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THEORETICAL TRANSFORMATION OF THE CONCEPT OF THE INVESTMENT
PROCESS.
Salamov Farrukh Fattoevich
Acting Professor of the Department of Economic Theory at the
Samarkand Institute of Economics and Service.
E-mail:
Key words:
rationality, equilibrium, economic system , capital, transformation of ideas and
human capital .
Abstract:
the article is devoted to the process of making investment decisions by economic
entities, as well as the expansion of the range of investment objects .
The end of the 20th century is associated with a gradual departure in the works of researchers
from the principles of complete rationality, equilibrium of the economic system, which
necessitates the transformation of ideas about the content of the investment process. This
concerns both the process of making investment decisions by economic entities and the
expansion of the nomenclature of investment objects.
In the industrial era, the traditional investment objects are the active and passive parts of fixed
production assets, changes in the volumes of inventories. In the final phase of the development
of the industrial mode of production, the monetary economy is becoming increasingly important,
which significantly expands the investment opportunities of macroeconomic actors . In this case,
the objects of investment are intangible assets presented in the form of titles, such as securities,
fixed-term contracts, intellectual property rights, etc. The emergence of a new stage of
development of society, namely the information stage, increases the attention of researchers to
the problems of information, accumulation of knowledge, formation of human and intellectual
capital
A. Smith expressed ideas according to which useful skills of workers can be considered as part
of fixed capital, that is, in this case, we are talking about the fact that the costs of acquiring new
skills and abilities of the workforce are nothing more than investments in human capital. An in-
depth analysis of investment costs in the process of forming human capital can be found in the
works of representatives of neo-institutionalism . Thus, according to G.S. Becker, activities that
promote the growth of future income by means of "increasing human resources", called
investments in human capital, can be presented in five main forms: costs of training and
education, improving labor skills, health care, geographic mobility and searching for information
on prices and incomes. Monetary investments in a person provide a long-term production effect.
Investment in human capital is characterized by certain features related to the fact that there is a
gap between the time of direct capital investments in the expanded reproduction of labor and the
potential opportunities for extracting income from real costs in the foreseeable future. It should
be noted that the size of future remuneration is quite difficult to calculate, since it depends on
many factors of a non-linear nature. This applies not only to exogenous factors caused by
uncertainty and risks
, but also to endogenous reasons that make the investment behavior of
1
M.M.Mukhammedov . , N.A.Kamilova // Economic theory / textbook. Samarkand 2023 pp. 288-289.
2
A detailed analysis of risk and uncertainty can be found in the works of neo-institutionalist F. Knight . He
distinguishes between "measurable" uncertainty, a situation in which one can insure against risk, and "true"
uncertainty, which has an unlimited set of possible outcomes. Investment activities can be carried out taking into
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economic entities difficult to predict.
Investment decisions can be only partially rational; business entities do not have sufficient
cognitive resources to correctly assess various scenarios. The economic model of behavior aimed
at maximizing utility or profit is replaced by a completely different system of rules for
implementing the investment process. The hypothesis of market efficiency has been shown to be
inconsistent through empirical observations. According to the studies,
investment process
participants do not always act rationally, especially under conditions of uncertainty. Uncertainty
is associated, on the one hand, with insufficient information about current and future processes,
and on the other hand, with the fact that it is virtually impossible to calculate the actions and
deeds of other people. Past experience cannot be the key to the future. According to J. Shackle ,
making an investment decision by an economic entity
is more like playing roulette than a
specific mathematical calculation of the probability of implementing a particular investment
project. Each investor has access to only partial knowledge, while complete knowledge is the
prerogative of the market as a whole
The unpredictability of the investment behavior of economic entities often lies not only in the
multifactorial nature of their motivation
, but also in the area of information processing and
decision-making. The most famous is the theory of bounded rationality. In constructing a
descriptive model of economic behavior, G. Simon believes that an economic entity is looking
for not the best outcome of events, but a satisfactory one, which may not ensure the
maximization of utility or profit. This is difficult to do at least because there is no universal and
consistent utility function, put forward by the neoclassical school, which would allow comparing
heterogeneous alternatives
. The search for options is carried out until the first acceptable one is
found, which is determined by the level of aspirations. The latter is dynamic, that is, it is
constantly changing. It is also worth considering the cognitive abilities of the economic entity
itself. The human brain is not capable of collecting the entire volume of information, much less
processing it, while making the right choice. R. Heiner I am sure that in complex situations
following the rules of satisfactory choice is much more profitable than trying to optimize
. In
general, the rationality described in the theories of G. Simon and R. Heiner is limited.
Conclusion:
The above once again emphasizes that rationality is only one of the principles used
in the process of making investment decisions. For example, when trading on the stock exchange,
only a small part of investors, mainly professionals, actually calculate their future income. The
overwhelming majority of participants in this process are based on the routine model, that is,
account both the first and the second, and it is precisely work under the conditions of the second type of uncertainty
that constitutes the essence of entrepreneurial activity.
3
Barberis N., Huang M., Santos T. Prospect Theory and Asset Prices // QWOTERLY Journal of Economics. Oxford
University Press, vol. 116(1), p. 1-53 ; Khaneman D., Tversky A. Prospect Theory: Anglicize of decision and risk
//Econometric. 1979. vol. 47 (2), p. 263-291
.
4
Shackle, G. L. S. Imagination and the nature of choice/Edinburgh , 1979 . P.34-38 .
5
Hayek , F. The fatal conceit. Mistakes of socialism / M.: Novosti, 1992. P.227-230.
6
In contrast to utility maximization as a key incentive for economic activity, including investment, an alternative
motive may be coordination maximization, which is more dynamic. An entrepreneur with innovative traits enjoys
any activity, since he is driven by aspirations that imply a certain level of spiritual tension. Coordination
maximization is limited by the unpredictability of the external environment, since failures reduce the level of
aspirations, and in such conditions the agent needs reliability, which can only be provided by behavioral inertia
( Foster , J. Evolutionary macroeconomics /- L. , 1987. P. 67-70 .) In addition, in real life, preferences often coincide
in time with the choice of action, and sometimes preferences are realized during or after the action itself. An
economic agent can even act, ignoring his own preferences, sometimes succumbing to altruistic impulses. ( March ,
J. Bounded rationality, ambiquitu and the ingineering of choice// Bell, J Econ. 1978№ 2. P.596-597)
7
Simon , H. Rational decision – making in business organizations // Les. Prih Nobel. 1978- Stockholm , 1979 . P285.
8
Heiner, R. The origin of predictable behavior // Amer.Econ.Rew.1983 No. 4. P .560-593.
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they make decisions based on the current situation, standard behavior options in specific
conditions, and also focusing on the behavior of other subjects.
Bibliographic list
1.
M.M.Mukhammedov . , N.A.Kamilova // Economic theory / textbook. Samarkand 2023
pp. 288-289.
2.
Barberis N., Huang M., Santos T. Prospect Theory and Asset Prices // QWOTERLY
Journal of Economics. Oxford University Press, vol. 116(1), p. 1-53; Khaneman D., Tversky A.
Prospect Theory: Anglicize of decision and risk //Econometric. 1979. vol. 47 (2), p. 263-291
.
3.
Shackle, G. L. S. Imagination and the nature of choice/Edinburgh , 1979 . P.34-38.
4.
Hayek , F. The fatal conceit. Mistakes of socialism / M.: Novosti, 1992. P.227-230.
5.
Simon , H. Rational decision – making in business organizations // Les. Prih Nobel .
1978- Stockholm, 1979. P285.
6.
Heiner, R. The origin of predictable behavior // Amer.Econ.Rew.1983 No. 4. P.560-593.
