Institute: concept, characteristics, types, regulation

The key elements of any economic system are public (social) institutions - these are constantly repeating and reproducing relationships between people, regulated by some norms and rules. Dulas North in his book “Institution, Institutional Changes and Economic Efficiency” he gives the following definition of the concept of a social institution: “ Institute is the rules of the game in society , or more formally, they are the constraints constructed by humans to give shape to human interaction.”

Institutions arose during the development of human society, differentiation of activities, division of labor , formation of specific types of social relations. Their appearance is due to the objective needs of society in regulating socially significant areas of activity and socio-economic relations.

Any the institution in its existence relies on a system of norms of behavior . A norm is a prescription for a certain behavior that is mandatory for fulfillment and has as its function the maintenance of order in a system of interactions. Compliance with such an order can be voluntary or based on sanctions (social, economic, legal).

Standards of behavior in the family, economic life and other important spheres of social life allow us to maintain a certain order and make life more predictable and safe. :

• The general characteristics of a social institution include
• identifying a certain circle of subjects who enter into relationships in the process of activity that become sustainable;
• a specific organization;
• the presence of specific social norms and regulations governing the behavior of people within a public institution;

the presence of socially significant functions of the institute.

There are various classifications of public institutions. Typically, there are two criteria for classifying institutions: substantive (substantive) and formalized. :

• Based on the subject criterion, the following types of institutions are distinguished:
• political institutions (state, parties, army);
• economic institutions (division of labor, property, taxes, etc.);
• institutions of kinship, marriage and family;

Based on a formalized criterion, institutions are divided into formal and informal . Activity formal institutions

is based on strict, normative and, possibly, legally enforceable regulations, rules, and instructions. Constitution, laws, orders, regulations, contracts, agreements of intent, etc. - these are formal rules. State, army, court, institution of marriage, school, etc. - these are formal institutions. Source informal institutions

is culture. In informal institutions, there is no regulation of social roles, functions, means and methods of activity and sanctions for non-normative behavior. It is being replaced by informal regulation through traditions, customs, social norms, etc. This does not make the informal institution cease to be an institution and to perform the corresponding regulatory functions. Regulation The activities of members of society within the framework of social relations are the first and most important function of social institutions. Institutions regulate people's behavior in such a way that people do not cause harm to each other, or that this damage is compensated for in some way. The second function of institutions is minimizing effort , which people spend to find each other and come to an agreement among themselves. Institutions are designed to facilitate both the search for the right people, goods, and values, and the ability of people to come to an agreement with each other. The third function of institutions is informational

- organization of the process of information transfer, or training. These are the main functions of institutions, regardless of their field of activity.

Economic institutions are stable forms of human interaction. These are a kind of norms and rules that perform the function of limiting the behavior of economic agents and streamlining the relationships between them.

This is a complex formation; all economic institutions are interconnected, complement and partially replace each other. Particular attention should be paid to the market and property.

Purchase and sale is simultaneously the mutual transfer by agents of full ownership rights to the goods being exchanged. A lease is a (temporary) transfer of economic rights to one good in exchange for rent. Anyone can be at a loss when renting.

Spot deal: execution of a contract immediately after its conclusion.

Futures contracts: the moment of concluding a contract and its execution are separated in time (hedging, speculation, arbitrage).

Hedging – transactions on the stock exchange. Speculation – operations during price fluctuations associated with changes in market conditions. Arbitrage is the simultaneous carrying out of transactions with one product on the derivatives market and the cash market and making a profit from the difference in prices.

A market is a set of transactions (from English - transaction)

Transaction costs (transaction costs) are the costs in the sphere of exchange associated with the transfer of property rights.

Forms of transaction costs: information search; costs of negotiations and contracts; measurement costs (errors in calculations, purchase of measuring equipment); costs of protecting property rights; costs associated with contradictory behavior of partners. These costs are reduced through wholesalers and intermediaries.

Property is a set of rights, sanctioned behavioral relations that develop between subjects regarding the use of economic benefits.

For business, the relationship of ownership of the means of production, which is expressed in 2 types of economic rights: the right of owner and the right of management (use), is important.

1. The right of the owner (appropriation of the means of production) - the right of subjects to be the owner of the means of production is legally secured, i.e. own (possess), use (benefit) and dispose of (determine fate)

2. Right of use (management or use of means of production) – rent, leasing, etc. For a time, the right of possession and use is given by the owner to another.

The relationship of economic realization of property is when the use of means of production brings income to the owner (profit, tax, rent, royalty - payment for the use of someone else's property).

Is it good or bad? What tasks do they perform? All these questions, as well as a number of others, will be discussed within the framework of this article.

general information

First, let's define the term "institution." It should be noted that it can be used in several meanings. Thus, if you say “economic social institution”, meaning an organization or institution, then this will be the correct use of the term. This is the name given to special research institutions that work within narrow specialties. An institution can also be understood as a set of statuses and roles, the purpose of which is to satisfy certain needs. This designation can be used for a public system of rules, for habitual ways of responding to specific stimuli, and for designating a structural component. As an example, we can cite the following phrase - “democratic institutions”. It is used quite often in modern journalism. Or, as an alternative, the institution of family or marriage (which many complain about being destroyed).

Interpretation

Essentially, institutions refer to popular ways of thinking. It can refer to relationships between individuals and entire communities. Let's take the economic institution - this is the belief that the greatest prosperity is possible under capitalism, and the need for equal opportunities, and so on.

Moreover, it often turns out that several spheres are quite strongly connected. Thus, equal opportunity mentioned earlier is an economic social institution. Although certain organizations engaged in specialized activities can also be created. An example is the Moscow Economic Institute. We will devote time to each of these interpretations.

Organizational plan

Various research institutes are created as separate organizations and institutions specializing in certain problems or tasks. They are a place where professionals concentrate in their field, who solve the issues posed to them. Very often, such institutes are approached to order research in a certain area or carry out complex scientific and technical work. In addition, these institutions provide (at a minimum) proper training to promising young people.

A common practice is for researchers to also work in a reputable company (even if only as a freelance specialist). As an example, we can consider economic institutions. The specialists working in them often also act as freelance advisers to senior administrative staff of commercial enterprises or even to government officials.

Let's look at an example. In conditions where top positions are most often occupied by people with a legal education (just remember the president and chairman of the government), economic institutions play an important role. They provide specialists who help choose the best solution for the country's development. Whether the recommendations will be followed is a separate question. After all, an economic institute is a kind of personnel forge, and not a control center, the decisions of which are not subject to discussion.

Of course, even professionals can make mistakes sometimes. But that’s why they are specialists, because their error rate is very low. Therefore, when a crisis rages, an economic institution is a useful tool in terms of restoring order.

Specific Features

When a certain organization is created, be it a military-political or financial-economic institution, it is always necessary to decide what tasks it will perform. They often act and influence the formation or development of a certain system of behavior.

Let's take democracy for example. What it is, in general, is clear to most people. But what about the implementation or solution of certain situations and aspects of social life? The institutes are working on possible options.

Institute as a public system of rules

Let's develop the example of the institution of democracy. Only now we will talk not about the activities of individual organizations, but about the public system of rules of behavior and interaction.

Let's take such an issue as the turnover of power. What's the best way to organize this? Within the framework of the institute, a special mechanism is provided - elections. They follow certain rules. As an example, you cannot order false negative material about competitors. The main bet is that each person himself tells what he does, what experience he has, outlines his vision of the future, and voters are only asked to vote for the one they like.

And this only applies to one aspect. Something similar can be said about others: the division into three branches of power to complicate the emergence of a dictatorship, and the large weight of civil organizations and much more. Moreover, there are many institutions (public systems of rules) that describe most aspects of various spheres of life. If it's hard to believe, then let's go through a few of them. So, there are the institutions of family, school, law enforcement system, army, social activities, and so on.

Conclusion

As you can see, the concept of “institution” is multifaceted. The topic itself is quite interesting, and it would be advisable to learn it not from one (or even several) articles, but to become familiar with fundamental scientific works.

After all, if we consider research institutions, then an institute is an extremely important and at the same time very complex organizational structure. And it is generally quite difficult to describe the activity of rule systems, since they are significantly influenced by the past of each individual country and locality.

Therefore, it is quite difficult to generalize here. Even if we talk, for example, about democratic traditions, it is very difficult to create a complete picture. How can one not recall the two-party systems of the USA and Great Britain in comparison with the parliaments of France, Germany and other countries.

to institute (English) - to establish, establish.

The concept of institution was borrowed by economists from the social sciences, in particular from sociology.

Institute is a set of roles and statuses designed to satisfy a specific need.

Definitions of institutions can also be found in works on political and social science. For example, the category of institution is one of the central ones in John Rawls’s work “A Theory of Justice.”

Under institutions I will understand a public system of rules that define office and position with associated rights and duties, powers and immunities, and the like. These rules specify certain forms of action as permissible and others as prohibited, and they punish certain actions and protect others when violence occurs. As examples, or more general social practices, we can cite games, rituals, courts and parliaments, markets and property systems.

The concept of institution was first included in analysis by Thorstein Veblen.

Institutes- this is, in fact, a widespread way of thinking with regard to the individual relations between society and the individual and the individual functions they perform; and the system of social life, which is composed of the totality of those acting at a certain time or at any moment in the development of any society, can, from the psychological side, be characterized in general terms as the prevailing spiritual position or the widespread idea of ​​\u200b\u200bthe way of life in society.

Veblen also understood institutions as:

• habitual ways of responding to stimuli;
• structure of the production or economic mechanism;
• the currently accepted system of social life.

Another founder of institutionalism, John Commons, defines institution as follows:

Institute- collective action to control, liberate and expand individual action.

Another classic of institutionalism, Wesley Mitchell, can find the following definition:

Institutes- dominant, and highly standardized, social habits.

Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North’s:

Institutes are the rules, the mechanisms that ensure their implementation, and the norms of behavior that structure repeated interactions between people.

The economic actions of an individual take place not in an isolated space, but in a certain society. And therefore it is of great importance how society will react to them. Thus, transactions that are acceptable and profitable in one place may not necessarily be viable even under similar conditions in another. An example of this is the restrictions imposed on various religious cults.

In order to avoid the coordination of many external factors that influence success and the very possibility of making a particular decision, within the framework of economic and social orders, schemes or algorithms of behavior are developed that are the most effective under given conditions. These schemes and algorithms or matrices of individual behavior are nothing more than institutions.

“Institutions are the basis of economic behavior”

The founder of the institutional direction is considered to be Thorstein Veblen (1857-1929), author of “The Theory of the Leisure Class” (1899).

The main thesis of Veblen's work: “Institutions are the basis of economic behavior.” Veblen opposed the one-sided interpretation of the motives of behavior of the “economic man”, which had become widespread since the time of the classics (A. Smith).

Veblen considers it wrong that economic science does not consider human behavior and its patterns, but focuses on the instruments of the market mechanism, the monetary system.

Veblen has two main ideas. The economy is constantly developing and evolving. Economic changes occur under the influence of institutions, which are also constantly changing. But often institutional changes lag behind, and institutions slow down development. To debug institutions, Western countries needed 400-300 years. This is a very complex, contradictory process. Hence the conclusion: it is not the market mechanism itself that changes, but institutions, the institutional environment, customs, and laws; each country has its own specific institutions; Economists should study not ideal schemes, but real norms, traditions, structures.

Criticizing the classics, Veblen stated: a person should not be treated as a kind of mechanical ball or a calculating machine, a kind of “calculator of pleasures and burdens.” He is guided not only by the profit motive and not by strictly arithmetic calculations, weighing the magnitude of costs with the magnitude of benefits.

The behavior of an individual as a consumer and participant in production is very ambiguous. His economic interests represent a complex and contradictory system, so social conditions and psychological motives should be more fully taken into account.

Institutes— habitual ways of carrying out the process of social life. The basis of the accepted way of life is the system of views held by social groups. The formation of institutions is conservative. Previously established forms and rules do not meet the current situation and must be constantly changed.

1 INTRODUCTION TO ECONOMIC THEORY

Political economy- one of the most ancient sciences. The desire to study this science is explained by the need to understand the motives of people’s actions in economic activity, the patterns of economic development at all times.

Currently, interest in political economy is increasing. The reason for this is the global changes that are taking place in the modern world.

In modern conditions, graduates of higher educational institutions, regardless of the specialty of each of them, must have an idea of ​​the ongoing economic processes and correctly assess the directions of social development. This is necessary in order to have a certain understanding of the world; competently assess ongoing reforms and transformations; have your own position on certain issues.

The most complete picture of the diversity of human personality can be given by the humanities, including economic theory, which highlights in a person what meets the task of explaining people’s economic behavior.

Economic theory is a method, an intellectual tool, a technique of thinking that helps those who master it to come to correct conclusions.

Throughout the history of the development of economic science, economic crises have been powerful impulses for the development of economic theory. For example, Alfred Marshall theory arose and became widespread as a result of the crisis of 1872, followed by a deep economic recession and then a depression that lasted for 20 years, Keynesianism appeared after the Great Depression of 1929–1933, monetarism after the crisis of the 1960–1970s. etc.

The inconsistency of formed views and ideas about economic processes, the crisis of modern economic thought is a global trend in the modern world.

The crisis of economic thought in Russia can be called a crisis of Marxism. For a long time, Marxism was the dominant ideology in Russia and the basis of the economic life of society.

Today Russia is going through a period of reforms, making a transition to a market economy, which has been developed in most Western countries, Japan, and the USA. According to many economists, the transition to a market economy should not be carried out exactly according to the Western model. The achievements of Western scientists should be the basis for understanding the general laws of economic processes in order to, taking into account the specifics of Russian economics, apply these laws of economics in the practice of Russian economics. All this makes it necessary to study and use the achievements of Western scientists in the field of economic theory.

2 ECONOMY AS INTERACTION OF SOCIETY WITH NATURE

Your business activities economic entities operate in a certain socio-economic environment. There are natural and social environments. The first determines the direct interaction of a person, groups, society as a whole with nature in the process of economic activity. The second has to do with the social organization of society.

The natural environment includes climate, soil, population, quality of food, housing, etc.

A person carries out his economic activities in conditions of natural limited resources (climatic conditions, volume of minerals, amount of precipitation, etc.). For example, most of the globe is occupied by seas, and this limits man's access to such a resource as land.

The most favorable territories for human economic activity are those regions that account for the average amount of precipitation (from 250 to 1000 mm). Such territories include Eastern China, Central and Western Europe, and the eastern half of the United States.

Of great importance in economic activity is heredity. For example, in some ancient tribes, babies with weak constitutions were killed. When pursuing social policy, government officials must remember that children inherit not only health, but also illness. Poor nutrition and unsanitary conditions contribute to an increase in mortality and illness not only of the present, but also of future generations.

Modern science about human life must also take into account the connection between man and the cosmos. A great contribution to this direction was made by Russian scientists V. I. Vernadsky. The main ideas of his teaching were reflected in his works on the noosphere. In the noosphere, a person can radically reorganize his life and change the conditions of his life. The power of man on Earth, according to Vernadsky's theory, is determined not by his physical strength, but by his mind and work, guided by the mind.

It is impossible to separate man from nature. All living organisms are interconnected with each other and with nature. Also, the Earth and other planets are inseparable and are in constant interaction.

Natural equality and biological unity- This is a law of nature, which is based on the principle of equality of all people. In economic life, this idea is embodied in the concept of social justice.

Recently, scientific and technological progress has made humanity a single whole. Communication means allow a person to be accessible in any corner of the world. All this reinforces the importance of universal human values ​​and makes global problems common.

3 MAIN ECONOMIC INSTITUTIONS AND ECONOMIC AGENTS

Institutes – This is a set of formal and informal norms and rules created by people, acting as restrictions for economic agents, as well as corresponding control mechanisms for their compliance and protection.

Institutions tend to change slowly in response to changes in the environment. Many institutions that were effective in the past become ineffective and yet remain so for a long time.

Institutes are divided into the following types:

1) formal. These are rules made by people. They are created to serve the interests of those who control institutional changes in a market economy;

2) informal. Generally accepted conventions and codes of behavior (customs, traditions, etc.). The role of institutions in economic life is to reduce uncertainty, organize relationships between economic agents, and limit the range of alternatives in human economic behavior. There are the following subjects of a market economy:

1) entrepreneurs;

2) end consumers;

3) owners of loan capital;

4) workers offering their labor;

5) owners of securities, etc.

In a closed economy, there are four groups of economic agents.

1. Household– an economic unit operating in the consumer sector of the economy. It consists of one or more persons, ensures the reproduction of “human capital”, and also makes decisions independently, is the owner and supplier of any factor of production and strives to maximize the satisfaction of its needs.

2. Enterprise (firm)– an economic unit whose purpose is to make a profit. Strives to maximize income, makes decisions independently, uses factors of production to manufacture products for the purpose of selling them. The enterprise spends the income received not on personal consumption, but on expanding production.

3. Bank– a financial and credit institution that regulates the movement of the money supply necessary for the normal functioning of the economy.

4. State (government) represented by a collection of government organizations that carry out their activities to achieve public goals. Budgetary institutions carry out the functions of state regulation of the economy.

The role of institutions is to create certain rules of behavior and sustainability of everyday life. Social institutions very often influence various organizations and the behavior of economic entities. They satisfy ideological or spiritual needs.

4 MODELS OF HUMAN IN ECONOMIC THEORY

Human model – This is a unified idea of ​​a person carrying out his activities in a certain system of socio-economic coordinates.

The first direction is model "Homo economicus". This model was considered by the English classical school, marginalists and neoclassicists. The focus of this model is on monetary interest, which is the main motive for the activity of “economic man.”

According to this model, an individual's behavior is aimed at maximizing utility within certain constraints, the main of which is his monetary income.

Analysis of people's economic behavior within the framework of the model "Homo economicus" involves the use of the postulate about rational human behavior, i.e. the individual’s desire to obtain maximum results at minimum costs in conditions of limited capabilities.

Second direction - Keynesians, institutionalism and the historical school.

Stimuli of human behavior include both the desire for material, monetary benefits, and certain elements of a psychological nature - adherence to various traditions, habits, considerations of prestige, the desire to enjoy life, etc.

Characteristic features of the model are incomplete information of business entities, stereotypical behavior depending on habits, religious aspirations, etc.

Imperfect information entails an increase in factors such as expectations, premonitions, etc.

Third direction - a fundamentally new type of model "Homo economicus", reflecting modern realities. It is characterized by a change in the motivation of activity compared to the “rational maximizer” model: an increase in the importance of not so much material as the spiritual needs of the individual (satisfaction with the work process itself, its social significance, complexity, etc.).

The model is characterized by the diversity and dynamism of needs, the main need is the need for self-realization, establishing connections with other people, etc.

Fourth direction- “Soviet economic man”. The roots of the model go back to the Stalinist totalitarian repressive regime. The “Soviet economic man” model reflects the main features of human economic behavior in the command-administrative economic system.

This model is characterized by the dominance of the desire to minimize labor costs, the dominance of dependent attitudes, and the expectation of a modest, but firm, guaranteed reward not for the results of work, but for the very presence in the workplace.

5 BENEFITS

Good – This is any object, phenomenon that satisfies any human need and meets the goals, interests, and aspirations of people.

Services occupy a special place among the goods necessary for a person, the role of which is increasing.

Services is a rational human activity that has a positive effect, as a result of which certain human needs are satisfied.

According to the most common classification, the following types of benefits are distinguished.

1. Material goods– these are natural, natural benefits (minerals, land, water, air); production products (food products, buildings, machines, cars, etc.). Sometimes relations involving the appropriation of material goods (patents, copyrights) are also considered material benefits.

2. Intangible benefits– these are benefits, the impact of which is aimed at developing human abilities and maintaining health. These benefits are created in the non-productive sphere - healthcare, cinema, theater, education, art, museums, etc. The following are distinguished: types of intangible benefits:

1) internal. These are abilities that a person is endowed with from birth and develops in himself at his own request (voice, oratory abilities, abilities for science, etc.);

2) external. These are the benefits that a person receives from the outside world (reputation, business connections, etc.).

According to the criterion of time, benefits are divided into: present and future, direct and indirect, long-term and short-term, etc.

The following classification divides benefits into economic and non-economic.

Economic benefits are the result of economic activity, their number is limited. This type of benefit is associated with the behavior of an economic entity under conditions of limited resources.

Non-economic benefits – benefits provided by nature without any human effort (air, water, light, etc.). Their quantity is sufficient to fully and permanently satisfy certain human needs.

A specific form of economic good is a commodity.

Product - it is a specific economic good, a product of labor intended for exchange.

The main characteristics of a product are use value and exchange value (value).

Use value endow a good with its usefulness, properties that allow it to satisfy any human need.

Use value has any product. The nature of the needs can be very different (such as physical, spiritual needs).

Exchange value– this is the quantitative proportion of the exchange of use values ​​of one kind for other use values. For example, 1 kettle for 5 kg of flour.

6 NEEDS, RESOURCES

Need- this is the objective need of people for something necessary to maintain the vital functions and development of the body, personality, requiring satisfaction.

The following are distinguished needs:

1) physiological (eating, drinking, sexual, etc.);

2) in social connections (participation in a group);

3) material and spiritual;

4) rational and irrational;

5) absolute and real, etc.

When needs are realized, they take on a specific form - form of interest.

The manifestation of economic needs expresses economic interest.

There are public, collective and personal interests, national and international, regional and departmental, group and family, current and future, rational and irrational, financial, labor, etc.

Interests are the basis of economic relations.

Economic relations – these are relations associated with the production, distribution, exchange and consumption of material goods and services.

Economic relations create the foundation for the economic organization of society and, together with productive forces, determine the characteristic forms and types of economic systems.

In any economic system, these relations are represented by production resources.

Economic resources - This is a set of various components of production that can be used to produce material and spiritual goods and services.

A distinction is made between labor resources (population of working age), natural, material (means and objects of labor), financial (money invested in production), information (data necessary for the functioning of automated production and its management using computer technology).

The production capabilities of the economic system are limited by the scarcity of the resources used. The reason for this is the depletion of non-renewable natural resources.

There are absolute and relative scarcity of resources.

Absolute limitation represents the insufficiency of production resources to meet the needs of the entire society.

If you reduce some of the needs of society, then the absolute limitation of needs becomes relative, since there are enough resources to satisfy a limited range of needs of society.

Absolute resource limitations are characteristic of natural and labor resources; relative is typical for material, information, financial resources.

7 ECONOMIC CHOICE

Economic resources is a set of various components of production that can be used to produce goods and services.

Due to limited economic resources, society is forced to make choices. In the selection process, you have to give up something.

What society refuses is called imputed(hidden) costs of achieving chosen goals.

For example, the monetary value of the economic resources of building bridges (costs of land, materials and labor, etc.) are the opportunity costs of houses, hospitals, schools that could have been built using the same resources.

Society can devote absolutely all its resources to the construction of bridges, or it can reduce the volume of this construction in order to also build residential buildings, hospitals and schools. The volumes of construction of residential buildings, hospitals and other buildings are not only alternative, but also complementary.

Society makes technological choices in the economy (for example, between the construction of bridges and residential buildings through the redistribution of resources).

A national economy that realizes its full potential cannot increase the production of any good without sacrificing another good.

The main problem of the effective functioning of the economic system is the problem of choice.

The essence of the problem of choice is that if each factor necessary to satisfy the diverse needs of a person is limited, then there is always the problem of alternative use and choice of the best combination of factors of production.

The problem of economic choice is reflected in three basic questions of economics.

1. What? (Which of the possible goods and services should be produced in a given economic system in a given period of time?)

2. How? (What combination of resources and using what technology must be used to produce the selected goods and services?)

3. For whom? (Who is interested in purchasing the selected goods and services, what should be the distribution of the gross income of society from their production?)

The properties of a given economic system are not always equal to the sum of the properties of its components. The system is dynamic and constantly evolving. An economic system is characterized by such properties as stability and variability; stability and mobility; inconsistency.

Economic contradiction – This is the simultaneous manifestation in the same economic process of mutually exclusive tendencies and properties, which is the essence and source of self-propulsion of economic processes.

8 PUBLIC PRODUCTION

The process of social production includes four stages: production itself, distribution, exchange and consumption.

Production is the process of creating material and intangible goods necessary for the existence and development of man.

In a market economy system, the immediate goal of production is to make a profit.

Distribution– the stage of determining the share, quantity, proportion in which each economic entity takes part in the production process.

In a market economic system, the distribution of resources occurs under the influence of the price mechanism.

Exchange - the stage of movement of material goods and services from one subject to another and the form of social connection between producers and consumers.

Consumption – the stage of using production results to satisfy certain needs.

Consumption can be divided into two types: personal consumption and industrial consumption.

Personal consumption carried out outside the framework of social production: eating, drinking, reading always remain an individualized process.

Manufacturing consumption involves the use of means of production to create new consumer goods.

Reproduction process– a renewing process that includes the distribution, exchange and consumption of produced goods.

Production in general is the process of human influence on objects and forces of nature in order to adapt them to satisfy certain needs. The labor process constitutes the material basis of the production process.

The main elements of this process are labor, objects of labor and means of labor.

Labor is the expedient expenditure by man of his labor power to transform the forms of nature to satisfy the diverse needs inherent in society.

Work force- this is the totality of a person’s physical and spiritual abilities, used in the process of manufacturing products (material goods). Labor to create material wealth is called productive, i.e., creating material wealth anew.

Labor in non-material production (labor of teachers, doctors, officials, etc.) is unproductive.

Objects of labor- this is the material basis of the future finished product, what the work is aimed at.

Means of labor- a thing (a set of things) with the help of which a person influences the subject of labor in the process of producing a finished product.

Material means of labor are divided into natural (earth, sand, stone, etc.) and technical (man-made).