MARKET ECONOMY OR MIXED ECONOMIC SYSTEM?

By Dr. Revaz Gogokhia

Operating in developed countries system in economic literature is known as market economy that is untrue, to our opinion. Incorrect is also the assumption that modern economic system is “mixed economic system” and social market industry in economic contents is a kind of mixed economy.

We think that social market industry and mixed market economy do not even exist, as market economy is not independent economic system on the one side and on the other, market, with its nature, is non-social. It acquires sociality as the kernel of mixed system with the help of state regulations.
Should also be mentioned that despite state regulation carries an important part in effective operation of mixed economy, it is unable to change competitive market organization. Even the regulation process is different with nature – it is a dialectical contradicting unity of balance and misbalance.
To solve successfully the problems of common meaning, State and private sectors play the same role in mixed economy, as all of the economic systems are mixed in each other (S. Fisher etc.). Thereof, modern economic system is mixed economic system that involves state and private sectors undividedly. Otherwise, it’s neither state, nor private economic system, but mixed one.
Mixed economy implies optimal concordance of state and market regulations of state proportionality. Right that is the idea of mixed economy. So we may now conclude that market economy is the kernel of mixed economic system and not the one acting and functioning independently.
The problem of correlation between mixed economy in general and free market is multilateral problem that is unpredictable. All is up to specification of each county. Namely, on the level of development and the circle of socio-economic problems, those exist there in current period. For example, in the formation process of mixed economic system, in the smallest period, fantastically succeeded such East Asian countries as Japan, Hong-Kong, Singapore, South Korea, Taiwan, Thailand, etc. They have succeeded because of discarding monetarism first of all, rejecting also total interventions by state in the economic processes and policy in general. In return for those, they have coincided adroitly the mechanisms of state regulations and free market. Naturally, it does not mean that there is a pattern called Asian Economy that may be fitting to every other. The thing is that Hon Kong gave priority to free flow of market forces, Japan and South Korea actively used state regulation mechanism that is correctable, in accordance with shifted socio-economic conditions. Despite all differences, there were some things unifying all of them: low rate of inflation, huge investments in education, flood of leading technologies from abroad, high level of freedom and wide open doors.
Besides all highlighted above, we’d italicize the environment that in recent times, mixed economic system acquired the social direction. At this sight, significant patterns are Swedish, German and Japanese ones of mixed economy. But important here is that even the closest to liberal American version of mixed economy is earning the character of social safety. Moreover, today US have formed the principally new types of social relations: social requirements important for state sector of economy, where dominates social property and social acquisition of work results that has exceeded private sector with its volume. Today’s social expenditures in US have noticeably excelled all other federal expenses. However, private capital could not run itself out in this sphere. Business there satisfies all individualized requirements by masses, which is caused by humanization of business. Besides, businesspersons claimed that the only source for endless possibilities in the universe is human and decided to involve people in production and shareholding. Right because of these phenomenal occurrences, US economy today is factually run by middle layer, or, in other words, socialization process of society has already been implemented, which, in contrary to many wises, does not require revolution and overturn.
Antihuman thesis – “prices rise”, does not effect economies like US and Japan much: more prices advance, more the wages and social benefits become with the help of federal bodies. It does mean that population there does not even suffer with the problem of price advance.
The richest experience of west in building the socially orientated mixed economy indicates to the fact that new can’t be built without destroying old. Therefore, important for humanity is not the antagonistic contradiction, but unity and, on the background of that, movement to socialized humanity, which is the basis for world unity.
Should also be mentioned that social orientation of mixed economy immanently implies social responsibility that is expressed with responsibilities of population for the results by economic developments. It is the most important question of formation of entire economic system, which acquires the certain actuality in transition period, as ordering economy could not establish the effective system for gaining the social wealth.
Expansion of social responsibilities by population in economic progress and economic effectiveness, as world experience shows, is achievable: first, when economic and social being of population improves on the basis of their economic activity; second, social responsibility becomes implemented with impartial differentiation of revenues and consumption, on the background of population’s productive activity; third, with optimization of expenses by state and entrepreneurs allocated for social purposes.
Today, many researchers and policymakers speak about that Georgia as well as other post-soviet countries should give priority to the construction of market economy and market system in general.
Yes indeed, if not count some exceptions: the army, policy and school, the most of economic life flows without state interventions and regulations and it is the real power of market economy. But do not think that state is the successor of past. State carries a huge part with creating the safe atmosphere that allows markets to prosper and expand? prosperity of today’s economy depends on maintenance of correct arrangement of demanded equilibrium and responsibilities.
As many researchers in west consider, there is no “net” market economy in today’s world. Moreover, this kind of economy had never existed. Coming out of all highlighted above, we may conclude that, for today, Georgian economy in transition faces the cardinal task – formation of market system as a basis for new economy and creation of considerable macroeconomic mechanisms for regulating the economy. Accordingly, assumption that catastrophic state of Georgian economy is caused by transition from social system to free market, that Georgia had already established the market system and many more are incorrect.