1. Read the text and complete the tasks.

The telegraph, as you know, appeared long before the telephone and quickly became a popular means of transmitting information. But few people know that in the 19th century. there was an attempt to make a business in the trade of telegraph devices, promoting them to the market as devices for personal household use. Such a business did not take place, since each buyer of the device had to learn Morse code and acquire communication skills in this “non-human language.” Engineer A. Bell, seeing that society needed a means of communication, soon invented the telephone, providing a simple and natural way for people to communicate. With the use of the telephone, the communications business began to expand rapidly.

(Based on materials from the Encyclopedia for Schoolchildren)

How the main economic issues were resolved in this particular situation:

1) What to produce and in what quantity?

In large quantities, what the people need and conveniently.

2) How to produce?

Economically, with benefits for yourself and customers.

3) For whom to produce?

For people.

2. Explain the meaning of the concepts.

Economic efficiency is the ratio between the manufacturer's results obtained and labor costs.

An economic system is a set of organizational methods for coordinating the economic activities of people to solve the main issues of the economy .

3. Name several ways to improve production efficiency.

Optimization of technology, increase in personnel levels, etc.

4. Fill out the table using the textbook text.

5. Analyze the situations and determine the type of economic system.

1) In country W, the main wealth is land, which is owned by the community. The production process is carried out in accordance with the customs of our ancestors. Families produce everything they need for life on their own farms. Commodity-money relations are not developed.

Traditional economics.

2) In country N, all natural and economic resources are owned by the state. Planning and pricing issues are resolved centrally.

Command economy.

6. Compare market and command economies. Select and write down in the first column of the table the ordinal numbers of their similarities, and in the second column the ordinal numbers of the differences between a market economy and a command economy.

1) dominance of the state form of ownership
2) solving the problem of limited resources
3) production of goods and services
4) competition between producers

7. In the section “The Wise Speak” there is a statement by the American economist V. Leontiev (see p. 160 of the textbook). Analyze the author's words.

1) How do you understand the meaning of this statement?

A person does something on his own initiative and decides where he will take it. Private initiative is decisive.

2) Write down two or three social science terms that can be used to explain the meaning of this statement.

Independent choice, demand, supply.

3) Give some examples to illustrate this statement.

A man opened a store and runs it himself.

“What?”, “How?”, “For whom?”

In order to solve the main problem of the economy - the distribution of rare resources, each economic system answers the following three questions in its own way (Fig. 3.2).

Rice. 3.2. Basic issues of the economic system

A traditional economy is based on traditions passed down from generation to generation. These traditions determine what goods and services are produced, for whom, and how. The list of goods, production technology and distribution are based on the customs of a given country. The economic roles of members of society are determined by heredity and caste. This type of economy persists today in some so-called underdeveloped countries, where technological progress penetrates with great difficulty, since it, as a rule, undermines the customs and traditions established in these systems.

A market economy is characterized by private ownership of resources and the use of a system of markets and prices to coordinate and manage economic activity. What, how and for whom to produce is determined by the market, prices, profits and losses of business entities.

The manufacturer strives to produce (“what”) those products that satisfy the needs of the buyer and bring him the greatest profit. The consumer himself decides which product to buy and how much money to pay for it.

Since in conditions of free competition the setting of prices does not depend on the manufacturer, then the question “how?” The business executive responds with the desire to produce products at lower costs than his competitor in order to sell more and at a lower price. The technology and organization of production, the use of technical progress, and various management methods are aimed at solving this problem.

The question “for whom?” decided in favor of consumers with the highest income.

In such an economic system, the government does not interfere in the economy. Its role is reduced to protecting private property and establishing laws that facilitate the functioning of free markets.

A command or centralized economy is the opposite of a market economy. It is based on state ownership of all material resources. Hence, all economic decisions are made by government agencies through centralized (directive) planning. Each enterprise's production plan stipulates what to produce and in what volume; certain resources, equipment, labor, materials, etc. are allocated, which determines the solution to the question of how to produce

A mixed economy involves the use of the regulatory role of the state and the economic freedom of producers. Entrepreneurs and workers move from industry to industry by their own decision, and not by government directives. The state carries out antimonopoly, social, fiscal (tax) and other types of economic policies, which to one degree or another contribute to the economic growth of the country and improve the living standards of the population.

The modern world is characterized by a wide variety of mixed models. For example, the Swedish system is known, in which social policy is at the core. The Japanese economic model is characterized by developed indicative (recommendatory) planning and coordination of government and private sector activities.

In the American economy, the state plays an important role in establishing the rules of economic activity, regulating business, and developing education and science. But most decisions are made based on the market situation and pricing on it.

The modern world is characterized by the presence of a variety of economic systems, for the classification of which different criteria are used. Today, the most famous are the formational and civilizational approaches.

The formational approach made it possible to identify the logical stages in the historical development of society and to identify five methods of material production (primitive communal, slaveholding, feudal, capitalist and communist) based on the assertion that the decisive role belongs to the direct production process, or mode of production.

It is interesting to note that K. Marx, in a letter to Vera Zasulich, identified only three large formations:

1) primary (archaic), where he included primitive communal and Asian methods of production;

2) secondary, based on private property (slavery, serfdom, capitalism);

3) communist. According to Marx, communism is not an “ideal mode of production,” as many imagined, but a historical era that includes a number of modes of production, the main content of which is the abolition of private property. The communist ideal, according to Marx, “The free development of everyone is the condition for the free development of all,” came to life only after the end of the era of communism in the new era of “positive humanism.” According to the ideas of K. Marx, F. Engels, and then V.I. Lenin, communism consists of two phases, the lowest of which is socialism.

In connection with the events taking place in our country and the countries of Eastern Europe, questions arose: is the teaching of Marxism about the socialist transformation of society correct and is the communist idea itself a utopia? Today everyone answers these questions differently. Some believe that, in fact, there was no socialism in the former socialist countries; rather, there was socialism in Western developed countries, which is why they talk, for example, about the model of “Swedish socialism.” Others argue that there was socialism, there was a world socialist system, but the socialist economic system was significantly deformed. Currently, in world practice, journalism and economic literature, one can increasingly come across the term “post-communist” or “post-socialist” countries, which indicates recognition of the existence of socialism in these countries until the recent past.

Today, the classic distinction of five modes of production is questionable for a number of reasons, including because it applies only to Western Europe and does not have universal significance. The Asian mode of production, the civilization of China and India do not fit into this; with a stretch, Russia can also be included here. Therefore, consideration of the processes of world development at the level of formation, the method of material production, with all its theoretical and historical significance, cannot cover the entire complex range of events occurring in the world. Certain limitations of this approach are obvious. Therefore, in the economic literature, attempts are being made to use other criteria to analyze the phenomena and processes of social life.

The theory of the cyclical development of society and the change of civilization is of undoubted interest in explaining various forms of economic systems.

According to this theory, seven civilizations are distinguished: Neolithic, which lasted 30-35 centuries, and in Russia 20-30 centuries; eastern slaveholding (Bronze Age) - with a duration of 20-23 centuries in the world, in Russia - 15-16; antique (Iron Age) - 12-13 centuries in the world and 11-12 centuries in Russia; early feudal - 7 and 7 centuries, respectively; pre-industrial - 4.5 and 2.5 centuries; industrial - 2.3 and 1.5 centuries; post-industrial - 1.3 and 1.4. The change of civilizations can be represented graphically (Fig. 3.3).

Rice. 3.3. Change of civilizations in the world

This theory allows us to take a fresh look at the processes taking place today in the world in general and in Russia in particular. It allows us to draw the following conclusions.

1. Since the market took place in all civilizations (although its role was different), the essence of the modern transition period comes down not to the transition to a market (it is impossible to move from market to market), but to the replacement of one civilization by another. The statement about the modern transition of Russia to the market indicates that we are captive of primitive stereotypes, cliches, according to which it was believed that socialism (including that built in Russia) is incompatible with the market, the plan and the market are antipodes, etc.

2. The duration of the transition economy, if it is understood as the stage of crisis and displacement of the outgoing civilization and the birth of a new civilization, according to the calculations of Leningrad economists V.I. Kuzmina and A.V. Zhirmunsky, is 1/4 of the total duration of the cycle, therefore, Russia will enter the new civilization approximately in 2010.

3. Due to the fact that Russia entered one civilization or another later, but passed through them much faster, we can assume that the peoples of Russia perceive progress faster than is commonly thought. It is wrong to represent the peoples of Russia as lazy, worthless and inert people. The evolution of civilizations shows the opposite.

In the economic literature, views on the development trends of economic (economic) systems are different. Some believe that the defining trend in the development of systems is the tendency towards uniformity, the unification of all structural elements. Thus, E. Preobrazhensky wrote that various economic systems can exist within the national economy on the basis of complete economic equilibrium between them, but such equilibrium cannot exist for a long time, because one system must devour another.

Other economists believe that the coexistence of different economic systems mutually enriches these systems, and this leads to economic growth and the emergence of a qualitatively new economic system. Thus, N. Bukharin found the deepest meaning of the NEP in the fact that for the first time the possibility of mutual fertilization of different economic forces was discovered, on the basis of which growth was ensured. The modern theory of convergence is based on the thesis that different economic systems, in the process of their own development and improvement, will ultimately merge and create a new economic system.

Such inconsistency of views reflects the inconsistency of the development of economic systems, when one trend comes to replace another. The modern development of many countries confirms this theoretical conclusion: general nationalization is being replaced by denationalization; universal planning - by abandoning it; centralization - decentralization, etc. The stronger the fluctuations, the greater the difficulties in the development of the country's economy.

Representatives of institutionalism are interested in two main problems: economic power and control over the economy, and therefore they use the concept of “institutions”.

Economic institutions usually refer to the rules of the game in society, or more formally, the human-created constraints that shape how people interact.

Institutions create a structure of incentives for exchange, social, political or economic. Institutions are both formal laws (constitutions, legislation, property rights) and informal rules (traditions, customs, codes of conduct). Institutions were created by people to ensure order and eliminate uncertainty in exchange. Such institutions, together with standard restrictions adopted in economics, determined a set of alternatives and thus determined the costs of production and circulation and, accordingly, profitability and the likelihood of engaging in economic activity. Jack Knight believes that institutions are a set of rules that structure social relationships in a special way, the knowledge of which should be possessed by all members of a given community.

Formal institutions are often created to serve the interests of those who control institutional change in a market economy. The pursuit of self-interest for some may have a negative effect on others.

Social institutions that fulfill ideological and spiritual needs often influence social organizations and economic behavior. Attempts by the state to manipulate social institutions, for example, norms, for its own purposes have often been unsuccessful. An example is the education of Soviet people in the spirit of the moral code of the builder of communism.

Institutions can be thought of as social capital, which can change through depreciation and new investment. Formal laws can change quickly, but coercion and informal rules change slowly. And here Russia can serve as an example, adapting suitable economic institutions of capitalism for the market model. Informal rules, norms, and customs are not created by the authorities; they often develop spontaneously.

Institutions slowly adapt to changes in the environment, so institutions that were effective become ineffective and remain so for a long time, since it is difficult to turn society away from the historical path established a long time ago.

There is a difference between institutions and organizations. While institutions are a set of rules and laws that govern the interactions and actions of individuals, organizations are corporate actors who themselves may be subject to institutional constraints. Organizations have an internal structure, an institutional framework that determines the interaction of the individuals that make up the organization. Some collective entities may thus be both institutions and organizations, such as a firm, a government bureaucracy, a church, or an educational institution.

To understand the relationship between institutions and production efficiency, the concept of transaction costs is essential. The term transaction costs was introduced into scientific circulation by Nobel Prize laureate R. Coase (b. 1910). These costs are not associated with production as such, but with the costs associated with it: searching for information on prices, counterparties to business transactions, costs of concluding business contracts, monitoring their implementation, etc.

Modern Western societies have already developed systems of contract law, mutual obligations, guarantees, trademarks, complex monitoring systems and effective mechanisms for enforcing laws. As a result, servicing transactions consumes enormous resources (although these costs are small per transaction), but the productivity associated with gains from trade increases even more, thanks to which Western societies have been able to grow and develop rapidly.

Increasing specialization and division of labor necessitate the development of institutional structures that enable people to undertake actions built on complex relationships with other people - complex both in terms of individual knowledge and in terms of temporal extent. The development of a complex network of social relationships would would not be possible without such institutional structures reducing the uncertainty associated with such situations. Institutional reliability is of fundamental importance because it means that, despite the ever-expanding network of interdependence due to increased specialization, we can be confident in the results that are inevitably becoming ever greater. more and more removed from the circle of our individual knowledge.

High transaction costs are very often associated with weak institutions (weak social enforcement of laws), but high transaction costs can also be associated with strong institutions that leave few rights to agents. The main goal when choosing institutions is to minimize transaction costs. Voluntary exchange will be based on greater trust if the government minimizes transaction costs by creating and clarifying property rights.

The effectiveness of coordination methods must be considered not from the point of view of normative assessments (bad or good), but from the point of view of saving transaction costs. Of course, this is not the only criterion, but it helps to understand why the attempt to build all social production according to the type of firm or “single factory,” as V.I. Lenin wrote, turned out to be untenable. Because regulation from the center (Gosplan) is accompanied by huge transaction costs due to the inability to concentrate all the information scattered in society about resources, consumer preferences, etc. in a single center.

1. A specially ordered system of connections between producers and consumers of material and intangible goods and services constitutes an economic system. At the same time, the economic system is a set of mechanisms and institutions for making and implementing decisions in economic activity.

2. The most important elements of the economic system are economic activity, productive forces, industrial relations, economic resources, production capabilities, results and efficiency.

3. Due to limited economic resources, the most important problem of the economic system is the problem of choice. The essence of this problem is that if each economic resource used to satisfy diverse needs is limited, then there is always the problem of alternative use and search for the best combination of rare resources. What we give up is called the opportunity cost of the expressed outcome.

4. The production capabilities of the economic system, limited by the scarcity of the resources used, do not, as society develops,

IOiibKU are not saved, but they can increase. The production possibilities of an economic system are characterized by a production possibilities curve.

5. Economic efficiency is the ratio of results and costs and economic activity. The result is an economic product, and the costs are the expended economic resources. Economic efficiency is characterized by a Pareto optimum - this is a state in which no one can improve their condition without worsening the position of at least one of the market participants.

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Lecture:

Main economic issues

Economic science, guided by the principle of rational use of limited resources to satisfy the unlimited needs of people, seeks answers to the questions: what, how and for whom to produce?

What to produce? This means deciding what, in what quantity and of what quality economic goods (goods and services) need to be created.

How to produce? This means deciding what resources and technologies will be used in the production of certain economic goods.

For whom to produce? This means determining for which categories of people (market segment) the goods produced will be intended, for example, toys for children, cosmetics for women.

The answers to these questions depend on the economic system operating in a particular society.

Economic system is a set of principles and rules of economic relations that arise in the process of production, distribution, exchange and consumption of goods.

Scientists distinguish traditional, planned (command), market and mixed economic systems. Let's consider their characteristic features.

Traditional economic system

The oldest type is the traditional economic system. It is characteristic of primitive society, but also exists in modern countries of South America, Asia and Africa, where resources are very limited.

Signs:

• resolving issues of what, how and for whom to produce is based on traditions (continuity);
• the basis of the economy is agriculture;
• communal form of ownership;
• universal manual labor and primitive production technologies that hinder the growth of labor productivity;
• subsistence farming, production aimed at satisfying one’s own needs and not for sale;
• low trade turnover, correspondingly low level of commodity-money relations;
• closed society, the existence of caste or class divisions that do not allow people to move from one social group to another, as a result of which socio-economic progress is hampered.

The traditional economic system has its advantages and disadvantages. The advantages are continuity, ease of organization of production, and minor environmental pollution. The disadvantages are low incomes, shortages of consumer goods, and limited economic growth.

Planned economic system

A planned (command) economic system is one of the signs of a totalitarian political regime. This type dominated during the Soviet era, but also functions in modern states, for example, North Korea and Cuba.

Signs:

• the decision of the main economic issues belongs to a centralized state body, which carries out directive planning of production;
• the basis of the economy is agriculture and foreign trade;
• the means of production are owned by the state, and only property intended for running a household can be privately owned;
• the emergence of a social division of labor;
• administrative regulation of prices;
• market monopolization.

The advantages of a planned economy are full employment, lack of inflation, free healthcare and education, and less social stratification between the poor and the rich. Disadvantages include a shortage of goods and services, an equal wage system, due to the lack of competition, producers (state monopolists) have no incentive to effectively use resources and introduce new technologies into production, and a race to fulfill the plan on time.

Market economic system

A market economy presupposes freedom of entrepreneurial activity, which is guaranteed by the state. The basis of the relationship between producers and consumers is individual interest and personal benefit.

Signs:

• the decision on what, how and for whom to produce belongs to the owner, producer, consumer;
• the basis of the economy is the service sector;
• a variety of forms of ownership is recognized, but private ownership predominates;
• deepening the social division of labor;
• trade relations are developing widely;
• pricing is free and regulated by market laws;
• competition;
• Scientific and technological progress achievements are being widely introduced into production.

The main advantage of a market economy is competition, which is necessary so that producers strive to create high-quality products, and consumers have a wide choice of a particular product or service (assortment). Another advantage is the interest of producers in using resources efficiently and meeting the maximum needs of people at minimum costs. This system also has disadvantages. This is income inequality, a significant social gap between the poor and the rich, unemployment, and periodic economic crises. The problem of negative external (side) effects is acute. For example, the operation of a pulp and paper mill causes water pollution (release of waste into water); Increased use of cars by people leads to air pollution. The state is forced to intervene in solving such problems, eliminating market imperfections.

Mixed economic system

This type of economic system combines the features of command and market systems with the predominance of the latter. Therefore, one of the important features of a mixed economy is multi-sector, when the role of both the state and private individuals is significant in production. But this system may also contain features of a traditional economy. For example, perfume production in France is traditional. The role of the state in a mixed economy is great and consists in:

• preventing a monopoly on the production of economic goods (with the exception of strategically important goods, for example, military equipment and weapons, space equipment);
• preventing shortages of goods and services;
• price stabilization;
• ensuring employment of the able-bodied population and providing assistance to disabled citizens (for example, disabled people, pensioners);
• the production of public goods (for example, health care and education);
• protection from unscrupulous market participants;
• in the fight against negative externalities of production.

Along with the above advantages, there are also disadvantages of a mixed market economy. Unlike a command system, a mixed system cannot completely overcome unemployment, inflation and the significant gap between rich and poor. This type of economic system is typical for Russia, China, the USA, Japan and other developed countries.

The basic problem of economics can also be presented as a problem of choice. Indeed, if each factor used to satisfy various needs is limited, then there is always the problem of alternative use and search for the best combination of factors of production, that is, the problem of choice. A reflection of this problem is the statement three main questions economy.

Three main questions of economics:

What? – problem of targeting.

– Which of the possible goods and services should be produced in a given economic space and at a given time? – How? production problem.

– With what combination of production resources, using what technology, should the selected goods and services be produced? – For whom? distribution problem.

– Who will buy the selected goods and pay for them, benefiting from them? How should society's gross income from the production of these goods and services be distributed? How to get rid of waste generated in the process of life, how to maintain the ecological balance in nature without reducing the level of consumption. This recycling problem.

5. Production possibilities in the economic system and the problem of choice.

The production capabilities of the economic system are limited by the scarcity of the resources used. Moreover, the limitation of all economic resources remains and even increases as society develops. This is due not only to the depletion of irreplaceable natural resources, but also to the fact that consumption constantly gives impetus to the development of production, that is, new goods and services are created, their quality characteristics change, which causes an increase in the need for consumer and investment goods. And each time society is forced to decide which of these goods to produce with available resources and on what scale.

The problem of choice in any economic system (be it a family, a company, a state) can be illustrated using economic model “Production Possibility Frontier”. And also, this model allows you to clearly demonstrate such fundamental economic concepts as limited resources, opportunity costs.

To build the model, we will plot the number of consumer goods (X) on the abscissa axis, and the number of means of production (Y) on the ordinate axis (see figure).

Means of production (Y)

Consumables (X)

O X B X C

The ABCD curve, called production possibilities frontier, characterizes the maximum possible volumes of production of means of production and consumer goods with full use of all available resources. Each point on this curve represents a certain combination of goods of these two types (for example, point B represents a combination of X B units of consumer goods and Y B units of capital goods.

The production possibilities frontier graph illustrates the fact that an economy that is fully utilizing productive resources cannot increase the production of any good without sacrificing another good. The functioning of an economy at the frontier of its production possibilities indicates its efficiency.

Based on this, the choice of the combination corresponding to point F is regarded as unsuccessful for a given society, since it does not allow it to effectively use production resources. Having chosen such a point, we would resign ourselves either to the presence of unused resources (for example, unemployment) or to the low efficiency of their use (for example, large losses, including working time). Production based on the choice of point E is generally unfeasible, since this point lies beyond the production capabilities of a given economic system.

Let's compare points B and C. By choosing point B, we will prefer to produce fewer consumer goods (X B) and more means of production (Y B) than by choosing point C (X C, Y C). More precisely, when moving from point B to point C, we will additionally receive Δ X = OX C – OX B units of consumer goods, sacrificing for this ΔY = OY B – OY C units of means of production. The amount of one good that must be sacrificed to increase the production of another good by one unit is called opportunity costs or costs of lost opportunities.

The ABCD curve is convex. This is due to the fact that one resource can be used more productively in the production of consumer goods, while others can be used as means of production.

If new technology, new technological processes are introduced simultaneously and evenly in all industries, then the production possibilities frontier AD will shift to the position of the dotted line A 1 D 1, the possibilities of producing both means of production and consumer goods with the same resources will increase approximately equally ( see fig.).

If innovations are carried out primarily in industries producing capital goods, the increase in the area of ​​production possibilities will be skewed to the right (see figure).

The main economic task is to choose the most effective option for allocating factors of production in order to solve the problem of limited resources and limitless human desires. A reflection of this problem is the formulation of three main questions of economics.

1. What should be produced - i.e. what goods and in what quantity;

2. How the goods will be produced, i.e. by whom, with what resources and what technology should they be reproduced;

3. For whom the goods are intended, i.e. who should consume goods and benefit from them.

Let's look at the content of each question. The first most important choice- which goods to produce can be easily illustrated by the example of a society producing only two goods A and B. Factors of production used in one place cannot at the same time be used in another production. This means that producing good A entails the loss of the ability to produce good B and has an opportunity cost.

The opportunity cost of a good or service is the cost measured in terms of the lost opportunity to engage in the best available alternative activity requiring the same time or resources.

Cash cost and opportunity cost are overlapping concepts. Some opportunity costs, such as tuition, take the form of monetary expenses, while others, such as the cost of leisure time, do not appear in monetary form. Some monetary expenses, such as tuition, represent opportunity costs because... could have been spent on other needs. Other monetary costs, such as clothing, food, etc., always exist and are therefore not included in opportunity cost.

Second Basic Economic Choice- how to produce. It refers to the existence of multiple ways to produce a good or service. Cars can be made, for example, in highly automated factories with huge amounts of capital equipment and relatively little labor, but they can also be made in small factories that use more labor. A key consideration when deciding how to produce is allocative efficiency, or Pareto efficiency.

Pareto efficiency is a level of economic organization at which society extracts maximum utility from available resources and technologies, and it is no longer possible to increase one's share of the result without reducing another.

When efficiency is achieved, more of a good can be produced at the cost of losing the ability to produce something else if the factors of production and knowledge are constant. However, production efficiency can be increased by improving the social division of labor. Its important characteristics are specialization and cooperation, which allow for comparative advantages in the production of goods to be taken into account.

Comparative advantage is the ability to produce a good or service at a relatively lower opportunity cost.

Let us illustrate the principle of comparative advantage with an example. Let's assume that two students work part-time in an office. Sergey can type a letter in 5 minutes, write and seal an envelope in 1 minute. Andrey needs to spend 10 minutes on the letter and 5 minutes on the envelope. Working independently of each other they can produce 14 letters per hour. Using the principle of comparative advantage, it is more efficient to organize work so that Andrey, who has a lower opportunity cost in typing letters, does only that. Then Sergey sealed and labeled the letters prepared by Andrei, spending 6 minutes on this, and in the remaining time he prepared another 9 on his own. In this case, the total result of the work will be maximum and amount to 15 letters.

The principle of comparative advantage has a fairly wide application. It can be used not only to organize production within an enterprise, but also in connection with the division of labor between firms or government agencies, as well as between countries.

The third key question of economics- This is the distribution of the produced product among members of society. It can be viewed in terms of both efficiency and fairness.

Efficiency in distribution is a situation in which it is impossible, by redistributing the existing amount of goods, to satisfy the desire of one person more fully, without thereby harming the satisfaction of the desires of another person.

Distributive justice has been interpreted in different ways. Let us highlight two extreme concepts. The first is that all income and wealth should be distributed equally. An alternative position is that justice does not depend on “equalization”, but on the operation of a distribution mechanism based on the right of private property and the absence of discrimination. At the same time, equality of opportunity is more important than equality of income. In a market economy, any product is distributed among consumers based on their willingness and ability to pay the prevailing price for it. Discussions about allocative efficiency are seen as part of positive economics, and those about fairness as part of normative economics.

The questions of what, how and for whom to produce are basic and common to all types of farms, but different economic systems solve them in their own way.

Major economic systems:

Traditional economics 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.

Market economy- this is an economic system in which the main economic problems of society are solved, first of all, through a competitive price formation mechanism.

Centrally planned or command economy- an economic system in which the main economic problems of society are solved mainly through the mechanism of directive centralized economic management.

Mixed economy is considered as a type of market economy, as an economic system in which, along with the developed private sector, the public sector of the economy also operates.

Transition economy is a modern economic system that exists in countries where the transformation of a centrally planned economy into a market economy is underway.