The market as an economic system of institutions. Institutions: formal and informal. Economic institutions Formal institutions of economics

- a method of organized construction based on social formalization of connections, statuses and norms. Formal institutions ensure the flow of business information necessary for functional interaction. Regulate daily personal contacts. Formal social institutions are regulated by laws and regulations.

Formal social institutions include:

1) economic institutions - banks, industrial institutions;

2) political institutions - parliament, police, government;

3) educational and cultural institutions- family, college, etc. educational establishments, school, art institutions.

Informal institute based on personal choice of connections and associations with each other, suggesting personal informal service relations. There are no rigid standards. Formal institutions rely on a rigid structure of relationships, while in informal institutions such a structure is situational in nature. Informal organizations create more opportunities for creative productive activity, development and implementation of innovations.

Examples of informal institutions- nationalism, interest organizations - rockers, hazing in the army, informal leaders in groups, religious communities whose activities contradict the laws of society, a circle of neighbors.

All economic agents - the state, private companies, citizens engaged in business, etc. - act according to certain rules. They show what you can and cannot do, how to build relationships with others economic agents. These rules are called institutions.

Institutes- these are the rules by which business entities interact with each other and carry out economic activities. (For example, this is the right to private property, or the procedure for opening and registering a new company, or the procedure for obtaining a state license to develop an oil field)

The concept of property. Subjects and objects of property. Types and forms of ownership. Modern theories of property. Property reform. Transformation of property relations in the Republic of Belarus.

Own- these are relationships between people that express a certain form assignments material goods, and especially the form of appropriation of the means of production.

Under the subjects of ownership understand specific people (groups) who enter into property relations with each other. The subjects of property can be an individual, a group of people, or society as a whole.

Property object name those elements of the conditions of production and the results of human activity that are assigned by a given subject.

Forms of ownership and their evolution:

Communal - production of products in excess of needs and securing it by inheritance, property inequality, disintegration of the community;

Slaveholding - appropriation of slave labor, means of production; slaves are the property of slave owners;

Feudal - production of a product within the natural economy of a feudal estate; exploitation of serfs;

Capitalist - hiring economically free labor, equality of property subjects;

Corporate - joint stock companies and firms;

State.

Property reform may carried out in the form of nationalization, denationalization and privatization.

Nationalization is the transformation of an object, economic resource or enterprises from private ownership to the ownership of the state or the entire country.

Denationalization is a set of measures to transform state property aimed at eliminating the excessive role of the state in the economy. As a result, most of the functions of economic management are removed from the state, and the corresponding powers are transferred to the enterprise level.

Privatization is one of the directions of denationalization of property, which consists in transferring it into private ownership of individual citizens and legal entities.

In economic theory, there are two types of property relations: private and public. Private characterizes this type of assignment ( social form production), in which the interests of an individual, social or other group dominate over the interests of the whole society, as a unity of various parts. Public property characterizes this type of appropriation in which interests are realized through their coordination.

In modern economic theory, a whole direction of economic analysis called neo-institutionalism has developed. One of the most famous theories in this area is the economic theory of property rights.

Denationalization and privatization are processes of transfer of property from one form of ownership to another.

The Law of the Republic of Belarus “On denationalization and privatization of state property in the Republic of Belarus” emphasizes that privatization is the acquisition by individuals and legal rights ownership of objects owned by the state.

• Lozovaya Irina Vladimirovna, Senior Lecturer
• Voronezh Economics and Law Institute

• COSTS
• NEO-INSTITUTIONALISM
• FORMAL INSTITUTIONS
• INSTITUTE
• INFORMAL INSTITUTIONS

IN this material The problems of formation and development of formal and informal institutions were studied.

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Neo-institutionalism in modern economic thought is one of the fastest growing and promising areas. New institutional economic theory began its formation in the 1960s and 1970s. By 1980, neo-institutionalism had identified areas of study such as:

• analysis of the institutional environment and its impact on the behavior of economic agents;
• analysis of contractual agreements;
• analysis of institutional evolution.

The theory of institutional change is a component of the “new economic history", which originated in the 1950s-12960s. The ancestor of this the newest direction In economic thought, the American economist Douglas Cecil North is generally considered to be a leading figure. The author of the theory of institutional change is also D. North. The goal of the theory of institutional change is the following: to identify internal factors that will contribute to changes not only in isolated, individual institutions, but also in the entire institutional structure of society. The key issue in working on the theory of institutional change is the role of institutional factors in economic development. D. North gives a completely new, individual concept of the term “institution”, analyzing the evolution of the institutional hierarchy of society.

In his works, D. North introduces an innovative view of the institutional structure of society into economics, relying on key concepts for the “new institutionalism” to assess well-known historical events: “property rights”, “transaction costs”.

D. North believed that if representatives of the new institutional theory, a study is conducted of the influence of institutions and organizations on economic efficiency, then the main issue of their work turns out to be the problems of the formation and evolution of institutions and the identification internal factors institutional changes. Exactly because of this reason scientific activity D. North belongs to the institutional-evolutionary direction.

The scientific works of D. North gained popularity in Russia. The reason for the interest in the works of D. North, in our opinion, is the verbal nature of his theory, and the use of neoclassical tools and the conceptual apparatus of evolutionary theory.

The center of research and the main unit of analysis of D. North is the concept of “institution”. According to D. North's theory, institutions are created by people. Accordingly, as a person evolves, he also changes institutions, which means that the formation of an institution must begin with the individual. At the same time, the restrictions that institutions impose on human choice have a significant impact on individual behavior.

According to D. North, an institution is a “framework” within which individuals interact with each other. These restrictions (“frameworks”) include:

• procedures to detect and suppress behavior deviating from established rules;
• formal restrictions in the form of rules and regulations. An example could be the constitution, treaties, decrees, etc.;
• informal codes of conduct. For example, customs and habits that limit the scope of formal rules.

According to D. North, it is the customs of tradition that can serve as an effective analogue of formal institutions, thereby ensuring resource savings.

Institutions shape the life of individuals in such a way that they do not think for the most part about their actions, which are regular, repetitive and obvious. It is from this influence that efficient markets emerge, which reduce the costs of concluding and maintaining contracts.

Let's look at an example. Let us take as the object of study a foreign company (institute) that is trying to build a business in another country, without mastering the formal and informal norms that have developed in advance. This company will bear high transaction costs. And only when they have mastered them will they be able to effectively exchange information and take an active part in various forms social, political and economic exchange. From here, we can conclude that social institutions in their function have the goal of reducing transaction costs.

As the division of labor, specialization, and exchange relations grow, not only transaction costs appear, but also the costs of opportunistic behavior. The costs of opportunistic behavior usually include the following: deception, violation of agreements, forgery, etc. This fact or leads to the emergence of another participant in the exchange - the state, which takes on the functions of protecting property rights and ensuring compliance with agreements. This fact, according to D. North, played an important role in the history of the formation of property rights.

Addressing the problem historical development, the American scientist believed that the basis for understanding this process is precisely institutional changes. According to D. North, changing the institutional structure is a complex process. By examining in detail changes in formal and informal institutions, one can conclude the following conclusions. Informal institutions are formed spontaneously, without any design behind them. At the same time, changes in them are carried out gradually, often at a subconscious level, forming alternative models of behavior. In turn, formal institutions are established and function consciously, and are maintained primarily by the state. Changes in formal institutions can be carried out simultaneously, through political or legal decisions. Moreover, formal institutions represent a hierarchy that includes rules of both higher and lower order.

Institutional change is a complex process influenced by many factors: technological progress, expansion and updating of product ranges, the emergence of new markets, population growth, the emergence of new ideologies that shape the structural preferences of individuals. In modern society, which forms “institutions,” there are quite a lot of problems (imperfect legal acts, codes, the predominance of informal institutions over formal institutions), without solving which, it is impossible to minimize transaction costs and the costs of opportunistic behavior.

Bibliography

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FUNCTIONS, OBJECTS, SUBJECTS

Any institution - economic, social, cultural - is, according to Douglas North's definition, a rule of the game in society, supplemented by a mechanism for enforcing its implementation.

The concept of an economic institution is found already in the first works on classical political economy.

Thus, Thomas Hobbes, in his famous work “Leviathan” (1651), interprets the formation of basic institutions as the result of the conclusion of a social contract between people who lived in a society without a state and caused damage to each other in the pursuit of profit.

Unlike Hobbes, who emphasizes the deliberate nature of the formation of institutions, David Hume in his Treatise of Human Nature (1748) writes that institutions such as justice and property arose spontaneously as a by-product social interactions. In his opinion, an important factor in the formation of an institution is the repetition of certain interactions, which reinforces stable rules, and the institutions that arise in this way benefit the entire society.

Adam Smith adheres to the same position. He believes that markets contribute to the formation of institutions beneficial to society as a whole, and unsuitable institutions are forced out of the market by competition.

Thus, the classical approach to economic institutions is characterized by one common feature- its supporters talk about the social effectiveness of any institutions, regardless of the method of their formation. But they all analyze only separate fragments of institutions, due to which different things fall under this concept. That is, it is difficult to talk about any relatively unified classical approach to this phenomenon.

Objects of economic institutions – various economic spheres(for example, property).

Subjects of economic institutions are people in the system of economic relations.

The nature of the rules that make up the essence of institutions allows us to divide them into formal and informal. Formal institutions correspond to formal rules, sanctions for violation of which are organized. On the contrary, informal institutions correspond to informal rules, and punishment for deviation from them is implemented spontaneously.

Advantages and disadvantages of informal institutions

The advantages of informal institutions include, firstly, the ability to adapt to changing external conditions, preferences within the community and other exogenous or endogenous changes. Secondly, the possibility of applying different sanctions in each specific case (after all, for some, a strict warning is enough, while others have to be excluded from the group).

The disadvantages of informal institutions are a continuation of their advantages. Informal institutions are often characterized by ambiguity in the interpretation of rules, a decrease in the effectiveness of sanctions, and the emergence of discriminatory rules.

The problem with interpreting rules arises when people of different cultures interact, different experiences, and also when information is disseminated with distortions. The effectiveness of sanctions is low when people are not afraid of being ostracized, assessing the likelihood of punishment as insignificant compared to the benefits from deviant behavior when they know that there are costs associated with carrying out punishment. In addition, during the functioning of informal institutions, discriminatory rules may arise against certain groups (for example, against redheads, gypsies or short people).

Advantages of formal institutions:

Firstly, the formalization of rules makes it possible to expand their normative function. Codification of rules, their official recording and recording in the form of a regulation or law allows individuals to save on information costs, makes sanctions for violating these rules clearer, and eliminates the contradictions contained in them.

Second, formal rules provide mechanisms for solving the free-rider problem. If the relationship is not constantly recurring, then its participants cannot be informally forced to comply with the rule, since reputation mechanisms do not work. For such relationships to be effective, third party intervention is required. For example, as a member of society, a person derives certain benefits from his position, but he may refuse to bear the costs associated with this position. The larger the society, the higher the incentives to engage in a free-rider strategy65, which makes this problem especially spicy for large groups with impersonal relationships and necessitates external intervention.

Third, formal rules can counteract discrimination. Institutions that arise spontaneously within a group are often structured in such a way that insiders have advantages over outsiders. For example, the main condition for the effectiveness of commercial networks is a small number of participants and exclusivity of participation due to high barriers to entry. Experience shows that informal institutions of online trade and finance contribute to economic development only up to a certain level, and then only formal institutions can ensure returns to scale, because only they can create an atmosphere of trust and enable newcomers to freely enter the market66. And such external intervention, counteracting discrimination and creating conditions for economic growth, is required quite often.

Rice. 1. Functions of institutions

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The relationship between formal and informal social institutions

All human activity is institutionalized. Institutionalization can be formal or informal. Consequently, formal and informal institutions are distinguished.

In any society, all social institutions are interconnected and interconnected, representing a complex integrated system. Such integration is based on the fact that any person needs to participate in various types social institutions, both formal and informal.

Note 1

A system of interconnected institutions regulates the behavior of its members, provides them with satisfaction of various needs, and ensures the development of the group as a whole. This system in the social totality has complex structure, and the development of needs leads to the formation of new institutions. Internal consistency in the activities of formal and informal institutions is a necessary condition functioning of the entire society.

Formal social institutions

Definition 1

A formal institution is social institution, in which the scope of means and methods of action, functions are regulated by legal acts, regulations of laws, formally approved regulations, orders, regulations, rules, statutes, job descriptions etc.

Formal institutions include:

• state,
• army,
• family,
• educational institutions,
• banks,
• production system, etc.

Formal institutions implement their management and control functions on the basis of strictly established formal sanctions (both positive and negative, related to rewards or punishments).

Formal institutions play an important role in strengthening society, as they are both powerful ropes of the system of social connections and a flexible, strong frame that determines the strength of society.

Informal social institutions

Definition 2

An informal institution is a social institution in which there are no means and methods of activity established by formal rules; they are not defined and not enshrined in regulatory documents and legislative acts. There is no guarantee of the organization's sustainability.

Informal institutions, in a broad social sense, carry out management and control functions, since they are the result of the will and social creativity of citizens:

• political movements,
• associations of interests,
• amateur creative amateur associations,
• cultural and social funds, etc.

In informal institutions, social control occurs on the basis of norms fixed in public opinion, customs and traditions, i.e. informal sanctions. Very often not formal sanctions act as more effective means of controlling people's behavior than formal sanctions and legal norms. Sometimes it is more preferable for people to be punished by official management or government officials than to accept the unspoken condemnation of colleagues and friends.

Note 2

An example of an informal institution is the institution of friendship. Friendship is a stable phenomenon of human society in modern world, characterized by clear, fairly complete regulation. The Institute of Friendship has no institutions, no professional recognition of rights and responsibilities, and no status of partners. Forms of social control are positive (trust, duration of acquaintance, smile, sympathy) and negative (quarrel, resentment, gossip, termination of friendly relations) sanctions, which are not formalized in the form of administrative regulations, regulations, etc.

Informal institutions play a significant role in the sphere of interpersonal communication in small groups.

Market how economic system institutions

As is known, all economic agents (state, private companies, citizens, businessmen, etc.) act according to certain, strictly fixed rules. They show what can and cannot be done, how to build relationships with other economic agents. These rules are called .

Institutions are the rules by which economic entities interact with each other and carry out economic relations. The set of formal and informal institutions forms an economic system.

Formal institutions - these are all regulated rules that relate to economic activity: Constitution, Codes, laws, decrees, regulations and orders of government.

Informal institutions include :

• firstly, traditions and sociocultural stereotypes;
• secondly, rules and procedures that are not authorized or sanctioned by the state, but are practiced by business entities.

Note that informal institutions play vital role in regulating economic behavior, sometimes determining the fate of economic transformations (reforms) imposed “from above.”

The importance of institutions for the economy is that they determine the nature and direction of economic activity. Institutions can promote economic growth. In this case, the country will develop rapidly. Institutions may also be socially inappropriate (for example, speculative or criminal activities).

Hence, a very important condition for the development of the economy of any country is the creation of an appropriate institutional system, including a system of economic institutions. From this point of view the market is one of the most important economic institutions, the functions of which are to determine ways to coordinate the activities of economic agents .

Like any economic institution, the market in its existence relies on a system of norms of behavior. Market system stable and capable reproduction only to the extent that individuals use in their everyday economic behavior the norms on which it is based.

The system of norms that makes it possible to carry out transactions in the market and achieve market equilibrium includes :

• complex utilitarianism - involves the individual maximizing his utility on the basis of productive activity;
• goal-oriented action (behavior) - involves the individual’s use of objects of the external world and people as “conditions” and “means” for achieving his rationally set and thoughtful goal;
• depersonalized trust - the possibility of purposeful, rational action is directly determined by the presence of trust between market participants, and, in market conditions, trust should be in a depersonalized form, since among market participants there cannot be only personally acquainted people;
• empathy - the ability to understand the position of the counterparty, which is an element of culture - there is no contradiction here with the norm of complex utilitarianism, since the rules of morality (“don’t lie”, “don’t steal”, “keep promises”) contain the collective wisdom of generations: compliance with the rules is more conducive to achieving usefulness than any attempt to pursue the goal directly;
• freedom in a positive sense - is determined by behavior based on empathy: than more active person, the smarter (more successfully) he interacts with the outside world, the greater the degree of his freedom;
• voluntary submission to the law is the main prerequisite for the system of market norms to go beyond local boundaries and spread to an unlimited number of potential participants in transactions. State guarantees that market participants comply with legally established norms of behavior increase the level of trust of counterparties and facilitate mutual understanding of interests and intentions.

Thus, a system of norms that support the market provides long-term guidance for public leadership. Their perception and sharing by society are the most important conditions for successful functioning