During the implementation of economic reforms in England and the United States since the 80’s p.

However, a complete analogy between the political and market systems cannot be drawn. They have a different structure. If there is a voluntary exchange of goods in the market, then in politics people are forced to pay taxes in exchange for some public goods. The consumer of these goods is society as a whole.

The difference between market and political exchange is that its participants have different purposes. There is a mutually beneficial exchange in the market. There are different views and beliefs in politics, and people in public office will not always be guided solely by considerations of the public good, the pursuit of good and justice. Like the average consumer or entrepreneur, they will seek to maximize their own benefits.

The decision-making process is like a kind of market agreement: you to me – I to you. You are my vote in the election, I am your – favorable laws, licenses and so on.

Thus, there is no mutually beneficial exchange in politics. Proponents of the theory of social choice conclude that there is political inequality due to economic reasons. This is inequality in obtaining information, its distortion, the adoption of decisions by officials, parliamentarians, which would help them to be re-elected (populist), or decisions that promote the interests of organized pressure groups (lobby), but are ineffective for society as a whole.

Given these contradictions, proponents of the theory of social choice propose to reform the political system. This reform involves the extension of market relations to the political sphere. Policy, they stressed, can and must be based on the same mutually beneficial contractual terms as market exchange.

The "effectiveness" of political exchange, Buchanan stressed, will be determined by how fully the principle of unanimity is implemented. "The unanimity," he wrote, "achieved by the participants in the collective choice of policy is similar to the voluntary exchange of individual goods on the market."

All the above once again confirms the idea that institutionalism has no general theoretical basis. But at the same time its directions have many common features.

The main characteristics of institutionalism:

critical analysis of orthodox theories based on | development of alternative programs; And an attempt to integrate economic theory with other social sciences – sociology, psychology, anthropology, law, etc.; attempts to study not so much the functioning of the system as its development (transformation of capitalism); ideas for personal narrative analysis of economic relations not from the standpoint of the so-called economic man, his disparate actions, but from the standpoint of the organization of society, the state; attempts to strengthen public control over business, recognition of the need for state intervention in the economy.

Modern institutionalists also criticize neoclassical and neo-Keynesian theories. They have retained the "spirit of dissent" of "rebellion" that finds its expression in modern reformism. They are also characterized by the expansion of traditional objects of theoretical analysis due to new pressing issues.


Neoclassical models in the economies of different countries: "Thatcherism", "Reaganomics". Abstract

The concepts of the Chicago school and the doctrines of the "supply economy" of "rational expectations" became another example of the effective intrusion of economic theory into the real economy.

During the implementation of economic reforms in England and the United States since the 80’s p. decisive steps were taken to restore self-regulatory mechanisms and limit state regulation.

In the mid-70’s p. it became obvious that inflation is not an alternative to unemployment, but only exacerbates its negative effects, turning it into a characteristic and permanent feature. The policy of most developed countries at that time was based on the principle of combating inflation and unemployment by freezing prices, increasing the budget deficit and public debt, reducing loans, increasing taxes.

Hayek once wrote that in a situation of rising inflation, governments must choose one of three possible economic policies: to continue to maintain inflation until complete chaos ensues; establish control over employment and prices, which will temporarily stop inflation, but change the nature of the economy, make it centrally controlled; restraining the increase in money supply, which will lead to rising unemployment, will reveal all the imbalances in the economic structure caused by inflation.


Monetarist monetary policy was introduced into the practice of managing public finances in Britain by the Callagen government in 1976 at the request of the International Monetary Fund. However, it was implemented very inconsistently because it was not popular.

M. Thatcher, who came to power under the slogan "supply economy" soon became convinced that it can be realized only when there are appropriate conditions. Therefore, as the basis of its economic policy, it takes the program of economic recovery, proposed by M. Friedman. At the request of the British government (1980), he outlined the essence of his model of economic regulation in a memorandum, where he theoretically substantiated the methods of its implementation and pointed out the directions and sequence of reforming economic relations. Economic policy, which was formed on the basis of his recommendations, has been steadily implemented for a decade and helped to strengthen the economic position of this country.

First of all, specific indicators of money supply growth in the medium term were identified as a means of controlling the money supply and its reduction was envisaged. The government’s goal was to limit the treasury’s money-making activities and protect it from the pressures of social demagoguery. In practice, this meant an automatic increase in discount rates and a reduction in lending when the growth of the money supply exceeds the control limit.

An important area of ​​money supply control was the decision to limit government spending, which creates a budget deficit. The number of government employees was reduced, the administrative apparatus was restructured, and especially its "expensive" units were liquidated.

Savings at the government level have, of course, affected local governments. A system of penalty budget allocations was introduced. And in preparation for the new elections, Thatcher included in her program a project of radical restructuring, which would guarantee the government full control over the dynamics of local taxes.

However, this policy also had negative consequences: the volume of housing construction was reduced, and some items of local budget expenditures became items of state expenditures. Savings on local spending on the social sphere required an increase in government spending.

Thatcher’s government has taken decisive action since the first election to prevent budget deficits, especially by increasing indirect taxes. At the same time, the tax burden on personal income was eased.

According to Friedman’s recommendations, the Conservatives tried to reduce spending on the social sphere, but in practice only managed to temporarily freeze them. This was due to the fact that during the reform period the economy was in crisis and the social sphere needed additional funds. However, the government did not abandon the idea, continuing to attack universal social programs, which required significant funds but were ineffective.

However, it was only after the second election that a social security project was developed, which provided for a significant reform of the state pension system and the guarantee of minimum incomes using strict means of controlling the financial situation of grant recipients. This project provided significant budget savings.

The doctrine of monetarism asserted that the normal functioning of free markets provides a natural level of resource use, including labor. That is why the Thatcher government declares the problem of unemployment universal, which cannot be solved with the help of stabilization or stimulus policies. Therefore, this is not a concern of the government, which can only coordinate the conditions for stable economic growth.

The government’s policy was aimed at forming a mobile labor market, ie adapting the labor force to the needs of production (the first step towards implementing the recommendations of the doctrine of "supply economy"), namely: stimulating retraining and vocational training of young people … In addition, measures have been taken to expand underemployment.

Budget expenditures for these purposes grew rapidly, but at the same time reduced expenditures to support the unemployed. Employment services played an important role in increasing employment. Thus, the Thatcher government has practically proved that employment is most influenced by policies to stimulate economic growth.

The concept of economic development, the implementation of which the government began in the mid-1980s, is based on the principle of free enterprise, formulated from the standpoint of monetarism and "supply economy". The restoration of the classical market economy was associated primarily with the denationalization of industry. The purpose of privatization was to demonopolize and create a competitive economy. It was also important to eliminate the need for the state to subsidize unprofitable and unprofitable state-owned enterprises, only 10% of which were self-financing, while subsidies to others were quite significant and to 50% of health care allocations, for example …

Privatization took the form of buyouts (direct and through shares) and provided significant revenues to the state and local budgets.

At the same time, decisive measures were taken to restructure the taxation system in order to promote business.

A significant stimulus to the dynamics of economic growth was the creation of free enterprise zones, within which special preferential rules for taxation, lending and customs control were introduced.

Along with these measures, a competition incentive program was created, which contributed to the creation of a large number of small and medium enterprises. This revitalized the economy, increased profitability and investment, and thus reduced unemployment.

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