Why little has been achieved in the Russian economy for 30 years

Any science strives for ordering, structuring, and on this basis – for scientific forecasting of the future. The economy is no exception. But if in the exact sciences such a goal is achievable, then in the humanities, social sciences (to which economics belongs), apparently, not very much. Individual patterns that are clear to everyone do not count.

For 30 years it was possible to understand that the rules that lead the Russian economy to marking time at best are wrong. The whole world is faced with this, but finds no better way out than to turn to high-browed interpreters with the question of what is wrong.

Adherents of false knowledge over and over again try to correct something, but again and again economic practice goes against the wrong, but well-established theory. On the “study” of which other researchers spend their entire scientific life.

Courage to admit to long-term wrong, as a rule, is not.

For example, take institutionalism, the mainstream of modern economic theory, a speculative empire on the sand.

A simplified interpretation of institutions is that they are the “rules of the game”. An extended definition by Douglas North is as follows: “Institutions are the ‘rules of the game’ in society, or, more formally, the man-made restrictive framework that organizes relationships between people.”

Next comes the canonical division of institutions into formal (laws, norms) and informal (codes of conduct) constructs, as well as into the enforcement mechanism that structures their interaction and implementation. It is believed that “together they form the incentive structure of societies and economies.”

Catastrophic mistakes consist in ignoring the “pre-theoretical” side of life, but most importantly, in underestimating the restrictive framework “created by man.” A dictator is also a person, and his limits are appropriate. Like the ruling estates with their “suffered” ideas about what should be and what is.

So the institutions turned into stalls. The role of the herd is destined for individuals, strata, the role of shepherds is reserved for the state (lawyer-legislator, regulator, policeman, investigator, overseer), one of whose functions is repression.

Economic theorists do not mention unconscious motivation (habits, traditions, culture), because it is difficult. Yes, “economics is 50% psychology”, as the author of the German economic miracle Ludwig Erhard used to say, but he is not an economist, right?

Traditional, “true” institutionalism did not start from the rational, but from the subconscious, intuitive, reflex, together – the basis of future rules.

In the early 20th century, the American jurist Walton Hamilton first defined an institution as “a common way of thinking or acting, imprinted in the habits of groups and the customs of a people.” The bias towards ideological principles is obvious.

We are talking about mentality, “the sum of knowledge of all generations”, but here’s the hitch – the mentality cannot be measured, which repels the same economists from studying it. And to recommend to practitioners what is not known by theory is quackery.

It is not surprising that in America, a country without history and values, Hamilton had practically no followers of economists. On the other hand, the “rules of the game”, “limiting frames” and the state as an apparatus of coercion (violence) arose.

The Americans liked the “correct” device: you draw up a universal protocol of formal reactions, distribute it among an indefinite circle of people and count the profits from completing the task set by the powerful of this world.

If someone objects that there were no “customers” for mainstream American prospectors, let me remind you that science in the United States traditionally exists on the money of private individuals and only then – the state nurtured by them. Together they are interested in imposing the rules domestically and exporting them around the world.

What is happening.

However, Hamilton was supported by European scientists. Thus, the German economist Viktor Vanberg, revealing the structure of the rules of individual and social behavior, began by dividing the rules into inherited, transmitted genetically or through education, and acquired, reproduced through culture and social experience.

Private and public rules in Vanberg’s classification were a single whole (which share is larger and which is smaller – a separate conversation). It must become immutable that any part of the cumulative rules of conduct cannot be ignored, otherwise failure is inevitable.

Later, the opinion of the “old” institutionalists was confirmed not so much by economists as by “related” humanities. For example, the American philosopher Richard Rorty believed that “most of our philosophical and economic convictions are determined not by assumptions, but by pictures, not by statements, but by metaphors.”

In reality, false beliefs were formed by status “interesters”.

It is generally accepted that in the economy family ties, friendships, emotions take place only as special cases of His Majesty the Market.

It has also become commonplace that with the increase in impersonal market interaction, the asymmetry of the information of the parties, opportunism (gaining benefits through deceit) and other distortions (for example, corruption) increase, leading to an increase in transaction costs or the cost of “lubricating” the economic mechanism.

All this is true, but along with the increase in the number of studies, the cost of “lubrication” has also grown. As a result, the total volume of the global transaction sector has steadily exceeded half of global GDP over the past half century. In the United States 10 years ago, out of 115 million employees, a quarter was engaged primarily in transaction support.

Man to man increasingly turns out to be a wolf. Hence the desire for economic simplification, when it is more profitable to work face to face, through a shake of hands, on the basis of recommendations, with an informal guarantor than with impersonal agents.

Problem? Even some.

Friedrich Hayek argued that if markets operate at non-zero costs (as they always do), alternative forms of organization may be preferable to the market. That is, the market is not always a thermometer of price and supply.

From this, the secret of the success of the Russian Old Believers of the 19th century becomes clear, which consisted precisely in economic simplification. It also contains the nature of the “innovation” of the Soviet period, when up to 70% of industrial production had the status of “the only supplier” (then the CPSU was the arbiter).

The reverse side of simplification is small-town autarchy with many other negative attributes. There was, is and will be a desire for simplification, but economists believe that it seems to be non-existent.

There is nothing to talk about.

There is no subject of conversation when the priority of the conceptual apparatus over laws and subsequent informal agreements are mentioned. A deal is a sacred act sealed with a handshake as a sign of trust. Let us recall the non-expansion of NATO to the East.

When property rights are a continuation of the former maxim “where the ax and the plow went”, and only after – all these “papers”. Radio inventor Alexander Popov will confirm.

When unity of command comes from a family, a stratum, whether it be a highway or a mentor. Above – the owner, and it does not matter what – the region or the country.

When the court and punishment is not a decree for us. We still will not deal with a crook without the latter’s right to rehabilitation. Although some believed individual oligarchs to the last.

When entrepreneurship seems to be good, but the real value is not risk, but stability. Any opinion poll will confirm this.

When Russia historically looks down on the whole world, not from the bottom up, learning, but vice versa. We continue to look “down on the bourgeoisie” and dreamily wait until we catch up and overtake everyone literally overnight.

When the tradition of circumventing any prohibitions comes from ancient times (the phenomenon of “black bath” generated by the smoke tax). A tradition that led to the fantastic success of parallel imports. And export.

When a Russian nomad, eager to change places, takes to the road and goes beyond the horizon, whose name is “justice”. No one will ever reach the horizon, but the process, not the result, is important for the satisfaction of life.

There are many things, friend Horatio, that are not common among economists.

The rest of the people intuitively understand everything, but they cannot say it.