Social effectiveness of the market economy: measuring and management

Abstract

Purpose

The purpose of the paper is to develop the scientific and methodological provision for measuring and managing the social effectiveness of the market economy and its approbation.

Design/methodology/approach

With foundation on the classical idea of effectiveness as a ratio of results to costs, and with acknowledgment of incompatibility and inequality of the elements of social effectiveness and the necessity of their ranking, the authors' formula for its evaluation is presented, and the methodology of its application is offered.

Findings

It is substantiated that the economic component of effectiveness of the market economy might have no connection with its social component, moreover, these two components could enter a vivid contradiction. This contradiction is especially vivid in countries with developed market economy. As the example of the USA shows despite the high global economy its market economy shows average statistical social effectiveness. While the experience of Russia shows that even with moderate global competitiveness of the market economy, it is possible to achieve its high social effectiveness. Advantages are achieved due to other social effects – active development of human potential and using the opportunities of the digital economy for social purposes. Social effectiveness of the Russian economy is assessed at 1.602.

Originality/value

The determined differences in the level of social effectiveness of developed and developing market economy predetermined the necessity for applying different measures to manage this effectiveness. A cyclic algorithm for managing the social effectiveness of developed and developing markets has been developed from the examples of the USA and Russia in 2019. It shows that perspectives of increasing the social effectiveness of certain market economies and leveling the disproportions of social effectiveness in the modern global economic system are connected to change of the measures of management with results and costs and for avoiding their mutual neutralization, the authors offer scientific and practical recommendations.

Citation

Bogoviz, A.V., Shokhnekh, A.V., Petrenko, E.S. and Milkina, E.A. (2021), "Social effectiveness of the market economy: measuring and management", International Journal of Sociology and Social Policy, Vol. 41 No. 1/2, pp. 167-177. https://doi.org/10.1108/IJSSP-03-2020-0060