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Doctor of economics, professor  Kiril Angelov

PhD candidate Kernebayev Aidyn  

 

EVOLUTION OF THE THEORETICAL CONCEPT OF THE QUASIMARKETS IN THE CONTEXT OF REFORMING OF PUBLIC SECTOR OF NATIONAL ECONOMY

 

Among various theoretical approaches using category "quasimarkets", the approach researching development of competitive structures in public sector of modern economy is contemporary. Evolution of the quasimarket structures researched within such approach nevertheless allows to fix the steady characteristics of such models representing components of its institutional structure.

Keywords: Quasimarkets, institutional structure, public sector, competitive budget purchases, non-profit organizations, voucher system.

 

The modern mixed economy assumes coexistence of two main economic sectors: market and public (state or public). In domestic economy in the 90th of last century the set of economic reforms was generally limited actually to processes of formation of market institutes. In current decade the vector of transformations began to be displaced towards the public sector preserving standards of functioning of administrative-command system of the past. The need for upgrade of public sector is more and more updated, and the reforms of the last decades in developed countries serve here as reference points. One of the directions of reforming in this regard is creation of special competitive mechanism in a number of the industries which are traditionally referred to public sector of economy and characterized as the quasimarkets by researchers.

L. fon Mises, famous neoaustrian economist applied the category "quasimarkets" in scientific turnover in his fundamental scientific work "Human Activities" (1949) [7]. In other work with respect thereto he used as the synonymous concept "artificial market" [8, p. 93–96]. With the help of these terms L. Mises tried to characterize a number of the socialist market models developed by the European socialists, in particular by O. Lange [24] and G. Dickinson [11, p. 246–249, 314–338, 372–382, 391–400], besides, that O. Lange, for example, offered at least three options of models in which degree of presence of the planned and market starts significantly differed [24, p. 95–96]. Condition of nationalization of property of large enterprises and the banking sector united them. In its turn, the specified models legally can be referred to group of theories of "competitive socialism" of the left sense" [6, p. 173] of such researchers-economists of the middle of last century as A. Pigu, A. Lerner, R. Moss [6, p. 168], R. Hall, O. Neyrat, etc. [5, p. 533, 535–536]. They tried to implement elements of these models in practice in some countries of Eastern Europe (Hungary, Yugoslavia) after World War II [6, p. 675; 12, p. 428, 618]. These models assumed wide use of the mechanism of market exchange and economic self-government among the entities with the state-owned socialist property on means of production. In general Mises subjected in the works these "quasimarket" models to criticism as utopian.

Other approach assuming other nature of use of the term "quasimarkets" got  distribution generally among domestic, and also some foreign authors [20, p. 185-215]. Since the second half of the 90th of last century, they characterized by means of the corresponding terminology the forming markets on post-Soviet territory, trying to reflect at the same time a number of their essential lines, uncharacteristic for the markets of developed countries, noting including their inefficiency in comparison with more mature analogs. In many respects such approach was caused by the negative estimates of results of the market transformations which are carried out in the 1990th, made directly after the end of this period [10, p. 5–27; 4]. However some authors continued to use terminology in the corresponding value and in subsequent [9]. One more option of use of category "quasimarkets" gained distribution in a framework of neo-institutional approach. It is connected with a research of processes of stimulation of the internal competition between the separate economic divisions which were widely adopted in last century. Theoretically similar mechanisms determined also as "domestic markets" [19], "hybrid firms" [18, p. 1–21], etc., were characterized, in particular, in works of O. Williamson, K. Menarda and others [12, p. 620; 27, p. 161–182]. Though later certain authors criticized the attempt of special allocation of similar structures as theoretically significant and justified [23, p. 37–60].

It is necessary to emphasize that in this article the content of category "quasimarkets", which differs from the above-stated determinations, is actualized.  This approach assumes that people understand the "quasimarkets" as economic institutes within which state financing of demand is organized and competitive interaction between subject among which prevail (dominate) the non-profit organizations, is stimulated. One of the first who referred to research of similar institutes and created the corresponding term in relation to the researched problem, there were British researchers J. Le Grand [25] and U. Bartlett [17]. They formulated their concept at the beginning of the 90th of the last century in relation to the reformed institutional mechanisms of interaction of the state, consumers and producers of services in education and health [26] by the government of Great Britain in the late 80th – the beginning of the 90th.

We should specify the choice reasons as a priority of this article the research of quasimarkets in the context of approach Le Granda – Bartlett. We believe that other approaches with lower degree of relevance in modern conditions as idea of quasimarket of L. Mises is relevant to a large extent from the point of view of history of economy and economic thought as practical implementation of the similar models replacing really functioning market mechanisms in industries and spheres, traditionally market for developed countries, is excluded now. In its turn logical to assume that reforms in the post-transformational economies will promote adaptation and increase of efficiency of the applied market mechanisms in the nearest future. Even if the last ones will keep national specifics, then it shall reflect rather possibilities of their effective adaptation, than insolvency and inefficiency assumed now.

Owing to this fact Le Grand Bartlett's approach differs in the prospects. The co-existing of market and public sector in modern mixed economy assumes both need of their interaction, and aspiration to use optimally the principles included in two of these systems. Implementation of these line items is possible within the specified approach.

The first in the history attempt of the conceptual characteristic of similar quasimarket in the 50th of last century [22; 14] became development of the concept of voucher system according to which potential consumers, for example in education, received on hands the special vouchers guaranteeing them provision of set of the corresponding services [15, p. 183-201]. The provided vouchers in the chosen educational institution guarantee further to this organization the state financing of training process.

In modern conditions the application of voucher schemes, in its turn, is justified if quasimarket projects are implemented locally, or within certain social groups, i.e. don't cover all society in general. In case of their full-scale implementation, for example, within all system of primary and secondary education in the country, there is no need in vouchers, as all citizens have the right to the secondary education provided by the state, and it is implemented automatically in case of admit of the child in school, chosen by parents. Respectively, the fact of admission in itself, shall initiate automatically ensuring the state payment of educational services of this organization. General the modern technologies allow to do in most cases without voucher distribution, based on information databases and techniques of standard financing [2].

Within the approach accepted by us, the quasimarkets are characterized as the system of the relations between economic agents in which producers compete for the right of rendering of services to consumers whose expenses are financed by the state [26]. Reforms, turned into a prototype of the concept of "quasimarkets", were carried out in Great Britain [25, p. 1258-1262], Australia, New Zealand, since the end of the 80th – the beginning of the 90th of last century, and some time later in some other, including developing countries. In Great Britain – "ancestor" of similar reforms, they were performed in the context of the neo-Conservative government policy, which was followed by privatization and commercialization of fields of public sector and public administration. So, since 1980 British "government and regional authorities began to implement "compulsory competitive tendering" in economic and social structures, functioning within the local self-government" [3, p.45]. In the social sphere the undertaken reforms assumed the continuation of the state participation in financing of medical and educational services, however the order and nature of the organization of their provision were changed. The production organization of these services shall be performed outside the state budgetary institutions financed according to the estimate now. At the same time the status of the great majority of similar organizations was changed – they passed into the category of non-state non-profit organizations. Formally, similar processes can't be characterized as privatization as the created organizations didn't become private companies, maximizing their profit, keeping generally the non-commercial status. But as at the same time they lost the status of the state organizations, similar processes reflect processes of privatization of the social sphere.

Some authors [1] note the growth of efficiency and quality of the provided services as a result of carrying out similar reforms. Obviously it formed the basis for the domestic reformers to set course for carrying out similar reforms in our country too. However not everything in this question is so unambiguous. Attempts of carrying out similar reforms in the sphere of health care in the second half of the 1990th the specialists recognize as unsuccessful [15; 16, p. 914-916]. On the other hand, in order that reformation processes were realized more fully in the most various industries of the social sphere, the state continues to carry out the corresponding institutional transformations.

Real models of the quasimarkets can have certain differences in connection with institutional specifics or industry features. Nevertheless, their typological  similarity allowing to unite them within one type of economic institute is significant. For the corresponding characteristic we use schematic approach (see fig. 1).

 

 

 

 

 

 

 

 

 

 

 

 

 


Fig. 1. Institutional structure of the quasimarkets.

 

This scheme requires some explanations. As it was stated above, considerable number of subjects of the quasimarket have the status of non-profit organizations, which have limited opportunities for expansion of the economic activity (investment) in this sphere. Potential preserving of deficit of positive motivation is also integrated to it. Feature of the services (education, health care) reproduced in the similar quasimarkets is that property of asymmetry of information is inherent in such services therefore they belong to the category of the confidential benefits. In this regard the state shall provide embedding of additional mechanisms of monitoring and control of economic behavior of the agents limiting sales opportunities of scenarios of opportunistic behavior, including possibility of provision of appeal to controlling (authorized) bodies. Besides, the additional motivational mechanisms stimulating more effective behavior of agents can be provided by the state. At last, the most important issue is the possibility of reproduction of the competitive relations in this sphere. For this purpose, it is necessary to provide transparency of the information flows allowing agents of the quasimarkets to make reasoned effective decisions within the economic behavior. For the traditional markets such standard information indicator is the price mechanism. However within quasimarket structures its use isn't always possible. In this regard there is a need for reconstruction of other system of information signals performing such function. For example, in the educational sphere the indicators of progress of pupils can act as such. But even when the price mechanism is reproduced within quasimarket structure, its identity with the mechanism of market pricing not necessarily remains. So in system of competitive budget purchases the price level can steadily deviate average market values. At the same time, though traditionally competitive budget purchases usually don't belong to the quasimarkets, on the institutional structure they are identical to them.

It is difficult to draw on justice of the thesis concerning stability of quasimarket structures and preserving them as effective from the social and economic points of view of institute. Some foreign researchers fix their further institutional evolutions in the direction of development of network interaction [21, p. 19-20], though forming of networks also can't automatically becomes a panacea that confirms the domestic experience [16, p. 888-890]. Obviously only the fact that forming of optimum quasimarket structures shall be based on accounting of institutional features and heritage of the national economic systems, adapting to their specifics.

LITERATURE

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