CC BY
0THE EVOLUTION OF SCIENTIFIC VIEWS ABOUT THE ROLE OF THE STATE AND STATE REGULATION IN A MARKET ECONOMY
Suyunova Kamila Bakhromovna
PhD teacher at Samarkand institute of economics and service
Umarov Oltinbek Bobir o'g'li 4th-grade student, at Samarkand institute of economics and service
oltinbek799@gmail.com
Annotation: The article contains scientific views on state intervention in the economy, substantiates the issues of determining the role of the state in the economy in the process of implementing economic reforms in the years of independence, as well as its role in regulating the economy by performing several functions. Serious attention is paid to the main principle of state intervention in the economy, namely the creation of freedoms for entrepreneurship and the balance of their responsibility to society. The create this balance, the work notes the need for a certain reduction in control, restrictive, prohibitive government measures in the context of large-scale economic reforms in Uzbekistan
Keywords: market economy, economic crisis, government intervention in the economy, economic reforms, monetary relations, supply, demand, entrepreneurship, profit, money-credit
Introduction. The history of scientific views on state intervention in the economy spans a long period. During this time, its essence has changed and evolved in accordance with the specific features and content of social and economic development. As society progressed through different stages of development, the state's approach to economic regulation also transformed.
There are several fundamental theories concerning the state's role in the economy: classical theory, Keynesianism and neo-Keynesianism, monetarism, institutionalism, Marxism, neoclassical theory, and neoliberalism. In the early stages of the formation of commodity-money relations, the state's intervention in the economy was primarily carried out through taxation of the property of producers of goods and services. As commodity-money relations developed and productive forces improved, the nature and scope of the state's economic intervention also expanded accordingly.
At the current stage of societal development, two main models dominate in addressing the problems of determining the state's role in the economy and the degree of its participation in economic processes: the scientific perspectives of Keynesianism and monetarism.
In Uzbekistan, during the years of independence, and particularly in recent years within the framework of wide-ranging economic reforms, the issues of state intervention in the economy have gained significant importance during the transition to a market-based economic system. Most importantly, in the new economic situation in the country, these comprehensive reforms have become a crucial step in overcoming
the remnants of a planned economy and replacing administrative-command methods of economic management with modern techniques characteristic of a free market economy. Reducing the state's involvement in the economy defines the current essence of the state's macroeconomic policy.
Literature Review. The scientific views on the state's role in the economy first emerged in the 17th and 18th centuries in the works of mercantilists. They advocated the idea that state regulation of the economy was necessary for the development of trade and production in a country. This idea dominated state policy until the late 18th century. In scientific literature, the reasons for the decline of mercantilist views on the state's role in the economy have been thoroughly analyzed. "While state regulation of trade and industry was recognized as necessary during the formation of market relations (17th-18th centuries), by the end of the 18th century, state intervention was perceived as an obstacle to the development of market relations. This shift in economic thought led to the emergence of different approaches to regulating the market economy."
As commodity-money relations developed and interest in private property increased, state intervention in the economy began to conflict with the interests of the rapidly growing class of entrepreneurs, both in terms of quantity and quality. Entrepreneurs increasingly viewed economic liberalization and the reduction of state intervention as essential for progress, perceiving the state's involvement as a hindrance. This growing conflict between the economic interests of the entrepreneurial class, which was becoming more entrenched in the economy, and the state's regulatory activities laid the groundwork for the emergence of a new economic doctrine.
The doctrine developed by classical economic school theorists concerning the state's role in the economy dominated for nearly 200 years as the primary approach to regulating the economy under market conditions.
However, the global economic crisis of 1929-1933 demonstrated the classical economic theorists' failure to address the idea of the market system's self-regulation without state intervention, particularly in overcoming deep economic crises. The need to rescue the world economy, and the economies of individual countries, from economic depression required replacing the long-dominant economic doctrine of the classical school with a new theory tailored to the severe conditions of the time. This complex task was fulfilled by the renowned British economist John Maynard Keynes (1883-1946). His work The General Theory of Employment, Interest, and Money (1936) rejected the concept of market self-regulation and created a new theory reflecting the changes in the economic situation in recent years. According to Keynes, the dynamics of national income are determined not by supply but by demand, and regulating demand through monetary policy is more effective. Moreover, Keynes advocated giving preference to government contracts with private companies rather than state investments. Keynes' teachings have been enriched with new scientific insights over the years, being creatively developed and adapted to the needs and demands of the time.
According to A.M. Babashkina, the degree of state participation in the economy and the tools affecting small businesses should be limited: "The essence of state regulation of the economy is not to harm through administrative measures or to support certain enterprises and market participants, but to equally protect private initiatives and all forms of property. The state's task is to develop the activities of state institutions that support market participants and to create conditions necessary for increasing the efficiency of the private sector," i.e., creating conditions that ensure the market's self-regulation. Similar views can be found in the works of many local economists. For instance, researchers R.A. Yusupov and Sh.A. Begmatova, while acknowledging that the market system cannot function without state intervention in the context of globalization, also argue that "state intervention in the economy must be within certain limits, as exceeding these limits can negatively impact market processes and ultimately reduce production efficiency." They emphasize that economic development can be achieved by balancing state intervention methods and market self-regulation mechanisms.
In our view, the opinions of researchers regarding the extent of state influence on the economy are worth considering. Indeed, excessive freedom in entrepreneurial activity can have negative consequences for society as a whole (such as high prices, environmental damage, poor-quality goods and services, etc.). Therefore, achieving balance is essential: entrepreneurial freedom must be aligned with the entrepreneur's responsibility to society. To achieve such a balance, we believe the state's controlling, restrictive, and prohibitive measures should be somewhat reduced, as these are precisely what negatively affect the development of market participants.
Main Body. In the textbook of economic theory, state regulation of the economy is interpreted as a system of indirect influence on the behavior of economic entities through the application of various instruments aimed at encouraging or restricting certain activities. In some sources, even more concise definitions of this concept can be found. For example, Russian economist M.G. Svetunkov defines it as: "State regulation is a system of legislative, executive, and control measures aimed at achieving the goals set by state authorities." This definition interprets state intervention in the economy as a system of legislative, executive, and control measures. In our view, it is more appropriate to consider state intervention in the economy primarily as an activity. Therefore, defining state intervention as the implementation of legislative, executive, and control measures by the state is more effective.
During theoretical research, we critically examined other researchers' definitions of this concept and, based on generalizations, proposed the following definition. State regulation of the economy is the activity aimed at ensuring economic and social stability, strengthening the state's socio-economic security, fostering stable economic growth, ensuring fair distribution of income, maintaining financial stability, and securing stability in foreign economic activities.
The state's role in economic regulation is manifested through several functions: • Market regulation (ensuring property rights and competitive conditions);
• Compensation for market failures (producing public goods, regulating negative externalities);
• Resource redistribution (redistributing income of individuals and firms through the tax system, redistributing financial resources through financial and tax systems).
The objective necessity of state regulation is explained by the fact that "the market mechanism cannot ensure stable and sustainable economic development, create a positive socio-economic environment, protect private property, and provide conditions for competition and the limitation of monopolistic activities." It is related to the following factors:
• The market does not ensure the preservation of non-renewable resources;
• The market is not capable of providing effective environmental protection; only the state can compel businesses to invest in environmentally friendly production;
• The market cannot regulate the targeted use of resources in accordance with the interests of the entire state (society);
• The market does not encourage the production of goods and services for public
use;
• The market does not guarantee the right of all citizens to employment and income;
• The market does not ensure the development of fundamental research in science;
• The market is not aimed at producing socially necessary goods;
• The market cannot develop stably under inflationary pressures.
In Uzbekistan, during the years of independence, the issue of determining the state's role in the economy took center stage in the formation of a market-based economic system. This is because the state's role in the economy fundamentally differs in its essence (goals and objectives, functions, methods, mechanisms of implementation, etc.) between a planned economic system and free market relations. Naturally, this situation has created significant challenges and difficulties in forming modern mechanisms of state intervention in the economy.
In the early stages of economic reforms, a policy of gradually reducing state intervention in the economy step by step was adopted. At that time, policies aimed at reducing state involvement in the economy were pursued through privatization, the withdrawal of state ownership, and the development of small and private entrepreneurship, thus forming a class of property owners. The task of reducing state intervention was set at a certain stage of economic development: "We must reduce the state's share and role in our economy to a strategically and economically justified level." In our opinion, in the initial stages of transitioning to a market economy, and even at the current stage of economic development, the active regulatory participation of the government can be seen as a necessary measure.
In addressing the issue of sharply reducing the degree and share of state involvement in the economy, the Decree of the President of Uzbekistan "On the Strategy of Actions for Further Development of the Republic of Uzbekistan for 20172021" played a crucial role. This important document set the task of liberalizing all spheres of life, including the economy.
In recent years, significant measures have been taken to sharply reduce the state's role in the economy and expand freedoms in entrepreneurial activity. Among them was the 2019 decree signed by President Sh.M. Mirziyoyev titled "Additional Measures for Further Development of the Economy and Increasing the Efficiency of Economic Policy" (Decree No. PF-5614).
The decree can be highlighted separately. This decree outlines significant measures aimed at eliminating excessive administrative barriers in business activities, improving the market and legal mechanisms for the protection and guarantees of private property, reducing the number of activities requiring licenses, and enhancing the role of local government bodies in regulating entrepreneurial activities. In our view, the implementation of these measures will be an important step in solving the challenges of rapidly developing entrepreneurship in our country. This is because various administrative obstacles and excessive oversight were among the major factors hindering the free development of entrepreneurship in the country.
The extraordinary situation in the economy caused by the coronavirus pandemic, which began in the early months of 2020 and has only been ongoing for a few months, along with the negative processes affecting the population's standard of living, has necessitated a revision and further development of scientific views on the role of the state in regulating the economy. Moreover, it has imposed new responsibilities on the state in ensuring socio-economic stability. Despite such extraordinary circumstances, Uzbekistan continues to consistently implement its strategic policy of reducing the state's participation in the economy.
Currently, the draft decree "On Further Reducing the State's Participation in the Economy, Radically Reforming State-Owned Enterprises, and Introducing Modern Corporate Governance Practices" (ID-14177) has been put up for public discussion. The draft envisions significant strategic measures such as reducing the share of state-owned enterprises in the economy, reforming and improving their efficiency, approving the strategy for state ownership, management, and reform of state-owned enterprises for 2020-2025, and maintaining accurate accounting of state-owned assets to reduce the state's involvement in the economy. Large-scale efforts will be undertaken to drastically reduce the state's role in the economy, which will be an important step in liberalizing market relations.
According to this draft decree, 111 enterprises will be reorganized, with business companies established on their basis. Eight state-owned enterprises (in the areas of transport, banking and finance, cotton processing, information technology, grain processing, utilities, geology, water management, and road construction) will be reformed. 295 low-profit and non-operating state-owned enterprises will be liquidated. Measures will be taken to privatize and reorganize 822 state assets. Furthermore, 2.0 billion soums in grant funds from international financial institutions will be utilized. In 2020, the state budget will receive a total of 3.491 trillion soums from privatizing state assets, dividends from state shares, and rental income from state-owned real estate, which is 4.3 times higher than the forecasted amount. Additionally, 25,895 state-owned
properties will be leased to entrepreneurial entities, creating new jobs and implementing other critical initiatives.
Conclusion. In conclusion, state intervention in the economy is primarily aimed at eliminating the negative and counterproductive effects of a market economy. At the same time, it creates favorable conditions and opportunities for economic development and for increasing the volume of gross domestic product (GDP) through supportive measures in the entrepreneurial sector.
Under market economy conditions, state intervention and its regulatory activities are more evident in indirectly managing and supporting entrepreneurship, particularly small and private businesses. This is because the state's main role in the economy is to protect economic freedom, which includes the freedom to produce, invest, and trade in the entrepreneurial sector. The protection of these freedoms, their regulation to a certain extent, and the support of small businesses and private entrepreneurship when necessary—along with creating favorable conditions for them to operate in a competitive environment—are the key tasks the state fulfills in this area. Today, the policy of drastically reducing state intervention in the economy is focused precisely on addressing these pressing tasks.
References
1. Babashkina, A.M. State Regulation of the National Economy / Moscow: Finance and Statistics, 2007. - p. 7.
2. Salisheva, E.G., Khabibrakhmanova, A.G., Salishev, R.G. Improvement of Institutional. 3.Foundations for State Regulation of Foreign Trade Activities at the Regional Level / Ufa: Vagant, 2007. - p. ll.Babashkina, A.M. State Regulation of the National Economy / A.M. Babashkina. - Moscow: Finance and Statistics, 2007. - p. 12.
3. Yusupov, R.A., Begmatova, Sh.A. Theoretical and Methodological Aspects of State Regulation of the Economy. Journal "Economics and Finance", 2018, No. 10.
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5. Svetunkov, M.G. Theory of State Regulation of Entrepreneurial Networks: Monograph Ulyanovsk: Publisher IP Vasilkina M.N., 2011. - p. 8.
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7. Savichev, O.P., Ziskel, N.A., Trifonov, S.V., Tsapuk, A.I. Economics and Organization of Small Entrepreneurship: Textbook. - St. Petersburg: Publishing House of St. Petersburg State University of Economics and Finance, 2010. - pp. 17-20.
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