We all live within society. It can be huge, such as international or within the state, or it can be quite insignificant: a family or a small circle of friends.
What is the social effect?
Modern business sees as its ultimate goal an increase in profits and, as a result, an increase in the cost of capital. Both manufacturers, and intermediaries, and retailers adhere to a simple rule: bought for the lowest price, sold for the highest, put the difference in his pocket. This is a kind of economic effect from the transition to a market economy and a capitalist way of managing and distributing resources.
The impact of a market economy on society
The effects of a market economy vary in the short and long term. Firms compete among themselves, fighting for the buyer, improve the product and advertising policy, produce a positive social effect, attracting additional labor. Their efforts are accelerating the development of infrastructure in the region, and the fraud of unscrupulous competitors is being made public.
Large enterprises seek to constantly expand their markets. For this, they begin to produce much more goods than the consumer really needs. The price of goods decreases, and in order to compensate for the losses, the manufacturer begins to experiment with the technology, cut costs, look for more affordable raw materials and components. Demand is increasing, and consumer confidence is declining. There is already a negative social effect. But the issue does not end with consumers and producers.
Through contact audiences, joint projects and investment, the business has a tremendous impact on the social sphere. Youth culture, worldview, life values are changing . Politics adjust to existing trends. All major research and development is funded by the private sector and is forced to proceed strictly in a given direction. The social effect is determined by the scale of entrepreneurship intervention in public life.
Social consequences of economic activity over time
Often this intervention is targeted, single, but over the years it tends to accumulate and strengthen its position. The development of computer technology in less than ten years has radically transformed the existing reality. Doors opened in the innovative fields of medicine, robotics, aircraft construction, rocket science, the automotive industry and, of course, the IT industry. At the same time, total degradation of youth began, military conflicts and cyber attacks became more frequent, and the number of terrorist threats increased. Not everything has a direct connection with the advent of computers, but electronic technology has definitely contributed a powerful social effect, the consequences of which will be visible for more than one decade. Moreover, the development of technology always leads to a change in the social sphere, regardless of the nature of such changes.
Social effect is
First of all, it is necessary to understand the very concept of this phenomenon. Economic dictionaries and textbooks give different interpretations of this definition, but agree that the social effect is the result of the firm's activity in the areas of the national economy, which is reflected in the development trends of society and does not lend itself to accurate calculation. An enterprise through its actions or inaction changes the social environment, and these changes are easy to identify, both positive and negative.
Positive moments of social effect
Other researchers believe that the social effect is a type of external effect - the visible reaction of society to changes in the internal environment of the enterprise. It can manifest itself in a positive way:
- departure from manual physical labor;
- reduction of working time;
- the growth of the creative component in the creation of goods and services and their promotion;
- raising the material standard of living of the able-bodied part of the population;
- increased interest in environmental protection;
- healthy lifestyle and respect for the body and its needs;
- a variety of entertainment and cultural opportunities.
Negative moments of social effect
In contrast, it is worth mentioning the visible negative sides:
- rising unemployment;
- mixing and assimilation of cultures;
- income differentiation and polarization of the population: the difference between the lifestyle of the rich and the poor is becoming more noticeable;
- there is no need to adhere to traditions and social norms of behavior;
- the growing role of loans - the popularization of life "on credit";
- substitution of values and concepts;
- the growing popularity of business ideology: living means consuming.
How to identify cardinal changes in society?
The market economy is slowly but surely crushing the social sphere under itself, forcing it to think with its own concepts and categories. In statistical reports you can see the growth of gross domestic product, national income, per capita income, but the real social effect is what usually remains behind the scenes in the annual report. Later, historians will undertake to analyze this passage of time, mark the starting point, culmination and development of the consequences. And here and now you need to be content with dry numbers.
World famous companies and large domestic market players care about their prestige and strive to raise themselves in the eyes of the public. Being engaged in socially useful activities, solving significant environmental and social problems, they keep parallel statistics on the growth or worsening of the situation in the public environment.
Estimated Social Performance Indicators
- Decrease or increase in unemployment among the population. There is a numerically expressed social effect of the project, a simple example: the city-forming factory was closed, hundreds of people were left without work and livelihoods, the indicator decreased. A new one was built on the site of the old factory - the indicator is growing again.
- Improving the quality of ecosystems. In this case, the economic effect means the social effect. Economically, this indicator is expressed in an increase in the enterprise’s expenses for environmental activities, the purchase of innovative equipment for a closed production cycle and the payment of environmental fines.
- Accessibility to the population of benefits and entertainment. Here we are talking about increasing the number of cafes, restaurants, cinemas, beauty salons, night clubs, highly specialized stores, entertainment complexes, etc. An alternative to the absolute amount of “establishments” is the growth of part of the income that the population spends on entertainment and on the domestic services sector. Usually these indicators are calculated together.
- The growth of the poor in total population with constant income. Easily calculated in absolute and percentage terms. And it serves as an indicator of the negative social effect. When in the country, on the one hand, unemployment grows, and on the other hand, the capital of the richest sections of society increases, an economic imbalance occurs. Money is depreciating, jobs are being cut. With the accumulated money, the employee can no longer purchase what he wants, and his social status falls. The poverty line is being pushed back, social tension is growing, social development is gaining a new round.
You can also calculate indicators such as GDP, GNI, trade balance and other macroeconomic indicators, but they are practically useless in determining the social effect, since they imply a measurement of economic rather than social good.
Global manifestation
A change in the economic policy of a large enterprise affects not only demand for its goods, but also suppliers from other sectors, fluctuations in the labor market, public mood, fashion, and the region’s political course.
The social effect of the project on a national scale, such as the construction of the Baikonur cosmodrome, determined the development prospects of the whole region and made significant amendments to the country's political course. The construction and first tests of the spaceport gave new jobs, an impetus in the development of space technology rocket science, but there were some social upheavals and high-profile trials.