:

· Fading competition. The critical statement is that the structure of a market economy allows and even to a certain extent stimulates the extinction of the main control mechanism - competition. There are two main sources of the weakening of competition as a control mechanism: 1) Although competition is desirable from a social point of view, it is most annoying to the individual producer because of its ruthless effectiveness. The free, individualistic environment in a market economy is characterized by the fact that entrepreneurs, in pursuit of profit and in an effort to improve their economic position, try to free themselves from the restrictive shackles of competition. Mergers of companies, secret conspiracies of companies, cut-throat competition - all this contributes to the weakening of competition and the evasion of its regulatory impact. 2) The technological progress that the market system encourages contributes to the decline of competition. The latest technology, as a rule, requires: a) the use of very large amounts of real capital; b) large markets; c) a complex, centralized and strictly integrated market; and d) rich and reliable sources of raw materials. This kind of technology means the need for manufacturing firms that are large-scale not only in absolute terms, but also in relation to market size. In other words, achieving maximum production efficiency through the use of the latest technology often requires the existence of a small number of relatively large firms, rather than a large number of relatively small ones.

· Uneven distribution of income. In this case, it is noted that the market is not focused on the production of socially necessary goods, but on satisfying the needs of those who have money. The market system allows the most capable, or dexterous, entrepreneurs to accumulate enormous amounts of material resources, and the right of inheritance enhances this accumulation process over time. This process, in addition to quantitative and qualitative differences in human resources supplied by households, gives rise to an extremely unequal distribution of monetary income in a market economy. The market system allocates resources to produce luxuries for the rich at the expense of resources to produce necessities for the poor.

· Wasteful and inefficient production, instability of development. First, the market system may fail to account for all the benefits and costs associated with the consumption of certain goods and services. The fact is that some benefits and costs appear to be external to the market in the sense that they fall on the share of other economic agents who are not directly buyers and sellers. Therefore, the market system is not able to ensure the distribution of resources that best meets the needs of society. Secondly, the violation of the market mechanism is due to the fact that the market system takes into account only individual needs. The market system, it is argued, is unable to accommodate such social or collective needs. Thus, the market system is an imperfect mechanism for ensuring full employment and stable price levels.

· Instability: inflation and unemployment. Economic growth is uneven, interrupted by periods of economic instability, periods of rapid economic growth are sometimes marred by inflation, that is, rising price levels, and there are periods when growth gives way to recession and depression, that is, low levels of employment and production.

· Negative influence of monopolies. As already mentioned above, the development of a market economy is characterized by the concentration of production and capital, which objectively arises as a result of the entrepreneur’s desire to strengthen the position of the enterprise relative to competitors. In this way, very large enterprises can be formed, the distinctive feature of which is that they are assigned the exclusive right to produce and sell a certain type of product or service. This exceptional position allows these monopolies to dictate any price to the market and, accordingly, receive high profits. On the other hand, due to strict ties to a specific enterprise, a monopoly can dictate low prices to resource suppliers.

· Does not provide fundamental research in science. With all the efforts of entrepreneurs to increase the efficiency of existing technologies and ensure the most economical use of resources, they cannot afford to divert resources to conduct fundamental research in science. The distant and uncertain prospect of obtaining economic benefits from this research leads to the allocation of resources in favor of faster and more certain opportunities for profit in other industries.

As noted above, the listed negative and positive aspects of a market economy are based on the contradiction “limitless needs - scarcity of resources.” Inherent in any type of economic organization of society, this contradiction is resolved in a market economy through the market distribution of rare resources between those industries that produce products in demand by consumers, to the detriment of those industries that produce products that are not in demand. Recently, we can note some trends in correcting these shortcomings of a market economy. Among them stand out the function of state regulation of the economy and structural changes in the forms of entrepreneurial activity.

a concept that appeared in the wake of the processes of democratization of Soviet and Russian society in the 90s. It was (and is) used to designate a political-state organization in which political and socio-economic life, management of public and state affairs, and the limits of personal freedom of a person are subject to strict limits and dictates from above. They are clothed not so much in the form of law, but rather in a system of command rules and customs, strict and even thoughtless adherence to which is unconditional. A.-k. With. means excessive centralization in the management of the country, the creation of a hierarchical vertical in which lower levels are subordinate to higher ones and the latter not only give appropriate instructions, but can also neutralize any objectionable step of lower bodies, thereby depriving them of any independence. A.-k. With. ensured the primacy of Marxist-Leninist ideology, the dominant position of one political party, and excluded political pluralism. freedom of opinion. In the end, A-k. With. led to a crisis of society and government, stagnation, which the processes of democratization and constitutional and political reforms in the country are aimed at overcoming. (S.A.)

This system previously dominated in the USSR, Eastern European countries and a number of Asian states.

The characteristic features of the administrative-command system are public (and in reality state) ownership of almost all economic resources, strong monopolization and bureaucratization of the economy, centralized, directive, economic planning as the basis of the economic mechanism.

The economic mechanism of the administrative-command system has a number of features. It assumes, firstly, direct management of all enterprises from a single center - the highest echelons of state power, which negates the independence of economic entities. Secondly, the state completely controls the production and distribution of products, as a result of which free market relationships between individual enterprises are excluded. Thirdly, the state apparatus manages economic activities using predominantly administrative-command (directive) methods, which undermines material interest in the results of labor.

With excessive centralization of executive power, bureaucratization of the economic mechanism and economic relations develops. By its nature, bureaucratic centralism is not capable of ensuring an increase in the efficiency of economic activity. The point here, first of all, is that complete nationalization of the economy causes monopolization of production and sales of products on an unprecedented scale.

Giant monopolies, established in all areas of the national economy and supported by ministries and departments, in the absence of competition, do not care about the introduction of new equipment and technology. A deficit economy generated by monopoly is characterized by the absence of normal material and human reserves in case of an imbalance in the national economy.

In countries with an administrative-command system, solving key economic problems had its own specific characteristics. In accordance with the prevailing ideological guidelines, the task of determining the volume and structure of production was considered too serious and responsible to transfer its solution to direct producers - industrial enterprises, collective farms and state farms. Therefore, the structure of social needs was determined by central planning authorities. However, since it is fundamentally impossible to detail and anticipate changes in social needs on such a scale, these bodies were guided primarily by the task of satisfying minimal needs.

The centralized distribution of material goods, labor and financial resources was carried out without the participation of direct producers and consumers. It occurred in accordance with pre-selected “public” goals and criteria, on the basis of centralized planning. A significant part of the resources, in accordance with the prevailing ideological guidelines, was directed to the development of the military-industrial complex.

The distribution of created products among production participants was strictly regulated by central authorities through a universally applied tariff system, as well as centrally approved wage fund standards. This led to the predominance of an equal approach to wages.

The unviability of this system, its insusceptibility to the achievements of scientific and technological revolution and the inability to ensure the transition to an intensive type of economic development made radical socio-economic transformations inevitable in almost all socialist (communist) countries. The strategy of economic reforms in these countries is determined by the laws of development of world civilization, as a result of which a modern market economy is being built there at a greater or lesser speed

More on the topic Administrative command system (centralized, planned, communist):

1. 5.2. Military-communist model of the Soviet planned economic system
2. TOPIC 6. ECONOMIC DEVELOPMENT OF SOVIET RUSSIA DURING THE FORMATION OF THE ADMINISTRATIVE-COMMAND ECONOMIC SYSTEM
3. TOPIC 7. ECONOMIC DEVELOPMENT OF SOVIET RUSSIA DURING THE REFORM OF THE ADMINISTRATIVE-COMMAND ECONOMIC SYSTEM (50-60S OF THE XX CENTURY)
4. 6.4. Economic development of Soviet Russia in the conditions of the administrative-command economic system (1933 – 1940)
5. TOPIC 8. ECONOMIC DEVELOPMENT OF SOVIET RUSSIA DURING THE CRISIS OF THE ADMINISTRATIVE-COMMAND ECONOMIC SYSTEM (1970s - 1980s)

The administrative-command system of the economy is a management concept in which the main role is given to distribution-command methods, and power belongs to the central governing bodies.

Characteristic is the centralism of economic activity, as well as the ideological method of government, the dominant party-state bureaucracy and the complete absence of democracy.

Basic moments

Types of economy:

• administrative-command;
• traditional;
• market;
• mixed.

Each developed state has a certain type. An administrative-command economy is also called a pure or planned economy. Its essence lies in the fact that management occurs exclusively through political decisions.

Central or local governments make all decisions on the use of resources independently. It is they who determine what quality and quantity of raw materials should be ordered for enterprises, and what prices to set for this or that product. In this case, both economic and technical factors and socio-political ones are taken into account.

Character traits

An administrative-command economy is characterized by:

• state ownership of most economic resources;
• monopolization and bureaucracy;
• centralized, directive, economic planning as the basis of the economic mechanism;
• hierarchy;
• imbalance of supply and demand, the indicators of which are increasing every year;
• the flourishing of the shadow economy and the black market;
• excessive rise in prices, emission of money;
• the collapse of the national market;
• rampant centrifugal forces;
• replacing commodity-money relations with barter exchange;
• lack of consumer right to choose a product;
• deformation of economic interests (for example, the priority of traders becomes not “sell”, but “hide”).

Advantages

The main advantage of this system is the ability to eliminate obvious unemployment (at least from a theoretical point of view). For this purpose, special resource management has been developed, with which everyone gets work. Thanks to this regime, total control over expenses and the desired distribution of income is possible.

Flaws

The main disadvantages of this business model:

• an administrative-command economy is not capable of ensuring effective economic activity;
• production monopolies do not introduce new technologies and technical innovations;
• the necessary material and human reserves that may be needed in the event of an imbalance in the national economy are completely absent;
• the system is characterized by a low level of satisfaction of needs;
• the risk of hidden unemployment;
• resource shortage;
• insufficient supply of consumer goods;
• "levelling".

Popov's concept

The term “administrative command economy” was first used by Gavriil Kharitonovich Popov. He contrasts it with the market one, emphasizing that the first is a pyramid in which orders come from the top, and the second is focused on the middle level. According to his theory, this is the level of plant directors, over whom there is practically no executive control.

Popov emphasizes that this system is so centralized that it is not capable of responding to a number of calls in a short time. He is convinced that the functions of the economy have a wide range, but at the same time their weak points are very open.

In general, the economist criticizes this theory, saying that the transition to a market system is good for humanity, because it is more consistent with the real needs of society.

Researchers consider the publication of Popov’s article a very significant contribution not only to the development of the economy, but to the historical events of the USSR. It was there that the idea of ​​restoring private property was proclaimed for the first time during perestroika.

Peculiarities

Administrative-command and market economies are two different regimes that have different effects on the development of the state and the life of society. For the first, the main feature is directive planning. This means that all organizations and enterprises must act in accordance with the planned targets of the government apparatus. The central governing bodies have full power.

Researchers emphasize that an administrative-command economy is based on a totalitarian or authoritarian regime. It is contrary to democratic principles of governance and does not accept competition, free markets or entrepreneurship.

Planned Economy

Managing an economy solely through central decision-making is a difficult task.

A planned economy faces difficulties during the introduction of new technologies or new equipment. This is because businesses are unable to conduct any experiments due to the fact that they do not have the rights to do so. A planned economy implies unlimited power in government.

Various consumers decide for themselves what products they buy, but businesses have no say. They are forced to produce according to the state plan, use certain technologies, purchase raw materials, materials and carry out special tasks.

A centrally planned economy is a concept that is based on public ownership, directive leadership and control over all spheres of social life.

Economic conditions are such that a free market for consumer goods is combined with strict regulation of enterprises. This is what causes problems. This has led to countries with planned economies gradually moving towards a market system in order to allow demand to drive production.

State dominance

The administrative command system is found in many countries. The basics of the economy are that the state patronizes the largest enterprises. The main distinguishing feature is the ownership of all resources: land, subsoil, minerals, institutions, the national economy and, of course, finance. The fundamentals of market economics rely on demand, in which case central authorities decide how much products to produce and to whom.

In such conditions, monopoly and bureaucracy are inevitably born, and this, in turn, significantly reduces the incentive for development. Among the positive aspects of the administrative-command system are free medical care, access to education and good development of the social sphere.

The mechanism of this system has a number of features. Firstly, all enterprises are managed by the state apparatus, or rather, its highest echelons, which reduces the independence of any economic entities to zero. Secondly, all market connections are excluded, the classical connection between supply and demand is absent, production is controlled by central authorities.

And finally, thirdly, the state apparatus carries out any management using administrative-command methods, and this reduces material interest in the results of labor.

Administrative-command economic model in the world

Each country has different types of economy. Somewhere some are clearly expressed, but somewhere several synthesize with each other and create one - completely new.

Former social countries, including the Russian economy, belonged to the administrative-command system. Today it is used by the DPRK and Cuba.

In these countries, there is an even distribution of consumer goods, and in areas such as education or the healthcare system, elements of equalization operate (everyone is equal before the force of the law).

Another characteristic feature is a narrow layer of the ruling state nomenklatura, which has privileges in access to consumer goods, for example, housing, sanatoriums, scarce products, etc.

The central government also acts as the owner of such an important resource as knowledge. Due to this, the level of general, vocational and technical education in countries with an administrative-command economic system is quite high. This also includes the entire workforce.

Economy of Russia

The core of the administrative-command economy is the USSR. The system developed in the early 30s of the twentieth century. This phenomenon was preceded by two events: the October Revolution, the years of military communism (1917-1920) and the period called the “new economic policy” (1921-1928).

The functions of the economy of that time were reduced not only to state control over all spheres of society, but also to the creation of production cooperatives. In agriculture, thanks to this regime, collective farms were formed.

In the Russian Federation, in recent years, many reforms have been carried out that are directly related to denationalization, the transition to market relations, privatization of property, and demonopolization. This led to the emergence of the modern economic system. However, not a single state can immediately switch completely to the new regime. Therefore, in Russia there is a synthesis of elements of the administrative-command system and a market economy with free competition.

Economic life is characterized mainly by a transitional nature. It can drag on for decades. The final option consists of many factors. Thus, the modern model of a market economy in Russia depends on:

• the relationship of political forces in the state;
• the nature of the reforms being carried out;
• the scale and effectiveness of international support for change;
• historical traditions.