Text 1. Read this article and give Russian equivalents to the underlined expressions.

ECONOMIC SYSTEMS

There are a number of ways in which a government can organise its economy and the type of system chosen is critical in shaping the environment in which businesses operate.

An economic system is quite simply the way in which a country uses its available resources (land, workers, natural resources, machinery, etc) to satisfy the demands of its inhabitants for goods and services. The more goods and services that can be produced from these limited resources, the higher the standard of living enjoyed by the country's citizens.

There are three main economic systems:

a) Planned economies

Planned economies are sometimes called 'command economies' because the statecommands the use of resources (such as labour and factories) that are used to produce goods and services. The actual system employed varies from state to state, but command or planned economies have a number of common features.

Firstly, the state decides precisely what the nation is to produce. It usually plans five years ahead. It is the intention of the planners that there should be enough goods and services for all.

Secondly, industries are asked to comply with these plans and each industry and factory isset a production target to meet. If each factory and farm meets its target, then the state will meet its targets as set out in the five-year plans. You could think of the factory and farm targets to be objectives which, if met, allow the nation's overall aim to be reached.

A planned economy is simple to understand but not simple to operate. It does, however, have a number of advantages.

· Everyone in society receives enough goods and services to enjoy a basic standard of living

· Nations do not waste resources duplicating production

· The state can use its control of the economy to divert resources to wherever it wants. As a result, it can ensure that everyone receives a good education, proper health care or that transport is available

Several disadvantages also exist. It is these disadvantages that have led to many nations abandoning planned economies over recent years:

· There is no incentive for individuals to work hard in planned economies

· Any profits that are made are paid to the government

· Citizens cannot start their own businesses and so new ideas rarely come forward

· As a result, industries in planned economies can be very inefficient

A major problem faced by command or planned economies is that of deciding what to produce. Command economies tend to be slow when responding to changes in people'stastes and fashions. Planners are likely to underproduce some items as they cannot predict changes in demand. Equally, some products, which consumers regard as obsolete and unattractive, may be overproduced. Planners are afraid to produce goods and services unless they are sure substantial amounts will be purchased. This leads to delays and queues for some products.

 

 

b) Market economies

The best examples of this type of economy are to be found in small South-East Asian states like Hong Kong and Singapore, though even they are not pure examples of market economies. Even they contain some businesses owned and run by the state.

In a true market economy the government plays no role in the management of the economy. Workers are paid wages by employers according to how skilled they are and how many firms wish to employ them. They spend their wages on the products and services they need. Consumers are willing to spend more on products and services which are favoured. Firms producing these goods will make more profits and this will persuade more firms to produce these particular goods rather than less favoured ones.

Thus, we can see that in a market economy it is consumers who decide what is to beproduced. Consumers will be willing to pay high prices for products they particularly desire. Firms, which are privately owned, see the opportunity of increased profits and produce the new fashionable and favoured products.

Such a system is, at first view, very attractive. The economy adjusts automatically to meetchanging demands. No planners have to be employed, which allows more resources to be available for production Firms tend to be highly competitive in such an environment. New advanced products and low prices are good ways to increase sales and profits. Since all firms are privately owned they try to make the largest profits possible.

Not surprisingly there are also problems. Some goods would be underpurchased if the government did not provide free or subsidised supplies. Examples of this type of good and service are health and education. There are other goods and services, such as defence and policing, that are impossible to supply individually in response to consumer spending. Once defence or a police force is supplied to a country then everyone in that country benefits.

A cornerstone of the market system is that production alters swiftly to meet changingdemands. These swift changes can, however, have serious consequences. Imagine a firm which switches from labour-intensive production to one where new technology is employed in the factory. The resulting unemployment could lead to social as well as economic problems.

In a market economy there might be minimal control on working conditions and safetystandards concerning products and services. It is necessary to have large-scalegovernment intervention to pass laws to protect consumers and workers.

Some firms produce goods and then advertise heavily to gain sufficient sales. Besides wasting resources on advertising, firms may also duplicate one another's services. Rivalfirms providing rail services, for example, could mean that two or more systems of rail are laid.

Finally, firms have to have confidence in future sales if they are to produce new goods and services. At certain times they tend to lack confidence and cut back on production and the

development of new ideas. This decision, when taken by many firms, can lead to a recession. A recession means less spending, fewer jobs and a decline in the prosperity of the nation.

 

 

c) Mixed economies

Command and market economies both have significant faults. Partly because of this, an intermediate system has developed, known as mixed economies.

A mixed economy contains elements of both market and planned economies. Some resources are controlled by the government whilst others are used in response to the demands of consumers. Technically, all the economies of the world are mixed: it is just the balance between market and planned elements that alters. So, for example, Hong Kong has some state-controlled industry, while Cuba has some privately owned and controlled firms.

The aim of mixed economies is t o avoid the disadvantages of both systems while enjoyingthe benefits that they both offer. So, in a mixed economy the state will intervene to supply essential items, like health, education and defence, while private firms produce cars, furniture, electrical items and similar, less essential products.

The UK is a mixed economy: some services are provided by the state whilst a range of privately owned businesses offer other goods and services. The Conservative government under Margaret Thatcher switched many businesses from being state-owned and controlled to being privately owned as part of its privatisation programme. This has taken the UK economy further away from the planned or command system.

 

 

Task 1. Answer the following questions:

1. List 3 disadvantages of a ―planned economy‖.

2. Explain what is meant by a ―market economy‖.

3. How does a ―mixed economy‖ combine the positive aspects of a planned economy and a market economy?

4. What kind of economy does Russia currently have? Give examples to back up your answer.

 

 

Task 2. Fill in the blanks with suitable expressions from the following list. Translate the sentences into Russian:

free price system, inflation, means of production, career options, free markets, shortages, preferences, government restrictions, unemployment, mechanism, elements, economic freedom, production, planners, state ownership, personal lives, market competition, private sector, long-term surpluses, court system, allocation, currency, centralised economic planning, planned economy.

1. A planned economy is an economic system in which a single agency makes all decisions about the production and                                           of goods and services.

2. In a centrally-planned economy, the                      decide what should be produced and direct enterprises to produce those goods.

3. Beginning in the 1980s and 1990s, many governments presiding over planned economies began deregulating and moving toward market based economies by allowing the                                                 to make the pricing, production, and distribution decisions.

4. Under a planned economy, neither                               nor idle production facilities should exist beyond minimal levels, and the economy should develop in a stable manner, unimpeded by                                        .

5. Critics  of  command  economy  argue  that  planners  cannot  detect consumer_, shortages, and surpluses with sufficient accuracy and therefore can not efficiently co-ordinate                             .

6. During certain periods in the history of the Soviet Union,                         were so common that one could wait hours in a queue to buy basic consumer products such as shoes or bread.

7. Critics  of  central  planning  say  that  a  market  economy  prevents            because the operation of supply and demand causes the price to sink when supply begins exceeding demand, indicating to producers to stop production or face profit losses.

8. Critics argue that since in a planned economy prices are not allowed to float freely, there is no accurate                                              for determine what is being produced in unnecessarily large amounts and what is being produced in insufficient amounts.

9. Critics also hold that certain types of command economies may require a state which intervenes highly in people's                                          , for example, if the state directs all employment then one's                                                       may be more limited.

10. There were two basic forms of property in the Soviet Union: individual property and collective     property.     According     to     communist     theory,                                     could not be individually owned, with certain negligible exceptions.

11. A market economy is an economic system in which the production and distribution of  goods  and  services  takes  place  through  the  mechanism  of

                                             guided by a                                            rather than by the state in a planned economy.

12. In order for an economy to be considered a true free market, the factors of labour, goods, services, and capital, must be free from                                                     and trading barriers so they are able to move freely across borders.

13. Most free market scholars believe that governments should be limited to at least: operating  a                                                 for  the  settlement  of  disputes,  maintaining  stable

              , protecting                                     and consumers, and protecting the country through national defence.

14.                                                 

is  a  necessary  condition  for  the  creation  and

sustainability of civil and political freedoms and it can only be achieved in a market oriented economy, specifically a free market economy.

15. Critics of market economy range from those who reject markets entirely, in favour of ato those who merely wish to see them regulated to various degrees.

16. There is not one single definition for a mixed economy, but relevant aspects include a  degree  of  private  economic  freedom  (including  privately  owned  industry)

intermingled with                                                         

(which may include

intervention for social welfare, or                                  of some of the means of production.

17. The term mixed economy was coined to identify economic systems which stray from the ideals of either the free market, or various planned economies and "mix" with      of each other.

 

 

Task 3. Translate the following sentences into English:

1. При плановой экономике государство контролирует использование ресурсов, необходимых для производства товаров и услуг.

2. Каждое предприятие получает свой государственный план, который определяет конкретные виды продукции, которые должны быть произведены в стране в течение года или 5 лет.

3. Для плановой экономики характерно установление выпуска продукции для предприятий центральным планирующим органом.

4. Если предприятие получало плановое задание, то оно автоматически обеспечивалось всеми необходимыми ресурсами для его выполнения.

5. В Советском Союзе объем выпускаемой продукции регулировался государственным аппаратом, была запрещена частная собственность.

6. Основной принцип плановой экономики состоит в том, что каждому гражданину должны быть доступны основные продукты питания, одежда, жилье.

7. В странах с плановой экономикой производство ориентировано на государственный план, а не на спрос потребителей. В результате этого может возникнуть дефицит на некоторые виды товаров и услуг.

8. При жестком государственном контроле у производителей нет стимулов увеличивать объемы производства и доходы предприятия.

9. Полностью свободной от государственного контроля экономики не существует. Государственное регулирование, как известно, в той или иной форме имеет место в любой рыночной системе.

10. В Советском Союзе зарплаты и цена на товары и услуги устанавливались централизованно. Некоторая дифференциация допускалась только между центром и регионами страны.

11. В России довольно долго существовала плановая экономика, поэтому, когда Михаил Горбачев начал проводить свои экономические реформы, никто не понимал, как действует рынок.

12. В странах с рыночной экономикой государство не контролирует экономические процессы. Зарплата сотрудников напрямую зависит от их квалификации.

13. В основе рыночной экономики лежит свобода предпринимательства и частная собственность на средства производства.

14. Рынок автоматически реагирует на изменения покупательского спроса.

15. В странах с рыночной экономикой товары и услуги производятся в условиях конкуренции, существует много самостоятельно действующих, конкурирующих между собой фирм.

16. Производитель товаров и услуг самостоятельно решает проблему распределения всех видов ресурсов, которые пользуются спросом на рынке.

17. Предприниматели стремятся получать все большую прибыль, предельно экономя естественные, трудовые и инвестиционные ресурсы.

18. Работодатель несет личную ответственность за поддержание рабочей силы в нормальном состоянии, за правильность принятого решения.

19. Защитники рыночной экономики утверждают, что такая экономическая система способствует эффективности использования ресурсов, стабильности производства и занятости, быстрому экономическому росту.

20. В странах с рыночной экономикой отсутствует необходимость в правительственном планировании и вмешательстве в экономический процесс. Поэтому роль правительства ограничивается защитой частной собственности и установлением правовой базы.

21. Недостатком рыночной экономики является полное отсутствие контроля за уровнем зарплаты, условиями труда и нормами безопасности.

22. В странах со смешенным типом экономики частный и государственный сектор сосуществуют. Часть услуг производится государством, в то время как частный сектор производит широкий спектр товаров и услуг.

23. Государственное участие в смешенной экономике Норвегии постепенно идет на спад в связи с приватизацией, происходящей во всех промышленно развитых странах.