Production and reproduction.

The production can be considered in the broad and narrow sense. In the narrow sense of the production is the process of creating goods and services in a certain period of time. In the broad sense of the production is continuously renewed process, which in addition to direct production includes distribution, exchange and consumption. This constant process of renewal of production is called reproduction.

There are 2 forms of reproduction: simple (extensive) and extended (intensive). Under the simple reproduction of the scale of production does not change, and all the surplus product is consumed by the manufacturer. Under extended reproduction the part of the value added product joins to functioning capital, thus there is increasing the scale of production.

Sphere of production combines homogeneous sectors and activities for final result:

• sphere of material production (result – things – the basis of social production);

• sphere of organized production (result – organization, organized public relations);

• sphere of spiritual production (result - information public consciousness);

• sphere of human production (people, population).

For the first time the analysis of social reproduction was made in the mid-18th century and the founder of the school of physiocrats is the french economist Francois Quesnay. This analysis was reflected in his work «Economic table» (1758). Quesnay has developed a prototype of reproduction relations in society. He also formulated the term «reproduction». More in-depth analysis of social reproduction was carried out by Karl Marx and described in the second volume of «Capital». Marx revealed a mechanism providing proportionality between the two divisions of social reproduction (production of means of production and the production of consumer goods) and within these divisions.

Figure 2. The parts of the reproduction process

John Keynes considered the problems of social reproduction and. After the great depression of 1929-1933, he tried to reveal the causes of violations of the reproduction process, considering that the main cause of the crisis is the lag (отставание) of solvent demand of the population.

5. Circulation of economic goods

Consider two-sector model of the economy consisting of only two macroeconomic agents, households and firms – and two markets – the market for goods and services and market economic resources (figure 3).

The figure shows that:

1) the cost of each material flow is the amount of cash flow;

2) national product is equal to national income;

3) aggregate demand is equal to total supply;

4) total revenues equal total costs.

Figure 3. Model of the circular flows in the economy

(Модель кругооборота потоков в экономике)

The scheme has the name of circulation model or models of circular flows. Material flows move counterclockwise, and cash – clockwise. The demand moves in a clockwise direction, and supply – against.

With the introduction of the state in the model of the circuit, it becomes complicated, including:
- taxes paid by households and firms;

- state subsidies to producers and transfer payments to households;

- government purchases of goods and services;

- public services to households and firms.

Basic terms and concepts:

Need
Benefit
Production in the broad and narrow sense

Distribution
Exchange

Consumption
Reproduction
Simple reproduction

Extended reproduction

Productive forces

Factors of production

Industrial relations

Work

Capital

Earth
Entrepreneurial skills

Border production capabilities

Alternative (opportunity costs)

Date: 2014-12-28; view: 1279