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It is customary to refer to subjects as the main actors in decision-making, or persons carrying out activities. The object refers to what the actions of the subjects are aimed at in order to change their state.
Subjects of a market economy - the concept
A market model is called such a model of economic development, which is characterized by freedom of private property, competition between producers, free access to enter the industry, decentralization and the absence of monopoly. The subjects of a market economy (SRE) carry out economic activities, plan and organize the production process and make decisions.
Subjects include:
- households;
- organizations;
- state.
This entity involves the association of individuals living together and jointly making the budget and decisions on its formation. This SRE has the following features:
- adoption of common decisions of the subjects, regardless of the number of its members;
- each of these subjects is endowed with certain resources and manages them independently: sells, consumes;
- the purpose of the activity of this entity is not to generate income. Each household has a list of its needs and has resources at its disposal, and its goal is to manage it in such a way as to maximize the use of resources to meet its needs.
Organization as a subject of a market economy
Any organization exists with the aim of obtaining maximum income in a market economy. The organization is engaged in the production of products, which it then sells, and the difference between production costs and the cost at which the goods are sold is the income of the organization. In its activities, the organization uses the resources provided by households.
By paying for the resource, the household satisfies its needs. Organizations, after purchasing resources, produce a product that is sold to the consumer. Moreover, the household is already a consumer of the finished product. And the organization at the expense of the received income buys an additional amount of the resource.
The set of actions of subjects organizes the cash flow. When constructing a cash flow, we proceed from the fact that all SERs act rationally, that is, their actions are aimed at obtaining the best result, taking into account the existing restrictions.
In the market model of economic development, the state has a special role: it does not act as a strict regulator and price setter, as in the case of the administrative model. It provides a control function through the actions of state authorities. Also, the state can act as a short-term regulator in the event of a sharp destabilization of the economic system during market fluctuations.
The state is responsible for socially useful goods, areas and industries that are unprofitable for private business.
The state is entrusted with such functions as:
- providing a legal framework for the functioning of all subjects in the economic system;
- issue of funds;
- implementation of tax and fiscal policy;
- creation of antimonopoly legislation, control over the activities of monopolies;
- socially useful goods: availability, production;
- foreign economic policy;
- ensuring a safe environment for the functioning of all entities.
According to the theoretical model of a market economy, in order for the state not to act as a regulator, one should:
- Legislatively allocate, consolidate and ensure strict observance, control over the inviolability of property rights.
- With a clear allocation of ownership, market failures do not occur in any areas.
- Transaction costs should be given priority.
- Government intervention only makes sense if the expected benefits of the intervention outweigh the costs incurred.
Also, this model clearly identifies public goods for which the subject does not pay directly, but still consumes: security, public administration, and others. At the same time, to cover the costs of their creation, there is a system of taxation.
Subjects of a market economy or business entities (economic agents) - actors in the economy who independently make decisions and carry out economic actions.
The main subjects of economic activity in a market economy are:
Households;
Enterprises or business organizations;
State.
This division of subjects, in essence, reflects the two main areas of economic activity of people. Household- a generalized element of the consumer sphere of the economy. Its main function in the economy is the consumption of final products and services.
households- this is the economic image of an average family that runs a separate household, owns joint property, receives a common income and has an average stable structure of expenses, is a convenient structural unit in describing the economic life of society. They strive to maximize the utility of the goods they acquire: they rank their needs and carry out expenses within the disposable amount of income.
Enterprises and the state are structural elements of the second main sphere of human activity in the field of economics - the sphere of business activity.
It is through this area that households receive income.
State(government institutions) are, as a rule, non-profit budgetary organizations that implement the functions of state administration of the country and regulation of the economy at various levels from the national to the local.
The goal of the state as an economic entity is to ensure a stable economic order and economic development of the country.
Enterprises or business organizations are mainly private firms of various economic status - from individual to large joint-stock companies.
Business - it is any kind of direct activity for the purpose of generating income, involving the attraction of own funds, or indirect participation in such activities by investing in the business of own capital. In this sense, being an employee in a government agency or being employed by a company is not a business, but owning shares or running your own gas station is a business.
Business offers complete independence in making business decisions and appropriate responsibility for the results of these decisions.
The main function of business organizations is the production of the entire mass of goods and services and bringing them to the consumer. Their goal is to maximize profits.
The given structure of economic entities reflects not separate spheres of people's participation in social production, but the distribution of each member of society in various spheres of economic life.
There are quite a lot of subjects of the market economy. These are producers and consumers, entrepreneurs and employees, industrialists, bankers, merchants, owners of loan capital and securities, etc. In the most general form, the subjects of a market economy are grouped into three large groups.
Let's consider them separately.
households |
How do owners of factors offer labor, land, capital in the resource market; receive income from the sale of resources; use income to purchase consumer physical goods and services to meet personal needs |
Entrepreneurs |
Demand for resources; offer tangible goods and services both for the business and public sectors (investment tangible goods and productive services) and for households (consumer tangible and intangible goods); invest their earnings |
State |
Presents a demand for economic resources for the implementation of activities in the public sector of the economy; offers money; offers public goods without direct payment or with partial payment, which positively affects the productivity of the business sector and reduces the cost of household consumption; carries out government regulation of the market economy |
Main interaction factors:
1. Costs
2. Cash income
3. Goods and services
4. Labor and capital
5. Resources
6. Labor and capital
7. Consumer spending
8. Goods and services
9. Expenses
10. Resources
11. Goods and services
12. Consumer spending
13. Goods and services
14. Taxes
15. Goods and services
Conclusion: households, as owners of resources, sell resources to firms, and already as consumers, they spend money income on the proceeds from resources, buy goods and services on the product market. Firms buy inputs to produce goods and services, then sell the finished product of their production to households in exchange for profits. The profit is used to buy additional resources to ensure the circulation. As a result, there is a real flow of economic resources, final products and services, and a cash flow in the form of income and consumer spending. These streams are simultaneous and repetitive.
Household as a subject of market relations
A household is an economic unit of one or more people. It ensures the production and reproduction of capital. It independently makes decisions in the consumer market, is the owner of any factor of production (land, capital, labor). Strives to meet your needs as best as possible. Households, in addition to families, can also be called organizations that are engaged in production (church, trade union, party).
The household is one of the three subjects of economic activity. Household covers economic objects and processes occurring where a person or family permanently resides.
The household is interpreted as an economic unit that consists of one or more persons united by a common budget and place of residence, supplies the economy with resources and uses the money received for them to purchase goods and services that satisfy the material needs of a person. The concept of a household unites all consumers, employees, owners of large and small capital, land, means of production, persons employed and unemployed in social production.
In general, a household can be characterized as an independent economic unit, consisting of one or more people who have some kind of production resource and strive to satisfy their needs to the fullest extent possible.
The main characteristics of a household:
Cohabitation and home improvement.
Joint farming.
Possession of certain resources.
Independence in making business decisions.
Striving for maximum satisfaction of needs.
Household types
Single households or simply households.
Single households are formed by singles, separate or several families, as well as these families together with singles. Single households in the Russian Federation include 139 million households. people, which is 94% of the total population of the country.
group households.
Group households are formed by permanent or temporary groups of people for the joint organization and arrangement of their lives in various hostels and boarding schools, in soldiers' barracks, cells of monasteries and barracks of correctional labor institutions. They unite 9 million in the Russian Federation. people, or 6% of the total population of the country.
Households are classified according to the following criteria:
Territorial and regional affiliation (area, region of the country, natural and climatic zone, etc.).
Demographic characteristics (family and non-family households, number of household members, gender and age characteristics).
Property characteristics (nature of housing, number of rooms, availability of a car, cottage, land, etc.).
Income characteristics (average per capita income, income group, sources of income, etc.).
Economic characteristics (employment, industry, sector of the economy, type of enterprise, position, etc.).
Labor potential (number of able-bodied people, level of education, professional training, etc.).
The social status of the household (determined by the head of the family or the family member with the highest income).
To characterize an economic entity, it is required to indicate the source and amount of its income, the direction and amount of its expenses.
Household is property, money, tools used by people at home. It covers the economic processes taking place in the place of life of people, families.
Household income is private income. They are formed by:
wages, labor, owner's profit, capital, interest and dividend, participation in a joint-stock company, rent, natural resources.
Each household's income is spent in three ways:
Payment of taxes to the state
Satisfaction of personal needs
Formation of personal savings
Savings is the post-tax non-consumable portion of a household's annual personal income. There are the following types of savings:
Household (in cash)
Institutional (bank deposits, insurance policies, bonds, shares, etc.):
a) "protective" - actions to preserve the original purchasing power of a given amount of money. They perform the role of self-insurance against unpredictable circumstances.
b) "speculative" - actions to multiply the purchasing power of a given amount of money. They play the role of a kind of "family business" according to the rules of a market economy.
In general, savings is a deferred demand for real goods (goods and services), and this "deferred" turns savings into a permanent "sword of Damocles" hanging over the market economy, i.e.:
A relative increase in savings (as personal income rises) means a relative decrease in the demand for consumer goods and services, which can cause a reduction in the production of these goods and an increase in unemployment (unemployment).
The preponderance of "home" savings can undermine the country's economy, so it is necessary to stimulate institutional savings, i.e. the participation of money in the circulation (economy) of the country.
Consumer spending is that part of personal income that irrevocably and without interest goes to producers.
And among the objects of consumer spending can be identified:
Non-durable goods (term - less than a year)
Durable goods (term - more than a year)
The household is one of the most important market institutions. The role of households in the development of market relations is relatively large and is determined by the following points:
First, households provide the necessary level of consumer demand, without which the functioning of the market mechanism is impossible.
Secondly, household savings are a source of savings and investment, which is very important in a developing economy.
Thirdly, households are the subjects of supply in the market for factors of production (entrepreneurial ability and labor).
Fourthly, it is the household that is the basis for the formation of production and the implementation of human capital.
Fifth, the ability of households to establish a family business contributes not only to the growth of personal well-being, but also to the development of a market economy as a whole.
In a market economy, the entire mass of resources constitutes the aggregate resource market, which, in turn, consists of many markets for specific resources. The owners of these resources are considered mainly households.
There are the following types of market entities:
1. Household.
3. Enterprises.
4. State.
1. Household (economic unit consisting of one or more people) - on the one hand, being a buyer of goods and services, on the other hand, it has at its disposal factors of production (labor, land that can be sold or rent).
They ensure the production and reproduction of human capital. They can own shares, thanks to which they also become owners of the means of production (capital). In addition, households act as buyers in the market for goods and services provided by firms and state enterprises. At the same time, they themselves are sellers in the resource market. Received from the implementation of production factors (labor) income is used to meet personal needs. It is also important that they independently make decisions in the consumer market.
2. Banks are a special financial and credit institution that regulates the movement of the money supply in the consumer market, which is necessary for the normal functioning of the market. The main function of banks is to accumulate funds and lend them.
Historically, the original business of banks is the intermediation of payments. They keep the funds of entrepreneurs, on whose behalf they conduct their settlements with suppliers and buyers, make payments to the state treasury, and provide cash services to firms (give them cash for wages and other purposes).
The monetary funds of banks are made up of their own capital (they form an insignificant part of all the funds) and deposits - customer deposits. Deposits are divided into term deposits (investments for a predetermined period and not subject to withdrawal before it occurs) and demand deposits (deposits to current accounts that the bank is obliged to issue at the first request of the depositor).
3. An enterprise is an economic unit that: - uses factors of production to manufacture products for the purpose of selling them; - strives to increase profits; - makes decisions independently.
4. State - in the consumer market, it is represented by government agencies that exercise political and legal power in order to fulfill social needs. The state is an imperative subject of the market, its orders are binding on everyone else.
The interconnection of all participants in the market activity is undeniable. They are interested in each other, the well-being of one market participant depends on the well-being of others. Even the same market entity can be part of a household household, a state institution, and a business participant. For example, working for hire as a civil servant, he is a representative of a government organization; owning the securities of a corporation, he represents the business; spending his income for personal consumption, he is a member of the household. All participants in market relations are real owners and have their own economic interests, which may coincide or conflict with the interests of other entities. Household households try to max-but satisfy their desires and needs; firms - to get the maximum profit, the state - to achieve the maximum welfare of society.
Each of them occupies a certain place in the system of social division of labor and, in order to realize their eq-s interests, must offer what is necessary for other subjects - carriers of market relations.
When considering the composition of the market as a system of economic relations, it is logical to single out the objects and subjects of the market (economic agents).
The objects of the market are goods and money. In the conditions of developed market relations, not only manufactured products (goods and services), but also factors of production (land, labor, capital) act as goods. In this case, all financial assets are usually considered as money, the most important of which are money itself.
The subjects of the market are sellers and buyers. Households, firms (enterprises, businesses), the state (government) act as sellers and buyers.
The interaction of all subjects is clearly realized in the model of circulation of resources, products and incomes.
Households (consisting of one or more persons), on the one hand, are buyers of goods and services, on the other hand, they have at their disposal factors of production (labor, land, which they can sell or rent). They can own shares, thanks to which they also become owners of the means of production (capital). In addition, households act as buyers in the market for goods and services provided by firms and state enterprises. At the same time, they themselves are sellers in the resource market. The income received from the sale of factors of production (primarily labor) is used to meet personal needs. Firms, having money capital at their disposal, acquire from households the factors of production they need in the resource market and use them to produce goods and services. Their main goal is to make a profit. The goods and services produced by them are sold by firms to households in the market for goods and services, using the income received to expand production activities.
The state also participates in the circulation model, which provides households and firms with its services through the country's national defense system, education and medical care, etc. To ensure the production of these services, the state collects money from households and firms in the form of taxes. From them, the state buys the resources, goods and services necessary for its business activity.
In addition to providing services, the state provides various cash payments to firms and households. It is mainly about transfer payments. An important part of transfer payments is state cash payments for social needs - pensions, benefits and other types of assistance to the disabled, unemployed and other low-income segments of the population. The second direction of transfer payments is grants and subsidies (cash payments provided by the state to firms to encourage the production of certain goods and services). Subsidies and grants can be provided both to producers of goods and services and their consumers, including households.
The circuit model clearly illustrates the relationship of all participants in market activity. They are interested in each other, the well-being of one market participant depends on the well-being of others. Even the same market entity can be part of a household, a state institution, or a business participant. For example, while employed by a government official, he is a representative of a government organization; owning the securities of a corporation, he represents the business; spending his income for personal consumption, he is a member of the household.
All participants in market relations are real owners and have their own economic interests, which may coincide or conflict with the interests of other entities. Households try to satisfy their wants and needs as much as possible; firms - to get the maximum profit, the state - to achieve the maximum welfare of society. Each of them occupies a certain place in the system of social division of labor and, in order to realize their economic interests, they must offer what is necessary for other subjects - carriers of market relations.
More on the topic 14. The main subjects of a market economy and their relationship.:
- 5.3. Financial planning and forecasting in a market economy
- 4.1. The place of commercial banks in the investment process of the real sector of the market economy
- 1.1. Socio-economic essence and role of a mortgage loan in a market economy
- Yu.V. Dubrovskaya HARMONIZATION OF INTERESTS OF ECONOMIC SUBJECTS AS A BASIS FOR REDUCING TRANSACTION COSTS IN THE SYSTEM OF HIERARCHICAL INTERRELATIONS OF THE ECONOMY
The subjects of a market economy are sellers and buyers.
Economic ties ensure the movement of products from producer to consumer, there is a multilateral exchange between producers, on the one hand, and consumers, on the other.
Such exchange processes are due to the social division of labor, which, on the one hand, separates producers, separates them according to the types of labor activity, and on the other hand, creates stable functional relationships between them. The first develops into economic isolation, into the independence of the management of each manufacturer and acts as the economic basis for the formation of subjects of market relations. The second is modified into exchange processes on an equivalent basis through the purchase and sale of goods.
As a result, the economic prerequisite for the transformation of a simple producer into a subject of market relations materializes and production becomes commercial. Producers independently organize the production and sale of products, reimburse costs, expand and improve production. Exchange processes in the conditions of commodity-money relations take the form of market relations.
From the limited economic resources follows the need for economic (economic) activity, in other words, the transformation and adaptation of economic resources in order to meet needs.
Economic (economic) activity is nothing more than a constant work on the evaluation, comparison and selection of alternative options for the use of economic resources. This happens at all levels, economic entities (participants in the economic process) participate in this.
Economic entities, or, as they are often called in economic science, economic agents, are usually referred to as all those who independently make decisions, plan and implement practical measures in the field of economic (economic) activity. Economic agents include individuals, families, heads of economic units (enterprises, banks, insurance companies), boards of joint-stock companies, government bodies and institutions.
A distinctive feature of economic agents is the adoption and implementation of independent decisions in the field of economic activity. These kinds of decisions are made and implemented by consumers. They either buy goods or refuse to buy. Independent decisions are made by enterprises producing goods and services. They plan what to produce, in what sizes, at what prices and under what conditions to sell.
The position and role of each economic agent is determined by its relation to the factors of production, by what particular factors of production it owns. Some have capital and economic power, determine the forms of management, participate in management, and engage in entrepreneurial activities. Others manage only their own labor force, and their ability to influence the organization of production, the distribution of income, participation in management is limited.
At the same time, different attitudes towards the factors of production not only divide, but also in a certain way connect people, create a mutual interest in combining heterogeneous factors, joint participation in the organization, and the constant renewal of various spheres and types of economic activity.
In accordance with the role played by economic agents, it is customary to distinguish between households, enterprises (firms) and the state (government bodies, state institutions), often non-profit organizations.
Market objects include goods and money.
What is a commodity? A commodity is a product of labor intended for exchange through purchase and sale. A commodity has two properties: firstly, it satisfies some human need, and secondly, it is a thing that can be exchanged for another thing. In other words, a commodity has a use value and an exchange value.
And no less important, the goods must not only be manufactured (produced), not only manufactured for others, but also sold to other people, that is, transferred on the basis of equivalent (equivalent) compensation (a gift, although produced to meet the needs of another person , is not a commodity).
Things do not become commodities in and of themselves, but only when they are objects of exchange between people. Therefore, the commodity expresses the relationship between people regarding the exchange of products of labor. The exchange of goods can take many forms, but in all cases, an exchange is an act in which we receive or give away one thing in exchange for another.
Money, on the other hand, has been known since ancient times, and it appeared as a result of a higher development of productive forces and commodity relations.
The entire history of the development of the economy is at the same time the history of the development of commodity production and commodity relations, where the links between producers were carried out through the exchange of one commodity for another. In the early stages, the exchange was random and carried out without the help of money.
Such an exchange (now called "barter") is fraught with considerable difficulties. The spontaneous process of exchange forced society to take a cardinal step in the evolution of exchange operations. As a result of a very long and complex development of exchange, one commodity stood out for the role of a universal equivalent. With the development of exchange and the creation of a world market, such a role was assigned to noble metals - gold and silver - due to their natural properties, such as qualitative uniformity, quantitative divisibility, storability and portability. Since that time, the entire commodity world has been divided into two parts: into "commodity niello" and a special commodity that plays the role of a universal equivalent - money.
Thus, money is a historical category that develops at each stage of commodity production and is filled with new content, which becomes more complex with changes in the conditions of production. The transition from a subsistence economy to a commodity economy, as well as the requirement to observe the equivalence of exchange, necessitated the emergence of money, without the participation of which the mass exchange of goods is impossible, based on industrial specialization and property isolation of commodity producers.
Thus, the essence of money lies in the fact that it is a specific commodity type, with the natural form of which the social function of the universal equivalent grows together. The essence of money is expressed in the unity of their two properties: universal immediate exchangeability and universal labor time.
The essence of money as an economic category is manifested in their functions, which express the inner content of money.
Money performs the following five functions: a measure of value, a means of circulation, a means of payment, a means of accumulation and savings, and world money.
The essence of the market is most fully manifested in its functions. The most important functions include:
- - the function of self-regulation of commodity production. It manifests itself in the fact that with an increase in demand for a product, producers expand the scale of their production and raise prices. As a result, production begins to decline;
- - stimulating function. When prices fall, producers reduce production, while at the same time looking for ways to reduce costs by introducing new equipment, technology, improving the organization of labor;
- - the function of establishing the social significance of the produced product and labor costs. However, this function can operate in conditions of deficit-free production (when the buyer has a choice, the absence of a monopoly position in production, the presence of several producers and competition between them);
- - regulatory function. With the help of the market, the main micro - function of democratization of economic life, the implementation of the principles of self-government are established. With the help of market levers of influence, social production is freed from its economic unviable elements, and due to this, commodity producers are differentiated.
The basic principles of a market economy are as follows:
- - freedom of economic activity, that is, free market competition of goods, services and securities without interference in the process of purchase and sale of the state or local authorities and administration. At the micro level, economic activity takes on the character of entrepreneurial activity (business). Free enterprise expresses the free right of private firms to use economic resources to produce goods of their own choice and to sell the goods produced in markets they themselves have chosen at free prices;
- - equality of market subjects;
The main economic argument in favor of a market system is that it promotes the efficient allocation of resources. According to this thesis, a competitive market system directs resources into the production of those goods and services that society needs most. It dictates the use of the most efficient methods of combining resources for production and promotes the development and implementation of new, more efficient production technologies. The "invisible hand" thus governs personal gain. It provides society with the production of the greatest amount of necessary goods from available resources. This therefore implies maximum economic efficiency.
It is distributional efficiency that makes most economists question the need for government intervention in free markets, or government regulation of their operations, except when such intervention becomes compelling.
An important non-economic argument in favor of a market system is freedom. One of the fundamental problems of organizing society is how to coordinate the economic activities of many individuals and enterprises.
There are two ways of such coordination: one is centralized control and the use of coercive measures; the other is voluntary cooperation through the market system. Only a market system is capable of coordinating economic activity without coercion. The market system represents freedom of enterprise and choice; in fact, on this basis, she succeeds.
Employers and workers are not driven by government directives from one industry to another in order to meet production targets set by some all-powerful government agency. On the contrary, under a market system they are free to seek to increase their own profits, subject, of course, to the rewards and punishments they receive from the market system itself.
The market mechanism has both advantages and disadvantages. The positive functions of the market make it, in principle, a fairly effective system. This does not mean, however, that market relations are absolutely perfect and ensure the progressive development of society in everything. The market economy has its inherent flaws (imperfections).
First, the functioning of the market system is based on the spontaneous action of economic regulators. This creates instability in the economy, and the inevitable disproportions are not eliminated immediately. Secondly, when the market environment is uncontrolled, monopolized structures inevitably arise that limit the freedom of competition with all its positive functions, and create unjustified privileges for a limited circle of market participants.
Thirdly, the spontaneous mechanism of the market does not tune the economy to meet many social needs, and does not internally contribute to the formation of funds that go to meet the needs of society that are not directly related to business. First of all, this is the formation of social transfers (pensions, scholarships, benefits), support for healthcare, education, science, art, culture, sports and many other socially oriented areas.
Fourth, the market does not provide stable employment for the able-bodied population and guaranteed labor income. Everyone is forced to independently take care of their place in society, which inevitably leads to social stratification, that is, division into rich and poor, and increases social tension. Market relations create favorable conditions for the manifestation of selfish interests that give rise to speculation, corruption, racketeering, drug trafficking and other antisocial phenomena.