The adherence of the government and the Bank of Russia to the liberal-monetarist, and in the current situation - even the libertarian course is determined not by the concept of a welfare state established by the country's Constitution and not by the goals of increasing social welfare, which such a state should follow. And not even the goals of economic growth or increasing its efficiency, although the supporters of this ideological choice are constantly justified by this.
As shown by the results of numerous studies, the choice of this course adopted by different countries for the sake of obtaining loans and credit ratings, as a rule, leads to a decrease in economic growth, an increase in social inequality, and a degradation of the country's overall potential. The rates of economic development of countries following the recommendations of the IMF are, on average, twice worse than those of countries that have pursued their own sovereign policies contrary to these recommendations (Fig. 1). [1].
Figure: 1. GDP of countries that (not) resorted to borrowing from the IMF.
In Russia, following this course turned into a socio-economic catastrophe in the early 90s, the bankruptcy of the state in 1998, a deep economic crisis in 2008, as well as stagnation that continues to this day. At the same time, there were no objective reasons for such a deplorable degradation of the economy - the available production, intellectual, labor, scientific and technical resources made it possible to produce products and ensure the income of the population at a level twice the actual level.
Libertarian doctrine
The results of the adopted libertarian course for the economy of our country and for Russian society as a whole can be called disastrous. According to the same IMF, for the period 1990-2018. Russia's gross domestic product in purchasing power parity grew by only 2.36 times, while the world average was 3.7 times. At the same time, the real sector of the economy has been marking time for 30 years (Fig. 2), and investment activity today is half as much as it was in the RSFSR.
Figure: 2 The volume of industrial production in the RSFSR and the Russian Federation (in comparable prices, 1980 = 100).
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(Source fig. 11.4-11.6: Grazhdankin A., Kara-Murza S. White Book of Russia. Construction, restructuring and reforms: 1950-2013)
Nevertheless, the financial and economic bloc of the Russian "power vertical" is not at all embarrassed by this fact, and the absence of a positive practical effect is hidden behind references to the authority of world economic thought: they say, everything is done "according to science", but "material" (people, society, state etc.) substandard, so we have what we have. As a result, a situation arises, described by I. Ilf and E. Petrov in the novel "The Golden Calf", where Shura Balaganov saws the weights stolen from Koreiko to the exclamations of Panikovsky: "Saw, Shura, saw - they are golden!" Of course, sooner or later it will become clear that the weights are simple, cast-iron, but the time and effort spent on clarifying this circumstance will no longer be returned.
Of course, this analogy, like all analogies, is very lame: after all, Panikovsky sincerely believed in the reality of his fantasies, which cannot be said about the leaders of the financial and economic bloc of Russia: they know very well what they are doing and for what purposes.
Economic theory, being a very important component of public consciousness, carries not only epistemological, cognitive, but also political functions, which are determined by the interests of the ruling elite, which are not always identical with the national socioeconomic interests and development goals of the country. At the same time, in order to achieve and maintain political stability, it must be positively perceived by society. In the modern knowledge society, this requires a pseudoscientific explanation of the fact that, in Hegel's words, "everything that is real is rational, everything that is rational is real." Or, as Voltaire ironically paraphrased Leibniz's "monadology", "we live in the best possible world."Therefore, the "mainstream" of economic science is called upon to substantiate the correctness and infallibility of the policy pursued by the state - regardless of practical results. In the same way, the USSR of the 1970s-1980s, in theory, built communism, but in practice, it lived in conditions of total "deficit" and was preparing for "market reforms."
The libertarian "mainstream" (English mainstream - the mainstream) of economic science is based on the classical postulates of rationality and optimal behavior of business entities, and therefore calls itself "neoclassical". Despite the obvious inconsistency with real economic processes, this neoclassical paradigm is leading both in the number of publications and - especially! - by weight in the structure of teaching economic disciplines, the amount of funding (grants) and prestigious prizes of all levels up to the Nobel Prize.
As a result, it is she who forms the appropriate way of thinking in the minds of the overwhelming majority of modern leaders, setting the economic and political course of national elites dependent on international capital, including the Russian one.
Therefore, it is necessary to dwell separately on the analysis of the essence of this very popular and influential concept, which has received the status of almost a “sacred cow” of the modern economy.
To understand the essence of a particular theory, one should understand the content of the axioms that make up its foundation. In the "neoclassical" liberal paradigm, these include:
- presentation of the whole variety of economic entities as economic agents, whose motivation is reduced to maximizing current profits;
- the assumption that these economic agents act absolutely rationally and are able to take into account all available technological possibilities, freely competing with each other in an institutional vacuum.
The invariable goal of any "neoclassical" interpretation of the economic behavior of economic entities is to establish a situation of market equilibrium, which is characterized by the most efficient use of resources with a complete balance of supply and demand, a situation that has never been observed in practice. Although in modern interpretations of neoclassical theory its axioms are complicated by the inclusion of various reservations and clarifications, they remain basically unchanged, giving rise to corresponding distortions in the notions of economic processes.
For the past half century, the fundamental classical postulates of economic theory have been the subject of sharp scientific criticism. Empirical studies of the behavior of firms in real markets have made it possible to establish that the motivation of business entities is by no means limited to the desire to maximize profits or any other indicator of economic performance. The fact of incomplete information about the market situation and technological capabilities available to a real economic entity was proved, and the value of transaction costs and other costs associated with making a profit was disclosed. The very possibility of achieving economic equilibrium as a result of decisions taken by real economic entities was also questioned.
But, perhaps, the main blow fell on the postulate of the rationality of the behavior of an economic entity in the market. Numerous studies have established the limited ability of business entities to carry out the calculations necessary for the optimal choice. In the concept of bounded rationality developed more than 70 years ago by Herbert Simon, firms are guided not by the optimal, but by the acceptable choice of their behavior [2].
Today, only the most blinkered apologists of market fundamentalism can insist on the adequacy of neoclassical theory, which, alas, include most of the people who determine economic policy in many countries of the world, including Russia.
The fundamental uncertainty of the set of production opportunities, the economic efficiency of new technologies, the differences in the ability of business entities to assimilate innovations, receive and process market information - this is not a complete list of the properties of economic reality that have not been adequately reflected in neoclassical economic theory. The concept of economic equilibrium significantly simplifies the content of economic processes, ignores a number of important properties of the real competitive struggle of various firms in an uncertain market environment.
The discrepancy between the theory of market equilibrium and the real behavior of business entities does not allow considering it as an adequate theoretical basis for studying the processes of economic development, and even more so! - for the formation of economic policy. The interpretation of economic growth, characteristic of the "neoclassical" approach, as a change in the equilibrium state of the economy over time under the influence of firms' reaction to an increase in the supply of productive resources within a given set of technological possibilities, inadequately describes the mechanisms of modern economic growth, which is based on scientific and technological progress, which has directly opposite properties: first of all, disequilibrium and uncertainty,- and to assess their effectiveness in the practice of economic management, the criterion of profit maximization cannot be applied.
In essence, the “neoclassical” paradigm of economic thought has a quasi-religious function, convincing of the infallibility of the “free market” with the cult of the Golden Calf, which determines economic behavior and justifies the system of distribution of national wealth and income that has developed in Western countries. This pseudo-scientific quasi-religion has its own dogmas, clothed in mathematically rigorous theorems of the properties of market equilibrium, setting the corresponding taboos and principles of decision-making in economic policy. The "Symbol of Faith" of this religion is the dogma of non-interference of the state in the "market element", as well as the primacy of the right of private property, which is referred to as "sacred". The adherents of this quasi-religion in Russia are guided by their "prophets" from the United States, where the training of neophytes from peripheral countries is well established. This preparation is carried out on the basis of scholastic studies of abstract models of market equilibrium that do not exist in reality. The meaning of these studies is purely ideological in nature of the deification of the “invisible hand of the market” and has nothing to do with real economic practice.
Who benefits from?
This fact alone provides a hint for answering the key question: "Who benefits?" The amazing vitality of the "neoclassical" paradigm and its popularity in the circles of large supranational capital is explained by the corresponding economic and political interests. Libertarian "neoclassicism" plays the role of a theoretical substantiation of the ideology of market fundamentalism and liberal economic policy, in which both TNCs seeking to minimize government regulation of their activities and a number of states that receive their "royalties" from these TNCs are interested: the USA, Great Britain, Switzerland and others.
This concept substantiates the claims of big business to dominance in national societies and throughout the world, since it reduces all social relations ultimately to the power of money. It also justifies modern forms of neo-colonialism, which allow the issuers of world currencies (primarily the American dollar) to exploit humanity through the unequal exchange of unsecured banknotes for real wealth. Therefore, it is energetically imposed by Washington through both direct political pressure and indirectly: through international institutions (IMF, World Bank, WTO, etc.) and through financing of the expert community of national ruling elites in order to exploit the countries they govern.
For example, the systematic policy of immersing the economy in the “element of the free market” being pursued in Russia regularly meets with the most positive responses from the IMF, rating agencies, and major analytical structures. In reality, liberal ideology is a screen behind which the appropriation of state property and the country's national wealth by the ruling oligarchy and big world capital has been hidden all these years.
If this were not so, libertarian "neoclassical" dogmatics would long ago become the property of the history of science - the same as the astronomical system of Ptolemy or the theory of "caloric" in physics, nowhere and never applied in the practice of government. But this is so - and therefore it is used as the basis for the policy of the same IMF in relation to third world countries with the aim of depriving them of opportunities for independent economic development. By imposing a tough monetary policy on its “clients”, the IMF deprives them of the possibility of expanding domestic credit and makes them dependent on external sources of financing, thereby subordinating them to the interests of foreign capital.
The end result of the financial and economic course carried out in Russia on the recommendations of the IMF for more than a quarter of a century has been the export of more than a trillion dollars from the country, the transfer of control over profitable enterprises to a foreign jurisdiction, and the subordination of the financial market to the interests of foreign speculators. In the absence of internal sources of credit, only those industries and types of activities that were of interest to foreign capital developed: export-oriented production of raw materials and trade in imported goods. Domestic-oriented manufacturers of investment equipment and high-tech end-use goods, in the absence of credit, were forced to cede the market to foreign competitors and curtail production.
In fact, the libertarian doctrine of the “Washington Consensus” implemented by the IMF (prescribing liberalization of foreign trade and exchange regulation, restrictive monetary policy and refusal of the state from responsibility for economic development) is a cognitive weapon that paralyzes Russia's ability to conduct independent monetary policy.
Under the pretext of the independence of the Central Bank from the government, this policy is artificially separated from the goals of development of the national economy and is subordinated to the tasks of ensuring the free movement of international capital. The restrictions imposed at the same time on the expansion of domestic credit put the economy in an extremely dependent position on the external environment and make it vulnerable to speculative attacks. Because of this dependence, during the crisis of 2008-2009, as in 2014, the Russian economy suffered more than other G20 countries.
The result of the policy imposed by the "Washington Consensus" by financial institutions was the degradation and disintegration of the domestic economy, its offshorization and being drawn into unequal foreign economic exchange, and the destruction of scientific and technical potential. The damage from this policy far exceeds the economic damage to the USSR from the fascist aggression and continues to grow by $ 100-150 billion a year.
This policy continues contrary to the interests of domestic producers and the position of the scientific community. Despite the constant criticism from scientists, protests from entrepreneurs and trade unions, and growing indignation of the general population, the authorities continue to follow the recommendations of their Western "partners" and curators, avoiding public discussion of their decisions.
Since the global financial market is dominated by the issuers of world currencies, the US and the EU, thanks to the adherence of the Bank of Russia and the government of the Russian Federation to the libertarian doctrine, they are able to determine the state of the Russian economy and manipulate the current macroeconomic policy. Thus, the damage inflicted on Russia from the economic sanctions imposed by the United States in 2014 was multiplied by the actions of the Central Bank, which followed the IMF's recommendations to raise the interest rate and let the ruble float freely in the absence of restrictions on transactional currency transactions, which led to a two-fold devaluation of the ruble exchange rate to dollar.
The resulting pulling of our economy into a stagflationary "trap" as a result of these actions took place against the background of the economic recovery that began in most countries of the world. The losses of the Russian economy from this policy of the Central Bank are estimated at 25 trillion rubles in unproduced goods and over 10 trillion rubles in unproduced investments. Its continuation leads to the growing lag of the Russian economy from the advanced countries of the modern world, which are entering the "long wave" of growth of a new global technological order.
Practically none of the goals that have been set at the state level in the field of economic policy since the 1980s. XX century was not implemented.
As examples confirming this thesis, one can cite the most significant reforms carried out in our country in the post-Soviet period under the influence of liberal ideology. The total privatization of state enterprises was imposed on society on the basis of a speculative premise that private property was obviously more effective than state property. In reality, the bulk of the privatized enterprises were ruined by new owners who were unprepared to manage these industries: large industrial cities turned into "plant cemeteries", in the place of which retail, office and warehouse premises grew. And the advanced scientific and technical potential created in the USSR has been preserved almost exclusively in state corporations. The most effective were enterprises created by their owners from scratch.on their own savings and on their own. But such “market entities” can hardly survive in a criminal-corruption business climate that directs business to an easy profit by appropriating other people's property.
A typical example here is the "reform" carried out under the leadership of Chubais, or rather "privatization", of the world's most efficient system for generating and distributing electricity and heat. After the fragmentation of RAO UES of Russia and the sale of its generating capacities, instead of the promised increase in efficiency, an explosive increase in tariffs took place, undermining the competitiveness of the Russian economy. Their investment component, which the reformers promised to abolish, has not gone anywhere: a kind of tax on electricity consumers used to finance investments in this industry, now in private interests.
Instead of zealous owners, day and night working to increase the efficiency of their enterprises, the free privatization of state property gave rise to a criminal and predatory type of "raider" pseudo-business focused on the "sale of stolen goods." The plundering of many efficiently operating and well-equipped enterprises, the transfer of a significant number of strategically important research and production structures under the control of foreign competitors - all this has become the norm for the “new Russian economy”. As a result, the efficiency of industrial production, measured by indicators of labor productivity, energy intensity and other generally accepted parameters, has decreased by more than a third, and the total volume of production has halved [3].
The privatization of the 90s, popularly called "privatization", largely shaped the stereotypes of Russian business ethics for years and even decades to come. Having created opportunities for easy enrichment through the appropriation of state property and subsequent speculation with shares of privatized enterprises, the technology of mass privatization implemented by the government directed the most active and energetic entrepreneurs not to create new goods and satisfy social needs, but to share unearned wealth and appropriation of sources of income previously created by society. …
Accordingly, instead of economic growth due to the activation of creative entrepreneurial energy, as a result of the privatization of state enterprises, a colossal recession and an explosion of criminal activity were obtained, provoked by the legalization of the plunder of state property.
Likewise, other structural "reforms" envisioned by the libertarian "mainstream" have been devastating for society. Transfer of forests to private exploitation by the Forest Code - massive fires due to violation of forest management norms by tenants. Privatization of agricultural land by the Land Code - depriving peasants of land, desolation of land and reincarnation of latifundists. Reform of technical regulation through the privatization of product certification functions - a sharp drop in the quality of goods and an increase in counterfeit products. The monetization of social benefits led not to a reduction, but to an increase in state budget expenditures and massive discontent among broad segments of the population. The liberalization of foreign exchange regulation instead of an inflow of foreign direct investment led to the colossal export of capital already noted above,offshorization of the economy and manipulation of the financial market by foreign speculators.
The list of unsuccessful reforms in relation to the declared goals of the "free market" can be continued almost indefinitely. But even in countries with developed market economies, there are many examples of catastrophic actions in the same spirit. Thus, the liberalization of banking regulation, initiated by well-known American economists, became one of the reasons for the global financial crisis of 2008-2009. An important factor in the latter was the collapse of financial derivatives bubbles, which happened contrary to the predictions of liberal scientists who had recently received the Nobel Prize for “proof” of the lesser riskiness of derivatives. And millions of ordinary Americans have lost their retirement savings and mortgaged homes.
Economic policy is always the resultant sum of interests. Unlike abstract models of market competition, the economy is run by real people who have their own material interests. Whose interests are served today by the libertarian doctrine and the "mainstream" of economic science, imposed on public consciousness in the system of economic education?
In the "neoclassical mainstream" of economic thought, the most famous embodiment of which is the doctrine of market fundamentalism, it is argued that the state should not be an active participant in economic activity and any state intervention in the economy is harmful - with the exception of those types of state regulation that are necessary for the existence of market competition and free entrepreneurship: protection of private property, antimonopoly policy, subsidizing spending on science, education of the population.
Thus, the doctrine of market fundamentalism protects capitalists from state interference in the management of the economy and the distribution of the social product. In fact, it serves the interests of large private monopoly capital, which does not need state regulation and support. And monetarism, which deifies money, serves the interests of the financial oligarchy. It reduces state regulation of the economy to ensuring freedom of movement of money and the most favorable conditions for the exploitation of national resources by owners of money.
Libertarianism in relation to Russia
Let's try to calculate the effect of the libertarian macroeconomic policy pursued by the Bank of Russia. In the 2000s, the Russian government lent money from Russian taxpayers to foreign borrowers at 4-5%, and Russian borrowers were forced to borrow money actually withdrawn from them abroad at 8-15% per annum. After the global financial crisis, rates decreased to 1-2% and 6-9%, respectively, but the difference remained the same. The damage from such a ridiculous financial exchange is estimated at tens of billions of dollars annually. The Russian economy lent to the American and European ones at low interest rates, and borrowed at high ones. At the same time, the greater the inflow of foreign currency into the country, the less the demand for loans from the national banking system became, and the more actively Russian enterprises borrowed abroad.
The unequal foreign economic exchange between Russia and the world financial system through the channel of current income from investments averages about $ 50 billion annually since the increase in oil prices since 2000. In general, the financial transfer from the Russian economy to the world economy within the framework of the monetary policy pursued by the monetary authorities reached $ 90-110 billion annually. In fig. 3 shows the main flows of unequal exchange of the Russian financial system with the outside world.
Figure: 3. Assessment of Russia's transfer in favor of the global financial system.
This unequal exchange is predetermined by the offshorization of the Russian economy, which resulted from the switching of demand for loans to foreign sources, which required the transfer of collateral and settlement bases there. The monetary authorities did not interfere with this process, justifying it with another libertarian dogma: on the liberalization of foreign economic activity, including the abolition of foreign exchange controls. Following this dogma cost the export of capital in the amount of over a trillion dollars, of which half settled in offshores, which became an important element of the reproduction of the Russian economy (see Fig. 4). Most of its private sector investments go offshore. At the same time, half of the money exported in them is irretrievably lost for the Russian economy, dissolving in foreign jurisdictions. The other half return to Russia under the guise of foreign investment, taking advantage of the preferential tax and legal regime and the right to repatriate their profits abroad.
Figure: 4. Offshorization of the Russian economy. Investment flows ** to Russia (+) and abroad (-) by country and type of jurisdiction (offshore and onshore), USD billion (Source: Petrov Yu. On the formation of a new economic model: restriction of budget expenditures or increasing tax collection? / / Russian economic journal. 2013. No. 4).
The lack of foreign exchange control in the context of the crisis "squeeze" of the total book value of the Russian stock market leads to the threat of transfer of the pledged assets of Russian companies into the ownership of their foreign creditors. It has already been realized in relation to half of the Russian industry, many of which have come under the control of non-residents (Fig. 5).
Figure: 5 The share of foreign capital in the industries of Russia in 2010–2014. (Source: Tsypin A. P., Ovsyannikov V. A. Estimation of the share of foreign capital in the Russian industry // Young Scientist. 2014. No. 12. P. 195-198. URL https://moluch.ru/archive/71/ 12215 / (date of access: 05.04.2018).
This threat is intensifying in relation to the entire domestic economy due to the growing monetization of the financial pyramid of American debt obligations, accompanied by a simultaneous sharp increase in emissions and the export of dollars outside the United States to acquire real assets. In the absence of measures to protect its own financial system, the Russian economy is absorbed by foreign capital and is deprived of the ability to develop independently, which dooms it to a deterioration in its position in any of the scenarios of further development of the global crisis.
These are the results of following similar policies imposed by the IMF in previous financial crises. In the context of linking the issue of money to the acquisition of foreign currency, the inflow of speculative capital first entails the inflation of the financial market capitalization, and then the outflow of foreign capital causes the collapse of financial bubbles and the uncontrolled devaluation of the national currency, the loss of a significant part of foreign exchange reserves, a decline in production and galloping inflation. The assets, which had fallen in price many times over, are then bought up again by foreign capital, the national economy loses its independence and is colonized by transnational corporations connected with foreign emission centers. So, on the circuit of artificial "bloating" and piercing of the "bubble" in the financial market in the 90s. foreign speculators,After participating in the "spin-up" of financial pyramids, for every dollar invested in the acquisition of privatization vouchers, they received assets worth hundreds of dollars, bought after the default of 1998 [4].
The libertarian monetary policy pursued in Russia objectively entails the colonization of the Russian economy by foreign capital, depriving it of opportunities for independent development. As substantiated in the analytical report of A. Otyrba and A. Kobyakov, “The policy pursued for a quarter of a century by the Bank of Russia and the government is to create favorable conditions for foreign capital for the development of the Russian economy and Russia's national wealth” [5]. Within the framework of the policy of "currency board" pursued by the Central Bank of the Russian Federation, foreign capital associated with emission centers of world fiat currencies gains priority.
It should be noted that the apologetic function of the "neoclassical mainstream" is incompatible with such principles of scientific research as the pursuit of objectivity, truthfulness, and practicality. The subordination of economic thought to the interests of the ruling elite dooms it to scientific mythology. Fulfilling a social order, popular economic doctrines do not require proof of their truth. There is enough support from the government and the ruling elite. And the fact that the practical application of the knowledge arising from economic theory does not give the desired results does not bother either pseudoscientists or the customers of numerous official forums designed to prove the correctness of the policy pursued by the state. The results of reforms that have failed from the point of view of the country's socio-economic development may well satisfy the interests of the ruling elite. As already indicated, the reforms of forestry, land, social legislation, technical regulation and the electric power industry, promoted by Russian liberals, have significantly expanded and strengthened the modern Russian "elite" formed in the course of the total privatization of state enterprises. Although they entailed, respectively, massive forest fires, landlessness of peasants, elimination of social benefits deserved by millions of people, an abundance of counterfeit products, a sharp increase in prices and tariffs. It must, however, be recognized that the crisis that befell the US banking and financial system, which took away the savings and homes of millions of citizens, was accompanied by the concentration of capital in the hands of the financial oligarchy.whose functionaries safely left the collapsed Wall Street banks on "golden parachutes" [6].
Let us also note that the pogrom of the Russian economy, perpetrated under libertarian slogans, is explained not only and not so much by theoretical delusions, but, above all, by the completely material interests of the "reformers" themselves. The expert opinion of the Accounts Chamber of the Russian Federation stated: “The privatization of state property was accompanied by numerous violations both on the part of federal bodies of state power, their authorized representatives, and heads of privatized enterprises, which led, in particular, to the illegal alienation of state property, including those with strategic importance, in favor of Russian and foreign persons at reduced prices …”[7].
Formal denationalization and transfer of control over property to private hands did not lead to the achievement of the goals that were defined in the state privatization program: the formation of the institution of "effective owners" and the creation of a socially oriented market economy. On the contrary, the way of privatization created favorable opportunities for corruption and rent-seeking behavior, blocking the formation of production relations normal for a market economy. In the public mind, privatization has clearly received the epithet "criminal". This has led to long-term negative consequences in entrepreneurial stereotypes.
Contrary to the expectations of the "reformers" who were convinced of the superiority of private property over state property, the mass privatization of enterprises was accompanied by a sharp drop in industrial production and an increase in the share of unprofitable enterprises. Several years after the start of the privatization campaign, one could state the ruin of the overwhelming majority (87%) of privatized enterprises.
On the other hand, the organizers of privatization succeeded in becoming very wealthy owners of the former public property, just like their foreign "consultants". It is curious to note that the desire to cash in on state property seems to be a “generic trait” of Russian liberals. For some reason, the most ardent of them maniacally love to steer state assets: corporations, banks, development and education institutions. And practically there is not a single example of an outstanding herald of liberal ideology organizing his own successful private business. This is due to the fact that liberal ideology does little to inspire real private entrepreneurs who understand the importance of state support for business, especially innovation. And the liberals who have seized the leadership of state-owned companies and state-owned banks are very fond of speculating about non-intervention by the state, since it gives them the opportunity to dispose of state money and assets as their own. In their mouths, liberal ideology serves as an excuse for the banal theft of state property.
Scientific approach instead of libertarian mythology
Of course, there are successful reforms as well as successful economic policies. But they, as a rule, are carried out based on the common sense of statesmen who are not burdened with economic education. Meanwhile, a correct scientific theory is needed for the successful development of the economy. As you know, "there is nothing more practical than a good theory." But the theory must correspond to scientific criteria of truth, explain cause-and-effect relationships, reveal the real laws of the processes of economic reproduction and give reliable forecasts. That is, to be tested in practice.
If we set before science the task of working out recommendations for the development of the economy in order to raise social welfare, then the subject of such a study should not be the search for conditions for achieving "market equilibrium", but, on the contrary, the study of the patterns of the increasing deviation from it in the direction of increasingly complex and diverse types of economic activities developing as a whole organism. It is the process of development of economic activity, and not the exchange of its results, that should become the main subject of economic science. The methodology should change accordingly.
The development process is characterized by the increasing complexity and increase in the internal diversity of the system. Therefore, in contrast to the theory of exchange, which focused on the search for a state of equilibrium and reduction from complex to simple in order to identify a universal equivalent, the theory of development should focus on the search for mechanisms to maintain increasing complexity within the reproductive integrity. As already mentioned, the evolution of living systems has a negentropic character, developing along the path of complication. The main subject of economic science should be the study of the laws of economic development, and, accordingly, the mechanisms of its complication, maintenance of integrity and stability in the process of increasing the diversity of economic activity and its results.
Today there is no need to convince anyone that scientific and technological progress is the main factor in the development of the economy. Continuous development and implementation of new technologies are at the center of economic development management at all levels. To understand the patterns of development of economic activity, it is necessary to understand the processes of change and change of technology.
Economic activity is not limited to production, it is immersed in a social environment, the inhabitants of which conduct, organize, provide economic activity and use its results in their own interests. This environment consists of people who enter into relationships with each other about economic activity and its results. These relations ensure the reproduction of economic activity with constant changes in the composition of the population of the people participating in them. The production relations themselves are determined by the institutions that keep people in them and set the forms for realizing the motives of their behavior. Therefore, in order to understand the laws of economic development, it is necessary to understand the processes of changing social institutions.
Social institutions regulate people's behavior to the extent that the latter are inclined to comply with the norms they set. This tendency is supported by positive and negative ties between the individual and society, the effectiveness of which is determined by the correspondence between the moral values of the individual and the dominant ideology. The higher this correspondence, the more efficiently the institutions that determine production relations work. And, conversely, as the proportion of people rejecting the dominant ideology grows, the ability of institutions to maintain appropriate production relations is reduced. Therefore, in order to understand the laws of economic development, it is necessary to take into account the evolution of people's value systems in interaction with the ideology prevailing in public consciousness.
Therefore, it is necessary to consider any economic system as a complex set of people: with their ideology, interests and motives of behavior, linking them with production relations and institutions regulating these relations, as well as means and objects of production associated with certain technologies. This complex system consists of countless elements and connections between them, which are constantly changing. It is characterized by: fundamental complexity, which does not allow to reduce all its components to some basic element; nonlinearity of interdependencies that are not reflected by simple functions; the uncertainty of states, which makes it difficult to make forecasts and develop practical recommendations.
Based on the foregoing, the central issue of economic science should be the study of the relationship between technological, institutional and ideological changes. It is this approach that is characteristic of the Izborsk club scientists, in whose works real patterns of modern socio-economic development are revealed and recommendations for their use in managing the development of the Russian economy are substantiated.
Testing in practice
The evolution of different states of the disintegrated world socialist system has demonstrated in practice a wide variety of trajectories for the transition from a directive to a market economy. Economic theory rarely manages to experimentally test one or another hypothesis, the consequence of which is the scholasticism and speculation of many of its directions. The period from the end of the last century to the beginning of the present century provided a wealth of empirical material, the significance of which is still underestimated by economics. In fact, a global experiment was set up to test the validity of basic economic theories.
The libertarian doctrine was taken as a "guide to action" in Russia, Ukraine, the Baltic states and the Eastern European states - members of the CMEA. At the same time, the experiment was staged under different conditions - Russia and Ukraine carried out the transition on their own, while other Eastern European states were quickly absorbed by the European Union. In turn, each of these experiments had its own additional differences. In Russia, the transition took place under conditions of an authoritarian political system, in Ukraine - under conditions of parliamentary democracy. Among the Eastern European states, a special case is the GDR, absorbed by its western neighbor.
The transition to a market economy in China, Vietnam, Belarus and Uzbekistan is an experimental test of another economic theory, known in the literature as economic theory, or physical economics. This theory is distinguished by a pragmatic approach to the study of economic phenomena, not burdened with speculative abstractions such as models of market equilibrium. And in this case, the experiment was carried out under two different conditions: the transition from a directive to a market economy and the absorption of the Hong Kong open market economy by socialist China.
Finally, two countries remained in which the main institutions of the socialist economy remained - Cuba and the DPRK. When evaluating the results of an experiment, they can be used as a "control group". It is curious that, despite the serious blow that fell on these relatively small economic systems with the collapse of the USSR and the world socialist system, they not only withstood, but also retained a considerable development potential. Cuba is showing strong economic growth, while North Korea manages to survive despite economic sanctions and colossal political pressure from outside. Moreover, Cuba exerts a powerful political influence on the countries of Latin America, many of which are now successfully developing socialist institutions of state ownership and planning.
In fig. 6 shows the rates of GDP growth in some transition economies against the background of the United States, which until recently was considered the most stable market economy. Here, one can clearly see the failures in the economic dynamics of the post-Soviet states that have chosen the libertarian model of transition to the market, and the successes of the states that have retained the system of central planning, combining it with the evolutionary development of market relations.
Figure: 6 Rates of GDP growth in a number of countries in 1993–2010,% over the previous year.
Adepts of libertarian doctrine have failed to provide a convincing explanation for the striking differences in the results of the transition to a market economy in different countries. Explanations of China's successes and Russia's failures, as a rule, boil down to frivolous arguments about the inconsistency of the shock therapy policy in the latter and to absurd hypotheses about the consistent implementation of the doctrine of market fundamentalism in the former. In a similar way, they try to explain the relatively successful development of Belarus by energy subsidies from Russia, although the neighboring Smolensk and Pskov regions, receiving energy at lower prices, demonstrate deplorable results [8].
In fact, the abrupt liberalization of the economy, the collision with the competition of highly developed economies and the natural deterioration of the investment climate have caused a sharp decline in investment activity. This hit particularly hard on the most modern industries producing technically sophisticated products. Lack of investment resources for modernization caused their collapse and degradation.
Most European countries have had to pay a high price to liberalize the economic mechanism. The reaction of the economy to the accelerated destruction of the usual management mechanisms in the absence or weakness of new market institutions and the lack of regulation of indirect levers of macroeconomic regulation has proved extremely painful. As a result, most countries in the early years of the "market" transformation were gripped by a deep economic crisis. Its main manifestations were the rapid rise in inflation, which threatened in some countries with the collapse of public finances, and the decline in production. Serious problems arose in the social sphere as well.
The most interesting for economics is a comparative analysis of the market transformation of the Russian and Chinese economies, carried out in fundamentally different ways at the same time, simultaneously with the structural crisis of the world economy. In these conditions, the result of any transformation of the economy was determined by a combination of its results with technological shifts that lay the future trajectory of economic development.
In Russia, the transition to a market economy was accompanied by the destruction of institutions that ensured the reproduction of scientific, production and intellectual potential. In China, these institutions were not destroyed, but were modernized, adapted to functioning in the conditions of market competition, along with the growth of new institutions of a market economy. At the same time, state policy was aimed at preserving and developing scientific and production potential, focused not on formal transformations, but on practical results.
The creation of conditions for enhancing the creative potential of the individual and entrepreneurial abilities through the planned activities of the state allowed China to increase production volumes by an order of magnitude since the beginning of reforms. In Russia and in most other post-socialist countries, the transition to a market based on the appropriation of state property by a small group of people close to the authorities could not ensure economic success.
As a result of a comparative experiment on the practical application of two different theoretical doctrines, diametrically opposite results were obtained: if in Russia there was a more than two-fold drop in the main indicators of scientific and technical potential, then in China their multiple growth is evident (Fig. 7). This proves the inadequacy of the libertarian doctrine, on the basis of which the policy of shock therapy was implemented in Russia, to the laws of modern economic development. The doctrine of rational management, corresponding to the evolutionary paradigm, which was the basis of the Chinese policy of transition to a market economy, on the contrary, made it possible to take into account and use these patterns. Their understanding is a prerequisite for assessing the correctness of the economic policy being pursued.
Figure: 7. Dynamics of GDP at constant prices,% change.
(Source: World Economic Outlook Database. International Monetary Fund. October 2018)
In Russia, contrary not only to scientific recommendations, but also to elementary common sense and international experience, citizens' savings, high-tech industries and natural resource rent were sacrificed to the idols of market fundamentalism - hundreds of billions of "petrodollars" went to feed the dollar financial pyramid, leaving the domestic scientific -production potential without resources necessary for modernization. Instead of the gradual growth of institutions of market competition and the careful transformation of the giants of the socialist economy into competitive corporations, the creation of a national financial and investment system focused on long-term lending to modernization projects, the country's scientific and production complex was emasculated as a result of privatization.
Patriotic Alternative to Libertarian Doctrine
The reasons for the sharp degradation of the Russian economy lie entirely in the sphere of economic management, which has developed as a result of "market reforms" along the lines of the libertarian economic model. The objective state of the scientific, industrial, human and raw material potential of the Russian economy did not foreshadow such a sharp drop in economic activity and investment, the level of which still remains below the pre-reform level. The export of a trillion dollars of capital, the emigration of several million qualified personnel abroad testify to the inability of the system of economic management created by the reformers to realize the existing opportunities for economic growth. Instead of forming constructive motives for socially beneficial economic activity, state policy aimed enterprising people at the appropriation of someone else's,not for the production of new, but for the redistribution of previously created wealth. This excluded the possibility of forming an intellectual management style and, accordingly, the transition to an innovative way of development.
In the initial accumulation of capital, which took place in Russia through the "privatization" of state property, people who were not burdened with moral principles had a competitive advantage: they were able to bribe an official, intimidate the director, deal with the labor collective, if necessary, destroy a competitor. Commercially successful and therefore dominant in the course of reforms, patterns of entrepreneurial behavior were determined not so much by creative motives as by criminal experience.
The traditional Russian economic culture, samples of pre-revolutionary entrepreneurship were not only not in demand, but also discredited by liberal reformers. Being honest, responsible, law-abiding, fair and conscientious turned out to be not only unprofitable, but absolutely unacceptable from the point of view of successful business. The winners were unprincipled, greedy and, as a rule, ignorant adventurers who bribed officials, deceived the state, "threw" partners, blackmailed enterprise managers, despised labor collectives and were incapable of managing high-tech production. As a result, there was a deep criminalization of economic management, the positive qualities of Russian economic culture were supplanted by the camp-bureaucratic criminal counterculture. According to Plato's classical classification, the management style that emerged in Russia should be defined as timocracy (the rule of the worst and the selfish). The transition from this system to democracy, understood in the Russian political science tradition as democracy by the people, is much more difficult than before, since for this it is necessary to overcome the resistance of the ruling elite, criminalized, cynical and opposed to the people in their interests.
The fundamental reasons for the sharp decline in the competitiveness of the Russian economy lie in the criminalization and degradation of the culture of management. Indeed, if it is not the increase in production efficiency and the qualitative satisfaction of social needs that lead to super profits, but the plundering of enterprises, deception of partners and the elimination of competitors, then what kind of economic development can we talk about? It is not surprising that instead of him, for more than a quarter of a century, we have been witnessing increasing degradation, export of capital, emigration of specialists who cannot find use for their forces, merciless exploitation of the country's natural and human potential, and appropriation of national wealth by criminal structures.
Thus, as a result of the libertarian policy pursued in the Russian economy, an extremely ineffective economic system has developed, inadequate both to the modern laws of economic growth, and to value-semantic motives and stereotypes of behavior of the overwhelming majority of the population. This economic system orients entrepreneurs not to creative socially useful activity, but to the appropriation of someone else's, provoking an endless "war of all against all." It discredits traditional moral values and provokes the criminalization of economic activity. It suppresses the creative energy of citizens, causes their alienation from the state, entails the destruction of scientific and production and the degradation of the country's human potential, a decrease in the competitiveness of the national economy.
But the stage of parasitic appropriation of the socialist inheritance is coming to an end, and the question, which is critical for the development of anti-crisis policy, arises: what spiritual core will guide the economic behavior of people? It is unlikely that the cult of the Golden Calf will become the new religion of our people, the majority of which profess either the reviving Orthodoxy or the communist doctrine. If we proceed from the tendency of the revival of Orthodox self-identification of an increasing part of the population of Russia, in order to model the economic behavior corresponding to it, one should turn to the analysis of the influence of the Orthodox worldview on the motives and limitations of this behavior. As its fundamental basis, you can use the Code of Moral Principles and Rules in Business,developed by a group of scientists and theologians under the auspices of the Moscow Patriarchate of the Russian Orthodox Church and approved by the World Russian People's Council [9]. It is a systemic generalization of the spiritual component of economic behavior regulated by the Russian religious tradition. As it is easy to see, the motive for maximizing profits in them is significantly limited by the requirements of observing the common good: not to allow discrimination against employees, strive for relations of cooperation, mutual assistance, fulfill mutual obligations, and provide social guarantees.not to allow discrimination against workers, strive for relations of cooperation, mutual assistance, fulfill mutual obligations, and provide social guarantees.not to allow discrimination against workers, strive for relations of cooperation, mutual assistance, fulfill mutual obligations, and provide social guarantees.
The spiritual core of economic behavior, corresponding to the Russian ideological tradition, is fundamentally different both from the liberal doctrine and from its criminalized embodiment in modern Russian reality. This largely explains the rejection by the overwhelming majority of the Russian people of the ultraliberal, libertarian "market reforms" that legalized immoral and, to a large extent, criminal forms of enrichment at the expense of the appropriation of someone else's. The overwhelming majority of Russian citizens refused a ticket to the “market paradise”, selling privatization vouchers for a pittance and not being tempted by the promises of “people's” capitalism. They did this not out of thoughtlessness, but out of rejection of the methods of enrichment proposed by liberal reformers at the expense of appropriation of state property.
The Russian spiritual tradition is filled with meaningful meaning, the most important components of which are creative activity for the common good, the embodiment of the principles of truth and justice. The doctrine of vulgar liberalism brought in from abroad and enthusiastically picked up by oligarchs and corrupt officials contradicts this tradition at the root. Society does not accept both thieves' methods of enrichment, and mockingly low wages, an oligarchic bacchanalia of persons close to the authorities against the background of mass poverty of the working population. The consequence of this dissonance of the spiritual tradition rooted in the public consciousness and everyday practice has become epidemics of socially conditioned diseases, a sharp drop in life expectancy, an abnormally high level of crime and mental disorders.
There are two ways to resolve the contradiction between spiritual tradition and practice. Either the spiritual tradition will be broken by the dominant economic practice, or the latter will be brought in line with the spiritual tradition.
In the first case, the substitution of the above moral principles of management by the cult of the Golden Calf with its characteristic war of all against all, social irresponsibility, the dominance of immoral and criminal methods of enrichment at the expense of the appropriation of someone else's will end. Examples of this kind of stereotypes of economic behavior are provided by underdeveloped countries in Africa and Latin America, with their characteristic low efficiency of both market mechanisms and institutions of state regulation affected by corruption. In this case, Russia will face further demoralization and degeneration of the population, degradation of production potential, transformation of the economy into a raw material colony of more developed countries.
In the second case, it is possible to build an effective economic system that works on the creative motivation of tens of millions of educated able-bodied citizens. At the same time, in the context of the transition of the world economy to an innovative path of development and the dominant importance of scientific and technological progress as the main engine of economic growth, the specificity of the Russian spiritual tradition gives fundamental competitive advantages. First of all, these are the dominance of the spiritual over the material, characteristic of Russian culture, the search for truth, craving for creativity and the ability to collective intellectual work. These qualities meet the challenges of the modern knowledge economy in the best possible way, in which the basis for success is the ability to create and master the latest breakthrough technologies. The scientific and intellectual potential that remains in the country can become the basis for the rapid growth of the Russian economy if favorable conditions for its activation are created. For this, an appropriate socio-economic policy should be pursued, focused on enhancing the existing comparative advantages of the national economy.
The gap between the dominant management style and generally accepted moral values entails a decline in management efficiency in both the public and private sectors. To build an effective economic system, working on the creative motivation of tens of millions of educated able-bodied citizens, it is necessary to bring the dominant economic practice in line with spiritual tradition.
As has been repeatedly mentioned above, entering the trajectory of sustainable economic growth and the welfare of society is possible only on the basis of a multiple increase in innovation and investment activity, a radical improvement in the quality of government regulation, and the rise of labor, creative and entrepreneurial energy of people. For this, the socio-economic policy pursued in Russia must have a certain spiritual core, corresponding to the national cultural tradition. At the very least, this policy should be meaningful and understandable to citizens, focused on achieving the socially significant goals they share. The activation of the intellectual potential of the country presupposes the formation of an appropriate moral climate. A sense of the correctness of the social structure is of fundamental importance for a Russian person,its compliance with the concepts of justice, rationality, expediency. Without restoring justice in the distribution of national wealth and income, overcoming the corruption of state power, and cleansing the economy of organized crime, a new economic upsurge will not be possible.
To build an effective system of economic management, corresponding to the spiritual tradition and moral values adopted in Russian culture, the fundamental principles of state socio-economic policy must be revised. Including in economic policy, it is necessary to abandon market fundamentalism, in personnel policy - from mutual responsibility and nepotism, and in management practice - from the cult of permissiveness and self-enrichment. The norms of social justice that are key for Russian culture in the distribution of national income and wealth must be restored. In particular, this means:
- revision of the results of privatization with the cancellation of illegal transactions and payment of a progressive compensation tax proportional to the increase in the market capitalization of privatized property at the time of its transfer to the secondary market
- restoration of pre-reform savings of citizens;
- the transition to a flexible monetary policy focused on the needs of the economy in long-term lending for the development of production, maintaining high innovation and investment activity;
- pursuing a tough antimonopoly policy, dramatically increasing the efficiency of state-controlled natural monopolies;
- restoration of the progressive scale of income tax;
- bringing the minimum wage in line with the real living wage;
- the transition to normative planning of social expenditures based on generally accepted standards in developed countries and national traditions;
- ensuring the rights of citizens to free higher education;
- return to public ownership of natural resources;
- introduction of a mechanism for rational use of natural resources with a scientifically grounded system of penalties for environmental pollution and the withdrawal of natural rent into the state revenue;
- the introduction of personal responsibility of officials for the proper performance of their duties, including the right of every citizen to seek the resignation of dishonest officials in court;
- the introduction of political responsibility of the federal executive power for the standard of living of the people.
Of course, the implementation of these principles will require political will and a consistent policy of following public interests, which the oligarchic-bureaucratic symbiosis, which has grown up on permissiveness, will resist with all its might. Overcoming such resistance is impossible without involving citizens in the processes of managing the economy and the state, restoring their electoral rights, implementing democratic forms of political structure and creating mechanisms for the responsibility of the authorities to society.
As a result of the inconsistency of the libertarian policy pursued with the fundamental values of Russian culture, the values of justice, rationality and expediency, the reaction of the people to the plundering of the country and the monstrous injustice of the socio-economic system that developed as a result of the "liberal reforms" was general drunkenness, drug addiction among young people, a sharp increase in the level of crime and suicide. People prefer to get drunk than to agree to low-paid work to enrich the new Russians who have appropriated the property of the whole people. Tens of millions of educated and qualified people found themselves on the social bottom, having lost the meaning of their existence.
The economic system that has developed in Russia is hopeless. Its preservation dooms the country to endless internal conflicts and external dependence, society to degradation, and the people to extinction. To avoid this, cardinal changes are needed in the entire complex of economic relations and state economic policy. These changes should bring the economic system in line with both traditional moral values, activating the "human factor", and with the laws of modern economic growth, activating scientific, production and intellectual potential. The possibility of solving such a problem is determined by the factthat the moral values and stereotypes of entrepreneurial behavior traditionally inherent in Russian culture of management correspond to the requirements and conditions of modern economic growth. The scientific and intellectual potential that remains in the country can become the basis for the rapid growth of the Russian economy if favorable conditions for its activation are created.
[1] The political dimension of the world financial crises / Ed. V. Yakunin, S. Sulakshin, I. Orlova. Center for Problem Analysis and Public Administration Design. The Age of Globalization. 2013. Issue No. 2 (12).
[2] Simon HA Administrative Behavior. - NY: Macmillan Co, 1947.
[3] Glazyev S. Lessons of the next Russian revolution: the collapse of the liberal utopia and the chance for an economic miracle. M.: Economic newspaper, 2011.
[4] Glazyev S. Lessons of the next Russian revolution: the collapse of the liberal utopia and the chance for an economic miracle. M.: Economic newspaper, 2011.
[5] Otyrba A., Kobyakov A. How to win in financial wars. Almanac "However". June-July 2014 No. 174.
[6] See: Starikov N. Crisis: how it is done. St. Petersburg: Peter, 2010; investigation film "Insiders" ("Inside job", 2010).
[7] Analysis of the privatization of state property in the Russian Federation for the period 1993-2003 / Report of the Accounts Chamber. M., 2004.
[8] Fedosov E. The innovative way of development as the main global trend // Bulletin of the Russian Academy of Sciences. 2006. No. 9.
[9] "Code of ethical principles and rules in business management." The final document of the VIII World Russian People's Council. Adopted at the final plenary session of the Council on February 5, 2004.