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

national economy and “overcoming technocratic approaches” in the economy. This, on the one hand, served to further deaden production investments in the unfinished construction of facilities of the technological level the day before yesterday, and on the other hand, prepared the conditions for a serious imbalance of supply and demand in the consumer market due to a sharp decline in the receipt of consumer goods (-10 billion rubles), accompanied by an increase (uncovered by resources) of cash income in the investment sector.

      Another concentration of imbalances was 1988, when the growth of monetary incomes of the population increased by 2.5 times, and the output of consumer goods by 6.4%, but if we do not consider alcoholic beverages, then only by 5%. The state budget deficit reached a record level (81 billion rubles), having increased by 5.8 times compared to 1985. In 1988, there were high absolute increases in GNP (50 billion rubles against 26 billion rubles in 1987) and produced national income (31 against 12 billion). But there were no adequate increases in the physical quantities of the product behind this.

      The dynamics of production in physical terms for the most important items of the nomenclature of industrial products considered in monthly reporting (158 items) is characteristic. If in 1986 there was a steady growth, and in 1987 a decrease in output affected a part of the products, mainly mechanical engineering, then in 1988 there was a decline in the production of every fifth type of product, and in 1989 – almost half of its most important types. The year 1988 was a springboard of inflation and economic anarchism, which was caused by unsuccessful laws on enterprise and cooperation, and the ill-considered breakdown of the old state structures. A huge destructive impact was exerted by the rapid removal of the previously existing distinction between cash and non-cash money turnover. All this has created space for the egoistic aspirations of the leaders of enterprises and cooperatives, the speculative elements, who are the most dexterous in redistributive actions.

      In 1990—1991, the logic of events, prompted by the pressure of the concepts of economic romanticism and populism, led to a state of the national economy that can be characterized as close to collapse. In 1990, there was an abrupt shift from a positive to a negative trajectory in the production of GNP and national income. The imbalance of economic relations of almost all enterprises has exceeded the critically permissible level. The economic efficiency of the development of the material and technical base of the national economy has become not just declining, but negative.

      One of the serious reasons for all this is the tendency towards the destruction of statehood. The economic reality that took shape in 1989—1991 became a synthesis of the worst features inherent in both the centralized model of management (its cumbersomeness, multiplied by the elimination of almost all incentives for power coercion) and the market mode of interaction (atomism, which develops into anarchy, the barter-speculative nature of relations, and the monopoly of the seller in relation to the buyer).22

      The author of the article mentioned in the footnote noted that the contradictions that became the subject of the analysis stemmed from the fact that “the main landmarks of reforms were the forms, not the content, of economic development. The objective criterion of progress, which is limited to the dynamics of the productive forces of society and the satisfaction of the material and spiritual needs of the population, has been lost.”

      Exploring Alternative Paths of Transformation

      The Soviet Union and its national economic complex collapsed (if we single out purely economic reasons for this) precisely because of the loss of sources for the sustainable implementation of the process of expanded reproduction of its economy. Extensive sources of reproduction were exhausted, and intensive factors could not be used because they were concentrated in the “non-economic” defense sector of the economy.

      There is no doubt that the economies of Russia and other countries of the former USSR were to undergo radical transformations. What kind of transformations would be optimal?

      At that time, the most active part of the initiators of the transformations had no doubts that it was necessary to quickly form a market-type economy, the prototype of which was the economic models of the most developed Western countries. At the same time, theoretical positions that were based on the belief in the possibility of socialist principles of economic management, if they could be implemented in some form “cleansed” of the negativity of Soviet practice, also remained widespread. They, however, were “on the defensive” and increasingly retreated under the pressure of the radical market direction of reforms. It must be admitted that the direction of reforms towards the development of market relations was absolutely justified in principle. But this does not mean that there was no alternative to the specific paths of reform chosen.

      Today, from the standpoint of the experience gained on the path of contradictory market transformations, it is becoming more and more obvious that ideological approaches are an extremely unreliable background for the choice of state decisions. The old communist ideology was a brake on effective entrepreneurial behavior in the economy, and, therefore, a brake on ensuring the country’s highly competitive position. But then a new ideology rose to the Olympus – the primacy of market individualism, and it proved to be intolerant of other approaches and aggressive. With unusual peremptoriness, decisions and proposals that did not correspond to the new ideology were labeled as “non-progressive”, “non-market”, and “conservative”, which was enough to remove them from consideration without delving into the content from the point of view of economic performance.

      Was it then possible to carry out effective transformations without completely rejecting the signs of socialism, but, on the contrary, deriving certain advantages from them? It is hardly possible to answer this question today. Reasoning in the style of the subjunctive mood is always insidious. But it would also be a mistake to abandon any analysis of possible variants of socio-economic systems with components of relations of the socialist type.

      Socialist and communist principles, which have been greatly discredited by the practice of the USSR, cannot simply be destroyed by some other ideology as fundamental values that attract many people. There is no reason to believe that they will not be in demand again and again by humanity in some respects in the future. Nikolai Berdyaev, one of the first and most profound critics of the model of socialism that developed in Russia after the October Revolution, remarked that “the movement towards socialism, understood in a broad, non-doctrinaire sense, is a world phenomenon” and that “it is not for the defenders of capitalism to denounce the falsehood of communism.”23 It is no coincidence that many ideas and principles of communism coincide with the universally recognized principles of decent human behavior, which are enshrined in the dogmas of the world’s major religions.

      The recent deterioration of relations between the countries of the world in claims to limited natural resources and the inevitable disillusionment with the models of absolute individualism on which Western prosperity was nurtured, has brought many thinkers back to the values of collectivism. An additional argument is the steady dynamism of economic development in China, a country where socialist principles continue to color the entire system of social relations while at the same time actively spreading creative market mechanisms.

      Unambiguous answers to the question of which model of economic and political system will be acceptable to the entire world community can hardly be found now. But the fact that this model will not be purely capitalist in the Western version in the foreseeable future is already recognized as true by objectively thinking researchers. The search for answers in terms of combining the motivations of market individualism and socialist collectivism will inevitably continue.

      Chapter 4. Radical Reforms: Concepts, Consequences, Challenges

      The idea of radical reforms, which set the tone for the transformation of the economic system in Russia, was the result of a collective awareness of the need to give

22

Kushlin V. The State in the Economy: Yesterday, Today, Tomorrow // Planned Economy. 1991. No. 6. Pp. 5—6.

23

Berdyaev N. A. The Origins and Meaning of Russian Communism. Moscow, Nauka Publ., 1990. Pp. 126, 150.