In most modern economies, the state is the key subject of economic management. Building various strategies of political governance, the authorities give special priority to ensuring the functioning of the national economic system. In practice, this may mean, first of all, the choice of the most effective methodology for building financial policy - at the level of the economic system as a whole or in the context of managing monetary processes in a particular industry. There are several basic approaches to solving such problems. What is their specificity? Based on what criteria can the state determine the optimal approach to the formation of financial policy?
The structure of the financial policy of the state
To begin with, we will determine the possible structure of the considered activities. What does the financial policy of the state include? Modern researchers distinguish the following main components:
- development of key conceptual provisions;
- the formation of goals, objectives, means of solving them;
- the formation of the necessary institutional mechanisms;
- maintaining the functionality of the national financial system.
There are a number of key tasks that characterize the financial policy of the state. Consider them.
The objectives of state financial policy
Experts identify the following main tasks of the state financial policy:
- providing the conditions necessary for the formation of financial resources;
- identification of mechanisms for the most rational distribution of assets;
- building a system of regulation of financial legal relations;
- periodic adjustment of the current monetary policy implemented at the state level.
This list can be supplemented by activities that adapt the solution of economic issues in specific industries.
Directions of the state financial policy
Let us examine in what directions the financial policy of the state can be represented.
Researchers distinguish the following options for the activities of the authorities:
- budget execution;
- tax collection;
- investment;
- solving social problems;
- customs policy;
- International activity.
Consider their specifics in more detail.
Budget direction of financial policy
This direction of the state financial policy involves solving the following tasks:
- collection and subsequent distribution of budget revenues,
- ensuring the interaction of budgets at different levels (in the Russian model - federal, regional, local),
- liquidation of the payment deficit,
- financing of various sectors of the national economy.
Tax direction of financial policy
This direction of state activity is closely related to the previous one, since taxes are among the key sources of budget formation. Ensuring the receipt of fees in the treasury is important for the formation of the country's reserves. The financial policy of the state in this direction is carried out through the establishment of separate institutions and the necessary legislative regulation.
Investment policy
Investment activities of the state can be very different. This may be participation in the structure of the authorized or share capital of business entities. This may be subsidizing and lending to various business projects. This may be the provision of state guarantees for enterprises.
Investment activity is the most important element, which includes the modern financial policy of the state. It predetermines an increase in the capitalization of the national economy, stimulation of GDP growth and welfare of citizens.
The social dimension of financial policy
The social aspect that characterizes the financial policy of the state is closely related to all that are noted above. It assumes that the government of the country has resources - which are formed mainly through taxes and other fees, as well as an effective institutional and legal framework. The main tasks that accompany the social direction of the financial policy of the state are: increasing the real income of citizens, paying pensions, and migration policy.
Customs policy
This type of activity is sufficiently close to the activities of state institutions in the field of tax collection. Customs duties are another important source of filling the country's budget. The state, as a rule, levies import duties, sometimes export duties, building a mechanism that combines the establishment of the necessary state structures, as well as the publication of regulatory legal acts.
International Activities
This area of activity is very close to customs policy, since the corresponding fees are charged at the border when exporting and importing goods, and their value is largely based on international agreements of the authorities. But, apart from customs activities, the instruments of the state’s financial policy on the world stage can consist in investing in various securities, bonds, funds, interacting with the IMF, the World Bank and other major structures.
The subjects of financial policy of the state
Consider the nature of subjects of state financial policy. These are primarily the legislative and executive authorities of the country. If we talk about the Russian political system, then the Ministry of Finance of the Russian Federation is the key institution responsible for the relevant activities. Key goals and objectives associated with the activities of this department can be formed both with the participation of the employees working in it and in interaction with other authorities, including the President. So, the head of state can disclose his vision of the financial policy of the state in messages to the Federation Council. The relevant provisions can be implemented, in turn, by the Ministry of Finance.
Methods of implementing the state financial policy
The history of the world economy includes facts reflecting the application by states of the widest range of approaches to building financial policy. Modern experts classify them into 3 main types: the classical financial policy of the state, regulatory approaches, neoconservative methods, planning and directive methods. We study their specifics in more detail.
Classical methods of financial policy
This approach was considered the main one in the economies of the capitalist countries in the late XVIII - early XX centuries. Based on the writings of renowned economists Adam Smith and David Ricardo. Key features of the classical approach: minimal government intervention in economic processes, the formation of an environment of free competition in the national economic system, the presence of market self-regulation mechanisms.
The state, working within the framework of the corresponding approach, tried to minimize budget expenditures, as well as debt obligations. At the same time, a rather complicated taxation system was often built up, capable of providing steady income to the treasury. The considered method of implementing the state financial policy was applied through the establishment of a small number of political institutions. Most often, it was a separate agency, relatively superficially interacting with other government agencies.
Financial Management Regulatory Policy
Government financial policy instruments can also be used as part of regulatory approaches. They were developed as an alternative to the classic at the beginning of the XX century. They are based on the writings of another famous economist, John Keynes. This predetermined their common name - Keynesianism.
The need to modernize classical approaches arose in connection with crisis trends in the economies of developed countries, which began to be observed at the beginning of the 20th century. The classical financial policy of the state, the content of which assumed minimal interference of the authorities in the economy, led to overproduction, excessive competition in the business environment, and a decrease in the level of social responsibility of enterprises.
The key point of this approach is that the state should intervene in key economic processes, if necessary. The authorities should establish the necessary financial institutions and enact laws through which regulation of the national economy can be implemented. Another major element of the approach under consideration is the formation of the necessary demand in the economy through budgetary resources. From the point of view of the tax aspect of the state’s financial policy, the key type of fees should be those that are levied on citizens' incomes under a progressive rate. This approach allows you to ensure a balanced budget, even with a high level of its costs.
Implemented according to the principles of Keynesianism, the financial policy (economic policy) of the state implies the establishment of a rather complex system of political institutions responsible for solving the corresponding problems. So, in the structure of political management, instead of a single department, services can be formed that carry out budget planning, control over its spending, tax collection, debt management. Keynesianism proved to be highly effective in the 30-60s of the XX century.
In countries where appropriate approaches to building economic policies were practiced, high growth rates of the national economy were ensured, low unemployment was established, and effective mechanisms for social support of citizens appeared. In the 70s, the role of the state financial policy was revised by leading economists, after which neoconservative approaches began to be introduced in the economic systems of capitalist states.
Neoconservative approaches
They suggested some approximation of the regulatory and classical models. So, the state should have limited its intervention in the economy to social programs, participation in key areas of monetary policy. The goals of the financial policy of the state assumed a multi-vector approach, there were more of them, and the structure became more complicated. Among the most obvious differences between the neoconservative approach and the regulatory one is the liberalization of state policy regarding tax collection. The considered method of economic management suggests that the authorities will try to reduce the payment burden of citizens and businesses.
Planned approach
The types of financial policy of the state considered by us imply the functioning of the economy according to market principles. In turn, the planned approach is characterized by the directive management of business processes - in contrast to those that are characteristic of commercial legal relations.
As a rule, the need for planned economic development is ideologically substantiated. At least, the ever existing economies of the corresponding type (USSR, Warsaw Pact countries), as well as still functioning ones (Cuba, North Korea), were based on the concepts of socialism,largely dissimilar to the foundations of capitalist approaches to managing the economic system.
The main goal of the state financial policy in this case is the concentration of key economic resources and their subsequent distribution in accordance with the planned criteria. The introduction of a planned approach may be accompanied by the need to liquidate previous financial institutions operating on market principles. It also predetermines the need for the state to form appropriate institutions implementing the nationalization of assets, as well as to issue legal acts that legitimize such activities.
What priority areas can include such a financial policy of the state? The content of the activities of the authorities involves solving problems related primarily to security: the formation and support of the armed forces and internal law enforcement structures. Another significant area of government activity in a planned financial policy is maintaining a sufficiently high standard of living. The solution of such problems may be given the highest priority. The fact is that the organization of the financial policy of the state within the framework of the planned model should have not only an ideological justification, but also real effectiveness. On the example of the economy of the USSR, it can be traced in achieving a high level of social protection of citizens, ensuring sufficient purchasing power of wages, and reducing unemployment.
It can be noted that modern experts characterize the Chinese economy as an environment in which a completely unique combination of market and planned approaches to the development of economic communications has formed.
The need for state participation in economic processes is reinforced by communist ideology. At the same time, the practical results of the development of the national economy of the PRC are also impressive.
Financial policy factors
So, we examined the main historical types of financial policy of the state. In modern economies, the authorities' approaches to managing business processes may involve the use of methods that are close to each of them. But what are the key factors that determine the state’s choice of various instruments?
Much depends on what level of financial policy in question. The specifics of market processes in different sectors of the economy can vary significantly. So, with regard to the oil and gas sector, energy - the relevant sectors of the economy, if we consider the Russian economic system, are key and are characterized by strategic importance. Therefore, the degree of government involvement in commercial processes in them is likely to be relatively higher than, for example, in the case of retail trade.
In practice, the situation is exactly this: the leading oil and gas and energy companies of the Russian Federation are owned by the state, the largest retailers are private firms. In the first case, the methods of financial management implemented by the state will be more close to the Keynesian model, in some cases they will involve the use of approaches classified as neoconservative. The intervention of the authorities in the retail trade, in turn, will be justified only at the level of tax regulation - and in this sense we can talk about building a predominantly neo-conservative model.
The fiscal policy of the state is likely to be based primarily on planned methods. There are few market relations in the corresponding sphere of capital management. Very small part budgetary institutions created by the state for the purpose of subsequent implementation on their basis of certain entrepreneurial activities.The functioning of the relevant structures is associated with the solution of social problems, ensuring the work of political management institutions. The work of budget organizations in the general case does not imply any profit, although it can be welcomed, for example, if we talk about the activities of autonomous institutions, which comprise a significant percentage of state organizations and municipal structures in Russia.
Thus, in determining the optimal approach to the choice of methodology are industries in which the financial policy of the state is conducted, and the areas of activity of power institutions. If we speak on a macroeconomic scale and try to characterize the approach of the subjects of political management to ensure the functioning of the economic system as a whole, it will be necessary to analyze the structure of state legislation - in particular, tax and budget, to study the ratio of GDP sectors to determine the leading and study the companies operating in them, for accountability to institutions of power. Carrying out this work will allow us to assess whether the state financial policy is predominantly classical, regulatory, neoconservative, or to a large extent consistent with the planning and directive principles.
