State regulation of the economy is an objective necessity even in modern market-type farms. A much more serious issue today is the ratio of methods of state control. Analysis of what methods and how the state uses, allows to determine the nature of its socio-economic development.
The nature of state regulation depends mainly on the type of economy, but it is necessarily present in both planned and market economies. If in the first case state control is total and determines all directions of socio-economic development, then as we move towards a market-type economy, its importance begins to weaken. State regulation in this case becomes only a periodic intervention in the economy and has as its goal to eliminate potential and existing problems.
The main methods of state regulation
The methods of state regulation directly depend on the nature of the economy. The main methods of regulation are divided into direct and indirect.
Direct methods are aimed at regulating economic relations with administrative instruments. These include legally established norms in the form of prohibitions, permits and various forms of coercion. They are called direct because they have a targeted effect on economic agents, for example, they introduce licenses to sell certain goods.
Administrative methods are used mainly in the spheres of state jurisdiction, such as ensuring national security, environmental protection, etc., as well as in the form of separate legislative norms in other areas of economic activity. These methods of regulation are of decisive importance in a planned economy, but in a market economy they are more limited and must necessarily be justified by economic interest.
Indirect methods are called in another way economic, which makes them especially important in a market economy. The essence of indirect methods is to influence the economic situation as a whole, while preserving the right of choice for individual subjects.
At the same time, the main state instruments are financial and monetary policy and various state programs, with the help of which the state is able to smooth out economic fluctuations and create more modern, competitive conditions for activity. The effect of indirect methods is most clearly manifested during a recession or overheating of the economy, when only the state can stabilize the situation by pursuing a certain budgetary and monetary policy.
Correlation of methods of state regulation
It does not happen that the state, intervening in the economy, uses any one type of method. There is always a ratio of both direct and indirect methods of regulation. It depends both on the sphere in which this or that policy is being pursued, and on the nature of economic development in general. As we move from a command-and-control economy to a market economy, direct and economic methods of regulation become increasingly intertwined.
