The fact is that the rules of today's economy took shape during the introduction of money in the form of round pieces made of gold alloy, which happened somewhere in the 6th century BC in the kingdom of Lydia. Then a certain amount of gold was placed in each, which predetermined lifespan the entire economic model based on which humanity began to consider gold.
If there is no supply of new gold, then there is nothing to make new ones from. As we see, the collapse of the existing economic model was inherent in it from the very beginning, since today all the rich deposits of gold have already been developed.
After all, from a certain volume of gold it was possible to mint only strictly limited quantity coins, since the gold content of the first coin set a standard that has become a tradition. That's why people began to think: you have exactly as much money as you get by dividing the available gold by the nominal weight of gold contained in the first coin. After all, so many full-fledged coins can be made from this volume of gold.
Since the volume of mined gold is still limited, there is no way to produce enough money (in the sense of gold coins) to service the trade turnover, which has increased many times over. Paper has long been used as a material for carrying money, and by the middle of the 20th century, gold coins were withdrawn from circulation, as state banks of all countries switched to paper banknotes. Replacing gold with paper, in addition to making the production of monetary units cheaper, finally made it possible to print as much money as the economy needed. But the gold that now lies in bank vaults has again become what it always was - a rare yellow metal.
It took several “world crises”, 2 world wars for everyone to understand that it was necessary to abandon the gold standard, which began with the creation of the Bretton Woods system, when gold was replaced by the dollar, and in 1971 there was a complete abandonment of gold as money .
However, even today many live in the illusion that they can mint as many gold coins as they want with the same gold content as in the first coin - and start the game anew, although even the abandonment of gold and the transition of states to paper money, which can be printed without restrictions - showed that today it is no longer about money, but the whole model needs to be changed.
It turned out that you can only escape once, but you cannot break the patterns. Those rules of the game of money that developed during the invention of gold coins are now returning humanity to the level of development that it should have been without the “era of growth” that was capitalism. And judging by everything, where the regression may stop for a while will be the level of the first half of the 20th century. GLOBAL FINANCIAL AND ECONOMIC CRISISAttention!, as well as online, have been transferred to the page. This page is a summary for the category World crisis. to go to sections and to the theme of the crisis you will find after a short introduction. For further growth, we need to abandon the old rules of the game and change the entire economic model, and not look for new types of money. There is no longer an opportunity to spur the old model, since the negative consequences of stimulating economic growth outweigh all the benefits. For the emergence of new demand and, accordingly, a new round of scientific and technological progress - somewhere you need to create a system of division of labor that exceeds the current level, but neither the elites (politicians) nor the people living in old ideas about nation states are ready for THIS.
CAUSES OF THE WORLD ECONOMIC CRISISA shortage of money paralyzes production, which is not designed to decrease. Manufacturers, in the fight for impoverished customers, are forced to reduce the cost of goods, which, coupled with a shortage of money, generates deflation in the form of an increase in the price of consumer money. In the end, a series of bankruptcies of enterprises begins as excess production capacity. Bankruptcies immediately cause difficulties in the banking sector, dragging the world economy and the financial sector into a contraction spiral. Well-established economic ties are collapsing, causing a shortage of goods in the domestic markets of countries, which states are trying to compensate for by creating import-substituting industries.
The narrowing of the entire global system of division of labor will inevitably lead to the elimination of individual countries, which will try to leave their own borders in order to create a system from a group of countries. Most likely, there will be no time for economic gain - the state will simply solve security issues of providing its citizens with vital products. The world will enter a period of economic wars, the main instrument of which will be the reduction in the value of national currencies, but the result of which will be a catastrophic decline in the standard of living - and primarily in developing countries. It is obvious that people (in the sense of the elites of countries) will somehow fight the complete destruction of the system - at least through the creation of blocs or economic unions of countries, uniting economies into a single economic complex. However, using the example of the European Union, we see how difficult it is to regulate a common shared economy, since it affects the interests of national elites. On the one hand, the EU creates conditions for the growth of the common European economy, but on the other hand, globalization presupposes the loss of sovereignty by the governments of individual countries. The contours of the future society are only outlined, but the way out of the crisis lies in the creation of a new formation. A new one is needed - probably uniting billions of people together, so that it is in it that a division of labor can be created, higher than today. How much more time will pass - maybe centuries, when they will begin to understand that the form of management of society - in the form - only holds back progress. The success of the United Europe showed the right direction - the creation of a United Earth, but the impulse given by capitalism was not enough to complete the experiment.
The existing economic model initially assumed non-stop growth of the system to include people and territories, but the impetus came with the invention of a special form of division of labor that combined the usual deepening division of labor into technological operations with the division of labor in management, known today as “the firm.” This happened in Europe only thanks to the unique circumstances associated with the unformed territorial empire, since, by inheritance from the Roman Empire, two verticals of power were formed in Europe - the dominant Catholic one, and the other secular, subordinate to the first church. The struggle of these power verticals contributed to the liberation of money from connections with power, and in the era of rebellion against the tenets of Catholicism, Protestant ethics appeared in Northern Europe, allowing interest on loans.
Over the course of several decades of constant growth in the world economy, the elites of most countries adopted liberal ideas, and replaced serious economic science with a cloud of contradictory theories called Economics, theories of micro and macroeconomics that are in no way related to each other. This mix from the tangled heterogeneous economic theories he explained to liberals why everything is so good in the rich countries of capitalism. However, the rich only became richer, and the poor did not become rich, and only a general rise smoothed out the inconsistencies. Today everything is changing in the world, because life without regard to Likho ended. Humanity has no chance to overcome the crisis, and to mitigate the consequences of the compression of the division of labor system, decisive action is needed, but liberal politicians unable to take responsibility on themselves, since the slogan “Freedom from all responsibility” is written on their flags.
Even the collapse of the financial sector in many countries will not be able to correct the situation in the real sector of the economy, where maintaining the standard of living requires all efforts to maintain the existing global division of labor. The more people in the system, the greater the volume of production and consumption that can be maintained, since goods will be affordable. While the national elites are poorly aware of this, an example is the increase in interest rates by the US Federal Reserve, which, according to the authors, should contribute to the return of dollars to their homeland, which at the same time bleeds all world trade.
The trouble is that the financial authorities of the leading capitalist countries continue to adhere to the recipes of bourgeois political economy (economics), which can cause a sharp collapse of the entire system. Most likely, hopes for a more or less uniform contraction of the system will not come true, since the national elites do not understand the nature of the real crisis, which, combined with their selfishness, will lead to a sharp acceleration of the destruction of the world economy. In a single system, we must act together. If Russia and other oil producing countries did not receive a certain amount of dollars due to a sharp drop in oil prices, then they reduced demand for products, primarily from China, which in China itself forces a reduction in the production of goods, which leads to a decrease in the need for oil, causing a further decrease in oil prices. Actually, this happens not only with oil, but with all types of raw materials. Thus, the actions of Saudi Arabia, which collapsed the oil market, obviously with the consent of the United States, accelerated the spiral of contraction of the world economy, but the “sinking” economies of developing raw material countries will soon drag the entire world economy with them to the bottom. The question of the possibility of starting wars is often raised, recalling previous experience in overcoming crises. Then it is not clear who the US elite, if it wants to start a world war, will consider as the next world leaders? since today the USA is the undisputed center of the system. What kind of peak is the United States still going to climb? if they are the “top” of the current world economy. It is quite crazy to oppose the center to the rest of the system, unless there is a desire to return the world to the Middle Ages.
Whether someone likes it or not, today - THE WORLD IS ONE in economic terms, at the same time, we see a lack of political agreement among national elites. The idea of creating a global supranational currency is becoming more and more visible, but it was rejected by the US elite. Actually, the search for a new economic model will begin only after the fall in living standards affects the elite itself, when popular discontent raises the question of not just changing elites, but changing the principle of their formation. Revolutions are possible, but they cannot solve the problem until the elites and anti-elites themselves understand that only by changing their essence can they somehow survive as a privileged part of society. And replacing one elite with another will change little. Great Economic CrisisToday came the one that no bourgeois economist can even name. The liberal elites have already forgotten about its existence and “blowed into the ears” of the whole world that under their control there would never be a crisis. However, the longer people who trust economic authorities are deceived, the more destructive the storm that gathers strength in financial bubbles will be. The world economy managed to survive the wave of the 2008 crisis, but since then the protective mechanisms have become so tense that they can break through anywhere.
The end of political economy
The fact is that economics was created to counter Marxist political economy, which studied the laws of capitalism to prove its finitude. Economicism was accepted in leading Western countries as mainstream economic theory of capitalism only because of his adherence to the postulate of the “eternity of capitalism.” believer in the eternity of capitalism- cannot not only talk about his death, but even think about it. However, no one canceled the idea that THERE IS NOTHING MORE PRACTICAL THAN A GOOD THEORY...
Liberal economists simply cannot say out loud that systemic economic crisis not over. Then they will simply be driven away from everywhere as healers deceiving the people with words about the absence of a crisis. Therefore, both the Russian government and the financial authorities, which consist of economists, constantly pronounce like a spell: financial crisis has ended, the economic recovery is steeper than before, everything is fine with us, etc. However, the solidarity of the Russian elite with the world elite will not allow it to move away from the postulates of liberalism, so a way out of the crisis will be sought in the bosom of outdated political economic theories, perhaps even in Marxism. Therefore, which for many reasons could only appear in Russia, there will still be not in demand for a long time power elite.NEOCONOMICS has long exhausted itself - it no longer provides answers to the problems of the modern economy, but Economics has no structure at all, since it is a collection - a mix - of contradictory hypotheses. However, today we can safely say that orthodox theories have been replaced by the basic economic theory of our time. FOR NEW TIMES - NEW THEORY! The page is a summary for the category World economic crisis and has a permalink: http://site/page/ekonomicheskij-krizis Below you will find the headlines of the main articles. | Neoeconomics forecast for Russia Oddly enough, real global crisis provides Russia with an opportunity hold place as the leading country in the world. The global system of economic relations will inevitably collapse due to the crisis. Individual countries, like penguins, will scatter to their own corners. Only a country offering global peace can bring them back together. above national idea, around which like around cursor focus other nations will gather. Russia has experience in building socialism, which we can transfer to other countries, since we “tried it on” in the USSR. However, these are just wishes, since the modern elite of Russia is hardly capable even realize the opportunity and begin the changes of social reconstruction. At the same time it is necessary debunk the successes of Tsarist Russia, which, unlike the USSR, had no basis for becoming a strong economic power. |
Today's Russia falls into the category of middle-income countries only thanks to industrialization in the USSR carried out by the Bolsheviks under the leadership of Stalin. The USSR probably made the last possible breakthrough in history in creating its own technological zone. It is the technological groundwork in the nuclear industry and space sector, coupled with advanced developments in military technology, that makes it possible not to consider our country exclusively a raw material appendage of developed economies.
From the RG dossier
Khazin Mikhail Leonidovich
Born in 1962. Studied at Yaroslavl State University and Moscow State University, majoring in mathematics. In 1984-1991 worked in the system of the USSR Academy of Sciences in 1993-1994. - at the Working Center for Economic Reforms under the Government of the Russian Federation, in 1995-1997. - Head of the Credit Policy Department of the Russian Ministry of Economy, in 1997-1998. - Deputy Head of the Economic Directorate of the President of the Russian Federation. In 1998, he left the civil service. Today he is the president of the expert consulting company Neokon. Author of the acclaimed book "The Decline of the Dollar Empire and the End of Pax Americana."
It was Khazin who laid the foundations of global crisisology in Russia. Suffice it to recall a number of his articles in 2006 and the conclusion of November 27, 2007: “The collapse of the global financial system: only a few days left.”
Crisis by order?
RG: The American economist Lester Thurow, who back in the 70s wrote that the United States had become dependent on China, and this would destroy them, is vying for the laurels of “crisis predictor.” What do you think of Thurow's ideas?
Mikhail Khazin/ Something needs to be clarified here. The main reason for the current crisis is the so-called “Reaganomics,” that is, the policy of stimulating final demand in the United States, both public and private. The export of production from the United States to China was a response to the emerging difficulties in the American economy, and for this reason could not in any way serve as a cause of the crisis.
As for me and my colleagues... We understood that the collapse of the United States was possible back in 1997, but then, due to the specifics of the civil service in which I was located, I could not insist on this. And our first article, published in July 2000 in Expert magazine, was called “Will the USA Achieve the Apocalypse?” The question mark was removed only in 2001, after we undertook a study of the US inter-industry balance, when the scale of the imbalances became clear.
RG: So you already started sounding the alarm in 2001, claiming that a crisis was inevitable?
Khazin: Exactly. But they didn’t listen to us.
RG: What can you say about the opinion that in fact the crisis was orchestrated by the Americans themselves in order to “save the world” on favorable terms for themselves, as they did after World War II (“Marshall Plan”)?
Khazin: As Stanislavsky used to say to his friend Nemirovich-Danchenko: “I don’t believe it!” The economic and socio-political consequences for them are too strong. But the fact that as soon as they realized that the crisis could not be avoided, they began to use it as much as possible for their own benefit - yes, of course, I believe.
RG: That is, the Americans will take care of themselves - at least in terms of overcoming their own crisis?
Khazin: More likely. And as President Medvedev correctly noted in his recent message, they will emerge from the crisis, despite the problems caused by this crisis in many other countries.
Why is the dollar so omnipotent?
RG: Stalin tried to untie world currencies from the dollar in the early 1950s. But they didn’t untie me. Why? And why didn’t Russia tie the ruble, for example, to the yuan?
Khazin: Yes, in the last years of Stalin’s rule the ruble was not pegged to the dollar. As for the “decoupling,” back in 1944, when the Bretton Woods agreements were concluded, tying all capitalist currencies to the dollar, and it, in turn, to gold, the US economy accounted for more than 50 percent of the world’s. But now production is only 20 percent. But in terms of consumption - 40 percent. And how will you untie your currency if it is in the USA that you sell a significant part of the products you produce and actually live on it? China, Japan, and the European Union today rely on exports to the United States. How are you going to cancel it? Yes, it would be nice to do this, but how?
RG: Isn’t it possible to introduce national or other currencies in foreign trade?
Khazin: This is quite difficult in the current conditions. First of all, because world trade is still heavily dollarized. And other money should be, let’s say, filled with goods, services and, therefore, endowed with popularity. Only then will they be able to compete with the dollar.
RG: So it won't work quickly?
Khazin: Hardly. Because this requires innovative content and rapid innovative development of the economy. That is, what is needed is not a raw materials, but an industrial vector of development, including export development. Then the ruble will become much more reliable than the “raw materials” ruble.
RG: Ideas for a new world economic order have been floating around in minds since the 50s, and they were especially popular in the Third World. Maybe it's time to implement these ideas? So the Russian President is talking about a new economic world order...
Khazin: Well, it’s one thing to talk, and another thing to actually do. Third World countries actually maneuvered between the two superpowers - and sometimes quite successfully. They had absolutely no intention of destroying one of them, thereby depriving themselves of such a wonderful maneuver. Yes, in 1971, the United States was forced to admit its default - they abandoned the gold backing of the dollar, but still, the so-called “Jamaican” system that replaced the “pure” Bretton Woods put the dollar at the forefront - precisely because it The dollar was built, and the entire system of world finance still stands today.
RG: Is the dollar permanent?
Khazin: The dollar performs two functions at once: it is both a world reserve and a trade currency, a single measure of value, after all. On the other hand, it is the national currency of the United States. And as long as the United States accounted for 50 percent of the world economy, there were few contradictions between these functions. And now they have become dominant. The US prints the dollar to improve its domestic economic situation, but at the same time weakens it as a world currency. That is why there are problems in many countries where the dollar is influential. And if the United States had “held” it as a world currency, then the crisis there would have been significantly stronger (and would have begun a long time ago). This is the root of the problem.
When did Russia slow down?
RG: Does this mean that the dollar and the petrodollar are closely interconnected? But at what point did Russia begin to “slow down,” that is, to use its oil windfalls irrationally? And why?
Khazin: Yes from the very beginning! This money practically did not reach the real sector - in particular, into innovation processes, the development of new technologies, personnel training, etc. Essentially, the money “dissolved” earlier. And it couldn’t be otherwise, because these issues are now often decided by financiers, many of whom, in principle, do not understand how an enterprise works. Note that this is a worldwide problem, with the possible exception of China. It’s just that this is becoming more and more apparent in our country and started earlier. So, in my opinion, oil money did not benefit us for future use - yes, it allowed us, mainly, to increase the consumption of imports, especially food. And now, after a sharp drop in oil prices, the “breaking” of this situation will begin. However, how can long-term industrial projects be planned when their financing actually depends on “petrodollars” in the first place, with such significant differences in oil prices?
RG: But then, how much will Russia’s budget, together with all its reserves, be enough if oil and gas prices in the world continue to fall?
Khazin: There are different estimates. The most pessimistic - that even before the New Year may not be enough. Optimistic - that it will be enough, and for a long time. Much here, again, depends on world prices for energy resources and monetary policy. But I don't think oil prices will quickly recover their previous heights. First of all, because cheap oil is profitable and needed by the United States, the European Union, and Japan, that is, the main “points” of the world economy and financial system. Cheap oil is not profitable for Russia. This is, perhaps, the main contradiction between the Russian Federation and the “American bloc” in the field of oil and general economic policy.
RG: We will now tell you our point of view, and you can correct us if necessary. The so-called Russian state capitalism of recent years consisted in the fact that the state created megacorporations that began to buy up private businesses. This required loans, which were taken out in the West. Hence the gigantic corporate debts, which are now the main threat to Russia. Do you agree with this? And if so, why did state corporations begin to buy ready-made capacities from private businesses?
Khazin: Well, they received part of the money for the purchase from the state. As for the purchase... If such a corporation is led by a financier (or someone who fancies himself a financier), then, in most cases, he does not understand the specifics of a particular production.
RG: Are you repeating yourself because this aspect is very important?
Khazin: Yes very. Let's say, such a financier is told that to develop such and such technology (or purchase), for example, 100 million dollars are needed. He estimates according to his criteria and says: I will give you 200, but you will return 100. He is told that this is impossible: the technology costs 100, and at least another 40 may be required to set it up, including training specialists, training engineers, and so on. But in his understanding, the proportions are different, and there is no need to prepare anyone. There is an overabundance of financiers of this kind today. And the necessary new generation technologists are not on the market. That is, today the same question is again - “Personnel decide everything!”
RG: But small and medium-sized businesses, although with difficulties, are already working?
Khazin: Yes it works. This is what they are trying to “embrace” in order to survive at his expense. Explaining to its owners that the maximum they can count on is a place with a good salary in a large office. As a result, usually after such operations the innovative part of small and medium-sized businesses simply dies quietly. I know many such precedents...
Let's switch to "bunnies"?
RG: Is it possible that the economic leaders in the post-Soviet space will be Belarus and Turkmenistan, whose policies of “pragmatic isolationism” and comprehensive state control over the economy have ensured that they are much less affected by the crisis?
Khazin: Why not? But they are too small. However, imagine that we would have been pursuing a policy similar to the economic policy of, for example, Belarus all these years! Then today we could, in my opinion, dictate our terms to many. More precisely, I mean the policy of all possible stimulation of industrial growth.
RG: Is it good or bad that Russia has not yet joined the WTO? Will we ever get there? And, perhaps, on better terms than we have been presented with in recent years?
Khazin: I am not sure that the WTO in its current form will exist in a couple of years. For the current crisis will most likely continue and destroy the global financial, monetary and trading systems, so there will almost certainly be no modern WTO. The modern system of world trade, controlled by the WTO, or more precisely, by the West, is gradually disintegrating. It is still difficult to say what will happen in return. It is possible that these will be regional trading blocs rather than a global organization.
Gold - for all time?
RG: Since we are economic journalists, our acquaintances and colleagues have often asked us in recent days where to store our savings. We advise them - in Swiss francs. Maybe we are advising stupidity?
Khazin: Well, this is, in principle, possible. But you forgot the yuan, and gold coins - why not worthy of storing savings today? The problem with savings is that the situation will change quite quickly: some currencies will rise and then fall just as quickly, so “expensive” assets will not be able to be sold quickly, and so on. As the famous joke goes: “The Ukrainian night is dark, but the lard needs to be hidden!” - if people want to transfer assets every week, then you certainly won’t give them any advice. However, such shifts are unlikely to be effective.
RG: Well, anyway. Many experts advise returning to storing savings primarily in gold...
Khazin: Yes, I am convinced that the best long-term investment today is gold coins. Today they are much more reliable than foreign currencies. Previous crises also showed that savings in gold turned out to be, one might say, safer. And they were even multiplied, unlike cash savings. As for our conditions and the ruble itself, it is advisable, in my opinion, to store the “accumulated” in rubles in any bank. The main thing is that the deposit is less than 700,000 rubles.
RG: How do you think prices for gasoline and food will behave in Russia? And what will happen to the social support system, especially the pension system?
Khazin: The state, in my opinion, will strive to fully support the social system, because it has not only socio-economic significance for the state and society. Another thing is the real payment and purchasing power of these pensions and benefits in the face of rising prices. Our gasoline prices may fall because world oil prices are falling (but, of course, not as significantly as oil prices), but the share of gasoline expenses in the family budget may increase. The main thing here is the size and prospects of this budget, not to mention the pricing policy of the gasoline business, or more precisely, of oil companies. And ready-made food is by no means becoming cheaper in the world, and the share of imports in Russian food consumption is still high and, according to a number of forecasts, may increase further.
RG: In other words, will the structure of consumer demand change, which will also affect prices?
Khazin: That's it! The crisis will greatly change and is already beginning to change the price structure and the consumption structure. And I do not rule out that middle-income families will have to limit their consumption, be it gasoline or food.
Recorded by Evgeny Arsyukhin, Alexey Chichkin
RG dossier
History of world crises
The first world economic crisis of 1857-1859 began in the United States and then spread to Europe. The reasons are massive bankruptcies of railway companies and the collapse of the stock market.
The crisis of 1873-1876 began with Austria-Hungary and Germany. The prerequisite was a credit boom in Latin America, fueled from England, and a speculative boom in the real estate market in Germany and Austria-Hungary. In the United States, a banking panic began after a sharp fall in shares on the New York Stock Exchange and the bankruptcy of the chief financier and president of the United Pacific Railway, Jay Cooke.
In 1914, a crisis began due to the outbreak of war. The main reason is the urgent total sale of securities of foreign issuers by the governments of the USA, Great Britain, France and Germany to finance military operations.
The fourth world crisis (1920-1923) is associated with post-war deflation (increased purchasing power of the national currency) and recession (decline in production). It began with banking and currency crises, first in Denmark, then in Norway, Italy, Finland, Holland, the USA and Great Britain.
1929-1933 - the “Great Depression”, which spread from the USA to most countries of the world
The sixth crisis began in 1957 and lasted until mid-1958. It covered the USA, Great Britain, Canada, France, Belgium, the Netherlands and many other capital countries. It was caused by overproduction, the collapse of the colonial system, and rising oil prices (due to the joint aggression of Israel, Great Britain and France against Egypt in the fall of 1956).
The crisis of 1973-1975 began with the United States; it is associated primarily with the “oil embargo” against the West by most major oil-exporting countries in the fall of 1973.
Black Monday: On October 19, 1987, the American stock index Dow Jones Industrial fell by 22.6 percent, following the American market, the markets of Australia, New Zealand, Canada, Hong Kong, South Korea, and many Latin American countries collapsed. This was due to the outflow of investors from those markets after a strong decline in the capitalization of several largest transnational and regional companies.
1997 - East Asian crisis, the largest decline in the Asian stock market since World War II. It arose primarily due to the withdrawal of foreign investors from most countries of Southeast Asia and from many Far Eastern “industrial dragons”. Reduced global GDP by $2 trillion.
1998 - Russian crisis, one of the most difficult in the history of Russia. Reasons: growing public debt, low world prices for raw materials, especially energy, and the pyramid of state bonds, which the Russian government was unable to pay on time.
Alexander Meshkov
First you have to fall. However, no one wants to fall and talk about it. But how then can we develop a new model of economic development? Moreover, the old liberal model and financial capitalism have exhausted themselves, says Mikhail KHAZIN, a well-known scientist and president of the Neokon expert consulting company.
Mikhail Khazin.
– Recently I came across the book “1968”. The world celebrated the anniversary of the events that took place in the eurozone and the United States, but, in my opinion, there was no serious research into what actually happened 40 years ago. But we were talking about a change in the socio-economic paradigm. The Western world has been rocked by a serious crisis, not inferior in scale and depth to the current one - when, in the words of the center-right Nicolas Sarkozy, the former president of France, a system has emerged “where everything is given to financial capital and almost nothing to the world of work.” True, at that time the reasons for the crisis were of a socio-psychological nature; people were seeking “self-realization” and a high quality of life. Now the basis of the new crisis is economic; the existence of the financial and monetary system, which was created in Bretton Woods at the end of World War II, is in question...
– In my opinion, parallels should be drawn with another time. But first things first.
From the point of view of the functioning of the current economic model, the current crisis is understandable; it has clear outlines. Over the past 30 years, first in the United States and then throughout the world, a system of demand stimulation has been in place, which has allowed the Western economy to develop in an expanded manner. It was built on the principle of increasing demand due to increasing debt. Households and corporations borrowed and spent funds. States did the same, increasing social spending. This model reduced aggregate demand, because not only borrowed money had to be returned, but also interest.
There was constant refinancing of debt. But such a system can only exist if the cost of the new loan is less than the old one. This model continued until the world's lender of last resort, the US Federal Reserve, cut rates. In 1980 it was 19%. But by the end of 2008, in December, the Fed discount rate became zero. That's it, the model has exhausted itself, a crisis has begun.
– But crisis phenomena appeared even earlier – in the early 2000s...
– You understand: when you refinance a debt, financial “bubbles” inevitably inflate somewhere, and sometimes they burst. This is, firstly. In addition, you need to understand that the rate on a real loan stopped even earlier, that is, refinancing became impossible somewhere in 2005-2006. Then a break followed. Today, the expenses of households in the West are greater than their income. They call different numbers. According to our estimates, this gap is approximately 25% of GDP. This means that in the modern West people spend more than they earn.
Given the current situation, consumption levels will fall. Global GDP will also fall. It will decrease by more than 25%, because when demand falls, income also falls. Today there are two options for changing the situation. First: maintain demand at any cost. The United States of America is following this path. They are increasing the budget deficit, taking advantage of the fact that theirs was smaller than that of Italy and Greece. President Obama increased the budget deficit by one trillion dollars per year. All this money goes to support social programs.
– What does he expect when the money runs out?
– As far as I understand, the key moment for Obama is the elections. As soon as he wins or loses, the crisis will take on new contours. The United States calls on Europe to tighten its belts, but at the same time gives money to Greece and Spain to refinance their debts. The main problem is that if you stop paying them today, the financial system will collapse. Why? Because these debts are not of someone, but of banks. Therefore, mass bankruptcy will begin. Of course, some money can be given to banks, but here another problem arises. In the context of increasing non-repayments, the cost of insuring financial risks changes: it increases sharply. And bankruptcy occurs along a different line. That is, in fact, it will no longer be possible to keep the global financial system in a more or less stable state in the next 3–5 years. The question of when it will “fall” is not of an economic nature, but of a political one.
– When will “hour X” come?
– This will depend on the behavior of different countries. Mrs. Merkel said, for example, that while she is alive, Germany will not pay the debts of Spain and Italy. Other states could pay these debts. But the problem is that in Europe you cannot pay for something if Germany does not pay. You cannot collect money from some family for hungry children by explaining that their mother is on holiday in the Canary Islands.
Chicago. November 16, 1930.
This is the global model. Therefore, the crisis caused by the fall in aggregate demand associated with the inability to refinance debts will continue. It started in 2008. But then it was “flooded with liquidity”, and the crisis became slower, similar to the early 1930s in the United States. There it lasted a little less than three years, from the spring of 1930 to the end of 1932. The rate of decline was approximately 1% of GDP per month, and it all ended in the “Great Depression.” How will the crisis end this time? We have not yet finished moving down the trajectory of decline; we have passed about 10-12% of this path (in the world). Not more. And we still have to fall and fall.
– But if these trends extend to Russia, then the budget will have to be cut, some programs will have to be cut....
– In relation to Russia, we are concerned, first of all, with oil prices. During periods of high emissions, prices always rise faster. The last major issue was on February 29, when the European Central Bank printed half a trillion euros. This gave about a three-month impetus to the rise in oil prices, and in May they went down. If neither the US nor Europe starts printing money, the price of oil could drop to 60-70 dollars per barrel, and then, of course, we will have a complete “ah” with the budget.
Option two – if money is printed, the price of oil will rise, but not as much as we would like. But at the same time, inflationary processes will begin in the world. And since the Russian economy is import-oriented, the country will have very high consumer inflation. She's already quite big.
As we see, the economic prospects in our country, taking into account global trends, are not rosy. Perhaps, due to inflation, we will have to somehow compensate for social expenses that cannot be cut. That is, it is possible that a gap will appear in the budget.
“We just breathed a sigh of relief: we paid off government debts...
“I wouldn’t be overly happy about this.” After all, we actually converted government debts into corporate debts. And what's the point? Previously, the state was a debtor, now it is Gazprom. Are you ready to bankrupt Gazprom? Me not...
– At the current growth rate (some economists talk about the “inertial path of development”), we will not be able to catch up with developed countries in the coming years and even decades, since they will not stand still either. Therefore, they started talking about the need for a “technological breakthrough”. Note: “national projects” were also preceded by discussion...
– National projects became an attempt to compensate for the previous omissions of the government in the 90s, to patch up the hole that formed in the economy as a result of the “brilliant” policy of Gaidar’s followers, who invested practically nothing in the sectors of the national economy. As for the “technological breakthrough”. To begin it, we need to really imagine what goals we are pursuing and what kind of world we live in.
We have been writing and articles about the job crisis for 10 years. It is becoming more and more obvious that we are right, that the economic models and processes that we describe take place, but have you heard our findings voiced by those who make decisions? I was invited to speak in Kazakhstan at an economic forum and in Uzbekistan at a public economic event. But in Russia, all discussions on the topic of the crisis are not welcome. We proceed from the logic that it will not happen. The liberal economic school has a complete monopoly on truth, which does not even have words to describe this crisis; she cannot admit that she was wrong about something, that she doesn’t understand something. These gentlemen simply ignore many of the real processes taking place in the economy.
– Academician Glazyev, developing his theory of technological structures, notes that we, one might say, slept through the fifth structure and used copies. But there would be no happiness, but misfortune helped. “In backward countries, as a rule, there are no significant production capacities of an obsolete technological structure and the resistance of socio-economic institutions to their destruction is relatively small, which... facilitates the creation of production and technical systems of a new technological structure,” the scientist writes. He says that we have more opportunities to master the new, sixth technological structure. And he names such “growth points” as nanotechnology and molecular biology. And other economists say: they say, it is necessary not only to create “growth points”, but to develop the entire national economy as an integral organism...
– All the same, without “growth points” economic development does not work; the only question is whether there is one or a hundred of them. It is clear that it is easier to move one growth point. But it's not that. The whole theory of “growth points” works in a situation of general economic growth. We have now entered a period of long-term decline, when innovations do not pay off. For this reason, financing innovative processes is fraught... They cannot survive on their own. This is a big problem and I don't know how to solve it yet. I do not rule out that we (the whole world) are facing quite serious technological degradation. About the same as in Russia in the 90s.
– During the time when there was a “Great Depression” in the West, we scraped out everything we could, but thanks to the equipment acquired abroad or the equipment made on its basis, we industrialized...
– What did Stalin do in the 1930s? In fact, he solved the problem set by Stolypin. Then, at the beginning of the 20th century, economic progress was associated primarily with mechanical engineering. But for its smooth operation, it was necessary for someone to buy the products of this industry. An individual peasant could not buy a tractor. This was within the power of wealthy, rich peasants. That is why Stolypin wanted to form large farms based on the kulaks. And as a result, he predetermined the subsequent civil war in the village. His program ended in failure. But Stalin did it differently: he created collective farms. A superstructure appeared that became a consumer of mechanical engineering products. And this program ended in success.
– You probably want to say that in relation to modern conditions the situation is now different...
- Absolutely right. In the 1930s, innovation was mechanical engineering, and today it is nanotechnology. But how do you get a person who doesn’t have the money to buy a bun for his child to buy some kind of nanotechnology product? That's the whole problem. Innovation will never happen in a falling market.
The Americans in the early 80s introduced a demand stimulation program only because they had a crisis in the 70s, and they could not launch a new wave of innovation during those years. That is, what we call information technology today. But when they began to stimulate demand, they used this wave - they destroyed the USSR and won. But the trouble is that today this tool for stimulating demand has already been exhausted.
– Why are you so sure that the economic decline cannot be stopped and the global crisis will last until it has passed its entire trajectory? Is humanity really so powerless that it cannot master rational forms of labor organization?
– Few people here pay attention to the fact that there are two economic sciences in the world. One is called political economy, it was invented by Adam Smith at the end of the 18th century. Then it was very actively developed by Karl Marx, after which it acquired pronounced Marxist features. And the West, as an ideological alternative, decided to come up with another economic science called “economics.” So, in those places where political economy says “yes,” “economics” says “no,” and vice versa. Political economy believes that capitalism is finite, for this reason “economics” says: capitalism is infinite. And in principle, it does not consider the concepts from which the finitude of capitalism follows.
But the end of capitalism was not invented by Marx, but, oddly enough, by the same Adam Smith. This social system appeared in the 16th-17th centuries. Contemporaries, observing the economy, drew attention to the fact that development under capitalism means a deepening division of labor. And then Smith took the next step: he explained that if there is a closed system, then in it it cannot rise above a certain “bar”. Any economic system at some point reaches such a level of division of labor that it needs to expand in order to develop further. Hence the conclusion: when markets become global, capitalist development will stop. For Smith and even for Marx, this was an abstraction, but today we live in a world in which global markets rule the roost. Therefore, innovation cannot pay off for economic reasons. Because for them to pay off, they need to expand markets, but this is not working.
– There are two options for the development of post-industrial society – favorable and unfavorable. As I understand it, you are leaning towards the second of them...
– No, my opinion is that post-industrial society does not exist at all. I'll explain what's going on. Imagine you had a factory where all the people worked together. Then it was divided into workshops, which were located at a great distance from each other, and as a result, the plant management decided that it had built a separate industrial region - a post-industrial society. But it exists only thanks to the presence of workshops. Therefore, as soon as there is a crisis in those workshops, the entire so-called “post-industrial society” falls apart... These are fairy tales that were invented in order to retroactively justify the super-incomes of the highest quintile groups.
– You always talk only about the economy. However, according to some scientists, the lack of education of our society in matters of morality and its unpreparedness for drastic socio-psychological changes led to depopulation in the 90s and other negative consequences. Some even believe that society should be governed more by sociologists, psychologists and educators than by economists and lawyers...
– I’m not a sociologist, I deal with economics and talk about what I’m responsible for. One thing is obvious to me: our society does not accept liberal ideology with its complete lack of morality. Either the existing system will collapse, or society itself will be destroyed. One out of two.
– But the “economy of knowledge”, “economics of development” open up new prospects for people, opportunities for its improvement and reform...
– Maybe, but when they start to destroy, there is no time for knowledge and no time for education. I really want to eat. When there is nothing to eat, people begin to get nervous.
– As one German writer said: “To the rich, talk about bread seems base. It’s because they’ve already eaten.”
- Like that.
– It turns out that we have now reached a stage of development when some primary needs, which seemed to have been overcome long ago, and society was solving issues of spiritual development, self-improvement, “self-realization”, quality of life, etc., again become dominant.
- Yes, it is true.
– How to solve them?
– It is impossible to solve them within the framework of modern financial capitalism.
– But isn’t world social thought really exploring various options for humane development?
– All Western theories are built within the framework of liberal ideology (economics is only part of it), and it is forbidden to talk about the end of capitalism.
– But the list of different directions is not limited to them alone. There are thinkers whose works have a social connotation. John Galbraith, for example.
– Galbraith died quite recently, his works date back to the 1950s and 1960s. He was, of course, a brilliant economist, and today the ideological “mainstream” does not welcome him very much. American Joseph Stiglitz, a heretic demoted from the World Bank, is also trying to do something, proving that he is an honest person, that not everyone has sold out for money. For this he is constantly subjected to moral and ideological pressure.
Yes, there are people who are trying to get out of the quagmire. So we are trying too. But in order to do something, you need to look at life soberly. The main question today is: what will be the model of economic development and how far we will fall as a result of this crisis. You see, talking about development until we fall is pointless.
– And how to rise and find strength for further development...
- This is the model we need. But first you have to fall. And no one wants to fall. Nobody wants to say this out loud. A modern politician cannot say: tomorrow we will live worse than today. This is impossible. He must say: no, we will live better.
– Nowadays there are probably fewer pessimists among religious leaders than among economists. Predicting the end of the world...
– Don’t confuse the end of the world with a crisis.
– A crisis from which we will eventually emerge.
- Of course, we will get out.
