Lecture 4 The forms of the social economy. Goods production.
Lecture outline 1. 2. 3. The main forms of the social economy and models. Natural economy, its features and peculiarities. Goods production: reasons and conditions of its formation, main features. Essence of the goods and its features. Essence and functions of money. Money circulation law.
Lecture aims are: • To understand the meaning of natural production • To understand the meaning and the role of goods production in developing market economy • To show development of value forms and explain how money appear.
1/The main forms of the social economy There are two forms of social economy: • Natural economy • Goods production
• Natural economy – is the elementary form of economics organization, with the help of which products are made only for satisfaction of own needs. The natural form of wealth was natural product ( that is, material benefit , which has definite profit and an ability to satisfy human needs in objects of utility and in means of production).
Essence of natural economy consists of its main features: • insularity ( producer supplies himself with all necessary things, uses only his own instruments of labour ); • universal hand work with low productivity; • direct economic ties between production and consumption ( that is, products spread directly between the members of the family or community, were used by them, that’s why exchange was escaped ).
Goods production • The goods are made to be sold • The economic relations between people are take place throw market
The conditions of the goods production development: • social division of labour ( producers specialized on making one type of goods ) • Private property (the results of the production are owned by holders)
• Commodity – is the product of labour, which is generated for purchase and sale or exchange.
What kind of things are called as goods? There are three answers of this question: • 1. Thing should be the result of labour, • 2. It should satisfy the needs, • 3. It should be exchanged on the market.
Goods have two features, 1. exchange value / value 2. consumption value/use value.
Commodity use value • Commodity use value – is utility, an ability to satisfy human needs, that is, qualitative commodity distinctness(отчетливость)
Commodity value – social labour, which is materialized in commodity, its quantitative distinctness. Value, as an economic category, expresses relations between commodity producers, concerning comparison of their labour expenses on goods and services production, with the help of which they realize exchange.
The goods exchange value is defined by the labour, which is used in the production process
There are the following factors are influenced on the exchange value: • productivity of labour; • intensity of labour ; • labour complication.
• Productivity of labour (PL) is determined by the production quantity, which is produced in unit time. It influences on the commodity value quantity in inverse proportion, that is, in how many times PL increase, in so many times commodity unit decrease, but the common mass of the produced commodities value doesn’t change.
• The intensity of labour is characterized by tensity of labour degree in unit time. If the intensity of labour increases then value of all produced commodities increases pro rata, but the quantity of unit commodity value doesn’t change.
• Modern economy is impossible without money, because there is permanent exchange of labour activity products, commodities and services. Money, ways of their movement, currency improve and complicate at all times. The money role increase in economic processes regulation and management, organization of economic cooperation between countries.
In economic literature there a lot of different determinations of money: • “ money – is, that they are really exist “; • “ money – is, that they realize “; • “ money – is temporary repository of purchasing power “; • “ money – is the product of agreements between people “ etc.
• Money – are universal and at the same time, relative, easily produced commodity, possessing very insignificant, own, independent value.
Money functions • currency, • measure of value, • means of saving.
• Money as means of wealth saving and accumulation. When we accumulate some money, we take them for some period of time out of the currency, but we turn them into means of future purchase, means of value preservation.