Scientists call the failures of the market economy in Russia

In the Russian Academy of Sciences ended the scientific conference “Results of market transformation of the Russian economy in the years 1991-2016. What’s next?”. Representatives of academia, the expert community, government and business appreciated the results of socio-economic development of Russia in 25 years of market economy. About what the conclusions in the scientific community and how the experience of transformation to use in the current environment, “MK” said one of the organizers of the conference, scientific Director of the Institute of Economics, RAS, corresponding member of Academy of Sciences Ruslan Grinberg.

Scientific Director of the Institute of Economics, RAS, corresponding member of Academy of Sciences Ruslan Grinberg. A frame from the video

— What brought the economy chetvertakova market reform?

— During the conference we noted a number of successful transformations that have occurred over the 25 years. First, overcome the isolation of Russia from the outside world, even despite our geopolitical alienation from the West. Secondly, to dismantle the mechanisms of the command economy and foreign trade monopoly has disappeared humiliating shortages of goods and services, discontinued hypocritical ideological struggle with materialism, establishes the right of the people to comfort, and even luxury, emancipation of the civil initiative of the people. Was created and began to function in the formal institutions of the market economy: commercial banks, commodity and stock markets, currency exchanges. The most important achievement is the development of an entrepreneurial class, but now he is in a sad state. In General, the Russians quickly mastered the market way of thinking, and the idea that the Russians inherent collectivism was wrong.

But, apparently, only positive evaluations, the conference was not limited?

Unfortunately, transformation with a negative sign were more visible and, in our opinion, even prevail over successes. From the market transformation we wanted the pace of economic growth close to developed countries, and ended 25 years of transition by achieving average annual growth rate of 1%. While the average annual rate of inflation, the reduction of which was a constant concern of the authorities was 54%. However, the volume of investments — the main indicator of economic development has not only increased over the years, but even declined, falling 10-15% from that of Soviet Russia in the last years of its existence.

In addition, we did not qualitatively change the structure of production and exports. We have 80% of foreign trade falls on the fuel and raw materials, making the ruble exchange rate is constantly fluctuating, unlike other countries. Another serious defeat — deintellectualization labor, the degradation of the social sphere, setting of systemic reforms, which means the commercialization and self-financing science, education, culture and health. And finally, one of the most important shortcomings — the gap between the classes of the population and the polarization of income, which exceeds even the situation in the US, where it is considered that the poor are to blame for their poverty, and there the gaps have always been large. Our calculations suggest that over the 25 years of transformation, only a quarter of the population have improved their well-being, and half of the population leads a fierce struggle for existence. It would seem that macroeconomic stability, which is all the time supervising the government achieved inflation settled at a record low level: but the improvement of people’s living standards has not occurred.

— The scientific name of the conference contains a question “what to do”. So also need the economy to complete the process of transformation, to mitigate the disadvantages and enhance the advantages?

In the study of the Institute of Economics RAS, we came to the conclusion that the state should be a full and active subject of the market economy, and not just the arbitrator engaged in monitoring compliance with the rules of the game. Because along with the market failures are government failures. To reduce their number, it is necessary to achieve the effectiveness of state investments in enterprises to change its monetary-credit policy, eliminating the volatility of the exchange rate through a combination of foreign exchange interventions and foreign exchange restrictions. The structure of budget expenditure needs to be reallocated in the interests of health, culture, science and education. You need to strive to increase the share of small business in the economy up to 60-70% in developed countries. You must overcome the dysfunction of state governance, the monopoly of the economic environment and bureaucratic arbitrariness, to transform the political system in favour of competition development and establishment of public control over the Executive. And now we have antisocial plutocratic family-clan capitalism, which is far from a healthy market economy.

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