Lecture 1. The nature and method of social economics Social Economics Yevgeniy M. Orel, C.Sc.(Econ.), Docent, Faculty of Economic Science, NaUKMA. - презентация

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2 Lecture 1. The nature and method of social economics Social Economics Yevgeniy M. Orel, C.Sc.(Econ.), Docent, Faculty of Economic Science, NaUKMA

3 Thursday, July 23, Course outline Nature and method Socioeconomic development and human progress Economic systems and models Market failures Government failures Infrastructure of social economics Social capital of the nation Economic issues of social sector Social policy Principal driving forces of the society Policy of the peoples welfare Income inequality and the problem of poverty Health care economics Ukraine in the context of globalization of the labor markets

4 Thursday, July 23, My contact info: Yevgeniy M. Orel, C.Sc.(Econ.), Docent, Faculty of Economic Science, NaUKMA Office: Tel.: (380-44) , intercom. 432 Cell-phone: Alt.

5 Thursday, July 23, What we do: Lectures – 20 hrs Seminars – 16 hrs 1 interim test Self-study – 43 hrs Consultations – 2 hrs Office hours – ~ Final test

6 Thursday, July 23, What we get: Number of credits 1.5

7 Thursday, July 23, Outline of the presentation ( Topic 1 Nature & method ) Subject-matter (nature) of social economics Principles of social economics The main branches of the social sector and its relations with the production sector Economic growth in the context of social economics Objectives of social economics: –Integration of personnel management with the economic and social functions of a business entity, –Ensuring the employment, –Overcoming poverty.

8 Thursday, July 23, In theory they distinguish: Free market economy Social market economy

9 Thursday, July 23, Free market economy Private ownership of the means of production; Economic incentives and motives, incl. those for entrepreneurs to receive profit; Market pricing system, i.e. price establishment via free and pure competition; No government interference: laissez-faire, laissez-passer.

10 Thursday, July 23, Flaws of the pure market system Ownership tends to concentrate in hands of a very few entrepreneurs, which leads to monopolistic pricing; The owners of the key factor of production – labor force – suffer the most when its supply exceeds its demand

11 Thursday, July 23, Social market economy, principal provisions Market is the basis of the economy; Market fails to solve a lot of social problems; Market economy is able to create conditions for solving the social problems; Meeting ever growing human needs is the core of the market economys mission.

12 Thursday, July 23, Social market economy, another view Social market economy is a socioeconomic policy combining market grounds and the principle of social equalization: –Efficiency, –Equity.

13 Thursday, July 23, Constitution of Ukraine: Article 1: Ukraine is a sovereign and independent, democratic, social, law-based state. Article 3: The human being, his or her life and health, honour and dignity, inviolability and security are recognised in Ukraine as the highest social value.

14 Thursday, July 23, Social economics Ruslan S. Grinberg – –Director, Institute for International Economic and Political Research, RAS –Scope of interests: Systemic transformations, government and market economy –Author: Concept of transformational inflation A.Ya. Rubinstein – –Director, Institute for Social Economics –Author: Theory of social economics –Seminal (!?) article: Problems of general theory of social economics (Проблемы общей теории социальной экономики)

15 Thursday, July 23, The nature of social economy Social economy is the system of economic mechanisms that grounds on ensuring the socially oriented economic growth in connection with the economically oriented social development.

16 Thursday, July 23, The nature of social economics Subject-matter of the social economics is the economic laws and regularities of the social production and achievement of social harmony, social compromise between and among individuals, social groups, the society as a whole, and the government, in the close and inseparable connection between economic and social relations, in achieving interrelated goals of steady economic growth and stable increase in the human well- being.

17 Thursday, July 23, ISSUES OF THE SOCIAL ECONOMICS : 1.) Demographic dynamics. 2.) Territorial allocation of the population. 3.) Migration, freedom of movement. 4.) Economic environment. 5.) Formation of the socioeconomic communities at the corporate and territorial levels. 6.) Education and culture 7.) Science and research activities 8.) Public health, sports, tourism, labor safety 9.) Effectivization (eфективізація) of economics, labor and social development

18 Thursday, July 23, ) Demographic dynamics a. Conditions and potential for the population growth; b. Optimization of the gender breakdown; c. Optimization of the age breakdown; d. Optimization of the professional and social breakdown of the population.

19 Thursday, July 23, ) Territorial allocation of the population a. Natural and climatic conditions of living; b. Other geographic conditions that affect the living conditions

20 Thursday, July 23, ) Migration, freedom of movement a. Research of causes and consequences of migration b. Overcoming negative causes and consequences of migration c. Organization of the shift-based schedule of work in the distant areas and in those with unfavorable working and living conditions;

21 Thursday, July 23, ) Economic environment business opportunities, jobs availability, wage levels etc

22 Thursday, July 23, ) Formation of the socioeconomic communities at the corporate and territorial levels - personnel at the business entities, - trade unions, - business associations, - etc.

23 Thursday, July 23, ) Education and culture - training, - general education, - cultural objects - etc.

24 Thursday, July 23, ) Science, R&D a. Optimization of fundamental and applied research breakdown b. Venture research development

25 Thursday, July 23, ) Public health, sports, tourism, labor safety – decrease in both overall and professional morbidity, – decrease in both professional and domestic traumatism.

26 Thursday, July 23, ) Effectivization (?!) Effectivization (eфективізація) of economics, labor and social development. Supporting an increase in the proportion between positive results and costs involved

27 Thursday, July 23, THEORETICAL PREREQUISITES Theory of convergence Jan Tinbergen 1.) Private ownership, 2.) Economic incentives and motives, 3.) Market-based pricing and economic management. There wont be applied the principle of : 4.) Governments non-interference in the economy.

28 Thursday, July 23, John Galbraith, He believed that convergence of two socioeconomic systems is possible under the similar technological structures and organization of the systems.

29 Thursday, July 23, Andrey Sakharov, The new economic system will be of a mixed type combining in itself maximal flexibility, freedom, social achievements and opportunities for the world-wide regulation. – Andrey D. Sakharov, The World in Half a Century

30 Thursday, July 23, PRINCIPLES OF SOCIAL ECONOMICS 1.) Unity of the socially oriented economic policy and economically oriented social policy; 2.) Separation and integration of the component parts of the national economy at the micro-, meso-, and macro-levels; 3.) System analysis of the sources and factors of the socioeconomic development; 4.) Formation and development of social partnership between and among the agents of labor, capital and policy as a necessary precondition of the socioeconomic growth.

31 Thursday, July 23, Social sector Social sector (cоціальна сфера) is the group of branches, businesses and organizations whose operations determine the human living standards and way of life.

32 Thursday, July 23, Social sector education, culture, public health, sports, public catering, housing maintenance, mass transit, communications, labor safety, social safety, social order, etc.

33 Thursday, July 23, Sub-systems of the social and labor sectors 1.) Social-labor relations. – resolving labor disputes, determination of job responsibilities; 2.) Employment of the population. – employment, re-training, unemployment benefits 3.) Labor remuneration. Wages, bonuses, fringe benefits, etc.

34 Thursday, July 23, ECONOMIC GROWTH IN SOCIAL ECONOMICS MICRO-LEVEL MESO-LEVEL MACRO-LEVEL

35 Thursday, July 23, ECONOMIC GROWTH IN SOCIAL ECONOMICS [1] MICRO-LEVEL – –efficient use of resources. –application of no-waste, environment-friendly technologies, –decrease in current stocks, –increase in rotation coefficient, –rational use of productive capacities, –etc;

36 Thursday, July 23, ECONOMIC GROWTH IN SOCIAL ECONOMICS [2] MESO-LEVEL – –business development, –creating new jobs, –etc.;

37 Thursday, July 23, ECONOMIC GROWTH IN SOCIAL ECONOMICS [3] MACRO-LEVEL – –optimization of the economic environment, –creating investor-friendly environment, –adequate financial and taxation policy, –lowering unemployment and inflation rates, –etc.

38 Thursday, July 23, Selected sources Художественная жизнь современного общества. Т. 3: Искусство в контексте социальной экономики / Под ред. А.Я. Рубинштейна. Слезингер Г.Э. Социальная экономика: Учебник. – М.: Издательство Дело и Сервис, – 368 с. Єременко: Соціальна економіка. Social Economics (collection)

39 Thursday, July 23, Functional grounds for economic growth [1]: o Technological – economic justification of technical decisions; o Labor – human relations with the natural environment, agents of demand and supply, economic policy in balancing interests between and among individuals and business entities;

40 Thursday, July 23, Functional grounds for economic growth [2]: o Organizations and enterprises – establishing an integrated system of management in various aspects of business operations; o Institutional incentives – increase in efficiency of institutional organs; considerations of institutional policy in establishing an optimal economic environment;

41 Thursday, July 23, Integration grounds of the economic growth: o Communicational – functional and cooperation relations; partnership-based and business-oriented relations; use of information technologies; o Correlation – maintenance of the optimal proportions between material and human resources; o Analytical and evaluation-based – analysis, evaluation, forecasts, modeling, investment strategies; information marketing development; intellectual property appraisal.

42 Thursday, July 23, Criteria of economic growth: 1.) MACRO – GDP growth; MICRO – increase in the physical amounts of goods and services; 2.) Increase in business activities – number and value of business contracts signed; 3.) Unemployment benefits payments as a negative indicator regarding the economic growth.

43 Thursday, July 23, OBJECTIVES OF SOCIAL ECONOMICS [1]: 1.) Increase in socially active population in proportion of the entire population, as well as effective use of the human potential; 2.) Sustainable and consumer-oriented production of economic goods (commodities and services) based on the increase in effective demand; 3.) Recreation of favorable living conditions;

44 Thursday, July 23, OBJECTIVES OF SOCIAL ECONOMICS [2]: 4.) Socialization of the economic environment on the basis of social partnerships between and among businesses, unions and legal framework created by the government; 5.) Social sector and market infrastructure development with the purpose of ensuring provision of consumers with goods and services;

45 Thursday, July 23, OBJECTIVES OF SOCIAL ECONOMICS [3]: 6.) Establishing and development of the professional training and re-training systems, with the purpose of ensuring effective employment under the conditions of the structural revamping of the national economy; 7.) Identification and separation of the social and labor-related incomes in proportion of the GDP with the purpose of ensuring socioeconomic development and increase in the living standards.

46 Thursday, July 23, Дякую за увагу! Thank you for attention! Thats it for now