ALTERNATIVE TO ECONOMY BASED ON EXPORTS OF RAW MATERIALS
Upon the initiative of VICTOR BIRYUKOV and with the support of the magazine “Our Power: Deeds and Persons,” the 2nd Roundtable in the series” Diversification of Russia’s economy” was held at the Moscow House of Economist on Tverskaya Street on February 10, 2010.
The keynote address was delivered by Corresponding member of the Russian Academy of Sciences RUSLAN GRINBERG, director of the Institute of Economics at the Russian Academy of Sciences. In addition to expert participants, the meeting was attended by representatives of mass media, the Ministry for Economic Development of the Russian Federation and the Russian Plekhanov Academy of Economics. The complete record of the discussion was published in Russian on VICTOR BIRYUKOV’s website.
In his report titled “Diversification of Russia’s economy: is it a myth or reality?” GRINBERG (PhD, Economics) warned that in five or six years Russia will run out of the scientific and technological potential accumulated by the USSR. Moreover, the crisis has enhanced the primitivization of the economy: the share of manufacturing industry in the overall industrial production is diminishing. And vice versa, other industrial and post-industrial states see “the massive expansion of funds to science and technologies, to fundamental and applied research.” RUSLAN GRINBERG said the industrial policy could be only implemented through direct planning based on physical targets under strict administrative control.
SERGEI ARTOBOLEVSKY, department head at the Institute of Geography of the Russian Academy of Sciences, pointed to the increasing popularity of geography in this country: Emergencies Minister Sergei Shoigu is the president of the Russian Geographical Society, while Prime Minister Vladimir Putin chairs its Board of Guardians. ARTOBOLEVSKY (PhD, Geography) looking into the problem from the viewpoint of regional studies, called not to limit diversification to industrial issues: a town may have various productions with none of them in need for skilled labor force. Therefore it is necessary to pay attention to the professional structure of population. Moreover, in the course of diversification it is necessary to take into account natural trends of every region and not to introduce by force science-intensive productions where, knowingly, there will be nobody to work on them.
Commenting on the idea voiced in the keynote report that historically modernization in Russia had been always carried out with the use of authoritarian methods, Director of the Institute of Globalization Studies MIKHAIL DELYAGIN noted: “Modernization needs no more authoritarianism than we have today… Simply, this authoritarianism is adjusted for corruption. Readjust it and everything will be all right.” Nevertheless, DELYAGIN (PhD, Economics) made a forecast that corruption will in any case lead the country to a systemic crisis. It will happen sooner (if oil and gas prices fall down) or later (if they remain high)” “The period when we guzzle away the heritage of the USSR is entering a critical phase as evidenced by the catastrophe at the Sayano-Shushenskaya hydropower plant.”
Member of the Central Council of the Russian Agrarian Movement VICTOR BIRYUKOV reminded that while the world’s population and living standards are growing, global farmland is shrinking for various reasons. This disproportion has already resulted in the global food crisis that broke out in 2007 and will only deepen in the future. Russia has a unique competitive advantage – its vast unused farmland. “The main guideline of the economy diversification should become the development of these areas so that our country instead of importing food could become its major exporter,” BIRYUKOV concluded and shared with the participants in the Roundtable his own experience of the rise of the meat industry in the Trans-Baikal territory on the basis of an agreement signed with the regional governor, Ravil Geniatulin.
Co-founder of the Yabloko political movement, economist and political writer YURI BOLDYREV expressed confidence that Russia’s main problem is not the degrading of production but rather the degrading of human capital. Therefore, “the objective of diversification should be an increase in human capital.” However, big business influencing the government prevents it from making proper decisions. Whereas in China big business is a result of previous “honest service to the Motherland,” in Russia it is often a result of dishonesty. That is why Russia’s big business is so “scared of order in the state” for fears that a strong state could take back criminally acquired wealth. Meanwhile, the right solution will be the following: “if you seriously want anybody to invest in complex high-tech branches of the economy, you, pardon me, must exclude all possibilities of easier profit-making.” Concerning the global food shortage, BOLDYREV stressed that Russia must produce food itself in spite of the fact that, for example, meat is cheaper in Argentina. Japan grows rice although its production is far cheaper in Thailand and Vietnam.
First Deputy Director General of the Institute of Natural Monopolies’ Problems BULAT NIGMATULIN (PhD, Technologies) claimed that the income of just 1 percent of the population in Russia equals that of all the others. He demanded to establish a regulator “in the form of a progressive scale of taxation of all kinds of income. After such redistribution of funds, GDP will grow by 50% only at the expense of the growth in demand of the poorest. Prof. NIGMATULIN drew attention to the correlation between per capita health care expenses and death rate and life expectancy. The financing at the rate of 4,200 rubles a year is irrelevant. Cancel it at all and neither life expectancy not death rate will change. But when these expenses grow, these indicators start moving toward improvement. Hence, the state financing of health care is the most effective instrument of countering depopulation.
An aide to the speaker of the Federation Council, Corresponding member of the Russian Academy of Agriculture and Vice-president of the Free Economic Society of Russia MIKHAIL KOROBEYNIKOV (PhD, Economics) noted that the political elite itself does not believe in the reality of the proclaimed plans of the economy modernization. He cited an example of “true diversification.” When in the capacity of the Stavropol regional secretary of the Young Communist League (KOMSOMOL) he oversaw the construction of hydropower plants of the Kuban cascade, “we managed to give people jobs, and boosted the crop yield, while our fourth start-up facilities gave water to Kalmykia.” Prof. KOROBEYNIKOV believes today that Russia’s economy should be diversified through the development of tourism, because in this sphere Russia’s potentialities are colossal: “If we develop all this hunting, fishing and sport tourism in our country we will not need oil because these spheres provide quite different possibilities of earning and quite different occupations for the people.”
Professor of the Russian State Humanitarian University ARKADY LIPKIN expressed confidence that in order to carry our diversification in the framework of the authoritarian modernization the will of the top authorities is not enough. It is necessary to gain support from a rather broad segment of the population. This support should not be “purely pragmatic” because historically “such great transformations never occur without a good deal of idealism.” “But where is that large enough segment dissatisfied with what it has and ready to fight for a new system instead of trying to adjust to the existing rotten one?” LIPKIN (PhD, Philosophy) believes that Russia today apparently lacks such segment. In his opinion, the authoritarian modernization can help avoid the primitivization of the economy but it is “inadequate to build an innovative economy.”
Professor of the Moscow Bauman Technical University VICTOR ILYIN (PhD, Philosophy) could not attend the Roundtable. His written message to the event reads in particular that, “The experience of debates at the previous roundtable strengthened my conviction that diversification needs a multidimensional approach: segmentation of property and a wider scope of products of course depend on some specific business and production decisions, but not only on them. It is far more important that by its purpose diversification is intertwined with the general amelioration of the social situation, which demands a greater productive self-realization.”
Summing up the results of the discussion, Corresponding member of the Russian Academy of Sciences RUSLAN GRINBERG presumed that the leaders of the country still believe that the market self-regulation could be successful whereas the free market philosophy is flawed as such. “In my opinion the only way to change the situation is to develop a citizen in oneself, not a subject. That is why when some of us say that we shall not allow ‘ukranization’ of the political life, I think that we must act vice versa,” GRINBERG concluded.
The host of the Roundtable, ALEXANDER NOVIKOV, member of the board of the Free Economic Society of Russia and editor-in-chief of magazine “Our Power: Deeds and Persons,” noted that experts’ debates at the 1st and the 2nd Roundtables have failed to find a common denominator and hence it is important to continue the discussion at the 3rd Roundtable “Diversification of Russia’s Economy” in April 2010.
The 1st Roundtable was held on December 9, 2009. Among other publications, its complete Russian-language record is available on the official website of Victor Biryukov. The keynote address was delivered by Full Member of the Russian Academy of Sciences Victor IVANTER. Taking part in the debate were State Duma’s Committee’s Chairman Yevgeny FYODOROV, Director of the Center for Russia Studies Igor CHUBAIS, President of the All-Russian Association of Privatized and Private Enterprises Grigory TOMCHIN and First Deputy Chairman of Federation Council Commission Nikolai CHURKIN among other experts.