For managing economic development

The ideological substantiation and justification of liberal globalization is the doctrine of market fundamentalism, which asserts the harmfulness of state intervention in the economy and prescribes the dismantling of state regulation institutions to ensure free capital movement. It is in organic unity with the interests of large U.S. capital, which has subordinated to them the institutional system of the American accumulation cycle. The scientific refutation of the market fundamentalism doctrine[174] will significantly weaken the staples of this system and facilitate its dismantling, including from the point of view of the productive elite of the U.S. and its allies, to which the new world economic paradigm is ideologically alien and poorly understood.

The market fundamentalism ideology, which rejects advisability of state regulation of the economy, is theoretically based on virtual models of market equilibrium. They illustrate the hypothetical self-sufficiency of the mechanisms of free market competition, which in models automatically ensure the optimal allocation of available resources in the absence of government intervention. The latter is justified only for the purpose of protecting private property, ensuring competition and national defense. However, despite the fact none of the axioms underlying these models (about the absolute awareness of economic agents, their possession of the most advanced technologies, their independence from each other and orientation to momentary profits) is not observed in reality, as well as the state of market equilibrium itself, this does not interfere with the demand for this ideology by the ruling elite, a significant part of officials, the business and expert community.

In its essence, the ideology of market fundamentalism is akin to religion. The difference is that the place of God in it is taken by money, and virtual mathematical models are used as the " creed." In response to the criticism of the latter as unrealistic on the part of the scientific community, the adherents of this religion endlessly complicate these models, giving their doctrine a likeness of science. At one time, the Marxist political economy of socialism embarked on this course. In response to the accusations of Western experts of dogmatism and scholasticism, Soviet economic thought developed a theory of the optimal functioning of the economy that utilized the same mathematical tools as the market equilibrium models. With the same mathematical precision it proved the possibility of an optimal national economic planning, which was supposed to lead to absolutely the same optimal allocation of resources as in the market equilibrium model[175]. However, it was as far from the real possibilities of centralized planning procedures as the models of market equilibrium were far from the real behavior of enterprises.

Perceptions based on faith and not on understanding of the laws underlying actual processes do not require experimental confirmation, and are resistant to any criticism. As they say, if reality does not correspond to ideology, so much the worse for reality. Therefore, the reality is subordinated to ideal ideas, justifying the negative results now by a combination of circumstances, then by the inadequacy of the nation to the ideological beliefs of the proxies of this policy. The most fanatical adherents of this religion even speak of the naturalness of the process of extinction of a part of the human population, who " have failed to fit themselves into the market." In so doing, they are very similar to their progenitor Bolsheviks who destroyed whole social classes who did not fit into their model of building socialism.

Market fundamentalists do not notice the social consequences of their experiments, just like the Bolsheviks, who viewed the masses as a fuel for the world revolution. Then, like today, a significant part of the accumulated national wealth was hauled away abroad. Only the Bolsheviks did this to fuel the world International, and not the global financial oligarchy, as it is the case today.

The religious consciousness is characterized by dogmatism and scholasticity of thinking, which rejects all doubts in the knowledge of " the ultimate truth." Doubters are expelled from the sect, and not admitted to discussions. On the contrary, the disputes inter se are conducted within the limits of axioms given a priori, and have no relation to actual objective laws. The experimental testing of hypotheses is replaced with judgment of spiritual authorities possessing " secret knowledge."

 It is clear that the ordaining of the most influential members of the sect to the appropriate " spiritual" rank of the " best in the world" ministers, bankers and other professionals is conducted by agencies specially authorized by the U.S.

Russian liberal reformers believed in market fundamentalism when the USSR was collapsing. Before that, many of them were Communists and believed in the dogmas of Marxist political economy. Without bothering themselves with any scientific analysis, they simply replaced one " creed" with another under the stimulus of the political situation. Now at meetings in government they endlessly chant the mantras of market fundamentalism as conscientiously, as in the lessons of scientific communism they were talking about the absolute advantages of socialism over capitalism and the inevitability of the latter’s replacement with a more progressive formation.

In a similar vein, they believe in the progressiveness of fundamentalism, convincing the leaders of the need to remove all obstacles to ensure the free play of market forces. The fact that the place of the latter is occupied by organized crime and monopolies does not bother them at all, just as under socialism they did not notice the dominance of departmental interests over national economic ones.

The birthmarks of scientific communism are clearly visible in the logic of the thinking of Russian market fundamentalists. Back at school, they already learned the doctrine of the progressive and irreversible development of society through a change in socio-economic formations. With the collapse of the USSR, they simply dispelled from their mind the postulate that socialism is a higher-level formation than capitalism and inevitably replaces the latter according to the law on the conformity of the development of productive forces and production relations. Following Fukuyama, they believed in the " end of history" and hurried to swear allegiance to the new religion. Although in fact this religion is nothing more than a modern version of the belief in the golden calf, its new adepts imported from scientific communism a desire for a semblance of science.

Reduction of the process of the progressive development of mankind by two stages and the replacement of scientific communism with science-like market fundamentalism came to yesterday's Marxists without much difficulty. They used the same methodology of religious thinking, replacing one system of axioms with another. This methodology contains a prerequisite for the linear nature of socio-economic development, which Marxism, in its turn, had inherited from Christianity.

Just as Christian doctrine regards social development as a process from the Nativity of Christ to the Second Advent, so the prophets of scientific communism and market fundamentalism are guided by the concept of the progressive and irreversible nature of social evolution. The essential difference is that for Christians it is the path of the fall and regress of public morality, and for the adherents of these science-like quasi-religions it is the way of humanity's ascent to ever higher forms of organizing the social life activity. Only that scientific communism constantly postpones the time to achieve the establishment of a perfect society, while market fundamentalism is ready to create it immediately, demanding the elimination of state regulation and a comprehensive global liberalization.

In their manic desire to destroy the state, market fundamentalists also very much resemble the Bolsheviks, who viewed the state as a machine of political violence serving the interests of the ruling classes and interfering with the free development of productive forces. And, just as the Bolsheviks gave way to the Stalinist guards of the builders of socialism in one country, market fundamentalists are not allowed in the developed countries to operate the control levers of the economy. They are only involved to take part in external operations to dismantle the regulation systems of the national economies of peripheral countries in order to establish control over them on part of the corporations belonging to the nucleus of the world capitalist system that consists of the U.S. and its partners in the G-7.

According to the methodology under consideration, anything that does not fit into the quasi-religious views of market fundamentalists has no right to exist.

From the point of view of its adherents, state institutions should evolve only in the direction of simplifying and reducing their significance. Although truth be told, the result of this evolution is the same as in Christianity, that is, death. Only that in Christianity the death of the body is vanquished by the liberation of the soul, whereas in market fundamentalism the reward for its adherents for the death of the national economy is merely the appropriation of the next " spiritual" title of the world's best finance minister or banker by international " authoritative organizations."

The presented analysis reveals the logic of decision-making by market fundamentalists. They are sure of their rightness not because they have some secret or objective knowledge, but because they believe in the quasi-religion of market fundamentalism. In its essence, it is nothing more than a modern edition of the belief in the " golden calf, " which justifies all ways of increasing wealth and allows the elimination of any barriers that hamper this process. As opposed to the classic treatises of A. Smith, whom market fundamentalists revere as their first prophet, they do not attach importance to moral factors. They justify in advance any means of making a profit that are not prohibited by law. At the same time, the range of activities that they consider prohibited is very conditional and subject to constant erosion, up to legalization of drug business and financial pyramids. It is no wonder that big capital, consistently seeking to weaken state regulation, generously endows the servants of the cult of market fundamentalism with a variety of moral and material rewards. This is done in accordance with the economic interests of the offshore oligarchy, which is lavish with endless presentations of the same ideas to the ruling elite. Their apparent flimsiness and harmful consequences of use are masked by deliberately splendiferous forums with engagement of well-paid foreign experts, a flow of publications in authoritative journals, and conferring of sonorous titles on the most convincing prophets of banal ideas of market fundamentalism.

Another important reason for the popularity of the market fundamentalism ideology among the ruling elite is its comfortable nature. This ideology releases governmental power from responsibility for the development of the country and upgrade of the national well-being, since, according to models of market equilibrium, its intervention entails a deviation from equilibrium and reduces the efficiency of resource use. Large business is released from social responsibility, because it owes the state nothing but taxes. Small businesses and state employees are left to their own devices and earn as they can, taking a little risk in case of violation of the law. Corruption of the judicial system exempts from compulsory compliance with the latter, if there is an opportunity to make an arrangement.

The dominance of market fundamentalism in the minds of the Russian ruling elite is explained, firstly, by the economic interests of the offshore oligarchy, which represents the most influential group in the Russian economy. Secondly, by the uncompromising acceptance of its main provisions by the part of the expert community that has been taken to the bosom of the authorities, imposing on the public consciousness the cult of the golden calf, modernized in the spirit of pseudo-science. Thirdly, by technological convenience for the powers that be, which may not worry about anything, because the market will set things right.

The problem is that none of the above ruling elite groups expresses the need for the development of productive forces. The offshore oligarchy takes twice as much money out of Russia as it returns back; the amount of the capital taken out has reached a trillion dollars and continues to increase by a hundred billion a year, simultaneously with the annual evasion of taxes of a trillion rubles. The doctrine of market fundamentalism ignores the very existence of the real sector of the economy, and its advocates simply do not notice its disappearance. For this part of the expert community, an acknowledgment of the problems of productive forces development is tantamount to political suicide, since the policy justified by them has already led to their degradation. The same applies to the power brokers who implement this policy.

As a result of the reproduction of this vicious circle of collective irresponsibility, the ruling elite has pried itself away from the interests of developing the real sector of the economy. With the exception of a number of structure-forming enterprises of the military-industrial and the fuel-energy complexes, it is thrown at the mercy of speculative business, the interests of which are by no means wholly equal to all-national concerns. Most of them have very limited understanding of the prospects for long-term development of the economy. As was shown above, within the framework of the current economic policy, the latter is subordinated to external interests. They are reduced, mainly, to supplies of raw materials and reclamation of the Russian market. Inwardly oriented industries, machine building in the first place, remain not called for. The economy shifts to imports of equipment and to a foreign technological base, paying intellectual rent at the expense of natural rent and underpayment of labor.

The danger of the market fundamentalism ideology for Russia lies in its lack of understanding of the laws of technical and economic development, which also excludes the policy of modernization and raising the Russian economy to the level of advanced countries necessary for their use[176]. If Russia " sleeps through" another technological revolution based on a complex of nano- and bioengineering technologies, just as the USSR failed to take advantage of the achievements of the previous one based on information and communication technologies, there will be a similar political risk caused by the inadmissibility of a hopeless technological backwardness for the national public consciousness. Moreover, this lag will be accompanied by a significant drop in the standard of living due to a decrease in revenues from the export of hydrocarbons and metals, the relative need for which inevitably decreases as the new technological paradigm spreads. In this case, it is unlikely that Russia will be able to fulfill the functions of the leader of the antiwar coalition.

If there is something permanent in the process of economic evolution, then this is scientific and technological progress that ensures a progressive development of productive forces and an advancing increase in the growth of labor productivity and production efficiency. At the present stage of economic development, its contribution to the GDP growth of advanced countries reaches 90%. It is also the main factor in increasing efficiency and reducing production costs, ensuring a reduction in inflation alongside with the growth of investments in the development of new technologies. Therefore, the ideology of market fundamentalism based on the paradigm of economic equilibrium is inadequate to reality, and the practical recommendations based on it are useless at best, and, as a rule, harmful.

A continuous innovation process, characteristic of the leading branches of modern industry and services, does not allow the economy to reach a state of equilibrium, as it has acquired a chronically nonequilibrium character. The main prize of market competition is the possibility of extracting intellectual rent obtained owing to technological superiority, protected by intellectual property rights and allowing to derive super-profits as a result of achieving greater production efficiency or higher product quality. In pursuit of this technological superiority, leading companies constantly replace a lot of technologies, the productivity of production factors varies widely, not allowing the equilibrium point to be determined even theoretically. The attractors arising in the evolution of the economic system, determined by the limits of development of existing technologies, are temporary, since they disappear and are replaced by others with the advent of new technologies.

In modern economic science a new paradigm has been formed that studies the processes of economic development in all their complexity, nonequilibrium, nonlinearity and uncertainty[177]. There is no need to lay out its basis within the framework of this chapter. It suffices to establish the inadequacy of market fundamentalism to modern scientific concepts of the economic development processes. Its underlying paradigm of market equilibrium cannot explain either the phenomenon of scientific and technological progress, which has become the main factor of economic growth, or the diversity of economic practices, many of which clearly do not fit into the views of market fundamentalists. The mainstream economic theory based on models of market equilibrium tries to ignore either of them. However, thereby it becomes archaic, since a theory that cannot explain the most significant manifestations of its subject of research can no longer be considered scientific.

Among the most significant manifestations of modern development that do not fit into the ideology of market fundamentalism, one should also note the structural crisis of the world economy and the shift of its development center to Asia. Both of these processes, fundamentally changing the character of the modern economy, were timely predicted by Kondratieff’s theory of long waves[178] and by the theory of centennial accumulation cycles[179].

It was shown above that the American cycle of accumulation is replaced by the Asian one. The imperial world economic paradigm, which was ideologically served by quasi-religious doctrines, gives way to the integral one, the ideological basis of which is represented by a systemic approach to achieving harmony of interests based on the growth of public welfare. This means that the claims of market fundamentalists to " secret knowledge" of the best ways to manage the economy are groundless, and their statements about the end of the world in the sense of the final establishment of the U.S.-centric global liberalization model are absurd. In fact, this model has reached its development limits and entered the phase of self-destruction under the influence of internal contradictions. Therefore, as shown above, it became outmoded and obsolete with respect to production relations that are being formed in China and other countries of the nucleus of the new centennial accumulation cycle.

This statement seems strange to market fundamentalists. Like real dogmatists, they do not wish to see the obvious facts that do not fit into the system of their views and perceptions. Governmental use of market mechanisms to achieve the planned indicators does not fit into their view of the world. The same applies to large loans financed by money issue and absorbed by private businesses in the priority development areas set by the state. Or, specifically, to state regulation of prices for basic goods that generate costs, in order to create favorable conditions for private entrepreneurship. Not to mention currency regulation and control, which does not prevent transnational corporations from making huge investments in leading Asian economies.

All these mechanisms of private-public partnership that are characteristic not only of socialist China, but also of completely capitalist Japan, South Korea, India, the countries of the Middle East, are rejected by market fundamentalists as obsolete and unpromising. They do not bother to prove this assertion, referring to the fact that similar mechanisms that operated not so long ago in Western Europe and many developing countries were curtailed. In their view, the U.S. model of capitalism is the most perfect one, and only time is needed for it to spread throughout the whole world. They do not reflect on the reproduction of the obvious inequality between the nuclear countries and the periphery of the American cycle of accumulation, in which the post-Soviet space is bogged down. Another thing ignored by them is physical impossibility of spreading the U.S. mass consumption type to the whole world due to the objective resource limitation.

The Soviet experience in managing economic development is also taboo for market fundamentalists, despite the obvious feats of socialist construction, which made it possible for the USSR not only to win the Second World War, but also to create the so-called " second world" that comprised one-third of the planet. Many elements of this experience were accepted and preserved by China, Vietnam, India, and formed the basis of the institutional structure of the Asian cycle of accumulation. The USSR was the trailbreaker in creating a culture of public administration of economic development, and not at all a dead end of economic civilization, as it seems to market fundamentalists.

The socialist experience also has been studied and used in the core countries of the American accumulation cycle, especially in the sphere of creation of public institutions of forecasting, indicative planning, social security and management of the scientific and technological progress. At the same time, the U.S. oligarchy that attained the global hegemony after the collapse of the USSR no longer needed state support. Not only the mechanisms of indicative planning and public control over prices and transboundary movement of capital were curtailed. Many prospective studies, social programs, international investment projects have also dwindled. The institutional system of the imperialist global economic paradigm has become rigid after competition had terminated. It has passed to the phase of global expansion and ceased to develop qualitatively. The apologists of market fundamentalism believed that the desired " Fukuyama-ish" end of history was there, with no obstacles remaining for the domination of big capital.

They were mistaken, because they were not familiar either with the theory of long waves, or with the concept of centennial cycles of capital accumulation, and also ignored numerous cross-country comparisons that testified to the monstrous failures of IMF policies in developing countries. It was of little concern to them, just as the Western public was little concerned about the overexploitation of labor and the environment destruction by transnational corporations in developing countries. Then again, the massive achievements of China, India, Brazil, Malaysia, Vietnam, Singapore, the United Arab Emirates and other countries that rejected the recommendations of the Washington Consensus and preferred an independent development policy based on the institutions of the integrated world economic paradigm, had to puzzle the adherents of the American " end of history." But in an ecstasy with their " victory" over socialism they did not notice that in opposition to Washington, the " Beijing Consensus" had been formed as a model of an effective system for managing the development of the economy under the leadership of the world's largest Communist Party.

 

 

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