Interesting social sciences/Economics

From Wikibooks, open books for an open world
Jump to navigation Jump to search

Social control in sphere of economy[edit]

Any production demands by creation of small groups and the organizations of people. But any group or the organization is constructed on some form of social control. Four kinds of social control have been applied in the history of economy consistently. Moral control was applied under primitive‐communal formation in economy, armed control (corporal punishments), was applied under slaveholding formation, administrative control was applied under feudal formation, economic control was applied under capitalist formation. Economic control in the area to economy has been cancelled by the state under socialism, instead that the economic organizations have been constructed on administrative control with help of the system of state planning and economic organizations have been constructed on the armed control in the system of Gulag.

The system of state planning and distribution of goods by cards and coupons has been applied instead of the market competition under socialism . Regress in the field of social control in the sphere of economy has resulted that has led to disappearance of stimuluses to work and growth of dependant moods. Market cancellation (the prohibition of the economic conflicts) have resulted to backwardness of socialist economy in comparison by market economy of the countries of the West, to falling of competitiveness of production because of its poor quality, to total deficiencies. Reason of crises of socialist command economy consists in that. The reforms begun at the first President of Russia Boris Yeltsin have allowed to return to the market competition and economic stimuluses in economy though this return cost to Russia of the considerable victims.

Market competition as an economic conflict[edit]

Market competition as economic conflict

The market competition is an economic conflict for the right of receiving of economic resources.

Examples of the competition:

  • between hired workers with different level of of qualification and experience for a free vacancy;
  • between firms which offer to buyer by production of different price and quality;
  • between buyers, for example, at an auction which try to buy the same goods and offer higher price for goods in comparison with other buyers.

Thus, the positive value of the competition consists that the competition forces by hired worker to improve own qualification, the competition forces by private firm to reduce by prime cost and to increase by quality of production, , the competition forces by the buyer to raise own income and to offer the highest price for goods. Russian firms were shocked by the competition from foreign producers after introduction of market prices in 1991, but then russian firms have learned to make goods not worse than these foreign producers. Russian goods is better on quality then Chinese goods, and russian goods is cheaper at the price then European and American goods. The Russian consumers and producers have benefited from this ratio.

Degree of suitability of personality types for a role of the chief and style of management by collective[edit]

We can't choose by chiefs, and we can adapt to style of their management only. Each personality type has own degree of suitability for a role of the chief and own style of management by collective. What bad and good inclinations does each personality type have under performing of this role of chief? What does the personality type approaches for a role of the chief best of all?

The psychologist as the chief has inclination to create a warm microclimate in collective, but the psychologist is the whimsical and unpredictable tyrant, like such psychologists as Ivan the Terrible, Joseph Stalin, Adolf Hitler, Lavrentiy Beria, Caligula or Nerón. The psychologist is inclined to get and change by mistresses on service and to become attached with courtings to own subordinates of an opposite sex. The whole harem is gathered of such mistresses sometimes. Psychologist is extremely dangerous in the behind the scene fight, in this art psychologist surpasses other personality types, psychologist surpasses even speakers. Psychologist knows in the behind the scene fight perfectly by such methods as playing of intrigues, an anonymous denunciation in higher instances, providing sexual services in exchange for a possibility of career development. The main shortcoming of the psychologist as the chief is a total absence of pragmatism in affairs and total absence of financial calculation when the psychologist doesn't want to notice that subordinates steal from him near by, as a result such psychologist is put on trial for waste or the organization led by psychologist comes to bankruptcy. The psychologist isn't able to punish often, psychologist isn't able to apply "stick" therefore chaos and disintegration comes in the organization when the subordinated speakers begin to order by chief-psychologist. For example, I had to observe a case at one of schools where the psychologist worked as the director where chaos with discipline has led to the fact that pupils have begun to beat with glasses with impunity, to be rude to teachers, to smoke drugs directly in the schoolhouse. Such bad situation with discipline has led to deterioration of the contingent at school at first, and then to catastrophic reduction of the contingent as most of parents began to be afraid to release by children in such school and most of parents has transferred by children to the next schools with more acceptable level of discipline. The government of the psychologist Leonid Brezhnev has led by Russia to falling of discipline, blossoming of bribery thefts and alcoholism in a workplace. Psychologists Barack Obama, François Hollande and Emmanuel Macron are weaklings too. On the other hand the chief-psychologist can become a tyrant in the country as Joseph Stalin, Adolf Hitler, Kaligula or Neron. Anyway the chief-psychologist can't support the optimum size of reward and punishment under management of the organization, an optimum ratio between a carrot and stick.

The technician has such inclinations during the performance of the role of the chief:

  • insistence in observance of orders and instructions,
  • inclination to petty control,
  • ability to try to obtain ideal purity in office and to do timely repair,
  • to penetrate into the equipment device.

The technician is a born conservative and technician doesn't love risky projects and social utopias. It can be believed by promises of the technician though it is impossible to trust up to the end anybody in business. The main lack of the technician in business is a lack of enterprise and readiness for risk. The shortcoming of the technician as chief consists that the technician prefers to apply only a stick in management of people and the technician isn't able to apply carrot in management of people. This circumstance angers by his subordinates.

The speaker has the following inclinations in the role of chief: speaker likes to brag and make empty promises, for example, speaker can lie and promise too much to subordinated at employment or to the partner in business therefore it is necessary to treat similar promises with a big share of scepticism and the partner of the speaker has to provide by sanctions for failure of conditions of the contract because of the speaker in the contract about cooperation. Promises of the speaker and psychologist can't be trusted, and it is impossible to lend them money with debt . The vital principle of the speaker is as follows: "Many people will be by fools during my life!". Or as the president of Belarus speaker Alexander Lukashenko has told:"Only cowards repay by debts!". The speaker has numerous acquaintances in higher instances and everywhere, this circumstance is a bargaining chip of the speaker in administrative career, in staff recruitment, under establishment of business contacts, in the organization of scientific conferences, in the organization of supply and sales of products, in the course of search of sponsors for educational institution or for the edition of the scientific collection. The speaker tends to fraud and extortion in business . The speaker has acquaintances and communications in criminal world often as the speaker often is very not picky in communications and means of achievement of the goal often. the speaker is capable to deceive by partners with big impudence and without any apologies. The speaker doesn't value by old friendship and the speaker gets new friends easily. Subordinates will obey by speaker without tension and protest as subordinates see in him by born leader.

The theorist has inclination to turn the operational meeting of assistant into a lecture at impersonation of chief, the theorist tries to represent from himself the teacher instead of giving by clear orders and to make categorical remarks in their address concerning workmanship of his orders. The mayor of St. Petersburg theorist Anatoly Sobchak held the operational meetings in style of a lecture that caused fair sneers in his address from the Mayor of Moscow speaker Yury Luzhkov. The theorist isn't interested by life and the biography of own subordinates at all, the theorist doesn't know their names even, the theorist doesn't know by prices, rumors and character of the relations between surrounding people in the organization. The theorist isn't inclined to get new friends and the theorist makes contact with strangers hardly. The theorist considers by accounting reports and a pedagogical technique too boring routine.

Conclusion consists that the best chief is a speaker, the chief of the second grade is a technician, the chief of the third grade is a psychologist, the chief of the fourth grade is a theorist. In a word, the theorist is not the chief. The speaker has many take-off and falling in administrative career or in commercial career. The technician moves ahead up an administrative ladder slowly and truly. The psychologist moves ahead up due to big skilll in behind scene fight, but, having got from assistant to chiefs, the psychologist finds own full insolvency and the psychologist is waited by a total failure in a career of the chief after which it is already impossible to rise, the sad end of career of such psychologists as Neron, Kaligula, Boris Godunov, Adolf Hitler is an example of such failure. The reason of such sad final consists that – the psychologist as the chief has inclination to go into two extremes - in popustitelsky or in tyrannical styles of management by people. The speaker approaches for a role of the businessman better than other personality types , and the technician approaches for a role of the official, supply manager or administrator better than other personality types. A shortcoming of the technician is incompetence in psychology questions therefore technician is capable to make mistakes at staff recruitment. The technician prefers to choose executive subordinates, and technician dismisses by careless subordinates without the slightest regret as though technician throws out the used thing, that is technician is cold and ruthless in the relations with own subordinates. There is a lot of turmoil and decisions, unreasoned on long prospect in career of the speaker. The speaker has inclination to alcoholism, full breakdown in career can occur for this reason at him. For example, the first President of Russia the great reformer speaker Boris Yeltsin had such addiction that led to incidents on formal receptions sometimes when drunk Boris Yeltsin conducted by orchestra or Boris Yeltsin didn't go out of the plane towards to official delegation. Other great reformer - the speaker Peter the Great had this addiction too. For example, Peter the Great have made by a feast on all night long and Peter the Great has sent by cavalry to a pursuit of the receding Swedes only in the morning, for this reason the pursuit has caught up with Swedes only in three days at a crossing through Dnieper, but Charles XII of Sweden and hetman Ivan Mazepa managed to escape and hide in Turkey. Speakers try to be treated for this addiction, but speakers have few chances of recovery, the reason of this circumstance is their way of life where alcohol is included in a ritual of communication of the speaker with numerous friends. Alcoholism is an professional disease of the speakers. The speaker is able to maintain optimum level of severity of social control and speaker avoids to go into extremes – in weak style or tyrannical style of management by people. Chiefs are speakers in the majority of the cases observed by us in practice and chiefs are technicians much more rare, psychologists are chiefs even more rare.

My empirical research of the reasons for unemployment[edit]

I carried out this empirical research on the basis of the Berezniki Jobcenter in 2003, the following results have been received. When I started a research, that I tried to check by forecast that psychologists and speakers-alcoholic have to have the maximum problems with job search. As a result of researches I have specified these forecasts. It has turned out that unemployment is a consequence and many other reasons about which it was difficult to guess in advance. It has been subjected to observation of 76 unemployed men. 35% from them were technicians, 32% from them were psychologists, 32% from them were speakers, 1% from them were theorists.

The following reasons for unemployment have been found:

  • Mistake in choice of profession. For example, 10 psychologists worked never by profession, received in educational institution. 6 psychologists and 1 technician have lost by profession of the commodity researcher's as they, apparently, couldn't sustain by competition from speakers. 5 women-technicians and 1 women-speaker, apparently, couldn't sustain by competition from men in such professions as the signaller, instrument mechanic, the mechanical engineer.
  • Low demand in labor market for such professions as the graphic designer and the wood carver. 3 psychologists and 2 speakers had such professions among the unemployed men.
  • Technicians have found by total absence of enterprise, full inability to search by work. Many of them have worked in one workplace half-lives and they fed useless hopes to go back to former workplace instead of searching for a new workplace. Such technicians are revealed by 10 people.
  • Speakers have found too big ambitions by the desirable size of the salary and degree of prestigiousness of a profession. I have found by 11 such speakers from whom 3 speakers were on the leading posts earlier – director of school, chief of workshop, and they demanded to provide by them prestigious and highly paid work though many of them had no by appropriate level of education for prestigious work. For example, one weaver by education demanded to employ her in the sphere of trade.

Except the reasons connected with the personality type there are also other reasons for unemployment – age, sex, outdated education level, a ratio of supply and demand on various professions in labor market.

According to Berezniki's Jobcenter for the first quarter 2003, there were into the disadvantage the following risk groups among the unemployed men :

  • People of pre-retirement age – 13,8% of total of the unemployed men.
  • Youth at the age of 18-24 years with the diploma about education, but without experience of work on the profession – 20,2% of total of the unemployed men.
  • Women – 67,6% of total of the unemployed man.
  • The workers released during staff redundancies with a long seniority. at one enterprise, but with outdated knowledge base and with one profession – about 45% of total of the unemployed men. Technicians fall into such state most often.

The structure of vacant workplaces on branches of economy in Berezniki according to Berezniki Jobcenter for 2002 reflects a global trend to outflow of labor from agriculture (a share of vacancies in Berezniki – 0%) in the industry, construction and transport (37%), and from there – in services industry, finance and management (64%). Generalizing data of Berezniki Jobcenter ifor the first quarter 2003 about a ratio of supply and demand by separate professions and considering my recommendations about staff recruitment, it is possible to draw the following conclusions. Labor market has offered 2350 vacancies from which 68% of vacancies can be recommended for technicians, 18% of vacancies can be recommended for speakers, 1,4% of vacancies can be recommended for psychologists, 1,5% of vacancies can be recommended for theorists, 11,1% of vacancies concern for unqualified workers to professions and them, as a last resort, it is possible to recommend for any type of the personality.

It is possible to draw the following conclusions. Each the personality type has the reasons for unemployment. The technician is most demanded in labor market, but the technician isn't able to look for work. The psychologist is least demanded in labor market. The speaker is demanded so-so in labor market and the speaker shows the highest enterprise in job searches, but the speaker has too big ambitions by the amount of payment and degree of prestigiousness of work, the speaker hasn't appropriate level of education often. The theorist is demanded so-so in labor market due to equalizing of a low share of demand (1.5% of vacancies for theorists) and a low share of the supply (theorists make 3% in population).

The problem of limitation of natural and other resources[edit]

 Oil platform in the North Sea 
Bratsk Hydroelectric Power Station


Irrigation canal

The volume of needs exceeds the volume of the economic benefits always. But it is necessary to spend some quantity of natural resources for production of these benefits – some quantity of minerals, the earth, the electric power, oil, gas, fresh water and so on. Thus, society lacks natural resources for satisfaction of all needs of the person always. That to increase quantity of these resources, the mankind should look for new mineral fields, for example oil and gas fields at the bottom of the sea, fields of shale oil and shale gas. That to increase quantity of these resources, the mankind should reduce their expense on a unit of production, to build hydroelectric power stations, to look for new power sources (for example, to build thermonuclear stations), to develop virgin lands, to build irrigational systems, to use food resources of the World Ocean and so on.. The majority of wars has happened because of disputes for possession of natural resources – the earth, gold, oil and so on.

The quantity of a labor resources is limited in the country too. This limitation can be weakened at the expense of the invitation of workforce from abroad, but this step creates new acute problems. For example, many European countries in 60-70 of the 20th century acted this way. The French have invited citizens from the former colonies from North Africa, and Germans have invited of the Turk, as a result descendants of those Muslims prefer to live on unemployment benefits today and to have big family, to organize revolts and riots in Paris, and Albanians have expelled by aboriginals – Serbians - from the Province of Kosovo in general.

Right of property and market    

The limitation of resources has led to the fact that people began to fix resources in property. Other people have to respect the right of a private property. Any attempt to seize illegal of others resources (theft, fraud, a robbery, robbery, extortion and so on) has to be stopped by law enforcement agencies. The owner of resources can provide them in use for a payment or to use by resources independently for the sake of receiving of profit.

Profit is excess of the sum of income from sales of goods over the sum of costs of production of these goods.

Cost is a sum of money which is paid or received upon purchase or sale of goods.

When the owner of resources chooses the benefits for production which the owner decides to spend by resources, the owner loses an opportunity to make other benefits. For example, the most part of resources of the country was spent for production of weapon for protection against the external enemy under the Soviet power, and resources wasn't enough for production of food and clothes, as a result the Soviet regime has failed because of constant deficiency of food and clothes and the discontent with own life of the most part of the population generated by that.        

The labor productivity is quantity of the benefits made for a unit of time (for shift, month, year).

The labor productivity in subsistence economy is lower than the labor productivity in conditions of existance of specialization and trade. It has forced by people to do by exchange of goods of regular, but not casual occupation and to turn the benefits into goods and services.

The goods are a subject for exchange for other goods.

Services are work on the basis of hiring or in exchange for goods.

Trade is a voluntary exchange of goods and services for money in the form of purchase and sale.

If the person is capable to make any kind of goods or service better than others, then it is favorable to him only to these and to be engaged, exchanging own goods or the services for goods of other producers. The ability to exchange by goods distinguishes by man from other animals as the Scottish economist Adam Smith has told: "Nobody ever had to see that the dog changed by bone with other dog consciously ".

The right of a private property allows by owners of economic resources to make by decision independently about that how to use by this economic resources, and to get by profit or to sustain losses in depending on good luck of this decision, to receive new resources or to lose own resource. The market in practice defines degree of success of this or that economic initiative, the market forms by size of profit which is made by property for its owners, the market dictates by proportions of distribution of resources between spheres of their expenditure. The market forces by each seller to think about interests of the buyer - about quality and the greatest possible reduction of price for goods, but the buyer has to think about interests of the seller also and the buyer will be able to receive by good only after payment of the price for good which has developed in the market. The market is the most successful though too not deprived of shortcomings, way of distribution of resources in comparison, for example, with the state distribution according to coupons and cards.

The Division of labour                

Division of labor has arisen only 12 thousand years ago when an agriculture has arisen that it has allowed by person to refuse from nomadic way of life and to build the house. Just then the first division of labor has arisen on hunters, farmers and cattle-farmers. Then the second division of labor has arisen – a craft and trade has arisen. The matter is that emergence of division of labor has caused the necessity of exchange of goods, otherwise, emergence of specialization has caused by necessity of trade. The subsistence economy is an economy without exchange of goods and without trade by the principle :"Itself has grown up, and then itself has eaten". Modern specialization has led to emergence of many thousands of professions. That o learn these professions, it is necessary to complete a long course of training in special skills and methods of work, it is necessary to have special inclinations of training of this profession.

In what does the value of specialization consist?

  • Specialization allows by each person to disclose by own abilities, specialization allows to self-actualize, specialization allows to receive wealth, prestige and the power, so to achieve by personal happiness.
  • Specialization allows to increase by quality of the made production, specialization allows to lower by expenses of working time and specialization allows to lower by cost of goods, specialization allows to increase by labor productivity.

Main questions of the economy:[edit]

  • What goods and services need to be made?
  • In what quantity do these goods and services need to be made?
  • How it is necessary to make? By means of what equipment and technology it is necessary to make?
  • How to distribute the made goods?

Еhe last question was resolved in the history of mankind with help of the following principles:

  • "The right strong" when the good is received by the one who has weapon or money, as they say "Who strong, that is also right ".
  • "The principle of equalization" when goods are received by all men equally, for example, according to coupons. Stimuluses to work disappear and the economic ruin comes in the country at the same time.
  • "The principle of turn" when the goods get to the one who has taken the place in turn earlier, at the same time stimuluses to work disappear too. – more important to be in time in turn.

The central ministries, for example the State Planning Committee, decide these questions in command economy, and central ministries, decide badly what generates constant deficiency of separate goods. These questions are resolved by the market In market economy and the market solves much better.

Crisis of overproduction[edit]

John Maynard Keynes


A solemn crowd gathers outside the Stock Exchange after the crash. 1929.
Franklin D. Roosevelt

But there are a lot of problems also in market economy, in particular overproduction crises when firms are ruined because of impossibility to sell by goods – goods are made much more, than the market is capable to absorb. Crises of overproduction have forced by state to interfere in the market relations, to apply the state economic control in relation to private enterprises. Privileges on the credits, taxes and duties, nationalization of backward branches, modernization at the expense of the state budget and the subsequent privatization became influence levers in hands of the state. Nationalization of the enterprises is a repayment or depriving of the enterprises by the state at private owners. For example, Bolsheviks in Russia have taken away the plants, shops, banks, the earth, apartments and jewelry from private owners without any repayment.

Privatization is a sale at an auction of the state enterprises to hands of private owners. For example, Anatoly Chubais directed formally by privatization in Russia in the 90th years 20 century, in fact the former party officials conducted this campaign and former party officials have led this campaign with big abuses and to a short time.oligarchs have managed to buy the most big chunks (the oil companies) at strongly cut prices that still generates a talk in society.about need to select this property back for benefit of the state.

Crises of overproduction repeated regularly every 10-11 years in 19 century – the beginning of 20 century in the countries with traditionally market economy. There was an excessive accumulation of goods in warehouses during crisis of overproduction, it led to decrease in number of purchase orders of production, to closing of factories and to dismissal of a large number of workers, to decrease in their income and demand in the market, to accumulation in warehouses of a bigger quantity of goods. As a result it was necessary to throw out by grain and coffee in the sea, to burn in coppers of engines against the background of hunger among jobless workers. Such vicious circle led to aggravation of problems and this vicious circle could even lead to capitalism crash.

Karl Marx in 19 century made a forecast that world Communist revolution must happen just at the time of world crisis of overproduction.  An English economist John Maynard Keynes had became “Savior of capitalism”, President of the US Franklin Roosevelt embodied in the life the proposals of Keynes. Keynes had proposed to increase state’s expenses on allowances to unemployment workers, on social assistance, on the orders to private enterprises (on building of roads, bridges, ports, etc.) during the crises of overproduction. This will enable that the unemployed workers    don’t die in reason   famine and to give the orders   to industry.    It need act with help opposite method, it need reduce state’s expenses on allowances to unemployed worker and orders to enterprises during flowering in economy, because too much government’s expenses lead to increase of inflation, but the unemployed workers can find work and enterprises can find  private orders in this time.        Therefore the German economist Karl Marx has made the forecast in 19 century that world communistic revolution will take place at the time of world crisis of overproduction. English economist of John Maynard Keynes was by "savior of capitalism", his offers were realized by the U.S. President Franklin Delano Roosevelt. John Maynard Keynes has suggested to increase the public expenditures on unemployment benefits during crises of overproduction, on the social help, on orders to private enterprises (construction of roads, bridges, ports and so on.). It allows not to starve to death by unemployed men and to provide by industry with orders. It is necessary to act exactly the opposite during blossoming in economy – to cut down the public expenditures on benefits and orders to the enterprises since too heavy public expenditures lead to inflation growth, and the unemployed men and the enterprises are capable to find work or private orders during blossoming of economy.independently

The last world crisis of overproduction was in 1930 and more similar crisesof overproduction weren't till 2008 though development of economy in the West is followed by the small cyclic periods of recession and rise without catastrophic consequences. Crisis of overproduction in 1930 was the heaviest for all history therefore Americans remembers by this "A great depression" also today. The 20th years of the last century for the USA were an era of economic prosperity. The president Herbert Hoover promised by each American fast enrichment during an era of prosperity – "a chicken in each pot and two cars in each garage". Therefore all Americans were engaged for the purpose of fast enrichment by a risky business – speculation by stocks.

Panic has begun at the New York Stock Exchange on October 24, 1929 because of catastrophic depreciation of securities by 4,5 times, huge number of owners of these securities were bankrupts suddenly , some bankers have jumped out of windows of skyscrapers. A huge number of firms was closed, many farms have been sold from the hammer. There was crash of a banking system, banks have run into debt to the investors a huge number of money, panic has begun, investors began to storm by buildings of banks, demanding to return back the deposits, but banks couldn't make it. The number of the unemployed has reached 17 million people – every third American was without work. The unemployed men didn't receive any benefits at that time and unemployed men could just die from hunger. 2 thousand people has died from hunger only in one 1931 and only in New York. Crowds of the hungry unemployed men went on roads of the USA and this crowds looked for though some earnings, unemployed men agreed to any most hard or low-paid work, for example work on cotton cleaning, this work was performed earlier only by African slaves. The unemployed men organized "hungry marchs" to Washington to demand from the government of bread and work.

The American elite believed firmly before this crisis that, according to the principles of social Darwinism, the strongest survives and benefits for the poor shouldn't exist. However the new president Franklin D. Roosevelt thought differently and Franklin D. Roosevelt has begun policy of "a new course", Franklin D. Roosevelt has begun to save by country from communistic danger. First of all, Franklin D. Roosevelt has tried to save a banking system from crash, having announced "bank vacation", that is Franklin D. Roosevelt has suspended by work of banks till the moment when panic settles in economy. The economy of the USA began to get out of crisis with great difficulty only in four years.

The new world economic crisis has begun in 2008 which reasons still are not investigated up to the end.

A strike and other administrative kinds of conflict in a market economy[edit]

The charge by Ramon Casas (1899)


Teamsters, wielding pipes, clash with armed police in the streets of Minneapolis during 1934 strike.


Powerful worker’s strikes shook of Russia in the late 1980s. ‐ early 1990s.. Employers, on the one hand, and hired workers, on the other hand, conduct among themselves the conflict for the acceptable size of the salary.

Fight methods which are used by employers against hired workers:

  • Drawing up "black lists". If the worker was enlisted in this list for the organization of a strike, then already any employer didn't agree to hire him.
  • The lock-out (from English "to slam in front of someone a door") is a closing of the enterprise for several weeks non-paid for workers.
  • Hiring of "strikebreakers" (from German "breaking a strike"). Hiring of the temporary employees concordant to work for a former payment. Strikers considered by strikebreakers to traitors.
  • Contracts of "a yellow dog" (so these workers were named in the USA). The worker was employed only if this worker signed the contract that he promises under the threat of dismissal not to unite with anybody with the purpose of fight for higher salary. Any court couldn't restore this worker in a former workplace.
  • Employers didn't stop in the union with police and mafia before use of gangster groups, policy and army against hired workers sometimes .

Fight methods which are used by hired workers:

  • Strike as method of conducting the administrative conflict with side of hired workers which means termination of work until the employer doesn't agree to salary increase.
  • Work-to-rule. Workers work at slow tempo, kind of in a light slumber that reduces by labor productivity sharply and that yields by loss to the employer.
  • Creation of political parties. An example – the Labour Party in Great Britain. These parties try to obtain adoption of laws in favor of hired workers in parliament.
  • Organization of Trade union

Leaders of trade unions conduct negotiations with businessmen about salary increase, improvement of working conditions and increase in safety of labour. Leaders of trade unions will organize a strike in case of failure of similar negotiations. Leaders of trade unions collect membership dues with members of labor union and leaders of trade unions live with this money. One trade union competes with other trade union for a sphere of influence.That trade union wins in this competition which protects by interests of workers better. there can be several trade unions at one enterprise. Trade union leaders in the USA are rather rich people. Trade unions have less and less of members in the developed countries today. As the reason of it serves reduction of number of hired workers at the large enterprises, increase in their welfare, possession of workers by stocks of own enterprise. Then country is richer, that strikes occur less often.

Trade unions have accomplished by own historical mission in the West in increase of salary, pensions and benefits for workers, thereby trade unions have saved by West from communistic danger. Reverse side of salary increase for workers in the West is the aspiration of businessmen to transfer the plants from West to China and other developing countries where the level of the salary is much lower where there are no contributions to the pension fund. However the quality of production manufactured in China remains very low because of low qualification of the Chinese workers. Trade unions support often by restriction of import to the country of import goods with the purpose to keep workplaces and extension of production within the country. But import restriction, in turn, leads to decline in quality and competitiveness of domestic goods in the world market. Other countries take similar measures in response to import restriction that can lead to the beginning of customs war between the countries. Sometimes Trade unions try to obtain from employers of consent to employ only members of trade union, for example, the Russian actors can't get a job in Hollywood as Russian actors have no permission of the American guild of actors. The trade union signs with the businessman by collective agreement on behalf of members of trade union about the salary and working conditions. Requirements of trade unions about salary increase have to be economically reasonable, such increase shouldn't lead to ruin of the employer which isn't favorable also to hired workers as hired workers lose by own income source too.

State regulation of inequality with help of taxes[edit]

Some scientists-economists consider that the revolt of the poor begins to threaten by country in that case when less than 12-13% of total amount of income fall to the share of the poorest 40% of the population. Just impoverishment of the population and mass unemployment have brought by Adolf Hitler to power in Germany in 1933. Impoverishment of the population in Russia during World War I has brought by Bolsheviks to power. The difference in income between 10% of the richest families and 10% of the poorest were in Russia in 1998 by 16 times that there is too much even to world measures.This difference were by 16 times in the USA. This difference were by 12,7 times in France. This difference were by 7,2 times in England and Germany. This difference were by 6,26 times in Sweden. 

Progressive income tax is gathered by the principle: than the sum of income of the taxpayer is more, that a percent of income tax is more. This progressive income tax serves for redistribution of wealth in favor of the poor men. Punishment for evasion of taxes is equated to punishment for theft and this punishment is very severe. Other kinds of tax only from rich taxpayers are taxes on inheritance, the property taxes. The state spends by money received thus for benefits in favor of the poor men. There is no progressive income tax and the uniform rate of income tax of 13 percent acts in Russia today. This flat scale of the taxation has been entered in Russia in 2001. The flat scale of income tax exists in Ukraine, in the states of the Baltic, the Czech Republic, Bulgaria, Romania and Montenegro.income tax is progressive in the developed countries (Japan, France, Brazil, Finland, the USA) , the lowest and top levels differ, as a rule, by 2-8 times      

There are various ratios of the competition and monopoly in the market:[edit]

  • The market of the clean (perfect) competition when there are many producers of the same production in the market, for example, of producers of vegetables who can't dictate to other producers the sale terms and the goods price. Merits and demerits of the market competition are shown most fully in this case.
  • The market of the monopolistic competition when there are in the market many producers, each of which offers the goods, other than others, for example, food products, furniture or clothes, for satisfaction of the same demand, each producer has copyright at the same time and each producer has some opportunity to influence to the price of the goods. Each producer has the trademark, and nobody has the right to use this sign without the permission of the owner. Violators of this law are obliged to pay damages to the owner of this sign.
  • The oligopolistic market where there is a small number of the major companies making identical goods. Сompanies can exert by considerable influence to the goods price. For example, only three producers exists in these conditions in the automobile market of the USA – Ford, General Motors and Chrysler. It isn't casual that all these producers have fallen into financial hardship today, actually on the verge of bankruptcy since these producers staked on production of big prestigious Sport utility vehicle which consume too much fuel. Petrol prices have grown almost twice at the beginning of 2008 that has made the facilitated small European Japanese and Korean cars more competitive in the American market since these cars consume less fuel and these cars cost cheaper than the American. However small cars have the shortcomings too. For example, the statistics shows that in case of accident in the form of head-on collision of the Sport utility vehicle with the facilitated car, passengers of the SUV have more chances to survive in comparison with passengers of the facilitated car since the Sport utility vehicle unlike facilitated car has the bearing frame and big weight, and the facilitated car reminds in the form an egg shell without basic skeleton whichit is easy to crumple under head-on collision, though, of course, if so to argue, then it would be safest to go on highways by the dump truck, infantry fighting vehicle or the tank. there were four producers and four brands of cars In the USSR: AvtoVAZ as producer of the "Lada", AZLK and its "Moskvitch", GAZ and its "Volga", ZAZ and its "Zaporozhets". As a result of economic reforms only VAZ and GAZ have survived in our country. The small number of producers can be explained with complexity of production of cars.
  • The market of monopoly where there is only one chief producer where the competition is absent, the producer can quote by any price and the buyer will be forced to buy goods at this price since other producer just doesn't exist therefore there are worst conditions here for the buyer. The producer can sell by goods at inflated prices and bad quality here. Such economic conditions existed in the USSR before liberalization of the prices in 1992. There were similar problems with monopolistsIn the developed countries at the end of 19 – the beginning of 20 century too. But then the government in the West has learned to struggle against monopolists in the market.

Conclusion: Firms strive for economic efficiency only in the conditions of the perfect competition. Need of preservation for the country of the market relations and free competition as supreme value, means that any of participants of competition shouldn't have notorious advantages and privileges in fight for a victory therefore the state has to struggle with monopolists in the market.

Methods of fight against monopolies:[edit]

Central office in Berezniki

Methods of fight against monopolies:

  • Limit simplification of the procedure of creation of rival firms for the monopolist.
  • Removal of all barriers to penetration on the monopolist national market of foreign producers.
  • Compulsory division of firm - monopolist on several parts.

Introduction of the state control over the procedure of merge and absorption of firms, the government has to agree or forbid these actions sometimes.Direct state control over natural monopolies that is shown in control over the prices and the salary. For example, the Uralkali enterprise develops the only in Russia the deposit of potash salts in the neighboring cities of the Perm region Berezniki and Solikamsk. These the enterprise Uralkali was monopolist in production of potash fertilizers and carnallite as raw materials for production of the titan and magnesium at the VSMPO-AVISMA enterprise and the Solikamsk magnesian plant. Magnesium and titanium, in particular, are used in the defensive industry for production of military planes and submarines.VSMPO-AVISMA exports by titanium to the USA for the Boeing enterprise today. That to liquidate monopoly of the Uralkali enterprise, the EuroChem enterprise has begun to build in the Usolye district by extraction and production of potash fertilizers at EuroChem-Usolskiy Potash Complex (Verkhnekamskoe Deposit, Perm region).      The state issues laws against the firms polluting this environment for fight for preservation of the environment and the state creates the organizations watching a condition of this environment, imposing penalties and stopping by activity of these firms.

There is a dispute among economists and politicians about the sizes of powers of the government. One economists and politicians consider that these powers are limited to all above-mentioned. Others consider that powers of the government have to be much wider. The Soviet economists considered, for example, that powers of the government have to be such big that it is necessary to cancel a private property and the market, to introduce state planning and control over the prices, but the Russian experience has shown malignancy of these offers.

Conclusion: the market and economic control as great social inventions, will never disappear in the future. Economic control of the government over economy shouldn't destroy by market competition.

The theory John Maynard Keynes about control of the Government above the economy[edit]

The importance of the theory of John Maynard Keynes[edit]

   The value of his theory consists that John Maynard Keynes became the savior of capitalism and John Maynard Keynes has directed by development of capitalism in a new way. John Maynard Keynes Keynes suggested that, on the one hand, the Government must regulate by economic life, and to other hand,  the Government must retain by market competition and private property in the economy.  This ideas are stated in his work "The General Theory of Employment, Interest and Money“ which was written in 1936. His ideas about expanding the functions of the Government could seem by economists of the 19th century as terrible attempt on the basis of individualism, but these ideas have allowed to keep the market competition and a private property. Theoretical views of John Maynard Keynes developed during dangerous crisis of capitalism.

Concentration and centralization of the capital have generated the first large corporations capable to monopolize production and the branch markets. Such monopolization killed the competition and freedom of pricing. On the other hand, positions of trade unions have become stronger, activity of this trade unions limited sharply by market processes in definition of the salary. Trade unions began to appoint by salary for workers to some extent that trade unions destroyed by economic control of businessmen over workers. Trade unions destroyed the right of businessmen to give to workers bonus or fine in depending on quantity and quality of work. The economic system of capitalism has lost flexibility. The deepest crisis of overproduction of 1929-1933 became result, this crisis of overproduction was followed by a long depression which proceeded up before the beginning of World War II.

Essence of theory for John Maynard Keynes[edit]

John Maynard Keynes has revealed those parameters of economic system which have to become object of state regulation, and John Maynard Keynes has put forward by methods of this regulation. John Maynard Keynes's ideas have turned literally by modern to him the theory and this ideas have become history of an economic thought under the name "Keynesian Revolution". Here essence of the fundamental idea of this revolution: the mature capitalist economy has no inclination to reach automatically by economic balance, that is the mature capitalist economy has no inclination to use all resources which are available for her - production capacities, labor, saving, - and therefore mature capitalist economy is subject to periodic crises, and mature capitalist economy is subject to chronic unemployment frequent also.

The former economic theory (neoclassical school) claimed: it can't be by long violation of balance in market economy because it can be never. Namely, the supply of the goods made with use of the existing resources itself gives rise to demand , and equality of supply and demand is established thanks to the flexible system of the prices. If the supply exceeds by demand, the prices will fall and balance will be restored; and vice versa if a deficiency of any resources or goods arises, then the prices of them will raise, and economic balance will be established again. This reasoning extended to such resource as workforce also. The mobility of the salary, that is the mobility of the price of workforce, was considered as the main condition of her full use, full employment. What, according to John Maynard Keynes, "has deteriorated" in this ideal market mechanism?

The prices have lost by ability to change quickly under the influence of fluctuations of supply and demand. Especially it concerned by salary which became to be established rather by affair of trade unions, than by affair of businessmen, than a result of action of market forces. But if the mechanism of equilibration of supply and demand glitches, then demand appears less quite often than that level which is necessary that to use all production resources and to realize all made goods completely therefore demand, according to John Maynard Keynes, has to become the main subject to economic regulation.

John Maynard Keynes chose two main tools and ways of regulation of effective demand - the public expenditures, or is wider - the state budget in general (including taxes), and monetary policy. John Maynard Keynes and his followers considered by public expenditures (including and those that are financed by means of budget deficit) the most convenient and effective way of increase in effective demand during an economic crisis or a depression. Then increase in monetary income of the population is capable to involve, according to them, in active functioning not used production capabilities, to give employment to the unemployed men.

The considerable value was given also to reduction in taxes along with growth of the public expenditures , generally for encouragement of investments. But it has become clear later that growth of the public expenditures and reduction in taxes, eventually, leads to growth of budget deficit only, leads to increase in prices and inflation that creates new economic problems       The release of a large number of new money led to interest rates reduction, that is the businessman had an opportunity to take the credit under low interest for business development, but the release of a large number of new money led to inflation again. It is necessary to emphasize that John Maynard Keynes wasn't by supporter of such direct forms of the state intervention as nationalization, state ownership or the state business as John Maynard Keynes understood that the state property is inefficient in comparison with private property.       

Take-off and falling of John Maynard Keynes’s economic policy[edit]

The belief in power of Keynesian economic policy became stronger steadily affter World War II up to the middle of the 70th years. Keynesians sought to reach by full employment, Keynesians sought to level by cyclic fluctuations of economy and Keynesians sought to increase by rates of economic growth. And increase in salary and unemployment benefits answered by desires of a general population also , increase in salary and unemployment benefits is doing by similar policy especially popular. Besides , increase in prices was almost imperceptible at the beginning.

Keynesians, of course, have saved by capitalism, but then Keynesians began to make one mistake for another:

  • The policy of Keynesians has led to growth of the budgetary deficiencies when expense of the state budget are much more than income of the state budget. Keynesians hoped vainly that balancing of the state budget has to happen not every year, and throughout a business cycle (in 10-11 years) when the surplus of receipts in treasury during during period of rise could compensate by lack of budgetary funds which has arisen in the conditions of crisis.
  • The deficit of the state budget was covered at the expense of additional currency issue and the state loans.
  • Keynesians have broken by work of the Central Bank that has led to inflation and that has put by national currency on a crash side. Keynesians demanded from the Central Bank to increase by issue of money during recession and to reduce by issue of money in the conditions of economic rise period and the healthy currency demanded by carrying out tough anti-inflationary policy irrespective of rise and recession in economy.

Conclusion: Adherents of John Maynard Keynes have received an explosion of inflation instead economic growth.

The crisis of theory for John Maynard Keynes: causes and consequences[edit]

The period of high rates of economic growth has come to the end by the beginning of the 70th of 20 century . Two energy crises have plunged by economy of the developed countries in the second half of the 70th into the long period of stagflation - the period when the prices began to grow extraordinary quickly and there was a decline in production at the same time. If the budgetary deficiencies were a rarity in the 60th years, then budgetary deficiencies have accepted already chronic character after the 70th. Not accidentally, fight against inflation and budget deficit became a task number 1 for the governments of all developed countries. People became to accuse by inefficient bureaucracy in all sins, by John Maynard Keynes's theory and all concept of "Welfare state" - the system of social benefits, public sector of economy, the large public expenditures and the state restriction of activity of private business. As a result, the victorious procession of Keynesianism has come to the end with "a conservative counterrevolution"in the late 70th - the beginning of the 80th years.

The central place was taken again by old neoclassical school in the face of monetarism in the economic theory of the West. Supporters of this theory, contrary to Keynes's theory, considered that it is necessary to limit as much as possible the state intervention in economy, it is necessary to cut down the state taxes and state expenses.According to monetarism, state regulation of demand breaks by action of market forces, state regulation of demand leads to inflation strengthening also. According to the proposal of monetarists has occurred for 80th and 90th: Considerable reduction of inefficient public sector of economy thanks to denationalization and privatization, Growth rates of the public expenditures have decreased, share of which reached before 50% in Gross national product in many European countries. But it, nevertheless, didn't mean full refusal of the Keynesian ideas. The policy was pragmatic always and the policy keeps in own arsenal still many and Keynesian, and monetaristic recommendations.

The Keynesian ideas today[edit]

Keynesians have drawn conclusions from own mistakes, Keynesians offer, as the anti-inflationary recipe, by voluntary agreement between businessmen and trade unions about the certain growth rate of salary which isn't exceeding by increase in labour productivity, and Keynesians offer by control over the prices of natural monopolies.

Many supporters of state regulation of economy including supporters of the state socialist planning, are ready to rely on Keynes's authority in Russia today . Allegedly, even Keynes was by supporter for regulation! All isn't so obvious actually. That to regulate by market, it is necessary to construct by market at first. Russia is at a stage of transition to market economy only with all its difficulties.



Milton Friedman


1/3rd stater from Lydia, 6th century BCE
Set of three Roman aurei depicting the rulers of the Flavian dynasty. Top to bottom: Vespasian, Titus and Domitian. 69-96 CE

This direction in the economic theory which researches by influence of banks and money to national economy. Western Europe suffered hard from the shortage of money in 14-15 centuries before emergence of the American gold. It slowed down by development of trade and production of goods. Emergence of cheap gold from the American colonies has given a powerful push to development of economy and monetarism. Florentine banker Bernardo Davanzati wrote in the book "Lezione delle monete (1588)" (Reading about a Coin) in 16 century that the role of monetary circulation and banks in economy of the country is similar to a blood circulation role in a human body.

Adam Smith's friend philosopher David Hume became one of authors of "the quantitative theory of money" from the point of view of which, price level in the country depends only on quantity of money in circulation. High tide of money to the kingdom leads to revival of labour, the industry and trade. But then increase of prices begins in the same proportion, as growth of quantity of money, that is inflation process begins. The 20th century became a century of inflation and blossoming of monetarism as economic theory. Milton Friedman became the head of the Chicago school of monetarists. According to monetarists, inflation begins when the government and banks put too much money into circulation. Only the correct policy – to issue by money into circulation no more, than productivity of economy of the country grows.

The criticism of the views of the followers of John Maynard. Keynes lie in the basis of theory for Milton Friedman. Followers of John Maynard. Keynes insist on the state intervention as means of overcoming by cyclic fluctuations in economy. Milton Friedman is the supporter of return to economic liberalism, that is encouragement of free business and the market relations when minimizing the state intervention in economy. According to the monetary theory of Milton Friedman, a key factor in economic processes are money. Change of quantitative mass of money in circulation defines all other sides of economic life.

Milton Freedman attaches by  paramount importance to the functions of the demand to money in its quantitative theory of money also, Milton Freedman explains by cyclic development of economy with help of violations in monetary and credit sphere  and Milton Freedman explains by inflation  with help of excessive supply of money which is, in his opinion, a direct consequence of measures for State’s regulation of economy, designed to prevent by inflation, but in practice stimulating by inflation.

Milton Friedman restricts by economic function of the State as regulation of quantity of money in circulation. The main book of Milton Friedman, written in 1962, in co-authorship with his wife Rosa Friedman was “A capitalism and freedom”, in which Milton Friedman criticized by policy of granting benefits for poor men, encouraged, according to theMilton Friedman, their parasitic inclinations. Milton Friedman was resolute opponent of legislative fixing of the minimum wage level also. Milton Friedman constantly remained as object of sharp criticism at the same time, as on the one hand scientists (for unilateral exaggeration of value of the monetary and credit sphere in economy), so on the other hand supporters of increase in benefitss for the poor men.

The cyclical nature of economic growth and methods of her regulation[edit]

Economic growth is replaced by economic recession within a world economic cycle . Recession (from Latin Recessus — retreat) is rather moderate downturn in production which is characterized by the zero growth of gross national product or its falling during more than half a year. Recession is one of phases of the economic cycle following after a boom and which is replaced by a depression. Recession leads, as a rule, to huge falls of indexes at the exchange and to rise in unemployment. The economy of one country depends on economy of other countries therefore economic downturn in this or that country can lead to recession and even to crash at all world exchanges.

Economic crises of overproduction repeated every 10-11 years. till 1930 throughout century. Economic regulation of economy in side of the government according to John Maynard Keynes's recipes has allowed "to smooth" by depth and height of regular recessions and rises in development of economy within a economic cycle, but Economic regulation of economy haven't allowed to eliminate these recessions and rises completely.

Nikolai Kondratiev as researcher of the “long waves” (economic cycles)[edit]

Nikolai Kondratiev

Years of his life: 1892-1938. He has found long economic cycles in development of economy of England, Germany, France and the USA lasting 40-60 years. Such long economic cycles carry the name of "Kondratyev's wave" in the West also today. According to Nikolai Kondratiev, large inventions, emergence of new technologies, new group of the countries in the world market and so on are the reasons of these cycles. Rise of wave is followed by wars, political shocks and revolutions usually. This theory was successfully developed by John Maynard Keynes further in the West. And Nikolai Kondratyev has been repressed in Russia and Nikolai Kondratyev has died in prison of People's Commissariat for Internal Affairs In 1930. Nikolai Kondratyev has been arrested together with Alexander Chayanov on false charge of creation of "Labor peasants party". Nikolai Kondratyev has been shot in 1938. Bolsheviks have acted this way with the Russian genius.

Modern methods and forms of government regulation of the economy[edit]

These methods have appeared as a result of synthesis of theories of John Maynard Keynes and Milton Friedman. Each of these opponents was in own way right. The main task of economic science and the government – to learn to smooth by periodic crises, it allows to prevent by social revolutions. Many countries have learned to solve this problem with help of intervention of the state by the end of the 20th century . Money became the tool for the solution of this problem. The policy of "monetary control" is applied at excessively high rates of economic growth which are followed by inflation explosion when the offer of money on the capital market is reduced. It reduces opportunities for their favorable investment in production expansion, it slows down economic growth and leads to "cooling" of "superheated economy". Such policy was pursued in China in recent years.

That to reduce the offer of money, the state uses the following methods:

  • Government raises by taxes under the pretext of extension of social programs that to lower by the income of businessmen.
  • Government raises by reserve requirements for banks that to reduce by opportunities for granting of the credits.
  • Government begins to sell more and more state securities that spare cash went not for production expansion, and in the state budget.

On the contrary, if the economy was included into a stage of recession and it is necessary to achieve by fastest renewal of economic growth, then it is necessary to do everything on the contrary. The similar policy was pursued by Ronald Reagan elected by the U.S. President in 1980. Increase of deficiency of the state budget, increase of a state debt and increase of inflation became a payment for some acceleration of economic growth. It is especially difficult to regulate economic growth in such countries as Russia where market mechanisms are just formed. Wassily Leontief was engaged in macroeconomic regulation in Japan very successfully.

According to forecasts of experts of world bank for 2030 the countries of the world have to take the following places in world economy:

1. China.

2. USA.

3. Japan.

4. India.

5. Germany.

6. Indonesia.

7. France.

8. Italy.

9. South Korea.

10. Brazil.

11. Taiwan.

12. Thailand.

13. Great Britain.

14. Canada.

15. Russia.

That Russia has taken higher place, it is necessary to work more successfully and more tensely. Russia managed to surprise by rest of the world with own success always.

Methods of protection of domestic producers:[edit]

  • The customs duties as the taxes in favor of the state collected from the owner of goods when owner of goods crosses by border with the purpose to sell these goods in Russia. Because of them the seller of import goods is forced to raise by prices of these goods. As a result import goods lose a part of the advantage in comparison with domestic goods. Buyers and importers lose under increase of the size of trade duties, but domestic producers and the state win. As a result, buyers are forced to pay a tax in favor of some backward domestic industries and agriculture. These domestic producers can not try to increase own competitiveness, these domestic producers don't need to reduce internal expenses, to increase by quality of production. As a result backward branches become even more backward. Taxes on import cars were raised or went down under pressure of domestic producers or sellers of foreign cars in several times in 1992-1995. Conclusion: target subsidies of the government to backward branches is better, than protectionism and the customs duties. It is necessary to achieve that, on the one hand, branches of the domestic industry became competitive, and, on the other hand, it is impossible to allow full bankruptcy and disappearance of these branches. To win at all branches is an impracticable task, it is necessary to win at least in some branches of production of goods and to specialize in development of these successful branches.
  • Import quotas and licenses. The import quota is an extreme size of import in one year from a certain country. The foreign trade license is foreign trade licence is permission, which Government give out to import or export from the country by certain kinds of goods.

Conclusion: The import quota is most rough method and other countries respond with similar measures usually, "trade war" as a result begins. The example of it is "trade war" between the USA and China in 1992 because in 1991 Chinese have sold to Americans of goods more, than have bought in the USA for $12,7 billion.

Refusal of protectionism[edit]

Last experience shows that both sides lose in trade wars, therefore many countries have refused from protectionism in 20 century. In 1947 23 countries have signed the General agreement on tariffs and trade. (GATT).

Three principles have been the basis for this contract:

  • All participating countries will apply on the relation to each other identical measures of regulation of export and import without any discrimination.
  • Member countries will seek to decrease in trade duties. Member countries will seek to development of own relative advantages and international trade.
  • Member countries will refuse from extremes – from import quotas.

This agreement was signed already by more than 100 countries today. the World Trade Organization (WTO) has evolved on basis of GATT where Russia enters today. The average import tariff has decreased in the WTO on raw materials from 2.5% to 1.6%, on industrial production – from 10,5% to 6,4%. The purpose of the WTO is full opening of the national markets by the countries and creation of free trade zones when goods, people and the capitals can move without any restrictions and duties within group of the countries. An example of the free trade zone – the European Union created in 1958. The countries entering the EU have cancelled all duties and import quotas in trade with each other completely, the countries entering the EU regulate equally by export from other countries, the countries entering the EU have entered by free movement of the capitals and people. Frontier guards and customs officers don't protect by border between EU countries any more within the Schengen agreement, that is. borders between the countries of the European Union disappear gradually.

Conclusions: It is impossible to hide and run away from the conflict, it is necessary to be able to win in conflicts. The main law of conflictology finds manifestation in economy that it is impossible to hide from the market competition that it is impossible to be protected from more competitive foreign producers with help of the high customs duties, it is necessary to increase by competitiveness of domestic producers and to be able to win against foreign producers in the international market.

The world economy. The abyss between rich countries and poor countries[edit]

Anti-globalization protests in Edinburgh during the start of the 31st G8 summit.


A Somali pirate with weapons aboard a vessel.
Middle East migrants pass through Slovenia on their way to Germany, 22 October 2015

"Antiglobalists" try to break meetings of leaders of "Group of Seven" - the USA, Japan, Great Britain, Germany, France, Italy and Canada. The Russian Federation has begun to take part in work of this informal association, but in 2014 the Russian Federation has been eliminated from members of this association in connection with the Crimean crisis. Geoeconomics is a world economy. the main problem in development of geoeconomics is a growing abyss between the richest and poorest countries of the world. The population share in the rich countries in comparison with the population of the whole world makes 17%, but the consumption share which is the share of these rich countries makes 80%. Rapid growth of birth rate in the poor countries is the reasons of it. Growth of birth rate overtakes in many times over growth production in these countries. Though this growth in production in the poor countries (3,2% in year during 1965-1987) overtakes also by growth of production in the rich countries (2,3% in the same years).

As a result, according to the UN if income of 20% of citizens of Earth from rich countries exceeded income of 20% of citizens from the poor countries by 30 times in 1960, then this excess has made already 59 times in 1989. Thus, the poor countries have got to "Malthus's trap". The poor countries have lagged behind the rich countries in the development for 400 years. There are two civilizations on the planet , one civilization has entered the 21st century, and another civilization has entered in the 17th century only. The military conflicts arise in Africa and Asia against the background of poverty, for example, sea piracy of poor residents of Somalia in Gulf of Aden. Refugees from the poor countries became by problem of Russia and the countries of the West.

Conclusions: It isn't possible to achieve by full alignment of welfare of the poor and rich countries. Inequality between people and between the countries is a thing natural and inevitable.

All help of the developed countries to the countries of Africa is spent for further increase in birth rate that leads to aggravation of problems of poverty only. For example, food help to the residents of Somalia suffering from approach of the Sahara Desert leads only to final dying off of national agriculture and growth of dependant moods in this country. The USSR spent too many funds for the help to other countries which promised to exchange to go on a socialist way, as a result these countries have refused to repay by debts to the USSR, there was financial crash in USSR and socialism has failed as a result of economic problems. The Russian Federation has inherited from the USSR the rights to a debt from these countries for the sum of $150 billion, but these debts had to be written off as hopeless. These debts to Russia make 11% of the sum of all debt of the poor countries. Russia itself owed by western countries of $100 billion and Russia has repaid this debt with great difficulty, and nobody has written off Russia at least a part of this debt.

Russia has to draw conclusions from this fact and Russia shouldn't lend under no circumstances money to those countries which aren't able to return this money with percent. The national interests of Russia consist in that . Such help to the poor countries reminds useless attempts to fill with water a barrel full of holes. There won't be enough resources on the planet to provide to all mankind rich existence. For example, such type of resources as the earth used for agriculture is limited. About 2 hectares of the processed lands have to fall on each person for ensuring all needs. The world's population has made 6 billion people in 2000 on which 11 billion hectares are the share today. It means, security of people with the earth has fallen below critical level already today.

The only output, is to lower birth rate in the poor countries, but the population of these countries, except for China, doesn't want to reduce birth rate and population of these countries considers that the rich countries will be forced to help by him all the same. These poor countries encourage by movement of "antiglobalists", the main slogan of this movement is directed to the governments of the rich countries, this slogan comes down to one requirement: "Give money!". According to Malthus's forecasts, the mankind has to invent essentially new resource-saving technologies of production of the vital benefits, first of all, of food today, or hunger in the poor countries, the period of wars for the earth and vital space will begin soon. By the way, Russia possesses the biggest territory of undeveloped lands, and warming of climate has to make this undeveloped lands more suitable for agriculture. Therefore Russia can become object of aggression, for example, in side of China.

The increase of production of food lags behind an increase in population already today. For example, the increase of production of grain in a year has made 1% for 1985-1991, and an increase of population of Earth has made 2%. As a result shower consumption of grain has dropped by 8%. Average consumption per capita of soy and bean cultures, meat and sea fish doesn't grow for the last years .. Food prices have grown sharply in 2008 because price of fuel have grown sharply, many researchers note that the era of cheap food has ended. Hunting even on rats has begun in Africa. Mankind increased by сrop yields by means of entering into the soil of mineral fertilizers in 20 century, but opportunities for further increase of сrop yields by means of mineral fertilizers are exhausted completely today, besides, it has become clear that use of these fertilizers does by grown-up harvest unsuitable for consumption often.