What are the advantages of internal institutions. Institutional economy
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4. External and internal institutions
External institutions Are institutions imposed from outside.
External institutions mb:
1) External rules of conduct - universal prohibitive rules, general laws.
2) purpose-specific directives - prescribe what people must do to achieve certain results (HSE admission rules, maybe!)
3) Procedural rules - rules of conduct for power structures (what they can and cannot do).
Internal institutions - emerging within society:
Agreements are balances in a repetitive coordination game. The rule of behavior R is an agreement if and only if each agent
- follows rule R,
- expects others to follow R
- prefers to follow R if others follow R.
Internalized (learned) rules are learned through habit, through the accumulation of experience. At a certain stage, they cease to be restrictions and are included in the system of preferences. Save on coordination costs and build trust in the community. Such trust is more effective than under implicit contracts, since contracts need to be monitored (public morality).
Customs. Customs and rules of good taste. Violation does not entail organized sanctions, but members of the community are watching everyone. You can earn a bad reputation or be ostracized.
Formalized internal rules - arise in the process of evolution, but then are formalized within the group (for example, the hockey rules).
Internal is better because:
Flexibility, better adaptation to external shocks
External ones are better because:
The expected sanctions are more understandable, there is a greater likelihood of the same interpretation of the rules by all agents, the prevention of discrimination (it is often present in internal ones), the solution of the free-rider problem (for example, literally, on the bus!), The solution to the prisoner's dilemma with inconsistent interaction (reputation does not work)
5. The concept of transaction costs. Transaction and transformation costs
Transaction - "This is not an exchange of goods, but the alienation and appropriation of property rights and freedoms created by society" (Commons).
Availability transaction costs makes transactions more or less economical depending on the circumstances.
Criticism of the neoclassical assumption that exchange occurs without costs led to the introduction of a new concept into economic analysis - transaction costs (Coase, 1930s). Coase used this term to explain the existence of the firm.
Arrow: T. and. - the costs of operating an economic system (like friction in physics).
North: T.I. consist of evaluation costs useful properties the object of exchange and the costs of securing and enforcing rights. These costs are the source of social, political and economic institutions.
In the theories of some economists, i.e. exist not only in a market economy, but also in a planned economy (Chang, Alchian, Demsets).
Chang: in the planned economy T.I. maximum, which determines its inefficiency.
Matthews: "The fundamental idea of \u200b\u200btransaction costs is that they consist of the costs of drafting and concluding a contract ex ante, as well as the costs of supervising and enforcing the contract ex post, as opposed to production costs, which are the costs of actually executing the contract."
Currently T.I. are understood as the costs of the functioning of the system. They arise when individuals exchange their property rights under conditions of incomplete information or confirm them under the same conditions.
Transformation costs - the costs accompanying the process of physically changing the material, as a result of which we get a product that has a certain value (material processing costs, ed, associated with the planning and coordination of the production process in relation to technology).
6. Types of transaction costs and means of their minimization
Paul R. Milgrom (Poul R. Milgrom) and John Roberts (John Roberts) proposed the following classification of transaction costs. This division is rather arbitrary. The authors tried to highlight two sides inherent in the system of transaction costs.
Coordination costs.
1. Costs of defining contract details. Basically, this is a market survey to determine what can generally be bought in the market before you narrow your approach down to anything specific.
2. Costs of identifying partners. This is the study of partners who supply the required services or goods (their location, their ability to fulfill this contract, their prices, etc.).
3. Costs of direct coordination. What does this mean in terms of market exchange? On the collective farm market, these costs are approximately equal to what you get to the market and walk around the rows, i.e. there is no significant induced cost in this case. As for a complex contract, there is a need to create a structure within which the parties are brought together. This structure represents, for example, the interests of the customer and ensures the negotiation process.
Motivational costs (i.e., the costs associated with the process of choosing: to enter or not to enter into this transaction).
4. Costs associated with incomplete information. Limited information about the market can lead to a refusal to complete a transaction, to purchase a good.
5. Costs associated with opportunism. They are especially common within the firm, but they also show up in market contracts. The costs associated with overcoming possible opportunistic behavior, overcoming the dishonesty of the partner towards you, lead to the fact that you either hire a supervisor, or try to find and invest in the contract some additional dimensions of your partner's effectiveness, etc.
Classification transactional costs Douglas North (Douglas North) and Trine Eggertson (Thrainn Eggertson) : (more details - questions 7 and 8)
search activities - search for information
bargaining activities - negotiating
contract making activities - drawing up contracts
monitoring - monitoring
enforcement - enforcement
protection vs 3d parties - protection from third parties.
isolation costs (shirking)
information costs
cost of scale
costs of behavior
Minimization TC :
monitoring (by the principal) or bonding costs by the agent: as TCs themselves, they can reduce the total amount of agency costs (see Jensen, Meckling)
Technological changes: can both lower TC (for example, by introducing new effective methods measurements) and increase them (the emergence of new, more complex goods)
The state introduces a system of measures and weights - greatly reduces the cost of measurement
the establishment and protection of legal norms by the state - reduces the costs of drafting contracts, enforcement of contracts and protection from third parties
vertical integration - allows you to reduce TC associated with investments in specific assets
monetary system - reduces the cost of finding a counterparty with pants, which produces the boots that I need!
It should be noted that taxes are a specific type of transaction costs. The state needs to collect them in order to minimize our costs. In exchange for taxes, the state provides us with transactional benefits: a monetary system, a system of standards, guarantees of personal security and guarantees of property rights, etc.
It is the desire to minimize transaction costs that can explain the emergence of firms and the state.
In this Lecture we will look at four specific institutions such as:
company,
and related problems. Why talk about it? The fact is that these institutions set the framework of the Soviet economy, and we will feel its consequences for another 20-25 years.
Up to 80% of the fixed assets that are used by today's enterprises were created under Soviet rule. During the same period, it grew to 70% of workers who work now, and to 50% of workers who will work in 10 years. Their economic, legal, technological culture was formed in the conditions of the Soviet-type economy. Once upon a time the classics of Marxism spoke of the birthmarks of capitalism. We can now talk about the birthmarks of socialism.
In this course, we have touched on the peculiarities of the Soviet economy, the socialist economy, in one way or another. Note that the use of the word "socialist" in this context is not entirely correct. "Socialism" is usually interpreted (which is more sensible) as a system of equalizing redistribution of the results achieved by private owners. Moreover, the word "socialism" must be used more carefully, not only because socialism necessarily presupposes the socialization of the means of production, but also because, in particular, that socialism as an economic system aimed at equalizing consumption, a person's opportunities to make a career is to a much greater extent achieved by market mechanisms and market economies (as evidenced by the successful experience of a number of European countries) than was achieved by the Soviet Union. Many dissidents quite rightly accused our system of being, in fact, not socialist, but oligarchic, and the difference in opportunities for our oligarchs and ordinary mortals is about the same or even more significant than that of representatives of big business and ordinary mortals in the West.
- 21.4. Soviet socialist model of state management of the economy
- 23.4. Soviet socialist model of state management of the economy
institutions that regulate the activities of business entities and relations between them and implement economic policy at the sectoral, regional, national, interstate and supranational levels. The subject of the world economy can be both an individual and a legal entity. In the first case, we mean an individual entrepreneur, in the second, commercial organizations.
the institutes that created the foundations of scientific knowledge for the industry found themselves in a difficult situation associated with the general crisis of state scientific organizations. Underfunding of fundamental and applied research, aging of scientific equipment, loss of many scientific schools - these are the common and still unsolved problems of many state institutes of metallurgy. Large companies of traditional
institutions (banks and insurance companies), on the basis of the State Bank of Russia, the People's Bank was created. Started in 1918. civil War essentially liquidated the credit system, since in the absence of commodity-money relations, the credit lost its significance. This confirms the fact of the merger in those years of the People's Bank with the Narkomfin (Ministry of Finance). The only source of income in the country
institute of jurisdiction: Chudinovskikh K. A. Subordination in the system of civil and arbitration procedural law: author. dis. ... Cand. jurid. sciences. Ekaterinburg, 2002.S. 13-14. * (14) See: Yakovlev V.F. Civil law method of regulation of public relations. Sverdlovsk, 1972.S. 151-152. * (15) For more details see: Osipov Yu.K. Legal regulations governing
institutions of democracy. The National Assembly, and later the People's Tribunate, did everything possible to protect citizens from abuse of power. Despite the dominant position of the Senate, the state life of the republic mainly ensured the urgency of the powers of officials, their accountability to the people's assembly, collegial structure government agencies... Merit of the roman
institutions of civil society and the formation of a system of regulation of social and labor relations on the basis of social partnership are interconnected and complementary processes. The real weakness of the trade union movement in Russia gave rise to a very curious and interesting type of social partnership - "the situation of a special role of the state in the system of social partnership." Calling
institutes. The same institutions, forms of business and management can be very effective in some conditions and completely useless and even harmful in other conditions. Therefore, in the implementation of economic reforms, one should in no way be guided by the direct copying of the models that have developed in other countries. The goals of economic transformation should not include performance components
institutions and instruments of state administration can be partly attributed to state regulation of the economy, while in their other part these are instruments not of regulation, but of direct control. For example, the collection by the state of taxes and tax payments from taxpayers is direct, direct government in the form of coercion. In the same time
institutions and planning tools applicable in the conditions of a market economic system that do not contradict the market principles of economic management. According to the above considerations, there is reason to assert that the system of state planning of a market economy is based on the following principles: 1) centralized planning across the entire economy of the country is reduced to predominant
institutions that allow for regulation in the interests of the development of production that is beneficial for all participants and the state itself. Let's highlight the main directions of state influence on the manufacturing sector of the economy in the conditions of market relations. The general line of action of the state is to pursue a structural policy, which in relation to the
In the economic literature, there are two types of institutions:
* External - establishing the basic rules in the economic system that ultimately determine its nature (for example, the institution of property);
* Internal - which make transactions between entities possible, reduce the degree of uncertainty and risk, and reduce transaction costs (enterprises, types of contracts, payment and credit funds, means of accumulation).
Therefore, the study of institutions, like other complex economic phenomena, must begin with their classification. Let us consider in more detail the typology of institutions depending on their functional role in the economy. This classification includes two types of institutions:
* system (or external)
* local organizational (internal).
Systemic are the institutions that determine the type of economic order, that is, the dominant type of economic system. These institutions establish the basic rules of economic activity, therefore they include not only purely economic rules and norms, but also political and ethical ones, without which the effective functioning of the entire economic system is impossible. An example of systemic institutions is the institutions that specify and protect property rights, determine the procedure for making and changing economic decisions, norms of economic ethics, etc.
Local organizational institutions are institutions that structure interactions associated with the conclusion of transactions, both in the open market and within organizational structures. Institutions such as, for example, stock and commodity exchanges, banks, firms, not only make transactions possible between various economic entities, but also reduce the degree of uncertainty and risk, and help reduce transaction costs. The functioning of such institutions is associated with the activities of related organizations, which creates a dichotomy.
The division of institutions into systemic and local-organizational makes it possible to deepen the analysis of institutional equilibrium. Institutional "markets" of the above two types of institutions are formed and operate separately. This does not mean that the formation of systemic institutions does not affect the functioning and selection of local organizational institutions and vice versa. By analogy, their interaction can be compared with the benefits of higher and lower orders by K. Menger. Consequently, systemic institutions are goods of a higher order, and local-organizational ones are of a lower order.
The difference between external institutions as fundamental prerequisites for a market economy and internal institutions created by corporations in the course of their development seems to be very important, especially for an economy in transition. External institutions form a set of fundamental norms and rules on the basis of which the implementation of a market economy is possible. These are the institutions that guarantee and protect property rights, ensure responsibility, freedom and obligation to fulfill contracts, constitute the basis of a market economy, while being at the same time derivative elements of a general legal democratic and free state order.
Within this given framework, numerous directly market (internal) institutions arise, which make possible connections, transactions between entities, reduce the degree of uncertainty and risk, that is, they represent forms of adaptation of business to external institutions. Their formation went from bottom to top and continued long time, being tested for strength, efficiency and compliance with the interests of business entities. The functioning of internal institutions is constantly carried out under double control: legal - from the state - and economic - from the market.
All these institutions are combined common features:
* they are typical for the system of division of labor;
* they operate on the basis of the principle of contractual relations.
Systemic institutions mean institutions that determine the type of economic order. An example of systemic institutions are institutions that determine the procedure for making and changing economic decisions, norms of economic ethics, etc. Local organizational institutions are institutions that structure interactions associated with the conclusion of transactions, both in the open market and within organizational structures. This category includes such institutions as, for example, commodity exchanges, credit and financial and investment and other institutions.
Discipline: Economy
Type of work: Coursework
Topic: External and internal institutions of the economy
Introduction.
An individual's economic actions do not take place in an isolated space, but in a certain society. And therefore it is of great importance how society will react to them. Thus, deals that are acceptable and profitable in one location may not necessarily be worthwhile, even under similar conditions in another. An example of this is the restrictions imposed on the economic behavior of a person by various religious cults.
To avoid matching the set external factorsinfluencing the success and the very possibility of making this or that decision, within the framework of the economic and social orders, schemes or algorithms of behavior are developed that are most effective under these conditions. These schemes and algorithms, or matrices of the behavior of individuals, are nothing more than institutions.
The purpose of this work is to examine the internal and external Soviet and modern economic institutions.
Give a definition to the concept of "institution";
Find out which institutions are called external, which are internal;
Consider Soviet economic institutions;
Consider modern economic institutions;
Draw conclusions on the material under study.
In the course of the research, we used the works of domestic and foreign authors on economics, institutional economics, encyclopedias, as well as data posted on the Internet.
External and internal institutions of the economy.
To begin with, it is necessary to determine what constitutes an institution, in particular, an economic institution. An institution is a set of roles and statuses designed to meet a specific need.
Definitions of institutions can also be found in works on political philosophy and social psychology. For example, the category of institution is one of the central in the work of John Rawls "The Theory of Justice". In economic theory, the concept of an institution was first included in the analysis by Thorstein Veblen.
Institutions are a common way of thinking about the particular relationship between society and the individual and the particular functions they perform; and the system of society's life, which is composed of the totality of those acting at a certain time or at any moment in the development of any society, can, from the psychological point of view, be characterized in general terms as a prevailing spiritual position or a widespread idea of \u200b\u200bthe way of life in society.
Institutions are dominant and highly standardized social habits.
Institutions are rules, mechanisms that enforce them, and norms of behavior that structure repetitive interactions between people.
It can also be said that institutions are formalized rules and non-formalized norms that structure interactions between people within economic systems (1).
Institutions regulate access to the legitimate use of rare and valuable resources and define the principles of this access. They determine what these or those interests are and how they should be implemented, taking into account the fact that the very scarcity of these resources, which makes it difficult to access them, constitutes the basis for rivalry and even conflicts in the struggle for their possession. Institutions regulate (structure and consolidate as socially recognized practices) such a struggle between different interests. They define the rules of the game, as well as the goals that can be achieved in this game, but not the moves that players must make during the game, while remaining within an institutionally defined space of opportunities, choices and incentives. Institutions define ways in which resource scarcity conflicts can be mitigated and resolved.
The functioning of institutions is determined by the nature of their activities, cultural traditions and many other factors, among which efficiency is far from the determining parameter. Changes often happen to them because the values \u200b\u200bthat determine their existence change, or they themselves become incompatible with other values \u200b\u200band institutions, but not for reasons of efficiency.
In the economic literature, there are two types of institutions:
External - establishing basic rules in the economic system that ultimately determine its nature (for example, the institution of property);
Internal - which make transactions between entities possible, reduce the degree of uncertainty and risk and reduce transaction costs (enterprises, types of contracts, payment and credit funds, accumulation funds).
Therefore, the study of institutions, like other complex economic phenomena, must begin with their classification. Let us consider in more detail the typology of institutions depending on their functional role in the economy. This classification includes two types of institutions:
System (or external)
Local organizational (internal).
Systemic are institutions that determine the type of economic order, i.e. dominant type of economic system. These institutions establish the basic rules of economic activity, therefore they include not only purely economic rules and norms, but also political and ethical ones, without which the effective functioning of the entire economic system is impossible. An example of systemic institutions is the institutions that specify and protect property rights, determine the procedure for making and changing economic decisions, standards of economic ethics, etc. (2)
Local-organizational are the institutions that structure the interactions associated with the conclusion of transactions both in the open market and within organizational structures. Such institutions as, for example, stock and commodity exchanges, banks, firms, not only make transactions between different economic entities possible, but also reduce the degree of uncertainty and risk, and contribute to lower transaction costs. The functioning of such institutions is associated with the activities of related organizations, which creates a dichotomy.
The division of institutions into systemic and local-organizational allows us to deepen the analysis of institutional equilibrium. Institutional “markets” of the above two types of institutions are formed and operate separately. This does not mean that the formation of systemic institutions does not affect the functioning and selection of local organizational institutions and vice versa. By analogy, their interaction can be compared with the benefits of higher and lower orders in K. Menger. Consequently, systemic institutions are goods of a higher order, and locally organizational ones are lower.
The difference between external institutions as fundamental prerequisites for a market economy and internal institutions created by corporations in the course of their development seems to be very important, especially for an economy in transition. External institutions form a set of fundamental norms and rules on the basis of which the implementation of a market economy is possible. These are the institutions that guarantee and protect property rights, ensure responsibility, freedom and obligation to fulfill contracts, constitute the basis of a market economy, while being at the same time derivative elements of a general legal democratic and free state order.
In this specified framework, numerous directly market (internal) institutions arise that make possible connections, transactions between entities, reduce the degree of uncertainty and risk, that is, they are forms of adaptation of management to external institutions. Their formation proceeded from the bottom up and lasted a long time, being tested for strength, efficiency and compliance with the interests of business entities. The functioning of internal institutions is constantly carried out under double control: legal - from the state - and economic - from the market. (3)
All these institutions are united by common features:
1) they are characteristic of the system of division of labor;
2) they act on the basis of the principle of contractual relations.
So, by systemic institutions we mean institutions that determine the type of economic order. An example of systemic institutions is the institutions that determine the procedure for making and changing economic decisions, standards of economic ethics, etc.
Local-organizational are the institutions that structure the interactions associated with the conclusion of transactions both in the open market and within organizational structures. This category includes such institutions as, for example, commodity exchanges, credit and financial and investment and other institutions.
Institutes of the Soviet economy.
It is known that in the Soviet economic system there were no mechanisms and institutions that are the main subject of study of Western economic science: competitive (albeit imperfect) markets, currency exchanges, many financial instruments, etc. Russian economists had to develop separate blocks of economic theory, and they did, despite the ideological press. Consider a few specific institutions of the Soviet economy and related problems.
These institutions set the framework for the Soviet economy, and the country will feel its consequences for another 20-25 years. Up to 80% of the fixed assets used by today's enterprises are created during the Soviet era. In the same period, it grew to 70% of the workers who work now, and to 50% of the workers who will work in 10 years. Their economic, legal, technological culture was formed in the Soviet economy. So, we will consider such institutions as: party, Gosplan and
company.
In the literature, both the Soviet people, the members of the CPSU, and the Politburo were positioned as owners in the Soviet-style economy. Most likely, this is not so. It is enough to recall how the elections to party organs were held in order to abandon the idea that the Soviet people were the owners. The political structure that existed in the USSR opened the way to the top of the bureaucratic pyramid only to people who were members of the party. This was an option of 17 million party members. 17 people could enter the Politburo, i.e. one person per million. But at least they did not choose from non-partisans; only party members had a chance to enter. On the other hand, it’s not possible to reduce everything to the Politburo, for members of the Politburo could be re-elected if they lost the support of the secretaries of the regional committees, members of the Central Committee or obviously did not fulfill the tasks assigned to them, etc. Thus, it was a totalitarian self-sustaining system, and since it was self-selecting, interest has always focused on the top. There are a number of serious works on this subject. Svetozar Peyovich, the largest institutionalist who wrote about the Soviet economy in 1970-80, considers the Politburo the supreme owner, because its members carried some liabilities for their decisions. However, the fact that the Politburo was the final authority that made the decisions does not mean that its members were the real owners.
The members of the Politburo did not exist as real owners - they were very significantly limited in their decisions and could not go beyond the framework of fairly strict consumption standards. Limited opportunities the satisfaction of personal interest, material consumption for themselves and their families, which were possessed by members of the Politburo, clearly demonstrate that they were not owners. They were top executives, and they were clamped as tightly as the party bureaucrats subordinate to them, if not more. The owner is free in relation to the subject of his property, and members of the Politburo were maximally not free. Mutual responsibility is a very accurate description of our existing system.
The hypothesis was widely discussed (and it is closest to the truth) that the nomenclature was the collective owner in the USSR. This point of view was held, for example, by M.Voslensky and M.Jilas. The nomenclature included all the leaders included in the administrative and party systems of subordination (i.e., about 1 million people). Party organizations nominated and approved their candidacy. All personnel movements were carried out from the corresponding department or the Central Committee, or regional committees, or district committees of the CPSU. Controlling personnel appointments, the party, in this way, controlled the replenishment of the "new class" itself.
The Soviet-style economy is often compared with the “Asian” mode of production, which also had a pyramid of officials (although the king was at the top, but in many states he became a ritual victim after some time).
It can be assumed that the Soviet system is a unique system in which there was no sovereign possessor of free choice in relation to objects of public property.
There is a fundamental, from the point of view of economic theory, position: a complete unconditional private owner is always and everywhere needed; if the interests of the private owner are not protected, then with any distribution of property, the system will be economically inefficient.
The classics of Marxism believed that commodity relations in society are harmful because they stimulate egoism, and considered them from a purely technological point of view, believing it possible to collect all the resources and all information in the center, systematically calculate and distribute them in an optimal way.
The idea of \u200b\u200ba “single factory” dominated our political economy. In the 1960s and 70s the large mathematicians who worked at the Central Economics and Mathematics Institute (among which was, for example, S. S. Shatalin) created the theory of the optimal functioning of the socialist economy - SOFE - which suggested the possibility of optimizing all flows at the level of the national economy, which he presented as “ united factory. " Naturally, this was only a theoretical model; in practice, it was not applicable. In reality, there are three types of transaction costs that prevent society from functioning as a single factory: measurement costs; the costs of acquiring and transmitting information; agency costs. But nevertheless, public property, which acts as the property of a socialist state, had to find some mechanisms of implementation, and state planning became such a mechanism.
The Gosplan was the center in which all the information about the production capabilities of all enterprises was collected, and where forecasts were made, i.e. several resource allocation strategies were calculated to meet specific needs. Thus, a unique experiment was conducted in the USSR for 70 years. In fact, it started from the time of war communism, although the State Planning Commission itself, as an institution that collects information and gives commands to places, arose about five years later, in the early 1920s. This experiment had limitations, since there was no market in which resources would be valued.
All that the Gosplan could do and honestly do, because many brilliant specialists worked there, was to collect information and plan the distribution of resources in the amount of 2,000 items. In the State Planning Commission, about 2,000 responsible employees were engaged in this. In addition, the State Planning Commission gave tasks to approximately 50 line ministries, which detailed them. The product range, which was directly disposed of by the ministries, amounted to 38,000 items. 2000 + 38000 \u003d 40,000 names of products in physical terms, described with a specific standard - this is the maximum that the Soviet system was capable of at the height of its information and computational capabilities. The system of material balances with more than 2,000 positions - a huge table where it was shown in dynamics which industry is heading from — was a huge achievement in Soviet economic science. The successor of this scientific school is the Institute of Economic Forecasting. However, in spite of this amazing planning system, its very significant negative side should be noted.
With 40 thousand planned (passed through 50 thousand officials) product nomenclature, its real nomenclature in 1970 It was by no means 40 thousand, but somewhere around 1-1.5 million. Those. The Gosplan captured and aggregated only 4% of the real product range, even if it amounted to 1 million items. Such coarsening of assessments, teams, strategies led first of all to our lag in the system of technological tolerances for products.
It is the limited computing ability that explains the presence of 2 thousand of the State Planning Commission and 40 thousand of the total product names in the country.
So, the planning system had its drawbacks, risks. The planning system for the enterprise very often failed. The enterprise received both the production plan and the suppliers, and the suppliers of the company were determined rigidly, there were no alternatives. And if the supplier of this enterprise disrupted supplies, then what? Those. the system of in-kind planning, in-kind designation of production plans and suppliers for each enterprise was extremely fragile, which constantly led to some breakdown of it — to disruption of plans.
The enterprise was a separate part of the public property. The creation of a separate enterprise, in contrast to the idea of \u200b\u200ba “single factory”, is a huge step towards realities, which was partially made under I.V. Stalin, and the company received the basic rights under A.N. Kosygin. Thus, two stages of the existence of Soviet enterprises can be distinguished. At first it was an enterprise of the Stalin type, to which everything was strictly planned ...
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