Economic behavior of the individual: types and methods of realization

When we talk about other people, we say: “she is very cautious in her behavior” or “he has been behaving unreasonably risky lately,” or “if she continues to behave as persistently, she will undoubtedly succeed.” What are the basis for such estimates? After all, we are often unaware of what really drives a person in his actions and judge him only on the basis of the actions themselves. Forming our idea of a person, we more or less consciously notice and highlight the general features of his individual actions. These traits add up to a holistic image that characterizes in our minds its carrier and determines our model of interaction with him. For example, we say “he is a reliable partner, you can deal with him.” This means that a person has repeatedly been honest in his actions towards others, fulfilled his obligations, brought the work begun to the end. Thus, we perceive behavior as a result component of human actions. reflecting the external orientation of its activity. Comparing the behavior of different people, you can find that some of them behave in similar ways in similar situations. Then we say that these people have a common type of behavior.

In economic sociology, the concept of “economic behavior” is widely used to describe the activity of people in the sphere of production, distribution, exchange and consumption of various goods and services. It allows you to fix the direction of the economic activity of people, which is carried out in order to meet their needs through one or another way of obtaining and consuming goods. Economic behavior, therefore, we can define as a series of purposeful actions of a person, focused in their totality on the implementation of a certain model of economic activity. What, then, can we say about this phenomenon, except that different people achieve the satisfaction of their needs in different ways depending on their capabilities, inclinations, preferences on the principle of “there are no comrades in taste and color”?

In fact, a person chooses an acceptable model of economic behavior for him from a rather limited number of opportunities. Acting as an economic entity, it manifests its economic activity in the context of the production and distribution relations that have developed in society, which set the “rules of the game” characteristic of a particular sphere of activity and determine the way of management corresponding to this sphere. In addition, in society there is such an absolute good as money. The presence of this universal tool for the exchange of the products of labor greatly facilitates the task of studying and predicting the economic behavior of people. In making economic choices, almost everyone will prefer more money to less, because money provides a person with the opportunity to achieve his goals, whatever they may be (the limitations of this rule will be discussed below). Therefore, in a narrow sense, economic behavior can be interpreted as a person’s chosen way of making money. A modern socio-economic system based on market principles of management can offer a person several such ways.

1. Hired labor. Perhaps the most common form of organization of production relations in society. Realizing his economic activity in this way, a person (employee) sells his knowledge, skills, and abilities to the buyer (employer) on the labor market. As a result of mutual choice, in the process of which both parties weigh the benefits and costs of each of the alternatives, the employee is included under certain conditions in the organizational structure, taking on the performance of the specified functions for an agreed fee.

2. Entrepreneurship. It is a form of manifestation of social relations arising as a result of the initiative activity of individual or collective economic entities in the spheres of production, distribution, exchange and consumption of material and spiritual goods, aimed, as a rule, at making a profit (income) and carried out on their own behalf, at their own risk and under their property responsibility. Recognized researchers of the phenomenon of entrepreneurship (J. S. Mill, A. Marshall,
J. Schumpeter, J. B. Say and others) believed that the specificity of this phenomenon, in contrast to economic activity as such, consists in the implementation of new combinations of factors of production and circulation. The logically completed version of this approach is reflected in the position of F. von Hayek, who considered entrepreneurship as the activity of a kind of businessman – an entrepreneur for whom the main thing is the analysis and use of various opportunities for the production of new goods, the discovery of alternative sources of raw materials, markets, new ways of organizing production, etc. Thus, entrepreneurial behavior seems, to one degree or another, innovative behavior. social subjects in the sphere of production of a wide range of goods and subsequent operation of them.

3. Franchising. A form of entrepreneurial activity associated with the investment of capital in already proven ways of producing goods. A typical example of franchising is the widespread mcDonald’s quick-service restaurant chain. Acquiring a license for the right to manage in this area, the entrepreneur copies the given organizational structure, creating his enterprise in the image and likeness of the formed standard, following this standard even in trifles (assortment, form of personnel, principles of customer service, etc.). Such a way of making money allows minimizing the risk of capital investments in comparison with the development of new types of activities, limiting, at the same time, the entrepreneurial initiative to a rather rigid system of rules and patterns.

4. Stock Exchange. The form of the market within which the purchase and sale of securities is carried out and their current market price is fixed. The appearance of the stock exchange was initially caused by the need to support the development of joint-stock firms, but over time, the exchange itself became a place for making money and very large ones. The way of making money in this area is associated with the extraction of income through operations with securities (shares, bonds, bills of exchange, etc.). Restrictions in the implementation of such a strategy of economic behavior are connected, firstly, with how developed this form of market is in principle in a particular socio-economic system and, secondly, with significant costs “at the entrance” to this sphere. Before a person can earn serious money in this way, he needs to get the appropriate education, and then accumulate significant work experience to become a professional intermediary in the securities market – a broker or a dealer.

5. Realization of individual abilities (use of talent). A special way of economic activity available to a person with unique, outstanding or at least just rare abilities in one or more areas of activity. If a person knows how to do something noticeably (significantly) better than others, then he can make money on it. Moreover, a person chooses a specific area of application of his abilities from among the alternatives available to him on the basis of a comparison of the benefits and costs of each of the options. By the way, the “relatively honest” ways of redistributing goods in their favor, which were brilliantly used by the famous literary hero Ostap Bender and are used with no less success in real life by his “heirs” (“thimbles”, “katals”, etc.) also belong to this sphere.

6. Network (multi-level) marketing. The network principle of building production and trading companies is widely developed all over the world, as it has shown itself to be the most flexible mechanism for distributing high-quality goods and services. For example, in the United States, more than 50% of the total turnover is carried out according to the network principle, in Japan – up to 90% of all goods and services “find” their consumer through network marketing. In general, according to world economic statistics, more than 30 million people work professionally in network structures. In the Republic of Belarus, a number of network marketing companies operate legally, which promote a wide range of consumer goods. Among them are such world-famous companies as VISION International People Group, ZEPTER, Mary Kay, Oriflaim, etc. They are self-organizing evolutionary structures that not only perform the function of saturating the market with missing high-quality goods and services, but also create new jobs for which the state does not spend money. Making an economic choice in favor of network marketing, a person concludes an employment agreement (contract) with the company and begins to work as an individual representative of the company (distributor), receiving remuneration depending on the specific results of his work in accordance with the approved business plan. To start activities in this area, you need start-up capital, the size of which, as a rule, does not exceed 200-300 US dollars. As for the development and subsequent implementation of a particular type of economic behavior of the distributor, he forms it independently within the framework of the existing legal field in the state and the development strategy set by the company.

Thus, weighing the benefits and costs of each of the variants of economic activity (associated with the extraction, distribution, exchange of various goods or the way they are consumed), assessing his potential and real opportunities in each case, a person makes his economic choice. The identification of meaningfully close patterns of behavior that various subjects use or are ready to use in solving similar economic problems allows us to talk about the formed type of economic behavior, and its implementers are considered as a group of carriers of this type of economic behavior.

An example of the construction of a typology of economic behavior is the materials of the republican sociological study “Socio-economic situation of various categories of young citizens and young families in need of improving housing conditions”, conducted in January-March 2001 by employees of the Department of Sociology of Labor and Economic Sociology of the Institute of Sociology of the National Academy of Sciences of Belarus under the scientific supervision of Doctor of Philosophy, Professor G. N. Sokolova (1023 people interviewed). The study identified two main strategies for improving the living conditions of respondents – one of them is rather active, associated with the willingness to invest their own funds in the construction, purchase or exchange of an apartment or house (73.0%); the second is rather passive, associated with obtaining housing for social use (on the basis of benefits), inheritance of an apartment (house), related exchange of apartments (27%). Among the types of economic behavior in line with the active strategy are the construction of a cooperative apartment (30.9%), the construction of an apartment on the terms of equity participation (21.7%), the purchase of an apartment (9.0%), the construction of one’s own house (6.6%), the exchange of a smaller apartment for a larger one (4.8%). Among the types of economic behavior in line with the passive strategy are obtaining housing for social use (on the basis of benefits) – 15.5%, obtaining an apartment (house) as an inheritance (6.1%), a related exchange of apartments (4.4%), other options (1%) (Fig. 8.1).

What kind of housing are respondents going to buy or build? The vast majority of them (88.5%) are focused on the purchase of an apartment; a minority (9.2%) for the construction of an individual house and 2.0% for something else (the rest did not answer this question). Of those who are focused on the purchase of an apartment, 5.8% would like to build a one-room apartment, 41.2% – a two-room apartment, 38.0% – 3.5% – from four or more rooms. We note the opposite orientation of Belarusian young families, in comparison with the orientation of their peers in industrially advanced countries, in relation to the type of housing (house – apartment). If, for example, in the United States there is a pronounced orientation to one’s own home, then in our country such preferences are shared only by 1/10 of young people (Fig. 8.2).

The task of an economic sociologist is to identify what objective and subjective prerequisites (gender, age, education, social status, ideas about their competitiveness, etc.) and to what extent affect the formation of certain types of economic behavior. Conversely, how and to what extent the implementation of certain types of economic behavior can affect the changing characteristics of the subject (for example, the level of competitiveness, socio-professional status, etc.). If, as a result of socio-economic research, it turns out that carriers of one type of economic behavior have one or more common characteristics, then it can be assumed (hypothesized) that these characteristics were a significant cause (factor) of the formation of this type. Such a hypothesis can be tested by sociological research in the monitoring mode, when for a certain period of time changes (or their absence) are recorded in the structure of types of economic behavior, as well as in the social characteristics of the carriers of these types.

Thus, economic sociology seeks not only to identify and describe certain types of economic behavior characteristic of representatives of various social groups, but also to explain the patterns of formation, development and transformation of these types. The solution of this problem is associated with penetration into the sphere of individual consciousness of the subject, namely, into the field of human thought processes regarding his involvement in economic activity. This is the side of a person’s thinking where he, acting as an individual economic entity, weighs the benefits and costs of various economic alternatives in order to make the optimal, in his opinion, choice. This is a kind of mode of thinking, in the process of which a person develops projects of specific actions in the sphere of production, distribution of exchange and consumption of various goods in order to meet his needs and implements these projects in appropriate types of economic behavior. Such thinking, which, on the one hand, is a product of human economic activity, and on the other hand, regulates this activity, is called economic thinking.