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

of the transformations carried out.

      In some cases, the external factors of transformation in Russia have played a rather insidious role. This is especially true of the group of factors that was conditioned by the special economic and political interests of highly developed countries and their large economic entities, which were laid down (sometimes explicitly, but more often covertly) in various kinds of recommendations regarding reforms to Russia, in the loans granted, in foreign economic transactions, and so on.

      At the same time, I would like to unequivocally note that the negativity resulting from this circumstance in the form of losses and ineffective outcomes for Russia cannot be presented as an accusation against our foreign partners. These partners deserve respect as truly sensible economic and political actors who pursue their policies and persistently build them in accordance with their own economic interests. It would be strange for a country (or a firm) that has long lived under capitalist competition if it cared more about Russia’s interests or its own “universal values” than about its own interests in the course of its behavior.

      Accusations should be brought against us, for all citizens of the country for the frivolity inherent in the advanced elite, for the lack of qualifications and experience of our leaders and businessmen, for tolerance in society towards those who managed to take advantage of the confusion to organize “trade” in the interests of the nation for their own selfish purposes. If society was to accept the realities of market relations, it should have demanded that the elite and the government develop immunity from the behavior of Russia and its representatives in external relations as a weak, dependent partner. The market has never nurtured the weak, it must, by definition, subordinate them to the strong or destroy them altogether.

      The long period of peaceful coexistence of countries with different political systems and levels of development and the absence of major conflicts have led to illusions about the harmony of their relations. Therefore, at the start of market reforms in Russia, many people had the idea that, for example, the West was asleep and saw the longed-for future, when Russia, after the completion of the transformation of socialism into capitalism, would join a friendly alliance of highly developed countries as a more powerful force than before. For some reason, it did not occur to the relevant conceptualists that this idea was, to put it mildly, illogical, inconsistent with the normal psychology of capitalist competition.

      Over the years of peaceful coexistence and subsequent globalization, the competitive principles of economic and political relations in the world have not weakened but have become more strategic. The intensity of competition has increased due to the sharp increase in per capita consumption of energy resources in highly developed and medium-sized countries and the perception that these resources are finite. In addition, there are significant technological opportunities for those with financial and intellectual advantages to influence the positions of competitors by initiating deliberate crises. Such attempts have become almost the norm of behavior of the powerful of this world.

      The Western countries had powerful motivations to weaken and liquidate the socialist camp led by the USSR and its economic system. After all, it was the main economic and political competitor at that time. The ideological component helped the West to accomplish this task, since the communist (socialist) system was already presented in the eyes of the mass philistine as the main concentration of “uncivilizedness,” as an “evil empire,” and so on. Subsequently, it became clear to many that the goal of suppressing communism as such was secondary, not the most important. Communism as an ideology was no longer dangerous for the developed West. In fact, the task of suppressing our country, as the main center of economic competition and military rivalry at that time, was of fundamental importance. Another aspect of this orientation of the West’s policy was the prospect of advantageous access to the rich resource base of the USSR.

      The fact that one country has benefited the most from this – the United States, which has turned from just the leader of the West into the only superpower in the world – did not immediately become obvious. But with the passage of time, it has become apparent that the world is entering a new era of fierce competition. This was especially evident after several global and local financial crises initiated by transnational corporations, and as the formation of serious centers of opposition to American financial and economic hegemony in Europe and then in Asia. The euro has become an obvious competitor to the U.S. dollar as a world currency. From time to time, the Japanese yen and even a hypothetical Asian currency based on the Chinese yuan indicated themselves in the same capacity.

      Thus, today there are enough grounds to isolate the real meaning of the interests of those circles that were the most active conductors of the ideas underlying the Western options for the transformation of the economy in Russia and in other post-socialist countries. The conceptual limitations of these options will be discussed in later sections of the book. At this point, it is necessary to emphasize the conclusion that these external impulses for the transformation of the economic and political system carried a significant share of deliberately destructive components in terms of their impact on Russia’s productive forces and competitiveness.

      Shifting Internal Forces Driving Change

      The noted impact of the external contour has had a significant impact on the structure of the internal driving forces of the transformation of the economic system in Russia. In the structure of the interests of our society, the interests of small but powerful groups of people have taken an undue place due to economic support from the outside. The real interests of the entire Russian society were largely crushed by the force of special economic interests emanating from the milieu of pseudo-entrepreneurs. which arose on a special soil, which was a mixture of the “Komsomol” and semi-criminal mentality. Moreover, such a specific entrepreneurship began to gain ground in business at a time when effective institutions of normal market relations simply could not yet appear within our country.

      The initially formed structure of economic interests strongly influenced the further change of institutions in the country. The vector of these interests was determined by two major components: first, the emergence of the interests of the shadow economy with a criminal orientation of the owners of this capital, and second, the emergence of a layer of enterprising people who quickly got their bearings in the new situation and managed to find themselves on the crest of privatization of the most lucrative parts of the national wealth in the context of the “denationalization” of the economy. Among this last group, there were unions of nomenclature figures of the former system with initiative people from the scientific and creative environment. Some representatives of the former Komsomol apparatus turned out to be especially active in the field of not quite pure privatization.

      These structural groups, merged in their mercenary motivations with the interests of external forces to weaken the economic potential of the former Soviet bloc, set the tone for major changes in state and public institutions in Russia and many other countries. Under their decisive influence, the political and economic system of the country was formed, and the new state machine, in turn, began to serve its creators to an increasing extent.

      Many researchers who have observed the processes of institutional transformations in Russia have believed that the initial distribution of ownership of capital in the implementation of reforms is important only in the sense that it must correspond to the private capitalist principle and be based on individualistic motivation. The expectation was that, in accordance with Coase’s theorem, after a while all possible injustices of the primitive accumulation of capital would be eliminated by themselves.

      Indeed, Coase’s theorem in its original version states the following: “The redistribution of property rights takes place on the basis of a market mechanism and leads to an increase in the value of the products produced,” hence “the final result of the redistribution of property rights does not depend on a legal decision [regarding the original specification of property rights]”13. However, it should be borne in mind

13

Coase R. The Firm, the Market, and the Law. Chicago: The University of Chicago Press, 1988. Р. 115, 158.