Governance and Problem Analysis Center V.I. Yakunin, V.E. Bagdasaryan, S.S. Sulakshin Economic Policy Ideology Moscow Nauchnyi expert 2009 УДК 330.8:338.22(470+571) ББК 65.02:65.9(2 Рос)-1 Я 49 V.I. Yakunin, V.E. Bagdasaryan, S.S. Sulakshin Economic Policy Ideology. Monograph — М.: Nauchnyi expert, 2009. — 256 p. ISBN 978-5-91290-044-0 h e present study summarizes the results of an interdisciplinary research which dei ned the outline of a new nationally-minded ideology of Russia’s eco- nomic policy. By introducing the category of “value” in the economic discourse, the authors formulate a methodologically new approach to analyzing economic phenomena and the government economic policy. A new ideology is formed in the context of the world philosophical and economic thought. h e study extensively analyzes theory and practice of liberal and neoliberal concepts, pay- ing particular attention to the monetarist trend in the economic theory. h e idea of the market’s self-regulatory ability being absolute is demonstrated to be an ideological myth. Evaluating criteria and international ratings for national economies’ economic development are proved to be non-universal and biased. h e study examines the Russian reforms of the 1990s in the context of world economic trends and the reforming experience in transition economies. Func- tions of a modern state in managing economic processes are dei ned. Proposed ideas are coni rmed by a wide range of historical examples and statistics. Translated from “Идеология экономической политики: проблема российского выбора”, М.: Научный эксперт, 2008. © Governance and Problem Analysis Center, 2009 All rights reserved. No part of this book may be reproduced in any form without writ- ten permission from the publisher, Governance and Problem Analysis Center. Table of contents Preface ........................................................................................................ 7 Chapter One Economic And Philosophical Strategy Considerations ..............................................................12 1.1. Epistemological foundations of economic theories .........................12 1.2. h e ethical paradigm of economics ................................................... 18 1.3. h e abstract notion of “economic man” ............................................ 20 1.4. h e value-oriented goal of economic strategies: a new methodological concept ......................................................................23 1.5. Implementation of long-term programs as a proof of economic processes’ knowability .................................................. 31 1.6. Strategies of the modern economic history ...................................... 36 1.7. Concerning one problem of the methodology of scientii c and expert analysis .............................................................................. 38 Chapter Two h e Myth About the Market Being Absolutely Self-regulated ............................................................49 2.1. h e world-view context of the genesis of the self-regulated market theory .......................................................................................49 2.2. What does this have to do with liberalism? h e historical genesis of the market economy ..........................................................52 2.3. Free market as a deviation in the history of economics. h e case of Africa .................................................................................55 2.4. An anti-market deviation: the experience of the Communist economy ................................................................................................ 57 2.5. h e synergic system of the market economy ....................................59 2.6. A metaphysical market and a real market .........................................61 3 2.7. h e challenge of TNCs .........................................................................64 2.8. Causative relationship between economic freedoms and development ..................................................................................65 2.9. h e market’s functional limitations ....................................................73 Chapter h ree Dead-ends of Monetarism...........................................................80 3.1. Monetarism in the world economics .................................................81 3.2. h e danger of a global crisis of the world economy .........................87 3.3. h e monetarist vanguard: scientii c analysis of the international monetary fund ...................................................90 3.4. Latin America as a monetarist testing ground ................................. 92 3.5. Failures of monetarist policies in the west ......................................101 3.6. h e new “miracle” of the japanese economy: neoliberalism as a factor of stagnation .................................................................... 106 3.7. Monetarism and the “new world order” ..........................................110 Chapter Four Foreign Economists About Russian Economic Reforms .......................................................................112 4.1. Open letters from by the world’s leading economist to Soviet and Russian leaders ........................................................................... 112 4.2. Joseph Stiglitz: Russian reform in the Neo-Keynesian discourse ............................................................................................. 117 4.3. Kenneth Arrow: “Shock therapy” policy in the theory of economic expectations ................................................................. 119 4.4. Lawrence Klein: “Polarization”of the Russian reform’s model ....................................................................................120 4.5. Michael Intriligator: h e “ICG” approach versus the “SLP” approach .............................................................................................. 121 4.6. Lynn Turgeon and Jacques Sapir about reformer’s inl ation phobia .................................................................................................. 123 4 4.7. James Galbraith: Russian reforms in the institutionalist discourse ............................................................................................. 125 4.8. Peter Reddaway on the IMF universalistic recommendations .............................................................................. 127 4.9. Lyndon LaRouche: Russian reforms in the theory of “physical economy” ............................................................................................ 128 4.10. Marshall Pomer about “open” economy ........................................129 4.11. h e Russian reforms: key assessment by foreign experts ............130 4.12. Neoliberal orthodoxy in Eastern Europe ...................................... 133 Chapter Five h e Government’s Role in Managing Economic Development ..................................................................................136 5.1. Intervention and non-intervention in economics in the theory of the civilization pendulum .....................................136 5.2. Traditions of state intervention in economy in the United States ............................................................................137 5.3. Western Europe: democratic regimes ..............................................142 5.4. Keynesian transformation in contemporary states ........................142 5.5. h e modern tendency to increase the role of the government..... 154 Chapter Six Stimulated economic development .......................................158 6.1. Stimulating development as a method of government management of economy ..................................................................159 6.2. Tax and credit stimulation................................................................. 164 6.3. Government regulation and stimulation on the labor market, in the energy sector, and in innovations .......................... 167 6.4. Environment protection as a factor of development ..................... 173 6.5. A “subsidiary” sector: stimulated development of agriculture .....174 5 Chapter Seven Comparative Analysis of Transition Economies in Various Countries and Historical Periods and of Russia’s Economic Development ..............179 7.1. h e phenomenon of a transition economy .....................................179 7.2. h e heritage of the socialist economy: destroy or reform? ........... 182 7.3. h e East European model of transition economy: the monetarist prescription of “shock therapy” .............................185 7.4. h e Chinese model of transition economy: tradition-based modernization .................................................................................... 194 7.5. h e Belarusian experience ................................................................ 202 Chapter Eight Russia’s economy in the world: a clarii cation of position ..........................................................211 8.1. Using GDP as a reference: the problem of accuracy ......................211 8.2. International indices as a propaganda tool: investment-mongering ratings .........................................................217 8.3. h e civilizational relativity of economic success ............................223 At erword .........................................................................................................226 Bibliography ...................................................................................................233