Today, after the Kemerovo tragedy, catastrophes such as the collapse of the “Bulgaria” motor ship, numerous fires of private boarding houses for the elderly, etc., perhaps no one doubts the need for state regulation and control of entrepreneurial activity. Adam Smith also wrote:
“... that use of the natural freedom of a few individuals, which could endanger the well-being of the whole society, should and should be limited by the laws of all governments - not only the most oppressive, but also the freest.”
Key Definitions
The application of a certain set of methods, methods or mechanisms by the state to stimulate entrepreneurs to solve problems relevant to the country's economy is called state regulation of entrepreneurial activity.
State regulation of entrepreneurial activity should be understood as the activity of the state in the person of its bodies, aimed at implementing state policy in the field of entrepreneurial activity.
The essence of government regulation
The essence of state regulation of entrepreneurs is due to the need to create suitable economic conditions that ensure the formation and functioning of a civilized market. To this end, government agencies establish uniform rules that help streamline the relationship between existing business entities. For example, procedures are introduced for registration, certification of manufactured products, licensing of activities, reporting forms of all types, tax administration, etc.
To increase the effectiveness of regulatory decisions, the state needs a clear understanding of the real state of the national economy and the determination of its development, which is based on an objective assessment of the strategic prospects of scientific development.
The rule of law in government regulation
In implementing this process, the state can apply only such forms of state regulation of entrepreneurial activity, mechanisms and instruments that do not violate the norms of the legislation of the Russian Federation. This is a key point. With such legal support, an appropriate regime of legal state regulation of entrepreneurial activity arises.
The main methods of legal regulation
The following methods of legal regulation are distinguished:
- The dispositive method (the method of recommendations), which provides for independent regulation by entrepreneurs of legal relationships and the corresponding most relevant behaviors.
- The imperative method (the method of mandatory requirements), which puts forward mandatory regulatory requirements for the entrepreneur.
- The method of coordination (the method of autonomous decisions), which allows you to choose a model of your legal relationship by agreement of the parties.
13 main areas of business regulation
In the economic literature, the following areas are distinguished in which it is advisable to carry out state regulation of entrepreneurial activity, based on legal support:
- Guaranteeing the right to private property: protection of confidential information and intellectual property (patents, copyrights, industrial designs, trademarks); protection against raiding; real estate, land use insurance).
- Granting legal status to business entities (registration, licensing, permission to trade).
- Protection of contracts and legal regulation of contractual relationships between business entities (contract law, forms of documents certifying ownership, etc.).
- State control and arbitration. Ensuring the safety of entrepreneurs (terrorism, fire and information security, etc.).
- Environmental protection (industrial emissions, landfills, illegal logging, forest fires, poaching).
- Protection of competition (antitrust law).
- Regulation of labor relations, development of social partnership (ensuring labor protection, monitoring the health of workers).
- Consumer protection (product quality regulation, prohibition of low-quality advertising and the imposition of low-quality services).
- State support of special types of entrepreneurial activity that are priority for the country (startups, technological entrepreneurship, socially oriented business, etc.).
- Regulation of foreign trade activities (non-tariff regulation, customs and tariff regulation).
- Financial regulation (ensuring the availability of investment resources for small businesses, currency regulation, refinancing rates, bankruptcy).
- Tax regulation.
Classification of types of state regulation
Types of state regulation of entrepreneurial activity are usually classified in accordance with the following categories:
- territorial prevalence of regulatory actions: macrolevel, mesolevel and microlevel;
- the nature of the impact on the behavior of business structures: direct and indirect regulatory procedures;
- type of relationship between government and business structures: subordination and coordination;
- industry focus: regulatory procedures used for agriculture, science and other activities.
Direct regulation is the presentation of peremptory requirements to entrepreneurs stipulated by laws. For example, mandatory accounting, licensing, registration of entrepreneurs or some decisions of the executive bodies relating to specific entrepreneurs. The essence of indirect regulation is the implementation of state influence by taking into account entrepreneurial interests, and more specifically, when the state uses different economic incentives instead of sanctions to fulfill its requirements: subsidies, tax preferences, priority receipt of government orders, guarantees and much more. A general classification is given below.
Methods of state regulation of entrepreneurial activity cannot be specified once and for all. They change under the influence of many external and internal factors and in the context of specific conditions of the country's development.
Over-regulated America
What country do you think is mentioned in the statement below?
“We have become a country ruled by bureaucrats. Yes, there should always be rules in society, but we have come to the point that there are so many millions of rules that it has become impossible to play this game. ”
At first glance, it seems that this is about us. But you are mistaken, this is about America. In his article “12 Ridiculous Government Regulations That Are Almost Too Bizarre To Believe”, American economist Michael Snyder condemns American bureaucracy for ineffective regulation. And this opinion is shared by many of his compatriots, criticizing the government for over-regulating the business. So not only our entrepreneurs complain about the actions of officials that impede the conduct of their business.
On the effectiveness of business regulation
State regulation can be both positive for the economy and society as a whole, for example, to promote competition, protect consumers from dangerous products, etc., and negative - to increase the costs of entrepreneurial activity, discourage investment, contribute to the growth of the shadow economy, etc.
Ineffective government regulation in the field of entrepreneurial activity can be a huge obstacle to its development. That is why, when adopting new regulatory acts, government structures bear a great responsibility for the negative consequences of their decisions.
By its nature, regulation is a balancing act between achieving social and economic costs and benefits. There is a fierce debate among scientists and practicing economists in competing economic and ideological positions on how to achieve the optimal balance between them. But everyone recognizes that effective state regulation should not “nightmare” a business, but rather stimulate the emergence of new entrepreneurs.