The Anglo-Saxon world is overcoming the crisis with difficulty, because it has been paying hypertrophied attention to the financial sector, which in the past thirty years has gone from being the assistant of the real economy to being its master. Many countries are already starting to realize this, but they are finding it very difficult to limit the monopoly of financial oligarchs.
On March 26-27 Lomonosov Moscow State University hosted the Moscow Economic Forum-2014, which focused on Russia’s future outside of energy. The forum was primarily aimed at searching for and analyzing alternatives to the resource-dependent model of the Russian economy; presenting projects on the development of non-raw materials economic sectors; drafting proposals to develop a new economy that would be based on non-energy production, modern technology and human potential; analyzing ways of ensuring Russia’s leadership and security in the world economy; and consolidating society to implement these alternatives.
On the eve of the forum, Ruslan Grinberg shared his thoughts about the forum and the main problems facing the Russian economy. Grinberg is the Director of the Russian Academy of Sciences’ Institute of Economics, Co-Chairman of the forum’s International Committee and expert of the Valdai International Discussion Club.
Having noted that Russia’s economic policy is sometimes described as rightist-liberal or market fundamentalism, Grinberg said that “there is also an alternative viewpoint that we would like to present.”
At the first forum we tried to understand what was going on and reply to the traditional Russian question of “who is to blame.” This time we are trying to answer another traditional question: “What is to be done?” This is always risky. It is much easier to lay blame on somebody than to say what needs to be done and how to change the economic policy.
Grinberg believes it is possible to say that the market economy has made it in Russia. About 20% of Russians form the middle class, which lives a more or less normal life. In general, this is not much; Russia deserves to have at least half of its people in that category.
Grinberg emphasized that “we want a new economic policy.” He thinks that in the modern world the philosophy of market fundamentalism when a stake on the free market supposedly decides everything else has ceased to exist. But regardless of everything, it still exists in Russia. We have come to the conclusion that we have wasted a lot of time and are continuing to lose it. The problem is that our relatively stable economy is primitive. The structure of our economy does not improve regardless of recession, stagnation or upsurge. This is why we plan to discuss Russia’s non-energy future at the Moscow forum. Does Russia have such a future? “We believe it does. We must look at those countries that have overcome the primitive structure of their economies and have managed, despite their powerful fuel-and-energy sector, to create, by a rational economic policy, an industrial landscape that is not limited to raw materials and fuel but also has highly processed products – ready-made goods. This is exactly what we are short of,” Grinberg explained.
Let me repeat that we are not against the development of the fuel and raw materials sector, Grinberg goes on. Quite the contrary, we believe that it is an asset of our people. The division of profits from this sector is not without its problems, but this is a different story. We do not want to sit and wait, worrying how oil prices will affect our lives and what the dollar-ruble rate will be (again, depending on oil prices). In other words, “on par with the fuel-and-energy future we should also think about Russia’s non-energy future, because the former alone is not enough for the country’s prosperity,” Grinberg says, adding that this could lead us to a blind alley as we cannot compare ourselves with Kuwait or the United Arab Emirates, which have enough oil revenue for everyone.
Grinberg believes that the Anglo-Saxon world is overcoming the crisis with difficulty, because it has been paying hypertrophied attention to the financial sector, which in the past thirty years has gone from being the assistant of the real economy to being its master. Many countries are already starting to realize this, but they are finding it very difficult to limit the monopoly of financial oligarchs. “I’m an opponent of all kinds of conspiracy theories, but I must say that some global financial nomenclature has asserted itself,” he said, and called it “an absolute parasite.”
Speaking about the government Grinberg said that it is taking measures against offshore business and tax evasion and that it “has learned to utter words that were important for us twenty years ago – such as strategic planning, public-private partnership and progressive taxation,” words that just recently were considered abusive. “But I’m aggrieved when I hear that decision-makers in the economy believe that we need private-public rather than public-private partnership. This is not a philological issue but a struggle between two philosophies. We believe that in the current conditions of economic stagnation there is absolutely no alternative to powerful state investment involving private business in the implementation of projects,” Grinberg said.
Speaking about the status of the ruble, Grinberg points out that there are no fundamental reasons for a drop in its exchange rate today, because the country has large currency reserves and good prospects for steadily high oil prices. “In general in turbulent time fuel and energy prices are reliably high, so our positions are protected in many respects,” he said.
Grinberg believes that on the whole Russia’s “safety bag” is diversified development of the domestic economy, which is producing ready-made goods on par with the developed fuel-and-energy sector.