Ramaz Gvelesiani, TSU Economic Policy Georgian-German Institute Director, Perfect Professor
Analyzing of economic policy always includes two aspects to be determined. From the one side, researching theory bases (economic policy theory), and from the other – opponent against transmitting into scientific practice (practical economic policy).
So, economic policy means the whole complex of science and practice.
Economic policy includes as political resolution making activities, as well as theory bases of these activities. It bases on the following disciplines: economic theory, political science (politology), sociology, government and administration law and other sort of complex researches.
Economic policy is a component of general politics. Economic- policy resolutions are importantly affected by political goals and interests, as for instance, creation of European Treasury Union, for common currency releasing, is a really progressive economy step aiming political integration and would be hard to be realized without the strong will. Economic conditions frequently opposite political conditions. Battling against economic power concentration and it` s opposition maintaining competitiveness development (under competitiveness policy frames), is not just economic relevant (market functioneering), but as far as possible existential pre-condition of our democracy. Resolutions making in both spheres demand obligatory of conflicts resolving (balancing society interests). While goals of several politics include equilibration distinctive interests and create every necessary frame- conditions (government system, authority system, parties` system) and institutions (law plenipotentiary, public administration and ect); Economic policy is a component of general politics, directed to the economic resolutions receiving and realization process, and finally influencing on maintain of economic subjects commodity and service providing. Besides, it includes resolutions on economy dealing frames definition and economy activities running regulation. Economy order forming (resolve of coordination problems and property form establishment) is among the basic issues.
Economic policy dealing as practical economic – policy might be explained and understood in the case of general policy complex influence on other spheres. Economic-policy may succeed if basing on economic policy theory cognition. Moreover, theory analyze and its transmitting into practice is always in opposite. Cognition is not obliging us to come to economic policy correspondence arrangements, in the spheres of money, finance, conjunctive or environment protection policy, but may face most important points of economic- policy problems resolve and its directed arrangements providing maintain on the scientific level, and there are a lot of causes of that. Practical economic policy as a general policy sphere submitted several sort of influences and results, rare taken into consideration while economic-policy advices receiving. So it might thereat economic policy goals realization (for instance unemployment reduction), because it` s being in conflict with economy or political aims (for instance, money purchasing capacity stabilizing, state budget consolidation). Goals may be changed in several period of time (for instance money purchase capacity advantage, instead of unemployment level reduction). Material and financial sources sufficiency obliges us making compromises. Team interests and dealing, influence on economic policy will makes difficult science advices inculcation. That is the issue not just of economic unions, professional unions and organization interests, but private interests of economic policy providers. Problem of interests of separate teams has been ignored for long period, by the way of economic policy resolutions making process was considered in the aspect of solid defined – common interest (common prosperity).
There are several views on economic policy separation. We come across as to separations like order and process policy separations are, presenting to be most strong phenomenon, volume and qualitative economic policy. Other sort of separations mention economy goals and activity spheres. At the same time there are conceptions not easing orientation of readers. Just economic policy consumes following conceptions: scientific economy policy, bases of economic-policy or theory of the economic policy. So, we believe dissociating of conceptions is mostly important. Besides, we use whole complex of methodology of problems dissociation.
Economic-policy theory (scientific economic policy) is economy methods of approach description and explanation way characterized, it researches motivations of economic policy, displaying forms and results, analyzes goals, goals dependence and determined prognoses of scheduled or unrealized arrangements concerning effecting on the economy. It ` s task mentions correspondence arrangements presentation and developing of means (economic policy tools) maintaining achievement of practical economic policy goals. But if just these issues existence, differentiation would be very small. Moreover, the issues requires theory cognition progress to be reached, not just being estimated as practical effect criteria.
Economic policy as entire state policy sphere considers exact economic policy arrangements and its institutional backgrounds. Which provides maintain of economic policy providing, determining all wills and influencing factors of economic policy. Practical economic policy is existed economic condition comparing with goals base. Diagnosed deviations influence on provided arrangements` volume and intensiveness. It places complex information and cognition economic condition and trends of possible development on top positions. Political consulting, aiming effect on practical economic policy should submit these requirements. In addition, it basically relays on the results of the economic policy analyze.
Economic policy theory is two spheres separated: general economic policy and special economic policy. General economic policy researches economic policy backgrounds, possessing really huge importance for every sphere of economics. This universal backgrounds include system of society goals and problematic of goals and means.
In the opposite special economic policy concentrates on rising questions related to economy sectors (sector economic policy) or regions (regional policy). Sector economic policy is separate economic subjects and technologies oriented (for instance, manufactory and agrarian policy, trade policy, energy and transport policy). Sector and regional development influencing on economy is the task of structural policy research.
Well – known fact is economic policy final separation. It follows from directly economic policy goals. We brought as an instance money and finance policy, conjunctive and employment policy, incomes and distribute policy, foreign economy and development policy, also environment protection policy. Such sort of definition makes easy all sort economic policies facing.
Order policy and process policy distribution is hugely important in economic literature. Order politics is basically competitiveness rules, “establishment principles” (according to Oycken) based. Structural policy developed in conjunction with order and current policies. That is independent sphere tightly related to left other both spheres of the policy.
Economic order policy aims qualitative frame –conditions forming. It considers whole complex of factors influencing on process of economic importance. Order policy regulates relations between private economic subjects on the following resolutions background. The resolutions are following:
– Coordination gear (decentralized market or central administrating);
– Property order (private or society property);
– Law system (state finance policy constitutional principles, competitive right for market economy dealing inculcation, rate law, taxpaying law, balancing regulations or regulation of staffers` participation in enterprise managing);
– Institution creating (first of all economic-policy provider) and plenipotentiary determination.
Order policy regulates relationship between private economic subjects. It should also distribute functions (tasks) among state and private economic subjects. And the issue rises: which subject of economy is able which task resolving more effectively with its own expanses. The response is effected by society`s goal – system, which is not free from controversy. Interests of resources optimal allocation is in frequent conflict with law principles distribute and its more perfect realization, what is able bringing us to the state tasks and expanses widening (Wagner`s law on generating state expanses).
Order policy resolutions influencing on economy policy goals and means (tools). As for instance, resolution on coordination gear on “market” influencing on private economic subjects (for instance, competitiveness among producers, striving for higher profits, employees and employers autonomy while negotiating concerning rates), also among proper economic subjects and states (for instance, fiscal policy tools use according to situation).
The goals of the process (current) policy includes purpose influence on market processes, wish short term share into state economy under existed order frames. The issue basically mentions macro economic regulation of economy, when micro economic administration remains as prerogative of market`s gear (conformist economic policy of order).
Order and process policy present to be one total, but order policy is much more advantage. These spheres of policy may have crossing points, order policy arrangements move us towards political results of the processes. As, for instance, if working term extension of trade centers, according to the new law, it will present political arrangement of order, providing activates of buyers and challenging process of buyers` inflow, that effects on policy results: as individual regulation of job time, possible amendments making concerning vacancies (part-time and full time positions correlation) and in the opposite: arrangements may provide order` s political causes in policy sphere.
Structural policy presents to be third essential sphere of state influence on economic processes. It aims necessary regional or sector processes bringing to accordance with the assistance of order political and process political tolls. Therefore, politics should be advantage one, which will give possibility sectors (or regions) changing via market forces, under adequate presented order policy frames. Non –direct influence of market economy forces stays in the opposite of direct influence of political resolution providers (interventional sharing). Structural- political arrangements are under the way, as for instance, financial assistance, which should easier adaptate with changed economic conditions. But, there is a damage of money expanding for old structures remaining then for innovation and adapting with new conditions.
Cognition object of economic policy theory presents to be practical economic policy. Besides, activities of economic policy providers are in the heart of it. The providers hugely influence on economy events and the frame – conditions. We basically bordered ourselves with state economic policy aspects. Of course, non-governmental (private) organizations and unions will face attempt influencing on state economic policy and their team interests inculcation. The authority is certainly is not supreme economic policy provider, but it has absolute right on resolutions making. With this point, economic policy is the complex of the society (governmental) aspirations, activities and arrangements, being provided in any exact field or sphere, aiming economic policy goals inculcation via influencing on economic processes tendencies or its frame – conditions determination and bringing to its correspondence way. Following from that, three essential tasks are faced, having to opposite economic policy theory:
– Economic policy theory considers all sort of complex of economy activity, directed to influencing on economic processes (quitting the arrangements also means economic policy, if the counteract is consciously provided), and the background is relations, means (tools) and motives knowledge among the activities.
– Economic policy is directed to “its own” goals launching. Economic policy theory aims these goals explanation and determines valid means for their achievement.
– Economic policy might be entire economy, sector (for instance, agrarian policy) or region (for instance, maintaining regions development) oriented. Importance of international aspects of economic policy gradually increases. For instance, under EU frames or generally, globalization process.
Order and process (current) political issues rising are among top agenda of the economic policy theory researching issues. Such sort of general demands does not give conclusions making possibility on the economic policy success or failure.
Therefore, pretensions to be risen against successful economic policy are elucidated.
Rational economic policy is systematically directed to comprehensive, well deliberated and self thought over goal system, in addition, it comes most close to the society ideal, which is possible while social-economic situation determining.
So, successful economic policy is bearing duty before the goal-system. The goals system should be comprehensive and should not reject distinctive sort of purpose relations. Competitive may be created among different goals. This possible “conflict” should be resolved on compromises base. Distinguish goals may be realized as complimentary usefulness, appearing with next closing to the goal and not marginal shortcoming concerning competitive goals (alternative expanses). The usefulness measuring possibilities are not clear, indeed. Problems creating causes might be several sort of social-economic conditions. Is it really impossible reaching the highest goal if there is no the goal` s will?
One may think, that following of rational economic policy is just illusion. We absolutely share the opinion, and stop on “rational” economic policy imagination. We do need model system, ascertaining us measure factual economic policy. As, for instance, competitive rule might be determinative for order policy or money policy –theory conception oriented.
Pretension against relational economic policy is too high and seems to be absolutely realized because of its complexity. Society purpose system is not just rational influence factors way determined. Estimation process covers its determination. And it makes harder justifiability estimating economic-political resolutions.
Economic policy, as the science first of all should analyze three basic issues:
1. What are the goals of the state economic policy?
What goals and motives is economic policy dealing based?
What are the backgrounds of eligible condition?
What development is most eligible?
2. What does the authority do as economic policy provider?
What is actual economic condition?
What perspectives are faced?
What resolution is the authority taking and why?
3. What means/ tools is used by the authority for the goals realization?
What is the effect of scheduled arrangements and what are the results if nothing happens?
Is there any optimal goal-means relation?
What means should be used, when and what volume?
Economic policy theory does its bit for responding on this and other questions and fulfils the following tasks:
1. Current condition description and explanation, including status- quo prognoses concerning actual condition development, if no arrangements will be realized.
2. Description of eligible condition.
Background should create light imaginations on what exact condition (goals) should be planed. Economic policy basically aims exact definition of goal, content and goal, or interpretation and purpose –system to be possible goal-conflicts (goals consistentions) way checked. So, the background of the rational economic policy is goals qualitatively and volumes determining (goals` operationally).
3. Correspondence means using determination, for current condition equalizing with eligible condition for existed situation equalizing with eligible condition. It also includes influence prognoses (goal`s projecting), when expected result of tools utilization is estimated.
4. Using of tools control and evolution with “improvements” standpoint.
Basic task of positive economic is analyze of current economic condition, including: 1. diagnose (description and explanation of current condition) and also 2. Next development (prognoses) predicting and the finalizing point is 3. resolutions making concerning demand on existing activity.
Diagnose aims description and explanation of existed economic condition (“determination of current condition`s place). So, diagnose, and prognoses as well fulfils two functions: background of economic policy form the one side and serves to the creation of economic science theories and re- checking, from the other side. Diagnose` s gist is importantly depended on the existed information quality. Germany as a rule uses four purpose indicators for whole economic condition diagnose, followed from stability law purpose (constant and moderate generation of economic, price level stability, high level of employment, foreign economy balance). Such sort of description is followed with causes analyze, what brought us to descript economic condition (causes analyze or economic condition explanation). The response should be reached on the request “Why?” that takes place with economic inter –relationship discovery in general and especially empirical regulatory.
While causes analyzing additional sort of problems might be faced:
1. In several spheres (for instance, prosperity, competitiveness and generation theory) there are no bimperical sort theories.
2. In the other spheres (demography – for instance, migration, consumer dealing, as for instance, advertising), there is full base of empirical content, but no one acknowledged theory. Relying on unreal hypotheses can not face the results of the exact researches.
3. In several spheres separate sort of theories competitive (models of hypothesis, for instance, in conjunctive and inflation theories).
While economic condition diagnosing, the prognoses should face its future developing. Empirical re-checking theories were the best for the prognoses` background, but as these sold theories do not submitting all the spheres of economy, the prognoses are often observation and experience based. They deduction way used with hypotheses and frame-conditions (for instance, space – the aspect of the time). Status-quo faces expected economic arrangements developing and the demand on the economic policy activities, also economic policy “sharing into” possesses necessary. And the “influence” in the theory should foresee expected results of the economic policy.