Deconstructing Putinomics

© RIA Novosti . Sergei Mamontov / Go to the mediabankIn his recent article, “We Need a New Economy,” prime minister and presidential candidate Vladimir Putin combines elements of different and sometimes contradictory economic theories – from neo-liberalism to the basic tenets of Marxism.
In his recent article, “We Need a New Economy,” prime minister and presidential candidate Vladimir Putin combines elements of different and sometimes contradictory economic theories – from neo-liberalism to the basic tenets of Marxism.  - Sputnik International
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In his recent article, “We Need a New Economy,” prime minister and presidential candidate Vladimir Putin combines elements of different and sometimes contradictory economic theories – from neo-liberalism to the basic tenets of Marxism.

In his recent article, “We Need a New Economy,” prime minister and presidential candidate Vladimir Putin combines elements of different and sometimes contradictory economic theories – from neo-liberalism to the basic tenets of Marxism.
This is actually a prominent trend in economics today – the blurring of borders between schools of economic thought and the diffusion of terms and ideas. The officials responsible for their countries’ economies seek to incorporate the best features of various schools.
Economic eclectic
Economic experts noted this eclecticism in Putin’s economic program and recognized the various economic doctrines it borrows from.
Ruslan Grinberg, director of the RAS Institute of Economics, said, “[Putin’s article] is a hodgepodge. On the one hand, he says that it is necessary to overcome deindustrialization and to choose priorities, and that this is the state’s responsibility – and in this sense he is a dirigiste [a doctrine regarding government involvement in the economy, with indicative planning in certain sectors – RIA Novosti], an economic planner. But then he says it is unacceptable for the state to interfere in the economy and speaks of the need to sell assets, like fossil fuel companies, which is an example of neo-liberalism.”
According to Valery Mironov, deputy director of the Development Center Institute, the prime minister’s effort to combine various economic ideas could be explained by either the complicated economic and political situation in Russia or simply by the way Putin thinks.
Mironov thinks that Putin’s ideas about the primacy of foreign trade, access to foreign markets, and economic growth through high-tech exports reflect neo-classical macroeconomic thinking, which is based on the idea of “ideal competition.”
The latest approach to foreign trade, according to Mironov, is based not on the primacy of certain economic sectors, as Putin contends, but on concrete enterprises in the most diverse industries. “It may be just a handful of enterprises in different industries, and it is these enterprises that require support,” Mironov says, noting that Putin “is still pushing the old idea about supporting select sectors.”
Mironov believes that the idea of supporting certain industrial sectors conforms to the European historic school that appeared in the late 19th-early 20th century. It encouraged protectionism, and its incarnations in the mid 20th century relied, as dirigisme, on indicative planning.
Meanwhile, some experts believe that in his article Putin ignored all academic schools.
Yury Danilov, director of the Financial Market Development Center, said, “There are sound ideas in this program and they prevail, but I haven’t noticed any reliance on an economic school of thought. His understanding of the role of the state is very strange – instead of establishing the rules of the game and monitoring compliance with them, as well as minimizing and insuring risks, the state is meddling in sectors where the income-risk ratio is inadequate. I don’t think it [this kind of government policy] conforms with any of the existing schools.”
Melting pot
There is nothing surprising in the eclecticism in the prime minister’s strategy, as the second half of the 20th century saw the convergence of economic doctrines and schools. Economic theories have converged since the 19th century. Advocates of different doctrines often borrow successful ideas and terms, sometimes expanding on and distorting them.
The concept of center versus periphery introduced by John Friedman and developed by the advocates of world system analysis is being used everywhere and sometimes in ways that Friedman and Wallerstein would not recognize. These advocates seem to deny the provisions of civilization-related school but in some of their work they speak about the influence of civilization-related differences on the formation of economies.
As for politicians and officials, they prefer not to be limited by any schools at all.
“There is no dominant school in the policy of any advanced country,” Danilov says. “All governments use a combination of the best recommendations from different schools. Monetarism may prevail in finances, dirigisme in industrial policy, and market regulation may be based on post-Keynesian ideas.”
Anglo-Saxon civilization has always been pragmatic. Despite having given rise to a host of economic theories, it has preferred to be guided by precedent rather than doctrine.
Grinberg believes this is especially relevant now because the economic crisis will make it necessary to revise economic doctrines. “The ultra-liberal school that has replaced post-Keynesian ideas is still in the driver seat. But the crisis has shown that this is absolutely counterproductive. The paradigms of economic thinking are about to change – there will be a new economic theory that will combine state activity with private initiative and environmental responsibility,” he predicts.
What the prime minister did not mention
Experts believe that in his wide-ranging article Putin neglected one school that is in the economic mainstream in the West.
This is neoinstitutionalism, a modern economic theory developed in the United States in the 1970s based on the inseparable link between politics and the economy. It emphasizes the importance of establishing and upgrading the rules of the game (institutions), which are the catalyst of economic growth.
“This theory links economic issues with political ones,” Mironov explains. “Political competition is necessary for economic competition and for the development of productive forces.”
Marx, for his part, insisted that the economy prevails over politics, that is, the economy is the foundation of everything, including the socio-political model. The modern version of neo-classicism is the closest to Marxist theory. Meanwhile, Lenin argued for the supremacy of politics.
“Now [Putin] actually proceeds from Marxism,” Mironov says. “Putin considers the economy to be more important than politics, and he believes institutions are of secondary importance, as if they can emerge by themselves. But they won’t. It is necessary to reform the political system, but he doesn’t say a word about this.”
Danilov attributes this to Putin’s desire to concentrate on practical issues, because he thinks that practice is more important than theory. The expert considers this view to be the main drawback of the article.
“The issues of the institutional economy must be more important for the president than import duties,” Mironov agrees.

The views expressed in this article are the author’s and may not necessarily represent those of RIA Novosti.

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