Trajectories of Economic Transformations. Lessons from 2004 for 2024 and Beyond. Valery Kushlin

richest 20 countries are now 37 times higher than in the poorest 20. That gap has doubled over the past 40 years, largely due to slow growth in the poorest countries. Similar phenomena of deepening inequality can be observed within many countries. An increasingly serious destructive factor is conflict situations have become more frequent. In the 1990s, more than half of the poorest countries were involved in conflicts, mostly civil conflicts. The result has been enormous losses, reversing the elements of progress and leaving a legacy of destruction and mistrust that undermines future opportunities. The relationship between nature and society has sharply deteriorated. Air pollution has reached critical proportions in many countries. Freshwater scarcity is increasing, with a third of the world’s population living in countries that already experience some or significant water scarcity. Since the early 1950s, nearly 2 million hectares of land (23% of the world’s arable and grazing land, forests, and wetlands) have been degraded. Deforestation of the land is proceeding at a significant rate (for example, since 1960, a fifth of all tropical forests have been destroyed). In many ways, there is a loss of biodiversity.5

      Of course, these and many other problems did not come to the fore all at once. It is rather difficult to name the specific years of their crisis escalation, just as it is impossible to record the exact years when major corrective steps were initiated by governments or international organizations. It should be noted, however, that the period of heightened concern in the world about new problems coincided with the maturation and unfolding of fundamental transformations of economic systems in several developing countries and countries that have for some time been called countries with economies in transition. It can be argued that active actions on the part of the institutions of the international community to overcome the aggravated problems were asymmetrical, they acquired the character of correcting the situation mainly among those who did not get into the “mainstream,” who lagged the leaders in the field of technological progress and social development.

      Russia and the other countries that made up the socialist system were among the first in the world to identify the most obvious economic contradictions. They manifested themselves in relief in the crisis of the extensive path of economic development, the inability to turn from which to a more adequate path of intensive type of expanded reproduction became a stumbling block for the countries of the Soviet bloc. And it is no coincidence that since the mid-1970s, in the USSR (and in Russia, which structured this union), in other socialist countries, there is talk of the dangers associated with a slowdown in economic growth. Table 1.1 shows that between 1980 and 1990, Russia’s already less impressive share of world GDP (compared, for example, with the United States or Japan) fell to 2.7%. The share of the other leading countries of the Eastern European bloc in world GDP fell to less than 1% in 1990.

      Looking at the table, we notice while there was a slight decrease in the quota in the production of world GDP also in the United States and Japan. The shares of China and India also declined slightly during this period, but in the following years there was a steady increase in the economic weight of these countries.

      The contradictory course of events in the economies of the socialist countries is very clearly illustrated by the parameters of exports and imports. Table 1.2 shows that in 1980—1990 the average annual growth rates of exports and imports in the transition economies6 fell to symbolic values of 0.9 and 1.5%, respectively. At the same time, when considering three consecutive periods (1960—1970, 1970—1980, and 1980—1990), the nature of the dynamics of the average annual growth rate of exports and imports in transition economies is identical to those in developed and developing countries. However, the decline in the average annual growth rate of exports from 17.6% in the 1970s and 1980s to 0.9% in the 1980s and 1990s was egregious.

      Table 1.3 shows how rapidly the share of transition economies, especially Eastern Europe, in world exports declined in the period after 1970.

      In the context of the obvious aggravation of the problem of efficiency in the economies of the socialist countries, the decrease in their economic weight in the world economy and considering the increased desire among the elites of these countries to change the situation as quickly as possible, the active transformations of the economy that have begun here have become the center of the global search for new solutions. The conceptual dominant in transformation programs has been reduced to the formation and stimulation of market entrepreneurial forces on the model of the United States and other highly developed Western countries.

      Transformations as systemic transformations in the economy and state structure unfolded differently in different countries and regions. In some places, for example, in Poland or the Soviet Baltic republics, political processes and demands came to the fore, followed only by radical economic reforms. In other cases, as in Hungary, for example, the process of economic reforms in the market direction was far advanced in the depths of the past, socialist system, and developed primarily in an evolutionary way. And in a completely evolutionary way, without the destruction of the political system, transformations developed in China. One way or another, the main content and motive of transformations and reforms was the formation of a market economy as a basis for familiarization with the values and lifestyle of highly developed countries of the West.

      The totality of transformation processes in post-socialist countries appears to the observer, who undertakes to comprehend them, as a socio-political shift, which has no analogues in history. Nevertheless, the researcher must be able to rise above the abyss of events, otherwise the vector of objectivity will be lost.

      Overcoming the euphoria inherent in the start of market reforms, it is impossible not to admit that the transformations that have unfolded in the post-socialist part of the world combine contradictory qualities: the uniqueness of the scope, on the one hand, and conceptual traditionalism, on the other. Indeed, the spatial scale of these transformations is impressive: they encompass at least a fifth of the Earth. They have begun to be implemented on the principle of almost instantaneous changes in the previous economic system, but, except for nuances, they are proceeding in different countries according to an almost uniform scenario in conceptual terms. In essence, transformations appear to be revolutionary only for the countries where they take place, and in a broader sense they are more than evolutionary, since they work by design, not to destroy, but to strengthen the prevailing traditional economic system.

      Recognition of this conclusion has serious methodological significance for understanding the origins and driving forces of transformations in post-socialist countries. They are initiated and moved not only by the contradictions that have accumulated within the socialist system, but to no less extent by the approach of a deadlock in the evolution of the highly developed world along the traditional trajectory.

      “The order formed in the post-war years, the ‘order of the 20th century,’ is being destroyed all over the planet, and not only in the former Soviet Union,” the outstanding thinker Nikita N. Moiseev remarked shortly before his death. “And our Russian conception of the future, and above all of the future of Russia, cannot be at all correct if we begin to regard the national internal crisis only as our own, outside of those general processes of global development that clearly testify to the general planetary ill-being.”7

      This global malaise prompts the highly developed countries – the most active and powerful part of the world – to use all means to overcome the emerging contradictions based on their understanding of “progress.” And far from a secondary place among the actions taken is given to the use of the processes of purposeful adaptation of the space of the post-socialist countries – a space that was not previously part of their direct influence –

5

World Development Report 2003: Sustainable Development in a Dynamic World – Transforming Institutions, Growth, and Quality of Life. Moscow, Ves Mir Publ., 2003. P. 2—3.

6

The use of the concept of “countries with economies in transition” in relation to the periods before 1990 is very conditional and is permissible only in view of the subsequent transformation processes in the socialist countries. According to the IMF methodology, the transition economies usually include the republics of the former USSR and Yugoslavia, Bulgaria, Hungary, Poland, Slovakia, Romania, the Czech Republic, and Mongolia.

7

Moiseyev N. N. How far until tomorrow… Free thoughts. 1917—1993. Moscow, MNEPU Publ., 1997. P. 251.