Providing economic infrastructure
Governments provide the basic institutions, rules and arrangements necessary for the satisfactory operation of a modern capitalist system. These include the definition and protection of property rights, the enforcement of contracts, the provision of a standard currency, weights and measures, corporate charters, bankruptcy, patents, copyright, the maintenance of law and order and the tariff system. Modern economic societies are political ones as well; it would not be possible for the economic system to operate without the rules of the game and the framework for economic life being provided by the political system. Contracts are legally binding because of the laws established by the state and backed, in the last resort, by state sanctions.
2. Provision of various collective goods and services
There are some public goods which, while valuable to the whole society, are difficult for individuals to pay for according to the amount of good used. Once provided for one, they are available for all. These include such items as national defence, roads and bridges, aids to navigation, flood control, sewage disposal, traffic control systems and other infrastructure. Many are characterized by their broad use, indivisibility and non-excludability and are, therefore, public goods.
3. The resolution and adjustment of group conflicts
A basic reason for the existence of government is the need to resolve or ameliorate conflicts in a society in pursuance of justice, order and stability. This may include actions to protect the economically weak against the economically strong. Government may seek to replace exploitation with equity through child labour laws, minimum wage legislation, or workers’ compensation programmes.
The maintenance of competition
Competition does not always maintain itself in the private sector and government action is often required to ensure that businesses do compete. Without government monitoring, the benefits of the free enterprise system would not necessarily appear. In the absence of suitable regulation, companies would be able to form cartels, restrict access to their products and fix prices.
5. Protection of natural resources
Competitive forces cannot be relied on to prevent the wasteful use of natural resources, to protect against degradation of the natural environment, or to care for the interests of future generations. Damage to the environment from market activity is the textbook example of externality and market failure. Only government can alleviate environmental damage.
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Minimum access by individuals to the goods and services of the economy
The operation of the market sometimes produces results that are cruel or socially unacceptable – poverty, unemployment, malnutrition – in their impact on people. Others because of illness, old age, illiteracy, or whatever, may simply exist outside the market economy. There is often disagreement over the level of assistance, the aggregate cost and particular programmes which may have some social costs.
Stabilization of the economy
There have always been fluctuations in the business cycle of the economy where boom conditions are followed by recessions. Government action may be able to alleviate these through the budget, or monetary policy or control over wages or prices. Although government action is often imperfect and sometimes wrong, the community regards the government as being responsible for the state of the economy and there is a public expectation that governments should act to try to solve any problem.
Source: condensed from http://do.gendocs.ru/docs/index-206555.html
Ex.1. Scan Text B to be able to name seven basic functions of government corresponding to these descriptions:
1.Conflict management –
2.Providing basic institutions and rules –
3.Environmental protection –
4.Providing public goods and services –
5.Supporting free enterprise –
6.Providing social assistance –
7.Regulating the economy –
Ex.2.◄► Explain in English the meaning of the following word combinations from the text and then give their Russian equivalents.
1.Property rights _______________________________________________
2.Legally binding (contracts) _____________________________________
3.Aids to navigation ____________________________________________
4.Sewage disposal ______________________________________________
5.Non-excludability ____________________________________________
6.Government monitoring _______________________________________
7.Socially unacceptable (results) __________________________________
8.Social costs _________________________________________________
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Ex.3.► Find in text B English equivalents to these words and word combinations:
1. (Насильственное) обеспечение выполнения контрактов _________________________________________________________________
2. Устав корпорации _______________________________________________
3. Коллективные (социальные) блага ________________________________
4. Смягчать конфликты ___________________________________________
5. Действия правительства _________________________________________
6. Внешний эффект (экономической деятельности); ущерб в результате действия экзогенных факторов________________________________________________________
7. Недоедание, недостаточное питание ______________________________
8. Совокупные издержки ___________________________________________
Ex.4.►◄ Speak about each government function. Be ready to interpret into Russian other students ’ answers.
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