Social guidelines of the economy and social policy

In a philosophical sense, economics must always, at all times, be social. After all, it cannot exist without a person and, in principle, is not needed, meaningless without him. This means, on the one hand, without people, the economy cannot function, the development of the economy depends on the quality of the person (people) himself. On the other hand, a person, the level and quality of his life depend on the level and stage of development of the economy.

However, these connections and dependencies are not straightforward or unambiguous, they are mediated by a number of processes, phenomena and relations. As a result, centuries of human history have passed without a real sense of such a connection. This, in turn, has led to  the traditional claim that maximizing the mass of goods and profits produced is the leading goal of society and the highest achievement of human progress. Man, people in this approach are an impersonal and faceless “factor” of production.

The changed realities of life, the global aggravation of social and environmental problems in the twentieth and twenty-first centuries, the logic of the development of economic systems urgently require a revision of such ideas.

Thus, social sustainability should become a generalizing, dominant benchmark for socio-economic development. Without it, there can be no stability of the economic system and society as a whole.

Social stability is such a state of society and its citizens, which is characterized by the stability of their economic and social situation, as well as the ability to self-sufficiency in the reproduction of their vital activity.

Forms of manifestation of social stability are:

the absence of income polarization and the situation of different social groups of the population; the sufficiency of incomes of all segments of the population for self-sufficiency in the reproduction of their lives; availability of social guarantees; reliability of social protection; availability and accessibility of critical links in social infrastructure; absence of social conflicts and confrontations.

So, social stability is the main generalizing benchmark and criterion of a socially-oriented market economy, which is determined by a system of social indicators (Latin – pointers).

The system of social indicators is a set of indicators used to record fluctuations and deviations in the social status of the population and its groups.

World theory and practice have developed to date 4 main groups of social indicators.

The 1st group of the system of social indicators consists of combined indicators of the standard of living of the population. The definition of the standard of living is based on an assessment of the quantity and quality of life goods consumed (material and spiritual). The standard of living is assessed as the provision of the population with vital benefits and as the degree of satisfaction of people’s needs for certain benefits.

The composition of life’s goods is very diverse. Along with the incomes of the population, the standard of living is influenced by living conditions, under the influence of which a certain way and style of life is formed. The system of indicators of living standards recommended by the UN includes a wide range of characteristics of living conditions. There are 12 groups of indicators.

births, deaths and other demographic characteristics; sanitary and hygienic living conditions; consumption of food products; housing conditions; education and culture; working conditions and employment; incomes and expenditures of the population; cost of living and consumer prices; vehicles; organization of recreation; social security; human freedom.

The listed indicators are considered as the main ones. Along with them, to assess and calculate the standard of living, a number of information indicators are distinguished, which, according to experts, are not direct characteristics of the standard of living. Information indicators include national income and gross domestic product per capita, taking into account their average annual growth rates. About the indicators of GDP per capita it is necessary to say especially, since there are attempts to use it as a generalizer. Experts believe that the use of this indicator, especially for the purposes of international comparison of living standards, is possible only in kind – through a comparison of the volume of vital goods directly or indirectly consumed by the population. The difficulties of international comparisons are mainly related to the consideration of the exchange rates of national currencies.

In the domestic literature, 8 indicators are distinguished as indicators of the standard of living (see Fig. 10.1.).

Rice. 10.1. Indicators of the standard of living

The standard of living can be determined by comparing the actual level of provision of the population with food, industrial goods, services, housing, etc. with the “consumer basket”, which includes a set of goods and services that provide a certain level of consumption (minimum – “poverty line” or rational – the most favorable for a person) of the average resident of the country.

The quality of life of the population is characterized by the following indicators:

working conditions and safety; availability and opportunities to use free time; cultural and educational level of the population; physical development and life expectancy; personal and property security, etc.

Group 2 – income indicators. According to the World Bank’s 1995 yearbook Social Development Indicators, Armenia, Georgia and Tajikistan were in the group of low-income countries ($695 or less), and all other CIS countries were among the 99 countries in the middle-income group ($695-8625).

Since 1990, the HDI, the Human Development Index, has stood out among the combined indicators. It is evaluated on the basis of:

life expectancy; level of education; real per capita GDP.

According to this index, in 1994, Canada ranked 1st, and Niger took the last. The Republic of Belarus in 1998 among the surveyed countries of the world was on the 57th place, Russia – on the 62nd, Ukraine – on the 78th place.

Group 3 – indicators of social participation. These indicators, obtained on the basis of sociological surveys, indicate the degree of ability of the subject (family) to follow social norms and traditions (for example, in the structure  of nutrition, social behavior) and maintain his social status.

Group 4 consists of subjective indicators. The subject himself determines, say, whether he is poor or rich.

The social sustainability of society is ensured primarily on the basis of the social policy of the state. The concept, criterion, forms, tools and sources of social orientation of state regulation of the economy are presented in Fig. 10.2. At the center of this system is a balanced realistic social policy.

Social policy is a set of principles, norms and methods used by the state to regulate the socio-economic conditions of society and relations between its social groups.

It is now generally recognized that the objectives of social policy (social priorities) are:

improving the material and living conditions of people; ensuring employment of the population, improving the quality and competitiveness of the labor force; guarantees of the constitutional rights of citizens in the field of labor, social protection, education, health protection, culture, housing; reorientation of social policy towards the family, ensuring the rights and social guarantees provided to the family, women, children and youth; normalization and improvement of the demographic situation. Reducing the mortality rate of the population, especially children and citizens of working age; improvement of social infrastructure.

The most important principles of the formation and functioning of social policy are:

the principle of social equality of people – members of this society (before the law, in the field of national relations, religion, etc.); the principle of social solidarity, understood as general support, based on the commonality of the basic vital interests and goals of the population of a given country; the principle of social justice, which has historical features, but is generally understood as relations of symmetry (or equivalence) in the life of society and its social groups (for example, the correspondence of rights and duties, practical contribution and the real position of a person).

The main functions of social policy can be summarized as follows:

stabilization, bringing to stability of social relations and social position; maintaining and stimulating the social and economic activity of the population; social support and protection.

Social policy is inherently long-term, focused on the long term. Therefore, the starting point of its development is the choice of a promising model of the socio-economic structure of society. Social policy should contain strategic guidelines aimed at achieving large-scale goals.

The strategic objectives of the transitional social policy are determined by the complex conditions of the transition economy. The state of the social and labor sphere with the limitation of financial resources and changes in the functions of the state requires a clear phased delineation of tasks and clarification of priorities in order to rank measures for the social protection of the population, the allocation of long-term, medium-term and emergency (urgent) measures.

At the moment, it is urgent to ensure the conditions for the social and physical survival of people. In the medium term – achieving the pre-crisis level and quality of life, their inherent consumption standards; and in the long term, it is the approximation of the level and quality of life to the standards of post-industrial society, achieved on the basis of the scientific and technological revolution.

Along with strategic guidelines, social policy contains a set of priority urgent measures to overcome the crisis. Their development requires the definition of social priorities. These primarily include: halting the further decline in real incomes, volumes and caloric intake; timely payment of salaries and pensions; slowing the expansion of the poverty and unemployment zone; suspension of the destruction of the social sphere.

In the future, subject to an annual increase in GDP and investment, an increase in industrial and agricultural production, a decrease in inflation and the budget deficit, it will be possible to restore pre-reform indicators of living standards and begin to implement long-term goals.

Social priorities also relate to the level and quality of life, healthcare, education, culture, ecology. To determine them, it is necessary to establish a ratio of budgetary and non-budgetary funds; to distinguish between the areas of application of direct and indirect methods of regulation; to develop social programs involving a structural reorientation of the economy, the development of housing construction, education, health care, and environmental measures. According to the consolidated budget of the Republic of Belarus, the volume of socially significant expenditures (on the social sphere, as well as various kinds of subsidies and subsidies, payment of compensation for deposits, benefits and compensations to the affected population as a result of the Chernobyl disaster) increased and amounted to 49.3 per cent of budget expenditures in 2001, against 47.3 per cent in 2000 and 45.9 per cent in 1999.

Social policy is not only multifunctional, but also structurally complex. In the structure of social policy (Fig.10.3.) five important structural parts can be distinguished:

policy of regulation of incomes of the population; employment policies; social guarantee policy; social protection policies; policy of protection of health and environmental safety of the population.

The transition period, due to its peculiarities and large costs, dramatically increases the importance of a competent and effective social policy. Moreover, without such a policy, social instability, or worse, social crisis and explosion can negate all efforts to achieve the objectives of the transition period. Therefore, when pursuing a social policy, it is important to clearly understand the features of its structure and update the relevant functions in time.