Trajectories of Economic Transformations. Lessons from 2004 for 2024 and Beyond. Valery Kushlin

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СКАЧАТЬ for the Eighth Five-Year Plan, 1966—1970), there was a decrease in the efficiency of capital investments in the national economy. The increase in the national income produced per ruble of capital investment in the Eleventh Five-Year Plan (1981—1985) amounted to 11 kopecks, which is 2.1 times lower than in the Eighth Five-Year Plan, and 2.5 times lower than in the Sixth Five-Year Plan (1956—1960). Was it possible to reverse this trend at that time? In principle, yes, if it were possible to organically combine the investment process with scientific and technological progress, to turn capital investments into a reliable guide to the national economy of the most effective achievements of science and technology18.

      These assessments were made in the political conditions of the pre-reform period. They are rather harsh in their criticality, but inevitably still bear the imprint of faith in the country’s ability to correct the flaws of the system within the framework of evolutionary targeted reforms.

      Missed Opportunities and Unrealized Approaches

      Comprehending today, considering the time that has passed, what I, as a researcher, wrote in the pre-transformational period, I must be more critical of myself. Yes, at that time, many of my ideas about our economy and society, as well as those of a few other scientists, were formed under the influence of a priori belief in certain ideals. In addition, many of the deep-seated flaws of the socio-economic system were not fully revealed to researchers at that time due to insufficient access to information. It seemed that most of the shortcomings of economic management in the country depended on subjective causes and could be eliminated with proper adjustment of the policy of the authorities. There was a hope for the existence and operation of national (nationwide) economic interests as the main factor in motivating people’s behavior.

      In many of my developments, I and some other economists proceeded from the possibility, through rational transformations of economic structures and forms of economic management, of building such a system of economic interests of enterprises and associations that would correspond to the structure of the long-term needs of society. In our opinion, this should ensure a stable interest of economic entities in the best (most effective) satisfaction of the needs of society and, accordingly, generate and reproduce the economic responsibility of these subjects for the degree of satisfaction of the needs of society.

      All this presupposed a high degree of democracy in society, transparency of entrepreneurial aspirations and actions of the authorities, and broad opportunities for public control. At the same time, the mechanism of market competition (competitiveness) in the behavior of economic entities oriented towards satisfying the needs of society was thought to be organically immanent in the entire system of economic relations.

      From these prerequisites, the proposed solutions to ensure socially promising (strategic) approaches to the reproduction of the technological base of the economy, the creation of conditions for achieving the greatest growth in the final efficiency of the economy in the process of renewal of the production apparatus followed19. The implementation of such approaches was focused on the mechanisms of optimal economic distribution of resources according to aggregate development goals within the framework of economic units specializing in meeting the basic needs of society. For this purpose, it was proposed to use detailed new methods of block-modular renewal of the production apparatus, which assumed an organic connection between investments in the economy and the implementation of the most effective scientific and technological innovations20.

      All these, as well as many other tempting offers, were not realized, for which there are many reasons. First, it is necessary to admit that in the development of the proposals, hopes were unjustifiably high for the possibility of understanding at the level of the central economic management bodies the key interrelations of the optimal development of the country’s economy, which is tuned to meet the needs of society. Here we must admit the truth of Friedrich von Hayek’s accusation against economists who believed (as we did then) in the possibility of a planned socialist economy, when he observed that “socialists, victims of arrogance, want to know more than is possible.”

      Secondly, the policy of our state at that time was fundamentally lacking purpose and energy. Collectivist-socialist driving forces were no longer brought into action by this state policy, as had been the case at certain stages earlier. And competitive entrepreneurial driving forces were not given the opportunity to emerge and express themselves. Ideological frameworks and regulatory frameworks severely limited and suppressed entrepreneurial initiatives.

      There was a great inertia of the approaches that assumed the eternal priority of the development of the “first subdivision” of social production (the branches producing the means of production) over the “second subdivision” (the production of consumer goods and services). Ideas about the expediency of building chains of expanded reproduction based on the structure and dynamics of people’s ultimate needs were rejected from the outset. Consequently, the technical level and the scientific equipment of the industries directly working to improve the well-being of the people fundamentally lagged behind the branches serving the production of means of production. For example, in 1987, the ratio of R&D expenditures to manufactured marketable products in the USSR Ministry of Light Industry was less than 0.09% compared to 2.9% on average in the country’s machine-building complex.

      In general, as of the end of the 1980s, the level of knowledge intensity in the main branches of material production in our country was noticeably lower than in the most developed countries of the world. According to available estimates, the average ratio of science intensity in the USSR and the USA was about 1 to 2 in civil engineering, 1 to 3 in chemical and metallurgical industries, and 1 to 5 in electric power industry. Although expenditures on science in the USSR and the United States were considered close as a share of national income (in 1987 they were 5.2 and 5.8 percent, respectively), the absolute amount of spending on science in the USSR was much less than in the United States. In 1987 they amounted to 32.8 billion rubles against $123.6 billion (1986) in the United States.

      The Soviet Union of the 1980s and 1990s was exhausted by competition (complex competition) with a much more powerful rival in the face of the United States (plus the countries of Western Europe, Japan, etc.). Maintaining military parity with the West required concentrating most intellectual and economic resources on the development of the defense complex. The volume of defense R&D in the USSR was estimated to be 3:221 on average. Moreover, the defense research sector was characterized by large overhead costs, which absorbed a considerable part of the appropriations for science and innovation. It turned out that the scientific support of that sphere of the country’s economy, which, under the normal structure of the economy, in fact, should be the main space of the economic process of expanded reproduction, was prohibitively low.

      Perestroika: Ideas vs. Realities

      The period of 1985—1990 was a very difficult and contradictory time for the country’s economy. In a political sense, it set the pace for the turbulent changes that were overdue. The beginning of perestroika was tinged with the euphoria of the emancipation of society, and therefore the strategy of “accelerating the socio-economic development of the country” looked like a completely natural direction for that time. The course taken for the rise of machine-building, the acceleration of scientific and technological development and structural shifts aimed at intensifying production was logical in concept and, moreover, relied on the historical confidence of the ruling party, which was accustomed to achieving its goals. But, faced with the very first difficulties and contradictions of the turn СКАЧАТЬ