Social and economic concept of “family economy”, its development and conceptual ways to raise welfare

Laws on the legal, philosophical, and moral aspects of the family have been developed, and books and booklets have been published. However, in our opinion, it is important to admit that its economic aspects and problems are not properly comprehended.

It should be noted that with the formation of the family, the issue of economic security was considered in equal terms with other aspects of the family, and in some cases, it was given a priority. In this regard, when it comes to the economic security of a family, each member has sufficient functions. Herewith the head of the family was empowered with a noble mission.

The country has a tradition of honoring the family and preserving its past and relevant traditions. Family dynasties, the passing of a profession from one generation to the next one, a family genealogy for the preservation of the family’s history have been cherished by the majority of families. This factor implies the assigning to the family head not just social and moral responsibilities, but economic obligation as well.

However, the economy of the family, with all its aspects and peculiarities, has been poorly understood both in past and nowadays. For example, the works “Principles of Economics” by Marshall, “Principles of Political Economy” by Mill, and “Wealth of the People” by Smith have not thoroughly considered the concept of the family economy (Vidyapin and Juravleva, 1995).

Taking this fact into consideration, in our opinion, solution of the problem of researching the economic and social nature of the family, economic relationships, and the family and economies related thereto, is currently considered a high-ppriority goal for scholars in economics.

Literature review . After Uzbekistan gained its independence, a number of new concepts, including such concepts as “family”, “family economy”, “household”, “housing (apartment) economy”, “family business” emerged in the economic structure of the country and were admitted as subjects of the microeconomics. However, in terms of economics, their content has not been thoroughly revealed with the account of all peculiarities and in reliance upon the differences available. Various literary sources provide different opinions on these concepts.

“The defining dictionary of Uzbek language” (1981) provides the following definition to the term “family” as “A group of people consisting of a spouse, children and the closest relatives who live together”. In general, this definition can be admitted because it reflects the composition of the family, but here the family was treated only as a group of people living together. However, this definition does not reflect the socio-economic function of the family.

From the point of view of Ulmasov (1998): “A family is a complex micro-social structure that is based on the common needs of people, blood relations, common property and interests, and joint demands”. According to Ulmasov, social life starts with the family.

In the opinion of Balikoev, “A family is a small group of people who are based on kinship relationships to fulfill the social, economic and spiritual needs of the individual, family and society as a whole” (Balikoev, 2008).

This definition complies with the current era of market relations, as the family is becoming an economic entity, not just a consumer. In this framework, the family is considered as a subgroup of a community united to meet social, economic and spiritual needs, rather than a combination of common people living together.

However, the definition of family as a subject of microeconomics is not adequately reflected in this definition. The terms of “family economy” and “household” are frequently applied. However, they are used as synonyms in many literary sources. It should be noted that some definite proposals have been formulated lately. To prove this statement we can give an example of Karimova’s opinion (1997). From the point of view of this economist: “Household is a subject of the economy, which consists of one leading an individual household independent or, more often, a group of people residing in one place and leading a common household. As a rule, such a group of persons is united by kinship or family ties”.

Karimova (1997) has found appropriate to separate household from family economy, and specifying the concept of family economy, she has mentioned, that family economy implies “a group of people living in one house (apartment)”, and “consists of only family members”.

There are also some inaccuracies in the author’s opinion. First, when describing a household, she has mentioned “people residing in one place”, then she also suggests that a household does not have to be a family member to show the difference between a household and a family economy. If it is not possible for the household members to live together, then the wording “people residing in one place” is not needed.

In our opinion, any definition of economic activity, especially family economy, should be based on its economic purpose. Any economic entity should have property, business activities and income from it and the right to own it. In describing the family economy, first of all, use the “family” definition is the most appropriate. However, if it is considered a family economy, it should have some family property, economic activity and family income. On the basis of this theoretical conclusion, a definition of a household is provided below.

The “family economy” concept implies an association of people connected by living together and living in one place. It may consist of even one person. The family is the basic unit of society, but it is also the cohabitation of a group of people connected by family ties or emotionally.

In the family economy the property belongs directly to the family, which production facilities are directly owned by the family, and both the workers and the beneficiaries of the labor should be members of that family.

The concept “household” slightly differes from the concept “family economy”. There various opinions regarding this concept. According to the opinion of Vidyapin and Juravleva (1995) “Modern economic ideas consider a family or, in a broader sense, a household not only as a major consumer but also as a producer”. This opinion of scholars shows that, on the one hand, family economy transforms from a consumer to a producer, and on the other hand, “family economy” and “household” are treated as two synonyms. However, it’s very difficult to share this opinion. This is because family economy and household differ not only in name but also in economic sense.

From the point of view of Bulatov (2005): “A household is an economic agent that deals with household business, that is, consumption”. However, in part 2 of this book it is stated that “Microeconomics object is households, firms, industries, the market of goods and services, as well as the resources market”. It is obvious that the authors of this textbook have contradicting views on households and their role in the economy. If the household were only a consumer, it would not be a subject of the microeconomics. If it was considered as a subject of microeconomics, then the household should not be treated as just a consumer.

In our opinion, Popov (2006) developed a very accurate definition to the the household as microeconomic subject. From his point of view, “A household is the primary form of entrepreneurial activity that seeks to minimize costs for achieving specific goals”.

It is appropriate that the household is viewed as a form of entrepreneurship. However, there are some drawbacks in this definition. It does not specify who or why somebody is involved in the household.

Professor Ulmasov (1998) directly equals the family with the household. Ulmasov supposes that: “From an economic point of view, the family is a household and is a key part of the microeconomic system. The rest of the group consists of firms, businesses and the economic sector”. From the definitions of the family and the household, we see that these are separate socioeconomic concepts.

The same ideas can be found in some classical literature. In general, in our opinion the notion of a “household” must meet some requirements. For example, in a household, the property, as well as the production facilities, belongs to the family. However, it employs not only family members but also other hired workers. The efficient performance of the results of labor are accordingly enjoyed not only by family members, but also by other people who participate in the working process. It is important to remember that within the framework of market relations, there is a great interest in labor. From this theoretical conclusion, a household can be described as follows.

A household consists of one or more people who live in the same dwelling and share meals. It may also consist of a single family or another group of people. The household is the basic unit of analysis in many social, microeconomic and government models, and is important to economicsand inheritance. In fact, households may include other hired people in addition to family members.

Recently, the concept of housing (apartment) economy has emerged in line with the concepts of family economy and hooseholds. Akhmadjonov (2006) proposes to introduce the concept of housing (apartment) economy in reliance upon the possibility of for several families to live in one apartment.

In particular, Akhmadjonov (2006) defined the nortion “apartment” as follows: “... small group of people, living in common with the living conditions, sharing a number of goods and services, combining their money and material assets”. In this definition, the nature of the apartment entity is not fully disclosed as a microeconomic entity because it considers an apartment as “a small group of people who combine their money and material assets”. It implies that not any people live in the apartment, but “several families living in the same apartment”. In addition, they consist of close-knit families or people who use their property for a certain amount of income. We summarized these theoretical concepts and found it necessary to give the following definition to the concept of housing (apartment) economy. A housing (apartment) is one person or more people with one or more families living together in one apartment to carry out activities such as producing, performing and servicing their own property to meet the social, economic and spiritual needs of the whole community and to generate some income (profit).

In general, whether it is a household, a housing (apartment) economy, or a family economy - they are all family-related entities. This relation started during the first economic formation and is still developing. The family has its own evolution as a subject of microeconomics. A family economy has given a rise to the development of other sectors of the economy. It has passed through various conditions. Finally, it has turned into a key unit of the economy.

Currently, a family economy is emerging as a social and economic entity. Therefore, its theoretical and practical analysis should be implemented within this framework. The welfare is the category that reflects the socio-economic essence of the family economy. Numerous conceptual measures are being implemented in Uzbekistan to improve the welfare of families. One of the most essential aspects is that they have created the conditions for prosperity through their free enterprise business.

One of the ways to improve the welfare of family economies is through familyowned businesses. In this regard, Pardaev and Kurbonov (1999) have developed the following definition to the concept of “family business”: “Entrepreneurship activities based on family property are called family business”. This definition explains the meaning of family entrepreneurship. However, the goal of the family members in this business shall be reflected. Taking this into consideration, by expanding and developing the views of the authors above, we find it appropriate to specify that in terms of family entrepreneurship, the basic goal of family members is to make a profit.

Family business is a freely selected activity based on family property, with the participation of family members, and to some extent, aimed at receiving income and profit for the family.

This definition clearly states that in order to become a family-owned entrepreneur, property, activities, goals and activities must be freely chosen based on their own free will and ability. Thus, it is possible to expand the theoretical conclusions on the improvement of the family economy and family business. The theoretical arguments presented above provide the basis for our conclusion.

First, the family has become a subject of microeconomics in the free economy based on market relations.

Second, the family has the right to own property, the production facilities, labor force and income (profit) as a result of activity as an economic entity. Social benefits may be provided on the basis of family business as well.

For example, if we consider a teacher - entrepreneur or a doctor -entrepreneur. They continuously develop and improve their skills through training and qualification upgrading. They think that it is better for people than for improving their professional skills. Such activities will continue to be financially and morally encouraged by community members.

Third, it is based on the fact that the concept of a household is wider than the concepts of family economy and housing (apartment) economy. It indicates that the hired labor could be involved and that the profits could be distributed to the hired worker according to their labour volume.

Fourth, family entrepreneurship is also a type of entrepreneurship that relies on family property and the labour force of family members.

Finally, the important conceptual directions for improving the welfare of families now are not only a way to raise salaries, but also to raise their income (profit) through the development of entrepreneurship of family members, utilizing property and efficiency of managening ane economic entity.

Analysis and discussions . One of the essential aspects of improving the welfare of the family is solution of the theoretical issues. However, the economic literature has not yet developed a comprehensive definition of family welfare concept. Therefore, this problem is also one of the problems which require being resolved.

Studies have shown that settlement of the family economy business can solve many social and economic problems in our country. First of all, it will create a class of small business and private entrepreneurship, which is the basic driving force of market relations and which will enable to enrich the domestic market with consumer goods and services, as well as solve the urgent problem of unemployment through the creation of new jobs. However, family economy business does not develop by itself. In this regard it is necessary to develop it at the present level, to bring it to a higher level of competitive products (works, services). This requires researching the theoretical and practical issues of this problem and developing appropriate recommendations aimed at their improvement.

Currently the entrepreneurship of the family business is constantly developing in Uzbekistan. To ensure and accelerate its development, it is necessary to establish the relevant family business associations. Large-scale social and economic problems for the development, improvement and raising welfare of the family economy can be solved through these associations. In the future, it is necessary to solve the problems associated with the establishment of family business associations in our country. Working out development concepts of such non-government organizations is currently considered to be a priority issue.

It should be noted that the deepening and liberalization of economic reforms in Uzbekistan are modifying the content and essence of the income of the family economy. After all, Uzbekistan is pursuing a social policy that serves the interests of all members of society and all segments of the population. This, in turn, has necessitated study of structural transformations, as well as the development of efficient tools to support the lowincome population. However, a comprehensive research on this area hasn’t been implemented yet. Therefore, one of the most urgent current problems is the development of ways to improve the welfare of the family through the reduction of a number of low income families.

The formation of market relations requires each family economy to take into account the income and its structural changes because property and income of the family economy, as mentioned above, on the one hand constitute a part of the national wealth of the state, and on the other hand, the object of taxation. In addition, the criteria for measuring family welfare, its low provision and wealth are based on these indicators.

Taking into account the impact of structural changes in income and expenditure on the household welfare, it is necessary to theoretically justify the differentiation of income and expenditure. It has been concluded that this problem should be investigated in the following areas: the difference between residents of cities with urban settlements and rural settlements; the difference between the income of families working in various fields; differences in the number of family members engaged in the household. The solution of these problems will be comprehensively considered in this research paper.

Liberalization of the economy, formation of market relations has led to a radical change in the essence of family income and related circumstances. These changes are reflected in the following factors: a new economic category - the category of labor force - has been introduced into our socio-economic life; the labor market has emerged with the account of the demand and supply; absolute and relative unemployment resulting from fluctuations in supply and demand for the labor force have been occurred; family members and population are gradually moving towards the principle of self-employment based on the development of entrepreneurship; new sources emerged in the family income -income from the use of property and entrepreneurial activity; while in the past only rent used to constitute income from the property, now such types of income as dividends, interest, investment yield income have appeared and are currently applied.

These circumstances, along with ensuring stability of the society, cause some problems. The core of these problems is differentiation of family income, the problem of unemployment and the emergence of low-income families. The main way of solving this problem, in our opinion, is, first of all, enhancing social activities of the population, as well as shifting to the principle of selfprovision and provision of other persons with material values and benefits. The second aspect in this regard is introducing the mechanism for material incentives based on new advanced methods. However, these measures also require resolution at the national level, at the level of the government and the Legislative Chamber of the Oliy Majlis.

The results of the research illustrate that one of the basic ways to raise family property and income is acquiring the income from the property use. With the account of this essential factor, we have developed the ways to enhance the property and income of the family by placing excessive property objects in the investments. It should be noted that this approach requires determining current and net values, as well as working out the methods of using discounted ratio. This issue still remains as a problem which must be solved.

At the present time, the ways to improve the efficiency of invested family resources should also be developed. These can include: prolongation of the project; increase (decrease) of the project’s dividend rate; increase in cash flow. However, these issues have not been adequately studied regarding family economies.

During the transition to market relations, inflation level remains at the same level. Taking this into consideration, it is necessary to develop methodological aspects of the assessment and analysis of family property and income in terms of inflation. The total rate of return on investment is determined using the nominal and real rates of the family income,. This enables to determine the value of family investment, taking into account inflation for one year, and to determine its impact on the welfare of the family economy.

Formation of market relations requires a family business entrepreneur to be proficient not only in entrepreneurship, but also in economic matters. Comprehensive economic knowledge of the entrepreneur generates more income for the family and, the most significant, increases the wealth. More importantly, the the property volume increases with the property use. This will be the basis for the economic prosperity of the family economy, as well as the entire population and the state.

Thus, the well-being of the family increases with the application of a variety of ways and tools. This fact justifies the emergence of another economic pillar to ensure ultimate goal of Uzbekistan – to achieve a unique and prosperous development of our motherland.

Currently in Uzbekistan the population of Uzbekistan accounts for 33,9 million people as of January 1, 2020. The average family member in the country constitutes 5,1 persons. According to our estimates, the number of families in our country is over 6,4 million. If at least one entrepreneur is raised out of each family, another 6,4 million additional work places will be created throughout the country. This is one of the key factors ensuring the diversification of the domestic consumer market. If each entrepreneur earns an average of 50 000 000, 00 UZS per year, this amount will constitute 320 million UZS for the prosperity of the Republic. On average 30 ous of this sum comes to the state (local) budget as taxes and other compulsory payments, which means, that our budget will be replenished by the additional amount of 96 million UZS.

It should be noted that that the top-target goal of reforms in our country is to create decent living conditions for our people and each family. This is, definitely, a very complicated and responsible task. To achieve this goal, it is not enough to implement just practical activities. It also requires a comprehensive study of this area and the development of scientifically sound recommendations for the welfare of every family.

Thus, it is obvious that the transformation of the family economy into a subject of microeconomics is not only economic, but also of significant social and spiritual importance, which can accelerate the formation of market relations in the country, as well as facilitate liberalization of the economy and modernization of the society.