Production- this is the process of transforming nature by man in order to create the material goods necessary to meet the needs of people, society.

Production is the process of combining factors such as capital, labor, land and entrepreneurship in order to obtain new goods and services needed by consumers.

The factors used in production are divided into constant (fixed) and variable. The former include those quantitative scales, the application of which cannot be changed in a given time period. For example, if the release of a given volume of products must be carried out in three working days, then during this time it is simply impossible to change a certain part of the input factors, say, production capacities. The second includes applied production factors, the volume of which can be changed in a given time period.

Factors of production, i.e. the material and monetary resources at the disposal of the enterprise, serving the process of production and circulation, form production assets (capital is their synonym). At the same time, each enterprise also has non-production funds that serve to meet the social needs of workers.

Production funds enterprises are in constant motion and go through three stages (two circulation stages and one production stage). At the first stage (circulation), an enterprise (firm, entrepreneur) acquires the means of production and labor power with money, i.e. factors of production necessary for the production process. Schematically, the stage of movement of funds can be expressed as follows:

where D - initially advanced money; T - goods; SP - means of production; PC - labor force.

At the second stage (productive), the factors of production are combined and the production process is carried out, which ends with the creation of new economic goods, the cost of which is greater than the cost of the consumed factors of production by the value of the surplus product.

This stage goes through the following scheme:

where P - the process of production of goods; T "- a product containing a surplus product.

At the third stage, the goods produced are realized according to the scheme T "- D", where D" is the increased initially advanced money.

At this stage, the enterprise can have a real effect on the cost of resources, can make a profit and opportunities to expand production, increase wages, bonus funds, social development funds.

Enterprise funds, passing through three stages in its movement, take three forms: productive, commodity and monetary. At the same time, each stage of movement corresponds to a certain form: the first stage is monetary, the second is productive, and the third is commodity. The successive passage of funds through three stages and their transformation from one form to another is called the circulation of funds, it is carried out according to the following scheme:

The circuits of the funds are constantly repeated: the end of one circuit is the beginning of another. The circulation of funds, considered not as a separate act, but as a continuously repeating, renewable process, is their circulation. The duration of turnover is characterized by the turnover time of funds, which includes the time of production and the time of circulation.

Production time- this is the period of the funds being in the sphere of production, it includes the working period, the time spent by the means of production in the production stocks, the time of breaks associated with the peculiarities technological processes or organizational reasons.

Turnaround time is the time spent by funds in the sphere of circulation, i.e. time for the acquisition of means of production and for the sale of products. The turnaround time tends to decrease as a result of the introduction of intensive technologies, product quality improvement, advertising, awareness of the state of supply and demand, consumer tastes, fashion, etc.

Depending on the specifics of the turnover, the funds of the enterprise are divided into fixed and current. The structure of the company's funds is presented in table. 10.1.

Basic production assets- this is a part of the means of production (means of labor), which functions in the production process for a long time and transfers its value to the cost of the goods produced in parts, as it wears out. Wear core production assets is the loss of their value and consumer properties. Distinguish between physical wear and moral.

Physical deterioration means the loss of fixed assets of their use value during their use or under the influence of natural and technical factors(corrosion, weathering, etc.). Buildings, machines, equipment and other means of labor are also subject to physical wear and tear. Here we are talking about the loss of physical capacity of fixed assets.

Obsolescence expressed in the loss of the value of fixed assets while maintaining their consumer properties. There are two types of obsolescence. In the first case, the means of labor lose part of their value due to the appearance of similar but cheaper machines, machine tools, equipment, etc. The second type of obsolescence consists in the fact that existing means of labor are being replaced by new, more productive ones. Obsolescence means the economic inexpediency of the economic use of obsolete fixed assets.

The process of compensating for the depreciation of fixed production assets by gradually including their value in the costs of producing the goods created is called depreciation. Depreciation deductions are periodic deductions to the depreciation fund of a part of the value of fixed assets corresponding to the amount of their depreciation. Deductions to the depreciation fund are made on the basis of the depreciation rate, which is the ratio of the annual amount of depreciation deductions to the cost of labor instruments, expressed as a percentage. It takes into account the physical and moral deterioration of fixed assets.

In the structure of fixed assets, active (directly involved in production - machine tools, machines, control devices and other equipment) and passive funds (creating the necessary conditions for production - buildings, structures and other economic facilities).

Revolving production assets- this is a part of the means of production (objects of labor), which is entirely consumed during one production cycle, changing its natural-material form. Their value is fully included in the cost of producing economic goods. This group includes objects of labor, i.e. the cost of purchasing raw materials, auxiliary materials, fuel and wage. Note that the objects of labor either materially enter the produced product in the form of a new use value (raw materials), or are completely consumed in the production process (auxiliary materials, fuel).

Along with the main and circulating production assets, each enterprise also has circulation funds. These include:

• finished products that have left the production stage (products in warehouses or on their way to the consumer);
• cash enterprises that are on his accounts in a bank or at the cash desk;
• accounts receivable - the amount of debts due to the enterprise from legal entities and individuals as a result of economic relations with them.

Circulating production assets and circulation funds form working capital enterprises. The turnover of working capital is an important indicator of the effectiveness of their use: the higher the turnover rate, the less working capital is required for the production and circulation of the same volume of products.

Since the productive consumption of available resources is carried out in the production process, there is a functional relationship between the volume of production and the amount of consumed production resources. It can be expressed using a production function. If the entire set of production resources is represented as the costs of labor, capital and materials, then production function has the following form:

Q = f(L-K-M),

where Q is the maximum volume of products produced with a given technology and a given ratio of labor (L), capital (K) and materials (M).

The production function is usually calculated for a specific technology.

Technology is the practical use of technology, equipment, physical and intellectual capabilities of the enterprise's personnel. Improvement in technology leads to new production methods based on the use of new machinery and equipment, as well as more skilled labor, which allows more products to be produced and therefore reflects a new production function. For various kinds industries (automobiles, agricultural products, confectionery, etc.) the production function will be different, but they all have the following common properties:

• there is a limit to the increase in production that can be achieved by increasing the cost of one resource, all other things being equal;
• there is a certain mutual complementarity (complimentarity) of production resources and their interchangeability (substitution). The complementarity of resources means that the absence of one or more of them makes the production process impossible - production stops. At the same time, the factors of production are interchangeable to a certain extent. The lack of one of them can be compensated by an additional amount of the other, i.e. resources can be combined with each other in the production process in various proportions;
• a differentiated assessment of the influence of each of the factors on the dynamics of output is given in relation to certain periods of time.

isoquant(from the Greek isos - the same and lat. quant - quantity) is a curve, the points on which show different combinations of factors used, under which the same volume of production is produced. The constructed isoquant has the shape of a concave curve. This means that a decrease in the amount of factor-capital consumed while moving along the isoquant requires a corresponding increase in the amount of factor-labor in order to prevent a decrease in output.

Depending on the time spent on changing the amount of resources used in production, there are short-term and long-term periods in the activities of the company. The short run is the period of time during which the firm is unable to quantify all of its factors of production. In this case, some factors will be unchanged, fixed, others - changing, variable. Influence the course and effectiveness of production in short term the firm can only by changing the intensity of the use of its variable factors (production capacity, labor, raw materials, auxiliary materials, fuel) or changing their quantity.

The long-term period is such a time period during which the firm is able to change the amount of all factors used, including production capacities. At the same time, this period should be long enough for some firms to leave the industry, while others, on the contrary, to enter it.

Marginal rate of technological replacement(MPTS) expresses the number of units of a given resource that can be replaced by a unit of another resource while maintaining the same output.

For example, the marginal rate of technological substitution of capital for labor is determined by the amount of capital that can replace each unit of labor without causing an increase or decrease in the production of automobiles. The marginal rate of technological substitution at any point of the isoquant is equal to the slope of the tangent at that point, multiplied by -1:

where ΔК is a reduction or increase in the resource of capital; ΔL - reduction or increase in labor resource; Q is the volume of production.

The curvature of the isoquant helps the manager to determine exactly how much labor savings will be required during implementation. new technology production.

According to the law of the production function, a change in the quantity of one of the factors of production causes a unidirectional change in the volume of production. The total amount of product produced with a certain amount of a variable factor and the invariance of other factors is the total (cumulative) product (TR) of the variable factor.

To characterize the product obtained by increasing the consumed variable factor, such concepts as "average product" and "marginal product" are also used. The average product of a variable factor of production (AR) is the ratio of the total product of a variable factor to the amount of that factor used. For example, if the variable factor is capital or labor, then the average product formula would be:

where AP is the average product of the variable factor (capital AR K, labor AP L); K - variable resource (capital); L - variable resource (labor).

In essence, this formula calculates labor productivity.

marginal product of a variable factor of production(MP L) is the increase in total product achieved by increasing this factor by one additional unit. If we again call labor as a variable factor, then we can write:

where MR is the marginal product of labor; ΔTR - change (increase) in the total output; ΔL - increment of labor as production factor for one extra unit.

The marginal product of a variable factor characterizes the marginal productivity of a variable factor of production, i.e. the productivity of the last additional unit of this factor involved in the production process (for example, the last worker involved in the production process), and the average product is its average productivity.

The relationship between a quantitatively changing variable factor and output does not mean that the latter always grows in proportion to this increasing factor. The most significant increase in the total product is given by the initial increments of the variable factor. Then there comes a moment, after which the same increments of it bring an ever-decreasing effect. It is quite possible that, at a certain stage, an increase in the variable factor will lead to a decrease in the total volume of output. This is where it comes into play law of diminishing marginal productivity, or diminishing returns of factors of production. This law is formulated as follows: starting from a certain moment, each subsequent cost of a variable factor of production gives a smaller and smaller increase in output.

Basic concepts of the topic

Company. economic independence. Commercial enterprises. factors of production. Variable and constant factors of production. Short term. Long term period of time. Production assets of the enterprise. Fixed and circulating production assets (main and working capital). circulation funds. Circulation of funds (factors of production). Turnover of funds, turnaround time. Depreciation of fixed production assets. Physical and moral deterioration. Depreciation, depreciation rate. production function. The total product of the enterprise, average and marginal. Law of diminishing marginal productivity. Isoquant. Marginal rate of technological substitution.

test questions

1. What is meant by production?
2. What factors are used in the production process?
3. What are the characteristics of an enterprise?
4. What types of enterprises can be distinguished depending on various classification criteria? Describe these types.
5. What is the difference between commercial enterprises and non-commercial enterprises?
6. What is the structure of the production assets of the enterprise?
7. What is the essence of the circulation and turnover of production assets?
8. What is the turnover time of funds?
9. What are the core funds?
10. What are the features of the physical and moral types of depreciation of fixed production assets?
11. What is meant by depreciation and how to calculate the depreciation rate?
12. What is the company's working capital?
13. What relationship does the production function express?
14. What common properties have production functions?
15. What indicators are used to measure the volume of output that depends on changes in the value of a variable factor?
16. What is the essence of the law of diminishing marginal productivity and under what conditions does it operate?
17. What is an isoquant and what properties does it have?
18. What does it consist of economic sense indicator of the marginal rate of technological substitution of capital by labor?
19. What are the characteristics of a production function with perfect interchangeability of factors of production?
20. What is a production function with a fixed proportion between the factors used?

Forms of organization economic activity are called economic systems. The economic system is an established and operating set of principles, rules, laws that determine the form and content of the main economic relations that arise in the process of production, distribution, exchange and consumption of an economic product.

There are 4 types of economic systems: - traditional economic system - centralized (planned) - market - mixed economic system, which provides for more active participation of the state in the regulation of economic processes compared to a liberal market economy

Traditional Centralized Market What should be produced? Agricultural products, hunting, fishing. Few products and services are produced. What to produce is determined by customs and traditions that change slowly. Determined by groups of professionals: engineers, economists, representatives of industry - "planners" Determined by the consumers themselves. Producers produce what consumers want, i.e. what can be bought How to produce? Produces in the same way and with what the ancestors produced. Determined by the plan. Determined by the producers themselves. Who receives goods and services? For whom to produce? Most people exist on the brink of survival. The surplus product goes to the chiefs or landowners, and the remainder is distributed according to custom. "Planners", directed by political leaders, determine who and how much goods and services will receive. Consumers get as much as they want, producers - profit. MAIN TYPES OF ECONOMIC SYSTEMS

Who receives goods and services? For whom to produce? Most people exist on the brink of survival. The surplus product goes to the chiefs or landowners, and the remainder is distributed according to custom. "Planners", directed by political leaders, determine who and how much will receive goods and services. Consumers get as much as they want, producers - profit. Definition A way of organizing economic life based on backward technology, manual labor, and a multi-structural economy. A way of organizing economic life, in which capital and land, almost all economic resources are owned by the state. A way of organizing economic life in which capital and land are privately owned by individuals.

The Traditional economic system is dominated by common, communal or state ownership (land and capital are in common ownership, and economic activity is based on traditions passed down from generation to generation). The basis of the traditional economic system is the subsistence form of social economy. In natural economy, the products of labor are intended to satisfy own needs manufacturer. The main feature of the natural economy: - isolation; - manual labor; - low labor productivity - lack of prerequisites for economic growth.

Subsistence economy is represented mainly by isolated economic units - a community, a patriarchal family economy, slave-owning and feudal estates. The main area of ​​the traditional economy is agriculture. Resources are distributed according to tradition. Factors of production are used inefficiently. In the traditional economic system, dependence on natural conditions is great. Technological progress, which conflicts with the traditional way of life, is limited.

Traditional economy: dominance of subsistence farming; production, exchange and distribution of products are based on customs and traditions products are produced for their own consumption, the division of labor is carried out by sex and age, the low level of productive forces is based on two factors of production: land and people are not used economic methods of coercion. limited number of goods produced.

The market economy is based on: private ownership of factors of production on entrepreneurial interest in competition - an important condition for a market economy is the rivalry between sellers and buyers for the best use of their economic resources; on the price mechanism that regulates the relationship of exchange between sellers and buyers - free prices. These prices are formed as a result of the free interaction of the forces of demand (buyers) and supply (sellers and producers) in the market. The producer, when deciding on the production of goods and services, is guided, on the one hand, by the prices of factors of production, and, on the other hand, by the estimated price at which the goods will be sold. on the freedom of consumer choice in the market of goods and services, the main motive and driving force of the economy is self-interest. Free pricing, economic independence of producers, competition of producers are the conditions for the functioning of a market economic system.

Negative manifestations of the Market system: - there is a deep differentiation of society in terms of income; - there is no proper social protection; - development is cyclic; - unemployment; - the importance of the individual is devalued; - the criminal situation worsens. However, in modern world there is no economy based solely on market mechanism. Market creation is not an end in itself, but a means of creating an effective economic system

To create a market, it is necessary to solve the following tasks: - liberalization of economic activity - freedom, rejection of central planning; - elimination of fixed prices; - termination of financial support for privatized enterprises; - the fight against monopoly, the creation of market competition; - restructuring of production, increasing the production of consumer goods; - Achievement of product competitiveness.

Command-administrative economic system: the state is the owner of all means of production; the state disposes of all economic resources; the state organizes the production of goods in accordance with a plan adopted by it in advance; a high degree of monopolization of the economy - the concentration of production at large enterprises; tall specific gravity military-industrial complex; management of the economy is carried out with the help of command-and-control administrative methods(orders, control, punishment, encouragement); all decisions are made centrally government bodies; there is no independence of commodity producers in matters relating to the production and distribution of products.

Pros: The state guarantees social protection, price stability. Disadvantages: - wage equalization does not stimulate entrepreneurship and initiative of producers; - there is a shortage of goods - the guarantee of the state order does not stimulate the introduction of efficient technologies. The predominance (dominance) of state property, state control over the production and distribution of goods and services, centralized production planning are the conditions for the functioning of the command-administrative economic system

Mixed economy modern conditions in developed countries there is a mixed economy. It combines market and state regulation. A mixed economic system involves a combination of private ownership of the vast majority of economic resources with limited state ownership.

A mixed economy is a way of organizing economic life in which land and capital are privately owned, and the distribution of limited resources is carried out both by markets and with significant state participation. There are sectors where the market cannot meet the needs of society - the defense of the country, large national projects, etc. IN mixed economy under the dominance of private property, there is a significant public sector. However, these SOEs do not receive government plans, they are forced to compete on equal terms with private enterprises and operate according to market laws. In its pure form, no type of economic system exists.

2. Establish a correspondence between the types of economic systems and their features. For each position given in the first column, match the corresponding position from the second column. SIGNS OF ECONOMIC TYPES OF ECONOMIC SYSTEMS 1) economic proportions are established A) Command economy based on central planning 2) economic needs of the population B) Traditional economy and depend on social belonging 3) decisions on major economic issues are made by the state 4) production technologies do not change for a long time 5 ) prices are set by the state

You make daily decisions that are the essence of the economy. Let's say you have $30. and you think how to spend them. Should you buy new jeans? A couple of CDs? A ticket to a rock concert? Or: how to spend time from three to six, say, on Thursday? Should you stay late at work despite a shorter working day? Or maybe take a course? Or prepare for a test in economics? Watch TV? Sleep? Both time and money are finite resources, and making decisions about scarce resources comes at a cost. If you choose jeans, the cost is to forego the CDs and the concert. If you sleep or watch TV, the cost may translate into a lower test score. Rarity, choice, and cost are the main themes of this chapter.

In this chapter, we introduce and analyze the fundamentals of economics. We intend here to develop the definition of economics given in Chapter 1, Subject and Method of Economics, and to reveal the essence of the problem of economy. To this end, we will illustrate, expand, and modify our definition of economics using tables and curves. production possibilities. We then briefly describe the different ways in which institutionally and ideologically different countries "solve" or respond to austerity problems. Finally, we will consider the market system as a model of circulation of flows.

Osnova economics

Two fundamental facts form the basis of economics and, in essence, cover the whole problem of economy. It is absolutely necessary to carefully define and think deeply about these two facts, since everything that will be the subject of our study in the field of economics is directly or indirectly related to them.

1. The material needs of society, that is, the material needs of its constituent individuals and institutions, are literally limitless or insatiable.

2. Economic resources, that is, the means of producing goods and services, are limited or rare.

Limitless Needs

Let us try to examine in detail and understand these two facts in the order in which they are named. What exactly do we mean by the concept of "material needs" in the first case? First of all, the desire of consumers to acquire and use goods and services that provide them with utility - this is how economists designate the pleasure or satisfaction received by people. Their list includes a surprisingly wide range of products: houses, cars, toothpaste, players, CDs, pizza, sweaters, etc. In short, a myriad of commodities, which we sometimes classify as basic necessities (food, housing, clothing) and luxury goods (perfumes, yachts, mink coats), are capable of satisfying human needs. Of course, what was a luxury item for Smith may be a necessity for Jones, and what was considered a luxury item a few years ago is now the most common essential item.

Services satisfy our needs as well as material products. Car repair, appendix removal, hair cutting, and legal advice, as well as goods, satisfy human needs. Upon mature reflection, we realize that we actually buy many products, such as cars and washing machines, precisely for the sake of the services they provide to us. The difference between goods and services is often much smaller than it seems at first glance.

Private firms and government departments are also in material need. Private firms want to have factory buildings, machines, trucks, warehouses, communication systems and everything else that allows them to achieve production goals. The government, reflecting the collective needs of the citizens of the country or pursuing its own goals, seeks to build highways, schools, hospitals, accumulate military equipment and weapons.

In their totality, material needs are insatiable, or limitless, which means that material needs for goods and services cannot be fully satisfied. Our needs for specific product or a service can be satisfied: for example, enough toothpaste or beer can be obtained for a short period. Of course, one appendicitis operation exhausts a person's need for it.

But the goods in general are quite another matter. We don't get them and probably can't get enough of them. This conclusion can be confirmed with a simple experiment. Suppose that all members of a society are asked to list the goods and services they would like to have but do not have. This list is likely to be impressive!

Moreover, over time, the needs multiply. Having satisfied some needs from this list, we replenish it with new ones. Material needs, like rabbits, have a high breeding rate. The rush of new products whets our appetites, and the hype tends to convince us that we are in need of countless items that we would never have thought to buy without this advertising. Not so long ago, we did not have the desire to acquire personal computers, light beer, VCRs, fax machines, CDs simply because they did not exist in the world. Moreover, having satisfied a simple need, we can no longer stop: it is known that the purchase of cars of the Escort or Geo models generates a desire to buy a Porsche or Mercedes.

In general, it can be said that at any given moment the individuals and institutions that make up society experience many unsatisfied material needs. Some of these needs - food, clothing, shelter - have common biological roots. However, others arise under the influence of customs and traditions that have developed in society. The specific types of food, clothing, housing that we seek to acquire are often determined by the general social and cultural environment in which we live. Over time, needs change and multiply as a result of new products and under the influence of extensive advertising and vigorous sales promotion.

Finally, let us also emphasize that the ultimate goal or goal of all economic activity is the satisfaction of these diverse material needs.

Lack of resources

Consider now the second fundamental fact: economic resources are limited, or scarce. What do we mean by the term "economic resources"? In general, we mean all natural, human and man-made resources that are used to produce goods and services. All this includes a wide range of objects: factory and agricultural buildings, all kinds of equipment, tools, machines used in the production of industrial goods and agricultural products; various means of transport and communication; innumerable types of labor; finally, last but not least, land and all kinds of minerals. It is quite obvious that there is a need for the simplest classification of these resources, and we divide them into the following categories:

1. material resources - land, or raw materials, and capital;
2. human resources - labor and entrepreneurial ability.

Earth. The economist puts much more meaning into the concept of land than most people. The concept of "land" covers all natural resources - all "gifts of nature" that are applicable in manufacturing process. This broad category includes resources such as arable land, forests, mineral and oil deposits, and water resources.

Capital. The concept of capital, or "investment resources", covers all produced means of production, that is, all types of tools, machines, equipment, factory, warehouse, vehicles And sales network used in the production of goods and services and their delivery to the final consumer. The process of production and accumulation of these means of production is called investment.

It is important to note two more points here. First, investment goods (means of production) differ from consumer goods in that the latter satisfy needs directly, while the former do so indirectly, providing for the production of consumer goods. Second, in the definition given here, the term "capital" does not imply money. It is true that managers and economists often speak of "money capital," referring to money that can be used to purchase machinery, equipment, and other means of production. However, money as such does not produce anything, and therefore cannot be considered an economic resource. Real capital- tools, machines and other productive equipment are an economic resource; money, or financial capital, is not such a resource.

Work. Labor is a capacious term that the economist uses to designate all the physical and mental abilities of people applicable in the production of goods and services (with the exception of a special kind of human talents, namely entrepreneurial ability, which we, due to its specific role in a capitalist economy, have decided considered separately). Thus, the work performed by a lumberjack, a salesman, a machinist, a teacher, a professional football player, a nuclear physicist - they are all covered by the general concept of "labor".

Entrepreneurial ability. Finally, what can be said about that special human resource, which we call entrepreneurial ability or, more simply, entrepreneurship! We will reveal the specific meaning of this term by defining four interrelated functions of an entrepreneur.

1. Entrepreneur takes the initiative to combine resources - land, capital and labor into a single process of production of goods or services.

Acting as the spark plug and catalyst, the entrepreneur is both the engine of production and the middleman bringing together other resources to carry out a process that promises to be profitable.

2. Entrepreneur takes on the difficult task of making major business decisions, that is, those non-routine decisions that determine the direction of a commercial enterprise.

3. Entrepreneur is an innovator, one who commercially introduces new products, new production technologies, or even new forms of business organization.

4. Entrepreneur is a person who takes risks. This follows from a careful study of the other three of its functions. In the capitalist system, profit is not guaranteed to the entrepreneur.

The reward for his time, efforts and abilities may be tempting profits or losses and, in the end, bankruptcy.

In short, the entrepreneur risks not only his time, labor and business reputation, but also by invested funds - their own and their partners or shareholders.

Decline in the productive capacity of the Cuban economy under Fidel Castro

The inefficiencies inherent in a command economy, a thirty-year trade embargo from the United States, and the recent withdrawal of aid from the Soviet Union are all leading the Cuban economy to collapse.

The fortieth anniversary of the communist revolution in Cuba in 1993 was overshadowed by the collapse of the economy. A shortage of basic goods began to appear on the island by mid-1989, and since then the problem has become wider and more acute. Long queues have become commonplace as consumers look to buy rationed items such as eggs, meat, fish and soap. Approximately 50 thousand Cubans have been diagnosed with inflammation of the optic nerve, which occurs due to malnutrition and lack of vitamins and gradually leads to blindness. Due to the lack of electricity, enterprises are closed and construction is curtailed. Due to the lack of gasoline and spare parts, cars, buses, tractors stopped. instead of tractors agriculture Ox-drawn carts are used, and hundreds of thousands of bicycles have been imported from China to replace cars and buses.

There are three reasons for the collapse of the Cuban economy under the leadership of Fidel Castro.

First, the Cuban economy is increasingly suffering from the problems posed by central planning, which have already led to the collapse of the command economies of Eastern Europe and the former Soviet Union. Central planning is simply unable to: a) accurately assess the needs of citizens; b) perceive market signals that lead to lower production costs; c) provide the necessary economic incentives for the efficient operation of workers and managers.

Secondly, the American trade embargo served as a factor in the economic downturn in Cuba. Although only 90 miles separate Cuba from the huge American market, this market was closed to Cuba for 30 years, which markedly reduced the volume and distorted the structure of its foreign trade.

Thirdly, the patronage of the Soviet Union ceased. For several decades, the Soviet Union provided significant financial support to its communist partner in the western hemisphere. The Soviet Union bought Cuban exports (mostly sugar) at inflated prices and sold oil and other goods to Cuba for low prices. According to estimates, Soviet economic and military assistance to Cuba averaged $5 billion. in year. The crisis of the Soviet economy and the subsequent political collapse of the Soviet Union put an end to these subsidies and dealt a very noticeable blow to the Cuban economy.

Estimates of the decline in Cuba's productive capacity vary. Some believe that Cuba's GDP has halved in recent years; others say three-quarters. In any case, this decline in production is not a temporary shift to a point inside Cuba's production possibilities curve, but rather a significant shift of the curve itself to the left and down.

Castro tried to rejuvenate the Cuban economy in several ways. First, an attempt was made to revitalize the tourism industry through joint ventures - in particular in the construction of hotels and resorts - with foreign firms. Secondly, Cuba invited foreign companies to explore for oil reserves on the island. Thirdly, Cuba is making notable efforts to establish trade relations with new partners such as Japan and China. It is doubtful that these usipias will be successful, and most experts predict that economic crisis in Cuba would entail either sweeping reforms towards a market economy or the overthrow of the Castro regime.

1. The science of economics is based on two basic facts: first, the material needs of people are practically unlimited; secondly, economic resources are limited.
2. Economic resources can be classified as material resources (raw materials and capital) and as human resources (labor and entrepreneurial ability).
3. The science of economics deals with the problem of using limited resources in the production of goods and services in order to satisfy the material needs of society. For this use to be efficient, it is vital that the available resources be fully employed and that the corresponding full output be produced.
4. Total production implies production efficiency - the production of any product with least cost and resource allocation efficiency - the production of a particular set of products most desired by society.
5. An economy that has achieved full employment and production efficiency, that is, one that operates on a production possibilities curve, is forced to sacrifice the output of some goods and services to increase the production of others. Since the performance of resources in different options their possible use is not the same, the redistribution of resources from one sphere of their application to another is subject to the law of increasing opportunity costs; this means that the production of additional units of product X entails the abandonment of the production of all more product Y.
6. Allocation efficiency means reaching the optimal or most desirable point on the production possibilities curve. It is determined by comparing marginal benefits and marginal costs.
7. Over time, technological progress, the increase in the quantity and quality of human and material resources allow the economy to produce all kinds of goods and services in ever greater volumes. A society's current choice of production structure determines the future position of its production possibilities curve.
8. Different economic systems world differ among themselves in their ideologies, as well as in their approach to solving the problem of economy. The fundamental differences are as follows: a) private or state ownership of resources; b) use as a coordinating mechanism market system or central planning.
9. The operation of the capitalist system can be described using the circular income model. This simplified model represents the markets for products and resources and the main streams of income and expenditure, as well as the resources and finished goods that form the circulatory system of the capitalist economy.

When analyzing the influence of the time factor on the elasticity of supply, economists distinguish between instant, short-term and long-term (long-term) market periods.

A. Marshall introduced the time factor for the first time to study the equilibrium of competitive prices.

Three types of equilibrium are distinguished depending on the market period during which producers can make certain changes in the factors of production: instantaneous equilibrium, short-term equilibrium, long-term equilibrium.

Instant Balance installed in the shortest market period. It is too small for producers to have time to respond to changes in demand and prices for a given product by adapting factors of production and changing supply. Therefore, the volume of supply in an instant market period is unchanged, fixed. In other words, the supply is perfectly inelastic, the supply schedule is a vertical line S m . With an increase in demand from D 1 to D 2, the equilibrium position will move from point O to point M, and the equilibrium price will increase significantly from P o to P m .

Short run equilibrium set in a short market period. During short term manufacturers cannot change their production capacity, technical base, number of equipment. However, they already have enough time to more or less intensively, depending on the change in demand, use their production capacities, equipment, technology. As a result, during this period, with an increase in demand, producers will be able to increase production through more intensive use of production capacity (for example, by attracting additional work force, increasing the shift work of equipment, improving the organization of labor and production). The supply of products due to changes in variable resources will increase somewhat and will be more elastic. The supply schedule will acquire some positive slope S s . The equilibrium position will move to point S. The equilibrium price P s will be higher than the initial price before the increase in demand P o , but lower than in the instantaneous market period after the increase in demand P m .

Long term equilibrium comes in long term. It can be long enough for operating firms to be able to adapt all resources to change production. Depending on the change in demand for products, individual firms can expand or reduce their production capacity, change the technical base. New enterprises can enter this industry and vice versa, some of the existing ones can leave it. As a result, with an increase in demand, manufacturers will be able to significantly increase production by expanding production capacities, updating equipment and technology, and entering new firms into the industry. Accordingly, the supply will increase significantly, which will be even more elastic. Supply curve S l will become flatter than in the short term. The equilibrium position will move to point L. The competitive price of the long-term equilibrium P l will be lower than at a short-term P s and even more so at an instantaneous P m equilibrium, but somewhat higher than the initial price that existed at a lower demand P o . A. Marshall associated a certain increase in the price of a long-term equilibrium (“normal price”) with an increase in demand compared to the equilibrium price with a lower demand with growing production costs in a developing industry. He thought it was normal normal phenomenon in a competitive environment, due to the fact that the expansion of the industry leads to an increase in prices for the resources consumed in it. A developing industry increases the demand for additional high-quality and productive means of production from other industries, contributing to an increase in prices for material resources, increases the demand for skilled workers by increasing their wages. Ultimately, this leads to an increase in production costs in this industry and, accordingly, to some increase in prices for its products. Therefore, the supply schedule in the long run can be described not as perfectly elastic (horizontal line), but as slightly raised, sloping.

Professor Klaus Schwab is a Swiss economist, founder and permanent president of the World Economic Forum in Davos since 1971.

The World Economic Forum is a Swiss non-governmental organization, the most known organization annual meetings in Davos. Leading business executives, political leaders, prominent thinkers and journalists are invited to the meetings. The subject of discussion are the most acute world problems, including public health and environmental protection.

We are on the verge of a technological revolution that will completely change the way we live, work and communicate. We are facing the greatest transformation in the history of mankind - the greatest in scale and complexity. We do not yet know exactly how this revolution will take place, but it is already clear that the answer to it must correspond in scale to the revolution itself; all participants in global politics must change, all players, from private to public sectors, both the academic world and society itself must change.

The first industrial revolution used the power of water and steam to mechanize production. The second industrial revolution used electricity for assembly line production. The third - automated production with the help of electronics and information technology. The fourth industrial revolution is based on the third - since the middle of the last century, the digital revolution has been going on in all areas of life. Technologies are merging, and the boundaries of the material, digital and biological worlds are blurring.

There are three signs by which one can judge that today's changes not only continue the Third Revolution, but are the heralds of the Fourth: speed, scale, and systemic consequences. Mankind has never seen such rapid technological progress. Compared to past industrial revolutions, which developed linearly, the scale of the Fourth is increasing exponentially. The fourth revolution is affecting every industry in every country in the world. The depth and breadth of the changes caused by it require the transformation of entire systems of production, management and management.

The possibilities of billions of people, constantly connected to each other through mobile devices with unprecedented power, memory and giving access to all the knowledge of mankind, are truly limitless. Soon these opportunities will increase many times over; new breakthroughs are being made in hitherto unseen areas - artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3D printing, nanotechnology, materials science, new batteries, quantum computers.

Already today we are confronted with artificial intelligence - autonomous machines, drones, virtual assistants, translator programs, advisor programs. The constant growth of computing power and ever-increasing volumes of data have allowed us to make more and more breakthroughs in the creation of artificial intelligence over the past few years: there are programs that develop new drugs and new algorithms that predict new trends in our culture.

Digital technologies are intertwined with material ones every day. Engineers, designers, architects - they all work with computer modeling, 3D printing, develop new materials, are interested in synthetic biology. All this brings us closer to the symbiosis of a person with microorganisms inside his body, with consumed products, even with buildings in which he will live.

Opportunities and Challenges

Like past similar processes, the Fourth Industrial Revolution will be able to globally raise the world's standard of living. The biggest beneficiaries of these changes so far are those who have access to digital world; Advances in technology have created products and services that make our lives easier and better. Order a taxi, book a seat on an airplane, buy groceries, listen to music, watch a movie, play a game - now all this can be done remotely.

In future technological innovation will make a revolution in production, raise its efficiency and productivity at times. Prices for transportation and communications will fall, global supply chains will become more efficient due to advanced logistics, the cost of trade will fall, which will create new markets and spur economic growth.

But at the same time, the new Revolution, as economists Eric Brynolfsson and Andrew McAfee note, could also strengthen the financial and social inequality around the world, disrupting labor markets. Automation of production will lead to machines, which will only widen the gap between the profitability of capital and the profitability of labor. It is possible, however, that the replacement of workers by machines will generally lead to an increase in the number of safe and well-paid jobs.

So far, we do not yet know which of these scenarios our world will follow. History hints that most likely we are waiting for some kind of combination of one with the other. But I am sure of one thing - in the future, the main factor of production will not be capital, but talent. This will lead to the division of the labor market into a low-paid segment of jobs that do not require qualifications, and a highly paid segment of highly skilled labor, which, in turn, will exacerbate social conflicts.

In addition to economic inequality, the Fourth Industrial Revolution may also increase social inequality. The biggest beneficiaries of innovation are intellectuals and capitalists - innovators, shareholders and investors. This creates a financial gap between those who live off labor and those who live off capital. Therefore, technological progress is one of the main reasons for the stagnation and sometimes even a decrease in the income level of the majority of the population of developed countries: the demand for highly qualified specialists has risen, while the demand for low-skilled labor has been falling and will continue to fall. As a result, either completely unskilled people or specialists are in demand; empty in the middle.

This explains the fear of the future and the acute sense of frustration experienced by the modern worker. It also helps explain why the middle class around the world feel dissatisfied and unfair. A winner-take-all economy, to which most members of the middle class are denied access, leads to the decline and destruction of a democratic society.

Society is permeated with digital technologies, the very dynamics of information transfer has changed - this also feeds discontent. More than 30% of the world's population today uses social media and media for communication, education and dissemination of information. Ideally, this should strengthen intercultural ties and cooperation. But unfortunately freedom of information also leads to the growth of unsupported expectations, misunderstanding of the criteria for success for groups and individuals, and the spread of extremist ideas and ideologies.

Consequences of the revolution for business

All directors and senior managers with whom I had to talk on this topic expressed the same idea: innovations that appear with incredible speed violate any forecasts and business plans. Even the most informed of my interlocutors could not keep up with the ever-evolving world. The technologies generated by the Fourth Industrial Revolution are influencing the business world more and more.

The supply has changed - new technologies have made it possible to find new ways to deliver goods to the consumer, which has destroyed or changed the supply chains that existed before.
Older companies have more and more young, nimble competitors who, thanks to access to global network outperform business veterans in research, development, marketing, sales and manufacturing. Young competitors suddenly become faster, provide better services, but at a lower price than their predecessors.

The demand has also changed. Business transparency has grown, consumers are increasingly influencing companies, new patterns of consumer behavior (largely due to access to mobile networks) are forcing businesses to adapt to the new state of affairs. Design solutions, the sales market, methods of delivering goods and services are changing.

The key trend of new business platforms is the ever-increasing mixing of supply and demand, the emergence of economies built on exchange. New platforms designed specifically to be accessed via smartphones or other mobile gadgets attract and gather many people, creating completely new types of consumption along the way. It is becoming easier for a person or company to create capital, which changes workers and social conditions. All these new platforms are multiplying and dividing into more specific service markets - laundry, shopping, parking, massages, tourism and the like.

In general, there are four main effects that the Fourth Industrial Revolution has on business: rising consumer expectations, improving product quality, group innovation, and the emergence of new forms of organization. Today, the customer is at the epicenter of the economy. Whoever he is, physical or legal entity, its maintenance is a task modern economy. Tangible goods and services are improved by digital technologies which increases their value. Materials are getting better and cheaper, and new ways of accumulating and studying data are optimizing their production. Analyzing consumer feedback and business success requires new forms of labor cooperation, taking into account the increased speed of development and changing markets. The emergence of global digital platforms and new business models means that the very concepts of “talent”, “culture” and “organization” need to be revised.

In general, the transition from a purely digital realm (Industrial Revolution III) to technologies based on a mixture of different spheres (Industrial Fourth Revolution) is forcing businesses to rethink the very foundations of their business. But the conclusion remains the same: CEOs and directors need to learn to understand the world around them, look for new business opportunities, and constantly evolve.

The consequences of the revolution for the state

Technologies that have emerged at the intersection of the physical, digital and biological world will lead to the creation of new platforms through which citizens can convey their opinion to the government, coordinate their actions and even avoid the attention of the authorities. At the same time, states will gain new tools for population control based on ubiquitous surveillance and power over digital infrastructure. But governments will have to change and adjust to the new levels of public involvement in politics. The state will cease to be the main source of wealth, which means that we are waiting for the redistribution and decentralization of state power.

The ability of states to change will become a matter of their survival. If they can accept the new, transparent, ever-changing world, they will endure. Refusing to change, they doom themselves to the growth of internal conflicts.

The main changes will affect the mechanisms of regulation. Modern regulatory systems appeared in politics after the end of the Second Industrial Revolution, at a time when the state had time to study the issue in its entirety, and then develop regulatory mechanisms. The whole process was linear and mechanistic, and went from top to bottom.
But this approach no longer works. The fourth industrial revolution has accelerated development processes so much that the old methods of regulation simply cannot keep up with more and more new technologies.

How can the state pursue the interests of the people while encouraging innovation and technological progress? The answer was given by the private sector, creating a "flexible" governance, especially in the areas of development software. Such management means that the regulatory mechanism itself must adapt to new technologies just to understand what it regulates. And for this method of management to work, the state and regulatory structures will have to work closely with business and society.

The fourth industrial revolution will change the very nature of national and international security. It will affect both the type of conflicts and their nature. The history of military affairs and national security is the history of technological progress. Modern interstate conflicts are increasingly "hybrid"; they combine direct actions on the battlefield with non-state phenomena and elements. The line between war and peace, soldier and civilian, and even violence and non-violence (think cyberterrorism) is frighteningly blurred.

With the development of military technologies, the advent of biological and autonomous weapons, non-state associations of people will reach the same level of lethality as states. This vulnerability will cause an explosion of fear in the population. At the same time, technological breakthroughs will potentially reduce the danger of military action by creating protective systems or increasing the accuracy of weapons.

The consequences of the revolution for people

And finally, the Fourth Industrial Revolution will change not only our lives, but ourselves. It will affect our self-identity, our personal space, our understanding of ownership, our consumption patterns, change the amount of time we spend on work and play, completely change the criteria for professional success. We will get to know each other differently, learn differently, communicate differently. Our attitude towards our body and personality is changing right now, and in the future this will lead to the development of human augmentation. The list of changes is endless and limited only by our imagination.

I am enthusiastic about new technologies and try to use them as early as possible, but sometimes I ask myself if integrating these technologies into our everyday life what we consider to be the essence of a human being - for example, a feeling of compassion or a desire to cooperate with other people. Take at least our attitude towards smartphones. Constantly connected to the network will take away from us one of the most important things in life: the ability to stop, think in silence and engage in a serious conversation.

New Information Technology will mainly affect what we call personal life. We instinctively understand the value and importance of privacy, but the interconnectedness of the world requires us to constantly share information about ourselves with outsiders. In the future, we expect more and more discussions and disputes related to the definition of personal life and the loss of control over the dissemination of information about it. And the revolutions in biotechnology and the development of artificial intelligence will force us to reconsider the very understanding of “humanity”. We will live longer, healthier, think faster and more efficiently. All this will force us to reconsider our moral and ethical boundaries.

Creating the future

Technology and the changes it has caused is not an all-destroying element over which we have no control. We are all creating the future right now, a future that depends on our actions as citizens, consumers and contributors. That is why we must direct the forces of the Fourth Industrial Revolution to create a world that meets our common interests and values.

But for this we need to develop a global system of views on exactly how technology changes our lives, how it affects the economy, society, culture and the individual himself. Yes, we are on the verge of great achievements, but they can also turn into our death. Today's leaders are too mired in traditional, linear thinking, too entangled in multiple crises, each requiring immediate action. They must think strategically about the forces of progress and innovation that will shape our future.