Elemesov R. E.
"A Mixed Economy" and the Problems of Classification and Transformation of the Economic Systems.
Journal "Vestnik KazGU". Serial of Economic Siences. Almaty, Kazakhstan, 1998, ¹ 7.

Unprecedented socio-economic crisis in the history of most of socialist countries in the 1980s-1990s of the XXth century put an economic science in a difficult position not only in analyzing and generalizing the reasons of the crisis, but also (and it is more important) in seeking the way out of the crisis. In fact, it was settled to go out of the crisis by transferring from the previous economic system to another – the market system. But it proved to be so that the economic theory both in the West and in our countries did not expect such a change of developments and was not able to answer a lot of questions posed in the course of the economic reforms. Now it is clear that transition to the market economy will take a long time and the economic theory is to solve the task of theoretical generalization of the transformation laws of the economic systems.

As it was stated by R. Coaze, Nobel prize-winner in Economics in 1991, "that the significance of including the institutional factors into the main sections of economics was found out in the course of recent events in Eastern Europe. The former communist countries are advised to transfer to the market economy, and their leaders are eager to do it. But without the appropriate institutions it is impossible to transfer to a market economy at any level. And if we knew more about our own economy, we would be more useful for them."

Such kind of statement made by one of the most competent contemporary economists, shows that the economic system has not been studied thoroughly in the West either, many important characteristics of the market economy are still little investigated. The economic system of socialism is called differently: "command-administrative system", "command economy", "military-mobilization", "state" and so on. But none of them has been generally recognized. It means that the economic system of socialism has not been given the comprehensive characteristics either.

No wonder that their hasn’t been formed the theory of a "transition economy" yet, the so-called economy of the former socialists countries, the Republic of Kazakhstan to be included.

The existing economic theories, in better case, may aspire to an addequate reflexion of the national economy of some countries or some of its parts. There doesn’t even exist a kind of consensus on the meaning of the notion "economic system" among the economists. This notion has become a key notion in the economic theory of today.

Though in any more or less serious economic work you can come across this term several times, you will never find the definition itself. Besides, this term is often substituted by "economic order", "economic model", "national economy" and so on. But when we speak about radical changes in a definite economic system or its transformation into another, such a free use of scientific notions becomes incorrect.

That’s why we will try to give a more complete definition of the economic system. In fact, biologically and socially stipulated needs are characteristic of any person. We strive to obtain food, clothes, shelter, a variety of goods and services, that are associated with good or high living standards. We are also endowed with certain abilities and are surrounded with material wealth – natural and produced. That’s why it is quite natural to use the available natural and material resources – labor force and managerial abilities, instruments and machines, land and mineral resources – for producing goods and services satisfying our material needs and wants. It is exactly what we call the economic system, the activity carried out within the framework of the organizational mechanism. Such kind of definition is acceptable for the academic purposes when the students are introduced with a range of problems under study, but for the research of the transformation system it is not acceptable.

In order to understand the essence of the notion, let’s take this two words separately: "economic" and "system". In spite of the fact that the word "economy" is of Ancient Greek origin and goes back to the past, there is not a generally accepted interpretation of this notion so far. For example, the Large Soviet Encyclopaedia gives three different meanings of this word. Of course, we can give a lot of definitions, but the thing is that for us it is more important to clarify the content of the term, not simply its definition. In other words the economy is the activity of people on using material and spiritual resources for producing goods and services to satisfy their own needs and wants. This definition, of course, doesn’t aspire to the originality but it is quite acceptable for further reasoning.

For the purposes of our research the second part of the term, the word "system" is of more importance . Let’s take the commonly used definition: "System is a variety of elements that are interrelating with each other and form a certain integrity, unity…"

Thus, the notion "economic system" suggests different approaches to the solution of the problem of transforming and reforming of the economy.

First of all, for researching the economic systems it is necessary to use the method of systemized approach.

Secondly, methodology is not a research of a system’s content, but it is a sphere of theoretical premises of the definite analysis. But when the theories worked out within the framework of these methodological prerequisites are not able to explain the new phenomena any longer, the consensus on methodology may be violated.

With regard to the economic reforms in socialist countries it has become clear that none of the economic schools and theories can advise more optimal methods of transforming the economic systems existing in these countries.

Under these conditions "the problem of overcoming the theoretical failures in researching the processes of the economic transformation shouldn’t be reduced neither to the search of the "correct" version of the transformation nor to the attempts to combine different approaches . The thing is that the main versions of transformation are derived from the relevant initial images (or, according to I. Shoompeter, visions) of the economic reality. These images have been formed within the framework of different schools of economic thoughts."

As the "initial image or vision" of real economics at different schools has been shaped at different times and under different conditions, naturally, they cannot be used for the purposes of transforming the definite economic systems. The attempt to clarify the notion "economy" undertaken by Ananiev O. will not be of great use either.

The thing is that "economy" is a complicated dynamic "system which is always in the state of transformation", i.e. transition from one state to another. At the same time the unity, integrity of the system means that it must be stable to the external impact preserving its main characteristics. The general economic theory must at least catch the evolutionary laws of the economic system in view of the mentioned characteristics. On the basis of such a definition it is necessary to find out not similarities but differencies of the economic systems. That’s why it gives rise to the problem about the possible number of economic systems and their differencies. In the economic science there exists such an opinion that in the XX th century there are three economic systems that present themselves as different versions of a mixed economy. But if the economy is understood as the system of life security of people, then it is possible in an individual way ("robinzonade" in the economic theory), in the family (household), in the collective team (commune, firm), in the state (national economy), on a world scale (the world economy). All of them can be regarded as the economic system of different levels and at the same time they are the elements of the economic system of a higher level.

Historically, it developed so that the formation of economics as a science was going on on the basis of researching the national economic systems, and the science on the national economy was called "political economy". But over the last half a century many economists kept asserting that the economic science as it is and as politics must be differentiated. Political economy, as they suppose, must be a science and be not dependent of subjective assessments. Some other economists consider that the main direction of the political economic research must have the form of an "objective science". In fact, "economics" is the theory of the market economy without the "national uniform". Of course, such kind of theory cannot become an instrument of transforming a certain economic system.

"It doesn’t matter whether you like it or not, but on the historical scene the nations as historical communities of people related by the language, culture, mentality, using mutual economic ties, common territory and the national state as the means of national survival and development, are and will remain the leading actors. Interrelations of nations is the main (though not only) driving force of new history, including the history of the world economy" – wrote Olsevich Yu., Russian researcher.

Thus, the notion "economic system" in a pure sense of the word in the contemporary historical conditions is applicable only to the national economy. Theoretically there exist as many economic systems as the national states. In the economic sources (literature) they are called as the national models of the economy. The national economic systems differ from each other immensely, that’s why their theoretical description can be carried out on the basis of their classification according to their specific features. In such a way the abstract theories of the economic systems can appear, but they don’t reflect some certain system, but their group on the basis of some important feature. That’s why these theories were not very popular in the course of economic reforms in the former socialist countries.

By virtue of this fact, all the contemporary economic systems are called " mixed ", and all the theoretically existing types of economic systems are the abstract generalizing models created on the basis of the classification of the national models of the economy according to some feature. As there are a lot of specific features of any economic system, the theoretical models often turn out to be compilative and unfit for a definite country under definite historical conditions.

Does it mean that we must give up all the achievements of contemporary economic schools and strive for creating a "new theory"? it seems to us that the time for creating the common economic theory hasn’t come yet, but there exist quite an acceptable methodological foundation for the comparative analysis and classification of the national economies – methods of the systemized analysis. There is no doubt that all the existing national economies are the system formations because "economy" is a system. The system formations possess certain attributes, without which they cannot function, i.e. all the national economic systems possess these attributes in one way or another. Here we’ll try to give some examples of principal attributes.

Indispensable elements of complex systems are components or parts. The components of the economic systems are numerous and they are of great significance in the comparative analysis of different systems. The national economic systems can have different components and while classifying the economic systems this characteristics plays a great role. For example, under the planned economy it was not necessary to have a currency system or a network of commercial banks. Though this issue remains disputable, this feature is of great importance while classifying the economic systems.

The second attribute is the structure of the system, the compatibility of elements it consists of. The system is stable and functions effectively under conditions of compatibility of parts, the interrelations of which with each other ensure the development of the system. This quality is of specific significance for working out the ways of transforming the economic systems. The destruction of the main element of the system may lead to the destruction of the previous system; of the secondary elements – to the gradual transformation (shock therapy or gradualism in the process of reforming).

The third important feature of the complex system has its inside structure of interrelated elements striving for the definite goals. Besides, this feature is the functional aspect of the system. So, transformation of the economic system is not simply an aim in itself but the means of solving the definite purpose-oriented function.

The fourth feature shows that the system operates in the outside world communicating with it through a large number of channels. As related to the economic system it means that the given society sets the definite tasks and evaluates the system by using a range of certain indexes.

And, finally, there is a managerial aspect of the system, without which it cannot develop steadily. Irrespective of the fact, whether the managerial decisions objective or subjective, the system itself presupposes the presence of this attribute.

The characteristics of the complex unified systems might be much wider, but we have mentioned only those attributes that show to a greater extent the possible quest for new directions in the economic theory.

In conclusion, it should be noted that under conditions of the mature transformation of the economic system, the main requirement is not to let its complete collapse, i.e. the withdrawal of the "extra" elements and introduction of the new ones must be "smooth" in order to give them a chance to adapt to the new environment and to avoid incompatibility of elements in the definite economic system.

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