In the formation and development of the theory of finance, 2 stages are traditionally distinguished. The beginning of the first belongs to the heyday of the Roman Empire. It ended in the middle of the twentieth century. During this period, the classical theory of finance was widespread. The neoclassical concept began to develop at the present stage of the formation of human society.
In short, the essence of the first theory is to justify the key role of the state in financial management. In the second concept, on the contrary, the movement of funds is controlled by private producers, large companies.
Let us analyze some features of the classical and neoclassical theory of finance in the article, and talk about the development of the money management system in Russia.
General information
In the framework of the theory of finance, the concept of finance is revealed through a description of their key features and functions. Finance is the most important economic category. They participate in the interaction between business entities and consumers, enterprises and the state.
In the framework of the theory of finance, socio-economic relations are studied related to the use, creation, distribution and redistribution of financial resources. It is based on economic theory and, in turn, is itself the basis for such areas as taxation, lending, insurance, budget policy, etc.
The essence, structure and functions of finance
It should be noted that not all monetary relations can be considered financial. There are significant differences between them.
Finances are considered as an economic tool for the distribution and redistribution of GDP, a mechanism for controlling the formation and use of monetary funds. Their essence is implemented in the following functions:
- Distribution. It consists in providing business entities with sufficient financial resources used in the form of earmarked funds. The redistribution of profit is carried out through taxation. Funds come from citizens and enterprises for the development of social and industrial infrastructure, investments in capital-intensive and capital-intensive industries with a long payback period.
- Control. This function is associated with the movement of product value. Finance can quantitatively reflect the production process as a whole and its individual stages. Due to this, the control of economic proportions arising in society is carried out.
- Stimulating. Maneuvering tax incentives, rates, fines, changing the terms of taxation, abolishing or introducing taxes, the state creates the conditions for the more rapid development of certain industries and industries and helps solve the most pressing social problems. Using financial instruments, the government stimulates technological progress, increases the number of jobs, invests in the expansion and modernization of enterprises, and ensures the rational use of financial resources.
- Fiscal. With the help of taxes, part of the profit is withdrawn from the subjects and is directed to the maintenance of the administrative apparatus, the defense of the country and the provision of the non-production sphere, which does not have its own sources of income.
Thus, we see a close relationship of finance with other economic categories.
Classical Theory: Initial Stage
Due to the fact that the formation of science continued for a rather long period, it is customary to distinguish several intermediate stages in it.
The longest was the period of an unscientific state. It began in the era of Ancient Greece and Rome. Then the state was considered as an institution accumulating funds to satisfy the personal needs of rulers and social needs.
State revenues came from several sources. The key one was land rent (payment for the use of territories). At that time, there was no need to organize a complex financial system, and there were not so many areas of spending.
Medieval Development
In the era of the Middle Ages, no significant developments were made in the framework of the theory of finance. Discipline, however, is precisely from the 5th century. began its active development.
A huge contribution to the development of science was made by Italian scientists. Among them one can distinguish such outstanding scientists as D. Karafa, N. Machiavelli, J. Botero. In the writings of the followers of the classical theory of finance, the key idea was the justification of active state intervention in the economic life of society.
In the Middle Ages, the transition to the scientific processing of knowledge began. The work of Italian scientists gave impetus to the development of science in other countries. So, based on the works of Italian scientists, J. Boden, a French scientist, for the first time systematized sources of finance, highlighting:
- Domains
- military trophies;
- gifts from friends;
- tribute from the allies;
- trade;
- import and export duties;
- taxes of subjects.
In the XVII century. in England, the idea of indirect taxation, stimulating economic activity through reasonable tax measures, etc., began to spread actively.
The turning point in the development of science
By the beginning of the XVII century. rapid development of methods and methods of replenishing the treasury was noted. However, despite this, in many countries the science of finance has not yet been universally recognized. Only by the middle of the XVIII century. Understanding gradually began to come to society that the state economic complex should obey uniform economic laws. Therefore, the XVIII century. It is considered by many scientists as a turning point in the formation and strengthening of financial theory. This century is considered the third period of development of the classical discipline - scientific (rational).
One of the first representatives of the theory were German figures I. Sonnenfels and I. Justi. They were specialists in cameral sciences. Among them were disciplines on the state treasury, revenue generation to meet state needs. In the framework of financial science, also included in the list of cameral disciplines, data were accumulated on methods of making profit for state needs.
New tax policy
The rules for its development were first proposed by I. Justi. Later they were successfully developed by the famous English economist A. Smith. According to the rules, taxes:
- should not cause damage to industry and human freedom;
- should be uniform and fair;
- must be scientifically sound.
In addition, according to economists, it is not necessary to create many cash desks and hire a large number of employees to collect payments.
I. Justi paid attention not only to replenishment of the treasury, but also to government spending. In his writings, he pointed out the need for sound financial planning and budget forecasting. The author, in particular, promoted the idea that costs should correspond to incomes and all property, to be useful to both the state and its subjects.
The final stage in the development of classical theory
The works of I. Justi are connected with the works of I. Sonnenfels, who interpreted financial theory as a set of rules for collecting income in favor of the state in the most profitable way. Moreover, the author focused on moderation in the collection of taxes from citizens.
Subsequently, by the end of the XIX century. thanks to the efforts of the followers of the German school, a completely unambiguous understanding of the concept of "finance" was formed, the structure of financial theory was formed. At this stage, the design of the classic concept was completed, which included administrative and economic knowledge on managing the income and expenses of the treasury.
Specific features of science
Formed by the XIX century. classical theory possessed two features.
Firstly, in the framework of the discipline, finances were considered as funds owned by the state (or public entities - municipalities, communities, lands, etc.).
Secondly, they were not regarded as exclusively cash. Finance was considered any state resources, regardless of their form. In other words, they could be received both in the form of money, and in the form of services and materials.
Beginning of the formation of neoclassical theory
The classic concept completed its development in the middle of the twentieth century. This was due to changes that occurred in the world economy on the eve of the Second World War, a decrease in the importance of the state and public entities. There was a tendency to develop and internationalize markets, to strengthen the role of finance in the development of foreign economic relations. There was a need for a theoretical rethinking of the value of resources at the level of a business entity.
Basic principles
Thanks to the efforts of representatives of the Anglo-American economic school, the new theory was called neoclassical. It is based on 4 key points:
- The economic indicators of the state, the stability of the country's financial system, largely depend on the economic power of the private sector. Its central link are large enterprises and corporations.
- The state minimizes its interference in the affairs of private producers.
- Of all the available sources of finance that determine the capabilities, timing, speed of development of large companies, capital markets and profits are recognized as key.
- Due to the internationalization of markets (labor, goods, capital), the economies of different states are integrated.
Examples of the implementation of the last thesis are the creation of a single monetary unit "euro", the development of common rules for accounting and reporting.
Structural elements
In general terms, neoclassical theory is defined as a body of knowledge about the organization and rational management of financial resources, markets, and relationships. The main sections of science are theories:
- option market pricing;
- utility;
- arbitrage pricing;
- capital structure;
- portfolio and asset pricing models;
- preferences of situations in time.
As world practice shows, in the real economy, one of the main roles is played by joint-stock companies. Their share in the total number of enterprises of different ownership forms may be small. However, their significance in terms of contribution to the formation of national wealth does not cause any doubts.
The development of financial theory in Russia
In the Soviet era, scientific circles dealt primarily with issues related to the theory and practice of public finance management. As for the problems of financial management in enterprises within the framework of neoclassical theory, they were addressed only at the end of the last century.
In Russia, the formation and development of science is associated with such outstanding figures as G. Kotoshikhin, Yu. Krizhanich, I. Gorlov, I. Yanzhul, A. Bukovetsky, etc.
As in Western countries, by the end of the XIX century. In the country, the classical direction of theory has formed. Some elements of enterprise financial resources management began to develop as part of the accounting system. Until 1917, there were 2 independent areas in the country: financial calculations (today they are included in the main sections of financial management) and balance analysis (it was carried out as part of the study of such a discipline as "balance sheet").
Conclusion
The theory of finance is an accurate reflection of the various processes taking place in the objective world, their mathematical relationship in the system of laws, categories and concepts. The concept explains the economic reality of the state and society, points to areas of work, general methods of influence on business entities.
In the framework of the theory, the financial policy of the government is developed. Its implementation is controlled by the Ministry of Finance of the Russian Federation. This structure is considered a key link in the system of distribution and redistribution of income.
The Ministry of Finance of the Russian Federation summarizes analytical and reporting data from the regions, studies monitoring data in various sectors of the economy. Based on these indicators, plans are developed for various time periods. The ministry also controls the correct spending of targeted budget funds.