functions and structure

4.1. Essence, principles and functions of a market economy

Every person is familiar with the concept of “market”. It usually refers to a place where sellers and buyers of goods trade with each other. In economic theory market - This is the sphere of economic exchange between people in the form of purchase and sale, based on the voluntary and equivalent exchange of goods. This is the most general scientific definition that can be given to the market: the entire history of mankind over the last 5 thousand years falls under it, i.e. as long as the market exists.

To characterize the specific state of the market, it is necessary to consider it in unity with the processes of production, distribution, exchange and consumption. This approach involves characterizing property and economic isolation, social division of labor, hiring labor, the risk of economic activity, supply and demand, prices, and infrastructure. A market presented in this form is an integral market system or a market economy. Based on the forms of interaction between individual elements of this system, I distinguish its varieties.

In economic theory, attempts have been made repeatedly to substantiate non-market economic systems - from T. More to K. Marx and the construction of socialism in the USSR. The fact is that the market economy has an ambiguous impact on the economy as a whole and the activities of individual people: along with the advantages, this system also has disadvantages. Their main parameters are shown in Table 4.1.

A modern market economy is built on principles that make it possible to somewhat mitigate the negative aspects of a market economy.

The principle of freedom of economic activity means the right of people to choose the type of economic activity. In a market economy, bans have been lifted not only on the production and sale of goods, but also on their resale. Access to traditional government activities is regulated by law: education, medical care, transport services, communications, etc.

Table 4.1. Advantages and disadvantages of the market.

Market advantages

Market Disadvantages

1. Freedom of choice of activity and economic responsibility for results 2. Efficiency of resource allocation based on rational management 3. Flexibility and adaptability to changing business conditions 4. High sensitivity to new technologies and products, allowing the implementation of scientific and technical progress achievements 5. Self-regulation of the economy 6. An effective system of incentives and material incentives for economic activity

1. An unstable system, subject to recessions and booms, which is unable to overcome monopoly and inflation 2. Does not guarantee people the right to work and income, creates economic and social inequality 3. Does not provide an economic mechanism for environmental protection 4. Does not cover basic research in science 5. Focused only on monetary income, does not contribute to solving social problems

The principle of universality of the market lies in the fact that its scope includes the whole variety of values ​​created not only by man, but also by nature. Not only goods and services, but also factors of production, as well as intellectual, spiritual, information products, objects and cultural objects are subject to market turnover.

The principle of diversity and equality of forms of ownership is observed when special favorable conditions are excluded for some forms of ownership to the detriment of others. Taxes, benefits, sanctions, restrictions must be the same for everyone, otherwise there will be no fair competition in the market.

The principle of self-regulation of economic activity is achieved by the fact that economic, mainly financial, rather than administrative and administrative methods play a decisive role in management. At the same time, the real market economy is such that it does this mercilessly, through fierce competition, uncompromising removal of losers from the market, through bankruptcy of firms and unemployment.

The principle of free pricing assumes that market prices are not set by anyone, but are formed as a result of bargaining between buyers and sellers. In economic theory, this is called the interaction of supply and demand. Such a pricing mechanism is not the only one in a market economy, but it must prevail and dominate prices regulated by the state or firms.

Market pricing is distinguished by the ability to set and automatically maintain prices in accordance with the value, utility of goods and ensure their equivalent exchange.

Principle of competition inherent in a market economy due to its nature: the struggle for the efficient use of rare resources in the economy. The desire to beat competitors, not to give in or to keep up with them creates an incentive for economic development. The danger of becoming an outsider in the competition for economic survival also contributes to increased economic efficiency. The socialist competition used in the USSR was of a formal nature and could not in any way replace the real competitiveness of market agents - competition.

The principle of self-financing and economic responsibility is expressed in the fact that market agents must bear responsibility for freedom of activity and independence in a market economy, i.e. cover all financial expenses for their activities and business development from their own funds and be responsible for their obligations, property and funds belonging to them.

The principle of state regulation means that no market can do without government intervention. The market needs laws that would define the rules of behavior in the market, and protection from their violation. In a civilized market economy, the state directs the market to achieve national interests; ensures the centralized formation and distribution of a significant part of financial resources through the state budget; provides a mechanism for connections to protect the public from adverse or unforeseen consequences.

In the 20th century Russia has made several attempts to build a civilized market economy, as evidenced by the Stolypin reform of the beginning of the century, the NEP and the transformations of the last decade of the 20th century. Experience shows that the country's attempts to create its own special Russian market model have not been successful, and are currently impossible due to the lack of the main factor of market transformations - time. Essentially, in Russia over the last decade, during market transformations, the foundations of the American market model were laid. True, this model in Russia is burdened by a conglomerate of negative trends:

Relapses of “socialist” market relations, when enterprises are not paid from the budget for completed government orders;

- “Asian” standards of market relations, in which workers work for nothing, without receiving wages for a long time;

- “shadow” market, in which enterprises hide income and develop various tax evasion schemes;

A kind of “imperialist” market, which is characterized by ignoring someone’s interests, seizure of property on the basis of illegal privatization, and the emergence of oligarchic groups.

In addition to achieving the general principles of building a market system in Russia, it is important: to determine the goals of the country's economic development, to develop a national idea of ​​​​increasing the well-being of people - no one needs a market for the sake of a market; comply with the technology of market transformations, not allowing selective, unsystematic implementation of economic measures in favor of the political interests of individuals; bear responsibility for decisions made.

The problems of the formation of market relations in Russia make the theoretical question of the boundaries of the spread of market relations relevant. Indeed, why are market transformations occurring at different rates, for example, in Moscow and the Far East? Are these objective differences or is it all about the people who run these regions? The answer to this question is given from different points of view by two theorems - A. Smith and R. Coase.

The essence A. Smith's exchange theorem is that the exchange brings benefits to both sellers and buyers; and as long as this happens, the division of labor and specialization of production increases. This condition leads to a reduction in the cost of production of goods and an increase in labor productivity.

But the larger the production, the more products come into circulation, and the functioning of the market also requires costs, which increase as it grows. First of all, these are costs associated with obtaining information about market conditions, processing transactions and their legal protection, and selling goods. Consequently, market relations develop until the costs of circulation exceed the savings from increasing the scale of production.

R. Coase's theorem, 200 years after A. Smith, supplements the boundaries of market development with the degree of regulation of property relations in the economy: if they are legislated, and the legal field of activity of market agents coincides with the economic field, then market relations are carried out without government intervention. In this case, the market boundaries are expanded based on current legal norms. But if the legal basis for economic relations is weak, the state, represented by its various bodies, has to intervene in the relationships between market agents and become an arbiter. All this increases the risk of transactions, increases the costs of lawsuits, lawyers’ fees, examinations, etc. Consequently, the market, on the one hand, ceases to expand, and on the other, a significant part of its agents goes into the shadow economy, where organized crime protects business on a secret, non-legal basis.

The theorems of A. Smith and R. Coase help to understand why it is so difficult in Russia to develop a market economy in conditions of a prolonged crisis and insufficient development of economic legislation. In developed countries, the market is served by legislation of 2-3 thousand laws, in Russia their number is significantly less.

The market has a huge impact on all aspects of economic life, fulfilling a number of significant functions. Among them we can distinguish information, regulatory, pricing, intermediary, sanitizing, and control functions.

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Principles of market relations

Introduction

The market as an economic category is a set of specific economic relations and connections between buyers and sellers, as well as trading intermediaries regarding the movement of goods and money, reflecting the economic interests of subjects of market relations and ensuring the exchange of labor products.

The essence of market relations comes down to the reimbursement of costs of sellers (producers and traders) and their receipt of profit, as well as the satisfaction of the effective demand of buyers on the basis of free mutual agreement, remuneration, equivalence and competition. This is precisely what constitutes the generic, essential features of the market. The material basis of market relations is the movement of goods and money. But, since the market operates in a certain economic system and, developing, turns into an independent subsystem, this cannot but determine the specificity of the forms of its manifestation (different proportions of market relations in the entire economic system, different organization of the market, different forms, methods and sizes regulation, etc.). The presence of specific features of the market (product range, market organization, traditions, etc.) allows us to talk about Russian, American, Japanese and other markets.

The main property of a market-type economy is the spread of market relations to all economic spheres, their penetration into all sectors, and coverage of all regions of the country. This property can be called the universality of market relations. Although the depth of penetration of market relations and the breadth of their coverage of socio-economic phenomena and processes are different in different industries and sectors of the economy, practically none of them are outside the zone of influence of the market. Thus, the entire economy becomes, as it were, a collection of diverse markets, differing only in the degree, measure, and depth of penetration of market relations into individual parts of the economic system. The market no longer exists only as a territorially and functionally isolated cell of the economy, but penetrates in the form of market relations into all cells of the economic organism.

State intervention in the economy is objectively necessary for any government, regardless of whether it is a market economy or a command-distribution economy. In a distributive economy, the government assumes all rights and responsibilities for the production and distribution of goods and services. There is simply nothing to regulate here. However, such a system has in fact shown to be ineffective and untenable.

The purpose of the work is to identify the relationship and influence of market relations on the socio-economic structure of society.

The subject of the study is the market and market relations, the object of the study is market relations in Russia.

Job objectives:

Define the concept of market, market relations, identify the mutual influence of subjects of market relations;

Highlight the features of market relations and the modern market, its structure;

Consider and analyze the formation of market relations in Russia;

Determine the role of government influence on the market and its problems.

1. The essence of the market

The market is a form of realization of commodity production. In modern economic literature there are many definitions of the market, but they all boil down to the fact that the market is a way of interaction between sellers and buyers:

the market is a set of economic relations of production and exchange of goods using money;

the market is an exchange organized according to the laws of commodity production and circulation;

the market is a mechanism for interaction between sellers and buyers, the relationship between supply and demand;

A market is any interaction that people enter into to trade with each other.

A developed market system consists of three elements: the market for goods and services, the market for production factors and the financial market.

Market of goods and services. Historically, it was he who initially arose. As a result of the development of market relations, markets for production factors were separated from markets for goods and services. The objects of purchase and sale in this market are consumer goods and services.

Factors of production market. The objects of purchase and sale in this market are land, labor and means of production. Accordingly, one can distinguish the segments of this market: the land market, the labor market and the capital market. In the land market, land means not only land as such, but also those additional goods and services that it provides: crops, raw materials, materials, minerals, etc. The labor market is organized in the form of a labor exchange, bringing together employers and hired workers who sell their labor power. In the capital market they organize the purchase and sale of means of production, buildings, structures, machines, and equipment.

The financial market is a market where financial assets are bought and sold: money, bonds, shares, bills and other securities. In this market, loan interest, exchange rates and securities are formed. In the modern market infrastructure, the financial market is the most perfect market, the most sensitive barometer of market well-being. The main instrument of the financial market is loan interest, which has become a universal criterion for the effectiveness of capital investments in any branch of production.

The subjects of market relations are participants in market transactions, i.e. purchase and sale transactions: individuals - buyers, sellers, entrepreneurs; legal entities - enterprises, associations, organizations, associations, firms, state, etc. From the standpoint of the functions performed in the market, subjects of market relations are divided into sellers and buyers, from the standpoint of forms of ownership into entities operating within the framework of state property, collective (group) property and private property. The main subjects of market relations in modern economic theory are usually divided into three groups:

1) households. They are the owners and suppliers to the factor of production market. The money received from the sale of labor services and capital goes to satisfy personal needs, and not to increase profits. Households are consumers of final products and services;

2) business (firm) is a business enterprise operating with the aim of generating profit (income). A business involves investing its own or borrowed capital in a business and is a supplier of goods and services to the market;

3) the government (state) is represented mainly by various budgetary organizations that implement state regulation of the economy. The government also supplies the market with goods and services from state-owned enterprises.

Market objects are everything about which purchase and sale relations arise: tangible and intangible goods and services, factors of production, technical innovations and ideas.

The market has a huge impact on all aspects of economic life, performing a number of functions:

ensuring interaction between production and consumption;

regulating The market acts as a regulator of production, supply and demand. A rise in prices is a signal to expand production, a fall in prices is a signal to reduce production;

stimulating. Through prices, the market stimulates the introduction of scientific and technological advances into production, reducing production costs and improving their quality, expanding the range of goods and services;

informational. The market provides objective information about the socially necessary quantity and quality of those goods and services that are supplied to it;

mediation. In a market economy, the consumer has the opportunity to choose the optimal supplier of products, and the seller has the opportunity to choose the most suitable buyer;

sanitizing (sanitary). The market clears social production of economically weak, unviable economic units and encourages the development of efficient firms;

social. The market differentiates producers.

The market has a diverse structure. Markets are classified as follows:

1) for objects of sale and purchase:

resource market,

consumer market: food market; market of non-food products (clothing, shoes, household appliances, cars, cosmetics, etc.); consumer services market (education, healthcare, housing and communal services, etc.);

financial market, consisting of the money market (currency and gold), credit market, insurance market, stock market;

market for ownership and use rights (rental and leasing market);

intellectual property market (patent market for various innovations, trademarks, etc., license market);

market of spiritual values

2) in a spatial context (by scale):

local (local) markets (one or more regions of the country);

regional markets;

national markets;

international markets (integrated national markets of several EU member countries, customs unions within the CIS, etc.);

world market.

3) according to the functioning mechanism:

free (based on the mechanism of free competition);

monopolized;

government regulated;

4) by volume of purchase and sale transactions:

wholesale markets;

small wholesale;

retail.

5) in accordance with current legislation, there are:

legal (official) market;

illegal (shadow) market:

6) according to the degree of saturation, they are distinguished:

equilibrium (demand and supply coincide);

scarce (demand exceeds supply);

excess (supply exceeds demand).

All of the listed types of markets differ with a certain convention. All of them not only interact with each other, but also mutually penetrate each other. The same market can be viewed from different points of view, i.e. assign it to a certain species for various reasons.

2. Principles of market relations

Principle 1. Private property means that any entity, at its own discretion, can acquire, use, control and sell any material assets, real estate, finances, assets, securities and more. The right of private property for several centuries was based on the rights of will and inheritance.

Property rights are based on the rights of possession, use and distribution:

The right of ownership is the ability for a subject to exercise physical control over a thing:

The right of use includes the right of ownership, and also allows the owner to use the thing, while deriving profit, income or benefit.

The right of disposal includes the right of use, and also allows the subject to decide the fate of a thing, i.e. sell, alienate or destroy.

To characterize property, the presence of a subject, object and subject of property is also important:

The subject of property is the person (individual, legal or state) who disposes of the property.

The object of property is the property itself, as a thing or an intellectual product.

The subject of property is a set of concepts associated with the category of property.

It is generally accepted that there are the following types of property: private, state, public, collective, national, family, personal, labor, share, rental, business, joint stock, mixed, etc. However, in reality there are only private and public ones. For example, in collective ownership there is no right of use and right of disposal, in joint-stock ownership there is no object of ownership.

Principle 2. Personal interest - any subject wants to buy cheaper and sell more expensive, everyone does, first of all, what is beneficial to himself. Business entities strive to reduce costs and increase profits.

Principle 3. Freedom of entrepreneurship and choice - means that the subject can engage in any income-generating activity. Personally participate in the business or hire hired workers. Entities can operate in the stock market, carry out real estate transactions, produce goods, provide services, i.e. Any type of activity that is not prohibited by law is permitted. However, on the one hand, subjects are free, but on the other hand, they feel the pressure of the market and competition, and are also forced to work according to the “rules of the game” chosen by the government, i.e. everyone is subject to the law.

Principle 4. Competition is an economic competition (struggle) of subjects totally, in all directions:

at offered prices.

on product quality.

on the techniques and technologies used.

on methods of organization and production management.

on technical characteristics and properties of goods.

Perfect competition is when an infinitely large number of producers and sellers of goods enter the market, so none of them can influence the prices and volumes of the total supply of goods. Competition allows you to dynamically change the supply of goods and services, the volume of investments and capital, without causing destructive harm to any of the participants in the competition.

Principle 5. Free pricing - any inflating, fixing or sharp reduction of prices is prosecuted by law.

Functions of government in a market economy:

development of effective legislation.

antimonopoly regulation.

maintaining the stability of the financial system and anti-inflation prevention.

creation of network and communications.

national defense.

maintaining public order.

public administration, regulation and control.

social support for the poor.

financing of the public sector.

Another function of government is to regulate the production of public and private goods.

Public goods are goods and services that are consumed collectively, approximately equally, and cannot be excluded from consumption (universal secondary education, maintaining public order, purchasing consumer goods).

Private goods are those goods and services that are not consumed collectively, not equally, or can be excluded from consumption (exclusive goods, paid education and healthcare, etc.).

3. Features of the formation of market relations in Russia

The essence of market relations comes down to the reimbursement of costs of sellers (producers of goods and traders) and their receipt of profit, as well as the satisfaction of the effective demand of buyers on the basis of free, mutual agreement, remuneration, equivalence and competition. This is precisely what constitutes the generic, essential features of the market. The material basis of market relations is the movement of goods and money. When market relations are random, most often commodity (barter) in nature, this characterizes an undeveloped market. Here the market plays a certain role, contributes to the differentiation of members of society, increasing motivation to develop the production of certain goods:

1) Unlimited number of participants in market relations and free competition between them;

2) Free access to any economic activity for all members of society;

3) Full mobility of factors of production and unlimited freedom of movement of capital.

4) Each participant has complete information about the market (rate of profit, demand, supply, etc.) The implementation of the principle of rational behavior of market subjects is impossible without information; etc. All this characterizes the free market, i.e. classical.

The distribution in the market is carried out on the basis of the income received. From the standpoint of market relations, any income obtained on the basis of free competition is fair. And those who are unable to receive this income are doomed to a miserable existence. For us today, it is extremely important, as V. Leontyev noted, to find the optimal combination of market and state regulation. There is not yet a single state that ideally meets this requirement.

The state, to a certain extent, ensures the conditions for the functioning of the market, and excessive government intervention in market relations leads to their deformation. In order to eliminate market distortions and eliminate the diseases of a market economy (unemployment, inflation, instability), it is necessary to create conditions for the transition to a market economy in Russia and its subsequent development. These conditions are:

1) Ensuring freedom of economic activity;

2) Formation of a free pricing mechanism;

3) Free maneuvering of resources;

4) Completeness and access to information;

5) Availability of market infrastructure;

6) Preservation of the non-market sector of the economy;

7) Consistent integration;

8) Providing social guarantees to citizens.

Unfortunately, these conditions have not been created in Russia on the eve of the third millennium. Market development in the transition economy of Russia is carried out in three directions:

1) Within the framework of corporate-monopoly forms of large economic systems. The most important task of moving towards a market economy is to break this corporate-monopoly power and develop real independence for all economic organizations and small business structures, various forms of free association;

2) Where previously commodity economic relations did not arise. This applies to real estate, housing, finance, monetary resources;

3) The formation of new markets that characterize a new direction of evolution - the emergence of market relations between labor and capital, the formation of labor and capital markets, the genesis of which is a specific feature of a transition economy.

It was assumed that the transition to market relations should be based on six fundamental principles. These principles are in the nature of world experience and serve as the ABC of the “transition to market relations.” So:

1) Price liberalization. Prices are formed based on supply and demand.

2) Private property, including in agriculture, guaranteed by law that protects the rights of the owner and ensures the reliability of the implementation of business contracts.

3) Privatization of state-owned enterprises, including the legalization of the right of private individuals to create new enterprises, the sale of most state property and the demonopolization of production in various industries.

4) Establishment of an open economy, including free trade relations, adequate protection of foreign investments, provision of opportunities for repatriation of profits and a convertible ruble.

5) Limitation of direct government intervention in the economy. Successful completion of economic reform will require a complete overhaul of the traditional role of the state. This means abandoning most of the functions that government agencies tried to perform in a command economy: government orders for most types of products, government approval of most investment projects, government setting of most prices, etc. Instead, in a market economy, the main task of the state is to protect and ensure sales opportunities, property rights and concluded business contracts, promote competition in markets through anti-monopoly policy, reasonable tax and monetary policies, development of the social protection system, assistance in the development of basic infrastructure sectors: transport and communications, etc.

6) Macroeconomic stabilization, meaning the elimination of the state budget deficit.

The main task for the transition to market relations is economic liberalization, which includes:

1) internal economic liberalization;

2) liberalization of foreign economic relations;

3) formation of market infrastructure.

Such transformations are typical for all countries making the transition from a planned economy to a market economy. Internal economic liberalization is associated with the following steps:

1) freeing the price formation process from centralized regulation;

2) the introduction of freedom of trade for individuals and legal entities;

3) subordination of the activities of producers to market requirements.

These transformations have a serious impact on the existing economic system, the way of life and thinking of people, and give rise to serious problems.

Significant contradictions arise in the production sector:

1) many enterprises in market conditions find themselves uncompetitive, especially with foreign producers;

2) producers who previously received subsidies from the state or worked for state orders (at military-industrial complex enterprises, in agriculture) find themselves in the most difficult situation;

3) the difficult situation of commodity producers is aggravated by a reduction in population demand.

4. Liberalization of foreign economic relations

An effective market mechanism in the economy can only be created if it is closely interconnected with the world market. The main forms of such liberalization are: expanding access to the country for foreign investment; elimination of centralization of foreign economic relations; removal of protectionist restrictions on imports; export liberalization; ensuring the convertibility of the national currency.

The policy of foreign economic liberalization in a transition economy should be optimal, ensuring the development of market relations in the country and their inclusion in the world economy, as well as supporting the development of domestic production.

Conclusion

The market is the entire system of diverse economic relations between people arising in the process of production, distribution, exchange and consumption, based on certain principles, the main of which is freedom of economic activity.

The market is a special economic mechanism that, through competition, promotes the rational distribution of resources, influences the volume and structure of production, forces the consumer to choose a rational consumption system and, ultimately, improves the Russian economy by freeing it from unprofitable, uncompetitive enterprises. For the relationship of market relations, an important role is played by the presence or absence of traditional private property rights to economic resources and, above all, the resources of land and tools for one’s own farming. In most countries, the evolution of communal economic relations and the emergence of the classical market system are associated precisely with the traditions of private ownership of land as a management resource. The preservation of these traditions has always and in all countries been accompanied by economic confrontations between communities, with private land plots allowing the former community member to create a separate economy, the development of which would be unthinkable without the exchange of products produced in it. Such a separate economy could exist economically only through the exchange of produced products.

For many years, our country was behind a kind of curtain called the “administrative command system,” covering all spheres of society, including every person. The most vivid reflection of this phenomenon is found in the economy of the state, since, along with politics and law, it determines the foundations of state and social life; it is in this triad that the most clear contradictions and patterns of social development appear.

The transition to the market is a very complex and lengthy process. In order to create a national structure of its economy that is adequate to market requirements, Russia must go through the painful path of determining its priorities in all areas and at all levels of society and the economy. After all, it must not only be included in the modern world economy, but also predict its role and place in the global division of labor.

The transition to market economics marks a fundamentally different approach to the problem of economic management in modern conditions. The acute situation in the economy of our country and Eastern European countries has determined the transition to the market as an urgent measure. For now, we cannot talk seriously about any market in our country. In the recent past, our economic system completely lacked the basis of market relations in the form of private property. The market under socialist conditions was usually considered only as a market for goods and services with a centralized distribution of material and financial resources, and a planned and directive distribution of labor. In the current conditions, there is no such market for goods, because there is an almost absolute shortage.

The formation of market relations presupposes the presence of all the necessary attributes of a developed market, including the money market, markets for production factors, monetary securities, and labor. These elements must be given complete freedom of expression. Only after this can regulatory systems be formed. The problems of effective market regulation can be positively resolved, first of all, as the task of ensuring a balance of interests of various business entities. The effectiveness of market regulation methods depends on a rational combination of means of direct influence on the market situation and indirect means through influence on various cost instruments. Market relations today are far from perfect, perhaps due to the fact that in nature perfection is generally unattainable.

A transition economy is an economic system that combines economic relations and mechanisms inherent in both dying and emerging systems; the interaction of elements of the old and new systems leads to the displacement of the former and the establishment of the latter as dominant.

The transition to a market is an indicator of the democratization of Russia, providing freedom of economic activity to every person and strengthening the rights of the owner. These categories are the most striking indicators of Russia’s revival. And let the transition to the market happen very painfully, slowly.

List of used literature

economic market money

1. Bazylev N.I. Economic theory: textbook. allowance / N.I. Bazylev - M.:INFRA-M, 2011. - 672 p.

2. Genkin B.M. Economics and sociology of labor: Textbook / B.M. Genkin. - M.: NORM - INFRA-M, 2010. - 416 p.

3. Zhuravleva G.P. Economic theory. Microeconomics: Textbook / G.P. Zhuravleva, N.A. Pozdnyakov, Yu.A. Pozdnyakov. - M.: INFRA-M, 2013. - 440 p.

4. Kiryushin O.I. Economic theory: Textbook / R.S. Gaisin, O.I. Kiryushin, V.G. Kuchkin, V.S. Semenovich. - M.: NIC INFRA-M, 2013. - 330 p.

5. Kovrey V.A. Economic theory: Intensive training course / V.A. Kovrey, M.Z. Achapovskaya, V.V. Ozhigina; Ed. I.V. Novikova, Yu.M. Yasinsky. - Mn.: TetraSystems, 2009. - 400 p.

6. Sazhina M.A. Economic theory: Textbook / M.A. Sazhina, G.G. Chibrikov. - M.: ID FORUM, SIC INFRA-M, 2013. - 608 p.

7. Slagoda V.G. Economic theory: Textbook / V.G. Slagoda. - M.: Forum, 2013. - 368 p.

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Market functions.

The functions of the market are determined by the tasks facing them. The market mechanism is designed to find answers to three key questions: what, how and for whom to produce?

To achieve this, the market performs a number of functions:

1) Pricing

As a result of the interaction of producers and consumers, supply and demand for goods and services in the market, prices are formed. It reflects the utility of a product and the costs of its production.

The market price is a kind of result, a balance between the costs of producers and the utility of a given good for consumers. Thus, in the process of market exchange, the price is set by comparing costs (costs) and utility of the goods exchanged.

2) Regulatory

It is associated with the impact of the market on all areas of activity, primarily on production. Constant price fluctuations not only inform about the state of affairs, but also regulate economic activity. A rising price is a signal to expand production, a falling price is a signal to reduce production.

Figuratively speaking, there is a regulating “invisible hand” in the market, which Adam Smith wrote about: “The entrepreneur has only his own interest in mind, pursues his own benefit, and in this case he is guided by an invisible hand towards a goal that was not at all part of his intentions.

By pursuing his own interests he often serves the interests of society more effectively than when he consciously seeks to serve them.”

At the same time, being a regulator of economic life, the market has repeatedly demonstrated that not all processes of macroeconomic regulation are subject to it. This manifests itself in periodic recessions and crises in the economy.

3) Intermediary

The market acts as an intermediary between producers, allowing them to find a profitable purchase and sale option. In a developed market economy, the consumer has the opportunity to choose the optimal supplier.

The seller, from his position, strives to find and conclude a deal with the buyer who suits him best.

4) Sanitizing

The market mechanism is a fairly rigid, to some extent cruel, system. It constantly carries out “natural selection” among participants in economic activities. Using the tool of competition, the market cleanses the economy of the inefficiency of operating enterprises.

Principles governing market relations.

Any market, regardless of its specific type, is based on three main elements: price, supply and demand, and competition.

The first element is prices. Changes in relative prices served as a guide for producers in determining the need to change production volumes. Price changes affect the choice of production technology. Prices ultimately determine who will consume the product at a given level of income. In addition, prices provide information about the state of the market not only for producers, but also for consumers. They predetermine the behavior of each economic entity in the market.

Price sums up and balances countless individual economic decisions.

Second, supply and demand.

Demand(solvent) is the demand for goods presented on the market, determined by the quantity of certain goods that consumers can buy at current prices and cash incomes. Demand does not express the entire range of needs of the population, but only that part of it that is provided by its purchasing power, that is, the monetary equivalent. Therefore, demand reflects the real structure of social needs.

Offer is the quantity of goods that are available for sale at a given price. The supply represents, strictly speaking, market funds (inventories), that is, a set of goods received for final sale.

The dependence of the quantity of goods sold and offered on price is expressed by the following graph:

The functions presented on the graph are called supply and demand functions, determined by their dependence on price. This follows the law of supply and demand: “When prices increase, the quantity of goods purchased decreases”; and “When the price rises, the quantity supplied to the market increases.”

When the price changes, the quantity of supply and demand changes. But there are other factors which are called non-price factors for both demand and supply.

For demand, these are: tastes and preferences of consumers, the number of consumers, the magnitude and dynamics of changes in consumer income, market size, price and scarcity expectations, prices for related goods. For supply: prices for resources, production technology, number of producers or sellers, taxes and subsidies, price and scarcity expectations of market agents, prices for related goods and supply of related goods.

Through these fluctuations, the price level is established at which the balance of production and consumption is ensured.

Finally, thirdly, this competition. The goal of every entrepreneur is to maximize profits, and, consequently, expand the scale of economic activity.

This inevitably leads to mutual struggle between entrepreneurs for the most favorable conditions for the production and sale of goods, growth in production volumes, and they act in relation to each other as rivals or competitors. If the supply of a product is greater than the demand for it, then competition between sellers intensifies. Each of them, in order to sell their goods, is often forced to reduce the price, which, as a rule, entails a reduction in the production of this product. If demand is greater than supply, then buyers are forced to compete with each other. In order to be able to purchase a scarce product, each of them tries to offer the highest possible price than his rivals can do. The price rises, and this stimulates an increase in the supply of this product.

Competition is a necessary element of the market mechanism. However, the nature of competition can be different, which significantly affects the way market equilibrium is achieved.

Differences in the nature of market competition are associated with the existence of various market structures, which differ from each other in the number and size of firms operating in a given market, the nature of the products produced by these firms, the ability of new firms to enter and exit the market, as well as the availability of information necessary for making economic decisions.

The market mechanism operates most effectively under conditions free, or perfect competition, that is, when the market situation is characterized by:

• a) many buyers and sellers;
• b) high mobility of production factors;
• c) the absence of barriers to entry or exit from the market;
• d) uniformity of products sold;
• e) equal access of all participants in market relations to information.

As a result, in perfect competition, each participant's share in sales or purchases is negligible, so none of the sellers or buyers on their own is able to influence the market price.

Strictly speaking, perfect competition in its pure form never exists anywhere. Only some markets can approach perfect competition in their characteristics (for example, the grain market). Therefore, perfect competition can be considered as a kind of scientific abstraction, the analysis of which is nevertheless necessary as the first to understand the principles of the functioning of the market mechanism.

If at least one of the signs of perfect competition is absent, then such a market structure is called imperfect competition:

• * pure monopoly when in the market one firm is the only seller of a product or service and the boundaries of the firm and the industry coincide;
• * oligopoly when there are a small number of firms in the industry;
• * monopolistic competition, which is characterized by the presence of a relatively small number of firms on the market, manufacturers differentiate their products.

In general, it is necessary to emphasize the following: regardless of the type of market structures, a necessary condition for their normal functioning is economic freedom, independence, and independence of subjects of economic relations.

Thus, very complex cause-and-effect and functional connections are established between the main elements of the market mechanism, developing under the influence of many socio-economic, political, psychological, organizational, technical, organizational and managerial and other factors. If we give the market mechanism a general characteristic, then it is a mechanism for setting prices and distributing resources or a mechanism for establishing economic relations (between sellers and buyers of goods and services) based on prices, quantities of goods and their structure.

We can conclude that the market is a very complex economic mechanism that allows the existence of the economies of each individual country and the entire world as a whole.

As the structure of society developed and improved, the beginnings of a future market began to appear. Thus, the natural form of management, where the production of material goods and services was carried out for one’s own consumption within a separate economic unit, was replaced by the commodity form, that is, a form of management based on the production of products not for personal consumption, but for exchange. Therefore, the market appeared as a place where commodity-money relations were carried out between various entities.

But over time, the meaning of this concept has changed.

Today, the essence of the market is revealed in its functions, which are determined by the tasks facing them. Namely, the market mechanism is designed to answer three key questions: what, how and for whom to produce?

The market has a system of interconnected markets, that is, unlike its original state, it is already a multi-level, hierarchical system in which markets such as the market for consumer goods, the market for factors of production, the labor market, the information market, the land market and the financial system interact.

And between these markets, various elements of the market infrastructure act as intermediaries. But there are also certain laws governing commodity-money relations: the laws of supply and demand, as well as the actions of prices and competition.

It must be said that the market is multifaceted and requires careful study.

The basic principles of a market economy are the following: freedom of choice of types and forms of activity, market mobility; equality of subjects with different forms of activity; self-regulation of activities; principle of contractual relations; freedom of pricing; decentralization of management and independence; economic responsibility; government regulation; competition and social protection mechanism.
The main principle of a market economy - freedom of choice of types and forms of activity - declares the right of any economic entity, be it an individual, a family, a group, or an enterprise team, to choose the desired, appropriate, profitable, preferred type of economic activity in any form permitted by law. Types of economic activity mean: production of various types of products, goods and provision of paid services, trade and intermediary, financial and credit, scientific and information, management activities.
One of the fundamental principles of a market economy - equality of market subjects with different forms of ownership - provides that the rights of each subject in economic activity, as well as restrictions, taxes, benefits, sanctions must be equal (adequate) for all subjects. Pluralism of forms of ownership in a market economy and their economic equality give rise to a diversity of these forms that is not usually inherent in a centralized (command) economy.
The processes of self-regulation inherent in a market economy, complementing and replacing public administration, extend to the creation of enterprises. Granting individuals, groups, and collectives the rights to form new enterprises, both initially from scratch and on the basis of divisions of existing enterprises, activates the process of democratization of economic management, but not only. This is another direction for implementing the principle of economic freedom.
A market economy is often defined as an economy of developed commodity-money relations. With the same reason, it can be called the economics of contractual relations. The advantage of an agreement between interacting economic entities as a tool for managing economic relationships is that it increases the economic independence of enterprises, promotes the transition from compulsory to voluntary relations, and increases the reliability of the functioning of the economy. The principle of agreement is universal. It extends its effect to mutual supplies, purchases, and obligations.
In the functioning of a market economy, the principle of freedom of pricing is actively operating. The price is not set by anyone, but is formed as a result of bargaining, based on a mutual agreement between the seller and the buyer. These are the prices that are commonly called market prices.
One of the principles of a market economy is self-financing. ATP is an economic unit (i.e., an independent economic entity, which is a legal entity and has its own bank account) and therefore is obliged to carry out financial self-sufficiency, i.e., self-financing.
The principle of decentralization of management in a market economy is derived from other principles and follows from the properties of this economic system. Decentralization of a market-type economy is manifested in the absence of a state plan established by the center that is subject to mandatory implementation. It is replaced by an indicative, recommendatory, advising forecast plan (business plan). With the decentralization of management, self-regulation of the economic activities of market economy subjects occurs. This requires the development of a system of rules of economic behavior that are common to all participants in the economic process. The establishment of uniform rules and norms of economic behavior leads to the economic independence of economic entities.
In a market economy, the principle of economic responsibility operates, providing for economical ways, measures and means of initiating liability, compensation for damage by persons and organizations that are guilty of it. The principle is based on compliance with contractual terms, violation of which is necessarily punishable by real fines, sanctions, and payment of penalties.
A business entity is liable for its obligations with its property and monetary assets. An entity that violates its obligations loses trust and is essentially deprived of the status of a full-fledged, reliable partner, participant in business entrepreneurship.
A market economy cannot exist and function without government regulation, which is manifested in the formation of a set of rules and restrictions on market activity, its support and updating, and monitoring compliance with these rules; withdrawal of part of profit and income through the taxation system, through mandatory payments to the budget. State regulation of the market is carried out on the basis of legislation issued

government regulations through state planning.
One of the important principles of the development of a modern economy is competition between enterprises, organizations, and entrepreneurs.
A market economy is characterized by the principle of social protection of the population from adverse or unforeseen consequences. Social protection is carried out through a system of state regulation in the form of restrictions that do not allow market effects to reach a socially dangerous level, and compensation - benefits, subsidies, installment plans, provision of goods and services at reduced prices or free of charge. Various forms of charity and helping the poor are widely practiced. At the same time, a level of social protection is maintained that does not have a negative impact on the effective functioning of the economic system and does not lead to social dependency.
When studying economics, macro and microeconomic problems are considered. The main macroeconomic problems are the volume of production in the country, economic growth, employment, inflation, social and economic crises, etc. In microeconomics, they study the volume of production and prices in individual markets, factors influencing changes in demand and supply, and determine the incentives for behavior individual and company.

LECTURE No. 3 – 4

Topic: Market organization of the economy. Markets and their varieties.

Plan:

1. Definition of the concept of market economy. The main reasons for the emergence of a market economic system.

2. Basic principles of a market economy.

3. Market definition. Economic subjects of the market.

4. Operating conditions and main functions of the market.

5. Methods of classifying markets.

6. Market models by forms of competition.

7. Advantages and disadvantages of the market economic system.

Definition of the concept of market economy. The main reasons for the emergence of a market economic system.

Under market economy is understood as a self-regulating economic system, which is based on the predominance of private property, freedom of entrepreneurship, purchase and sale of not only consumer goods, but also means of production.

What are the main reasons for the emergence of a market economic system?

1.Limited economic resources. This is an objective law that dictates the need for appropriate behavior of people in the economic system; it affects all factors of production (land, labor, capital).

Limited resources and production capabilities force people to choose between relatively scarce, necessary goods, i.e. The release of some goods means the refusal to release others.

2.Social division of labor. One of the reasons for the division of labor is the limited economic resources. The social division of labor is one of the objective economic laws that accompany the evolution of people's productive activity and the process of the emergence of markets.

3.Exchange of work results.

Economic relations of exchange of the results of labor arise from the natural property of man - the tendency to exchange the products of his labor in order to obtain the material benefits he needs. By exchanging some goods for others, people most fully satisfy their needs. The exchange of labor products is caused by an increase in needs. The exchange process acquires a market character, since it is carried out on mutually beneficial, equivalent conditions. The principle and meaning of such an exchange looks something like this: “Give me what I need, and you will get what you need.” It is in this way that people receive maximum consumer benefits in conditions of limited resources and division of labor. Participants in market exchange do not set a goal to promote public benefit, but only have in mind their own, individual interests, and pursue only their own benefit. At the same time, the “invisible hand” directs them towards a goal that they do not set, namely, satisfying the interests of the entire society, meeting the needs of the entire society.

The formation of the market is shown in Fig. 1.

Fisherman Hunter Fisherman Hunter Fisherman Hunter

Potter Farmer Potter Farmer Potter Farmer

Self-sufficiency Decentralized Centralized

exchange exchange

rice. 1 Formation of centralized exchange.

Thus, the market organization of the economy arose through the process of exchange of labor products of people who are able to produce them in limited quantities, but need many consumer goods produced by other people.

Basic principles of a market economy.

The basic principles of a market economy are:

1.Free choice of types and forms of activity. This is the main principle of a market economy. It declares the right of any economic entity (person, family, group of people, enterprise team) to choose the desired, appropriate, profitable or preferred type of economic activity and to carry out this activity in any form permitted by law.

Types of economic activity include the production of various types of products, goods, provision of services, intermediary, financial and credit, scientific, and management activities. In a word, any types of actions in the sphere of production, distribution and redistribution, exchange, consumption and use of a social product that are not prohibited by law. In a market economy, prohibitions are lifted not only on production, but also on the sale, resale, and exchange of goods both by the producers themselves and by any intermediaries standing between producers and consumers. Only those types of activities that pose a real danger to the life and freedom of people and are contrary to moral standards are prohibited.

Thus, the initial principle of a market economy is the following: “Every subject has the right to choose for himself an arbitrary form of economic activity, except for those prohibited by law, due to their social danger.”

2.Free pricing. With free pricing, the price is not constrained by external restrictions, it is not set by anyone, but is formed as a result of bargaining, on the basis of a mutual agreement between the seller and the buyer, as a result of the interaction of supply and demand. It is these prices that are commonly called free market prices.

3.Competition – competition of economic agents in the market for consumer preferences in order to obtain greater profits. Products offered to the market must be competitive, i.e. have such consumer properties that would distinguish it favorably from the original products of other competitors. The winner in the market is the producer whose products are more competitive.

4.Equality of market subjects with different forms of ownership. This principle states that the economic rights of each of the subjects, including the possibility of carrying out economic activities, restrictions, taxes, benefits, must be adequate. Naturally, the adequacy of the rights of enterprises with different forms of ownership should not be understood as absolute equality or sameness. Different forms of ownership themselves create different production and economic opportunities; it is also irrational to have the same rules, say, taxation, for enterprises that have different conditions for making a profit. We are talking about something else: about not creating “special” conditions, a special favorable treatment based on the form of ownership, putting one of them in an advantageous position and the other in a disadvantageous position. In essence, this is a prerequisite for fair competition between different forms of ownership. The other side of this principle lies in granting all forms of property the right to exist in the economy, which gives rise to their diversity.

5.Self-regulation of economic activities. Self-regulation of a market economy is ensured, first of all. the fact that it assigns a decisive role in management to economic rather than administrative methods. The market mechanism ensures self-adjustment of economic processes through fierce competition, bankruptcy and unemployment.

6.The principle of contractual relations. A market economy is an economy not of orders, but of contracts, agreements. The advantages of a contract as a tool for managing economic relations are that it increases the economic independence of enterprises and promotes the transition from compulsory to voluntary relations. The principle is universal and covers all spheres of the economy. However, it must be remembered that the principle of contractual relations is at the same time the principle of mandatory compliance with them by both parties.

7.Self-financing. Any economic unit, gaining economic independence, pays for it by having to cover all financial expenses for its existence and development from its own pocket. The principle teaches the ability to live on one’s own funds, generates economic responsibility, teaches the ability to raise money, keep records and control finances. Self-financing is part of a more general principle - self-sufficiency of economic entities with all the resources they need.

8.Decentralization of management and independence. Decentralization of a market-type economy is manifested in the absence of a state plan established by the center, subject to mandatory implementation, and its replacement with a recommendatory forecast plan. The rights of the state administrative apparatus are limited and do not give it the opportunity to command the activities of economic entities that have the right to independently make economic decisions. However, in a market economy there are elements of centralization (uniform legislative acts and regulations, centralized formation and distribution of a significant part of financial resources).

9.State regulation of the market, which is carried out through legislation, through state planning, distribution, on the basis of regulations adopted by the government.

10.Economic responsibility. The market economy is based on the need to compensate for the damage caused by its perpetrators. This is facilitated by the need to comply with contractual terms, violation of which is punishable by significant fines, compensation, payment of penalties, i.e. the economic subject responds with his property and money, and nothing arouses responsibility more than the fear of losing what belongs to himself.

11.Social protection mechanism. Methods and means of social protection are presented in two main categories: - permanent restrictions (minimum wages, minimum allowable tax rates, etc.)

Social compensation (benefits, subsidies, installment plans, free and discounted goods and services for certain categories of the population)

However, the level of social protection in a market economy is maintained such that it does not have a negative impact on the effective functioning of the economic system.

12.P the principle of universality of the market - the inevitability of the penetration of market relations into all spheres of social production, otherwise the economy would not be a market economy. An economy can be considered market only when commodity-money relations become prevalent and penetrate all spheres and sectors of the economy. This is the essence of the principle of universality. Everything becomes an object of purchase and sale: housing, means of production and natural resources, capital, labor and labor, intellectual and information products, spiritual values.