THE ECONOMY AND ECONOMIC SYSTEMS

It is difficult nowadays not to have some knowledge of the economy and economic systems. All business organizations are affected to some degree by economic forces such as the rate of inflation and the amount of skilled labour available. Clearly, firms will benefit if the economy becomes more prosperous; wages rise and customers have more money to spend. The economy is an immensely complex entity.

There are a number of ways in which a government can organize its economy and the type of system chosen is critical in shaping environment in which business operate. An economic system is quite simply the way in which a country uses 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.

Planned economics.

Planned economies are sometimes called “command economies” because the state commands the use of resources (such as labour and factories) that are used to produce goods and services. Planned economies are economies with a large amount of central planning and direction when the government takes all the decisions, the government decides production and consumption. Planning of this kind is obviously very difficult, very complicated to do and the result is that there is no society which is completely a command economy. 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 is set a production target to meet. 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 has, however 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’s tastes 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.

NOTES:

skilled labour - квалифицированная рабочая сила;

available - имеющийся в распоряжении; наличный, пригодный;

benefit - прибыль, выгода, приносить прибыль (выгоду);

prosperous - процветающий, преуспевающий;

customer - покупатель, заказчик, клиент;

entity - единый организм;

to shape environment - формировать среду;

to satisfy = to meet (met) – удовлетворять;

demand - спрос, потребность;

inhabitants = population - жители, население;

to inhabit – населять;

to populate -/-/-

to enjoy - пользоваться, обладать, иметь;

citizen – гражданин;

to own – владеть;

owner – собственник;

natural resources - природные ресурсы;

a large amount - большой объем;

central planning and direction - централизованное планирование и руководство;

consumption – потребление;

to consume – потреблять;

consumer – потребитель;

obviously – очевидно;

сomplicated = complex – сложный (трудный);

to have a number of common features - иметь ряд общих черт;

intention – намерение;

to comply with – подчиняться;

a production target to meet - производственная задача (задание), которую надо выполнить;

an objective = an aim = a purpose - цель, задача;

an overall aim - общая цель;

to enjoy a basic standard of living - иметь основной уровень жизни;

to dublicate production - дублировать производство;

to divert - отвлекать (ресурсы на другие цели);

to abandon - отказываться от чего-либо;

a major problem faced by command or planned economies – основная проблема, стоящая

перед командой или плановой экономикой;

change - изменяться, изменение;

сhanges in tastes and fashions - изменения вкусов и моды;

to underproduce – недопроизводить;

to overproduce – перепроизводить;

to regard smth. as - воспринимать что-либо, относиться к чему-либо, как;

delays and queues - зд. перебои (с товарами) и очереди;

COMPREHENSION QUESTIONS:

1. What’s an economic system?
2. What does a standard of living depend on?
3. What’s a planned economy? What are its main features?
4. Give the advantages of a planned economy.
5. What are the disadvantages of a planned economy?
6. What causes delays and queues for some products?
7. What can you add to the list of advantages and disadvantages of a planned economy?

VOCABULARY EXERCISES:

Exercise 1. Suggest the Russian equivalents:

Each factory is set a production target to meet; to divert resources to wherever it wants; new ideas rarely come forward; tend to be slow when responding to changes.

Exercise 2. Replace the underlined words by synonyms:

Obsolete products; it can ensure that...; it can be very inefficient; there is no incentive for individuals to work hard in planned economies; it led to many nations abandoning planned economies over recent years.

Exercise 3. Fill in the gaps with the words and expressions from the text.

1. The type of system chosen is — in___, in which business operate.
2. An economic system is the way in which a country uses its ___ to satisfy the demands of ___ for goods and services.
3. The more goods and services that can be produce, the higher the standard of living ___ by the country’s citizens.
4. Planned economies are economies with ___ of ___, when the government ___ all ___ decides ___ and ___.
5. The actual system employed ___ from state to state, but command or planned economies have ___.
6. It is ___ that there should be enough goods and services for all.
7. Industries are asked ___ these plans and each industry and factory is set ___.
8. Nations do not waste resources ____.
9. The state can use its control of the economy ___ to wherever it wants.
10. There is no ___ for individuals to work hard in planned economies.
11. Command economies tend to ___ when ___ to changes in people’s tastes and fashions.
12. Planners are likely ___ some items as they cannot ____ changes in demand.
13. Some ___ and unattractive products may be ___.
14. This leads to ___ for some products.
15. It is ___ that have led to many nations ___ planned economies over recent years.

Exercise 4. Find in the text English equivalents for the following:

Имеющиеся в распоряжении ресурсы; управлять использованием ресурсов; управление экономикой; отказываться от плановой экономики; иметь высокий жизненный уровень; иметь общие черты; подчиняться 5-летнему плану; значительное количество; ставить производственные задачи; полученная прибыль; стимул к эффективной работе; перебои и очереди; реагировать на изменение спроса; предсказывать изменение спроса; основная проблема, стоящая перед.

Exercise 5. Translate the sentences using all the active possible:

1) Если хозяйство плановое, то работа прмышленности подчиняется плану, в котором государство определяет производственные задачи и планирует развитие на 5 лет вперед.

2) В плановой экономике покупатели лишены возможности влиять на производство товаров.

3) Поскольку значительная доля полученной прибыли должна быть выплачена государству, то в условиях плановой экономики стимулы работать эффективно, невелики.

4) Промышленность часто выпускает непривлекательные и старомодные товары, поскольку невозможно предсказать изменения моды на 5 лет вперед.

5) Государство в условиях плановой экономики может гарантировать своим гражданам образование и медицинское обслуживание.

6) Все крупные решения, касающиеся объема используемых ресурсов, структуры и распределения продукции, производства и потребления принимаются центральным плановым органом.

Exercise 6. Divide the text into logical parts and make up a plan.

Exercise 7. Give a summary of the text.

Exercise 8. Express your attitude towards planned (command) economy.

Exercise 9. Make up bits of conversation using the formulas expressing talking about effect:

1. as a result... – в результате

2.... with the result that... – с тем результатом, что...

3. This means (meant) that... – это значит (значило), что...

4. It followed that... – из этого следовало, что...

5. Сonsequently... – следовательно...

6. Therefore... – поэтому...

Text B

Exercise 1. Read the text without using a dictionary and answer the following questions:

a) What is the region’s (East Asia) success due to?

b) What did Lee Kuan Yew say in his interview for the journal “Foreign Affairs” of

American society?

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