LESSON 5

1. E>R>E phrases (to be written out from the English text) for translation by ear.

Chapter 1: ECONOMICS AND THE ECONOMY

The Role of the Market

Markets bring together buyers and sellers or goods and services. In some cases, such as a local fruit stall, buyers and sellers meet physically. In other cases, such as the stock market, business can be transacted over the telephone, almost by remote control. We need not go into these details. Instead, we use a general definition of markets.

A market is a shorthand expression for the process by which households’ decisions about consumption of alternative goods, firms’ decisions about what and how to produce, and workers’ decisions about how much and for whom to work are all reconciled by adjustment of prices.

Prices of goods, and of resources, such as labour, machinery and land, adjust to ensure that scarce resources are used to produce these goods and services that society demands.

Much of economics is devoted to the study of how markets and prices enable society to solve the problems of what, how, and for whom to produce. Suppose you buy a hamburger for your lunch. What does this have to do with markets and prices? You chose the cafe because it was fast, convenient and cheap. Given your desire to eat, and your limited resources, the low hamburger price told you that this was a good way to satisfy your appetite. You probably prefer steak but that is more expen­sive. The price of steak is high enough to ensure that society answers the 'for whom' question about lunchtime steaks in favour of someone else.

Now think about the seller's viewpoint. The cafe owner is in the business because, given the price of hamburger meat, the rent and the wages that must be paid, it is still possible to sell hamburgers at a profit. If rents were higher, it might be more profitable to sell hamburgers in a cheaper area or to switch to luxury lunches for rich executives on expense accounts. The student behind the counter is working there because it is a suitable part-time job which pays a bit of money. If the wage were much lower it would hardly be worth working at all. Conversely, the job is unskilled and there are plenty of students looking for such work, so owners of cafes do not have to offer very high wages.

Prices are guiding your decision to buy a hamburger, the owner's decision to sell ham­burgers, and the student's decision to take the job. Society is allocating resources - meat, buildings, and labour - into hamburger pro­duction through the price system. If nobody liked hamburgers, the owner could not sell enough at a price that covered the cost of running the cafe and society would devote no resources to hamburger production. People's desire to eat hamburgers guides resources into hamburger production. However, if cattle contracted a disease, thereby reducing the economy's ability to produce meat products, competition to purchase more scarce supplies of beef would bid up the price of beef, hamburger producers would be forced to raise prices, and consumers would buy more cheese sandwiches for lunch. Adjustments in prices would encourage society to reallocate resources to reflect the increased scarcity of cattle.

The Command Economy

To highlight the role of markets and prices, we now ask how resources might be allocated if markets did not exist. One example is a command economy.

A command economy is a society where the government makes all decisions about pro­duction and consumption. A government planning office decides what will be pro­duced, how it will be produced, and for whom it will be produced. Detailed instruc­tions are then issued to households, firms, and workers.

Such planning is a very complicated task, and there is no complete command economy where all allocation decisions are undertaken in this way. However, in many countries, for example those in the Soviet bloc, there was a large measure of central direction and planning. The state owned factories and land, and made the most important decisions about what people should consume, how goods should be pro­duced, and how much people should work.

To appreciate the immensity of this task, imagine that you had to run by command the city in which you live. Think of the food, clothing, and housing allocation decisions you would have to make. How would you decide who should get what and the process by which these goods and services would be produced? Of course these decisions are being made every day in your own city, but chiefly through the allocative mechanism of markets and prices.

The Invisible Hand

Markets in which governments do not intervene are called free markets.

Individuals in free markets pursue their own interests, trying to do as well for themselves as they can without any government assistance or interference. The idea that such a system could solve the what, how, and for whom problems is one of the oldest themes in economics, dating back to Adam Smith, the famous Scottish philosopher-economist whose book The Wealth of Nations (1776) remains a classic. Smith argued that individuals pursuing their self-interest would be led 'as by an invisible hand' to do things that are in the interests of society as a whole.

Suppose you wish to become a millionaire. You play around with new ideas and invent a new good, perhaps the television, the motor car or the hand calculator. Although motivated by our own self-interest, you make society better off by creating new jobs and opportunities. You have moved society's production possibility frontier outwards - the same resources now make more or better goods - and become a millionaire in the process. Smith argued that the pursuit of self-interest, without any central direction, could produce a coherent society making sensible allocative decisions.

This remarkable insight has been studied at length by modern economists. In later chapters, we discuss in greater detail the circumstances in which the invisible hand works well. We also show that there are circumstances in which it does not lead society to allocate resources efficiently. Some government intervention may then be justified.

The Mixed Economy

The free market allows individuals to pursue their self-interest without any government restrictions. The command economy allows little scope for individual economic freedom since most decisions are taken centrally by the government. Between these two extremes lies the mixed economy.

In a mixed economy the government and private sector interact in solving economic problems. The government controls a signifi­cant share of output through taxation, transfer payments, and the provision of goods and services such as defence and the police force. It also regulates the extent to which individuals may pursue their own self-interest.

In a mixed economy the government may also be a producer of private goods such as steel or motor cars. Examples of this in the UK include the nationalized industries such as railways and coal.

Most countries are mixed economies, though some are close to command economies and others are much nearer the free market economy. Figure 1-4 illustrates this point. Even the Soviet Union allows consumers some choice over the goods they buy. Private agricultural markets co-exist with centrally organized 'col­lectives'. Conversely, even countries such as the United States which espouse more enthusiastic­ally the free market approach, still have substantial levels of government activity in the provision of public goods and services, the redistribution of income through taxes and transfer payments, and the regulation of markets.

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David Begg, Stanley Fischer, Rudiger Dornbush

Дэвид Бегг, Стенли Фишер, Рюдигер Дорнбуш

2. R>E phrases (to be written out from the Russian text) for translation from page («измы», « чистый капитализм», « командная экономика»).

Глава 2: введение в проблему экономии «измы»

Следует осознать, что для решения пробле­мы экономии общество может использовать множе­ство институциональных структур и координацион­ных механизмов. Вообще говоря, индустриально развитые страны мира в основном различаются по двум признакам: 1) по форме собственности на сред­ства производства и 2) по способу, посредством которого координируется и управляется экономи­ческая деятельность. Рассмотрим главные черты двух «полярных» моделей экономи­ческих систем.

Чистый капитализм

Чистый капитализм, или капитализм эпохи свободной конкуренции (laissez faire), характеризуется частной собственностью на ресурсы и использованием си­стемы рынков и цен для координации экономи­ческой деятельности и управления ею. В такой системе поведение каждого ее участника мотиви­руется его личными, эгоистическими интересами; каждая экономическая единица стремится макси­мизировать свой доход на основе индивидуального принятия решений. Рыночная система функциони­рует в качестве механизма, посредством которого индивидуальные решения и предпочтения предают­ся гласности и координируются. Тот факт, что товары и услуги производятся, а ресурсы пред­лагаются в условиях конкуренции, означает, что существует много самостоятельно действующих по­купателей и продавцов каждого продукта и ресурса. В результате экономическая власть широко рас­сеяна. Защитники чистого капитализма утверждают, что такая экономическая система благоприятствует эффективности использования ресурсов, стабильно­сти производства и занятости, быстрому экономи­ческому росту. Вот почему здесь очень мала или вовсе отсутствует необходимость в правительствен­ном планировании, в правительственном контроле и вмешательстве в экономический процесс. В самом деле, сам термин laissez faire в приблизительном переводе означает «пусть идет, как идет» (let it be) то есть пусть правительство не вмешивается в экономику. Резон здесь в том, что такое вме­шательство подрывает эффективность функциони­рования рыночной системы. Поэтому роль правительства ограничивается защитой частной собственности и установлением надлежащей правовой струк­туры, облегчающей функционирование свободных рынков.

Командная экономика

Полярной альтернативой чистому капитализму яв­ляется командная экономика, или комму­низм. Эту систему характеризуют общественная собственность практически на все материальные ре­сурсы и коллективное принятие экономических ре­шений посредством централизованного экономичес­кого планирования. Все крупные решения, касающи­еся объема используемых ресурсов, структуры и распределения продукции, организации производ­ства, принимаются центральным плановым орга­ном. Предприятия являются собственностью госу­дарства и осуществляют производство на основе государственных директив. Иными словами, произ­водственные планы устанавливаются плановым ор­ганом для каждого предприятия, причем план конк­ретизирует количество ресурсов, которое должно быть выделено каждому предприятию, чтобы оно могло выполнять свои производственные задания. Рабочие закреплены за профессиями и даже, быть может, распределяются согласно плану по геогра­фическим районам. Соотношение в национальном продукте средств производства и средств потре­бления устанавливается централизованно, таким же образом осуществляется и распределение потреби­тельских товаров среди населения. Средства про­изводства распределяются между отраслями на основании долговременных приоритетов, устанавливае­мых центральным плановым органом.

К.Р. Макконнелл, С.Л.Брю C.R.McConnell, S.L.Brue