Liberalization of prices

There is in the market economy such a thing as price liberalization. This phrase means that the state establishes free prices on the market, thus encouraging the activities of entrepreneurs. The process of such pricing gives flexibility to the whole system of the economy as a whole and leads to an increase in production. As a consequence, competition in the market is increasing, manufacturers are forced to come up with new interesting ideas and improve the quality of goods. In other words, the liberalization of prices leads to the emergence of a free pricing system in the state. This is due to the fact that in this case the government can partially or completely remove from itself the functions of direct price regulation.

Here is how, for example, the liberalization of prices in the United States looks like. In this country, prices for dairy products are regulated by Congress, which sets only the optimal price boundary. If prices for dairy products are lower than it, then the state buys all these goods to send them for export or charity.

In a planned economy, which is characterized by strict control over all values (they are set from above), price liberalization is simply necessary. It allows the capital in the economy to move freely, and the market for goods and services becomes more mobile. In addition, properly produced price liberalization allows to reduce the level of bureaucracy in the field of economy and to expand the opportunities for the inflow of investment funds and access to the international market.

The liberalization of prices for today is known in two versions. The first option inherent in the countries of Eastern Europe and Russia is the method of "shock therapy". It is known to many who survived the unrest of 1992.

The second option, softer, it is called - "gradual liberalization." It is this system of transition to free pricing that most developed European countries adhere to. By the way, Vietnam and China developed in the same way, in 1973 - 1986 - France, and after the Second World War and the countries of Western Europe.

As for our country, the liberalization of prices in Russia took place in the very first month of 1992. It was then that the state exempted from its regulation the price of all products, except milk, bread and tickets for public transport. A decree was issued on freedom of trade. Every citizen could transfer his money to the currency. In addition, the share of imports of goods produced in Russia increased. I must say that the liberalization of prices in Russia has been thoughtless and swift. So, that by March 1992, politicians and the population had experienced the fullest method of "shock therapy" - there was a hyperinflation of 2600%. All this led to a devaluation of money, including those that many Russian citizens had in their bank accounts.

The authorities had to introduce coupons for many goods and give them to the Russians, and enterprises - to make loans. Since there were no current assets in the factories and plants, wage arrears began to occur . By the way, salaries have also depreciated. But unemployment has grown, the difference between the rich and poor layers of society has sharply emerged. Unquestionably, the "Gaidar" reforms have borne fruit.

Now in the country there was no shortage of goods, but the prices for them increased 30 times, but the incomes of the population for the year decreased by almost 50%. The reform has hit hard on pensioners and state employees. Now many analysts say that the error of the monetary reform of that time lies in the fact that politicians thoughtlessly implemented the theoretical recommendations of monetarists, not taking into account the specifics of the Russian economy.