In its previous issue Novaya Gazeta told that one of the most noticeable events of the last pre-election week was presentation of the economic report prepared by a collective of authors from the Russian Academy of Sciences (RAS). The report was edited by Ruslan Grinberg, director of Institute of Economics at RAS, corresponding member of RAS. The experts have put in doubt the economic policy carried out during last eight years. The primitivization of Russian economy is not only going on, but it’s increasing every year leading to constant aggravation of the state of social sphere. The authors of the report call the country’s leadership to giving up making a fetish of economic growth and to concentrating on the humane aspects of development. Below, Mr. Grinberg gives his point whether such a social turn is possible and what we are supposed to expect from the renewed country’s leadership.   

Q: Your report has made a big noise not only due to an extended criticism of the economic outcomes of Putin’s reign, but also due to the fact it contains conclusions and recommendations much different from campaigning promises by Medvedev. Whose reaction did you calculate for and who did you address your report to? 

A: According to my knowledge, Dmitry Medvedev has the text of the report at his disposal. But the matter is not about that. Many members of the academic community, my colleagues, they just think it to be most important to bring our opinions and thoughts of what should be done to the top persons making decisions. I believe all that to be just an illusion. There are different scholars, different academic groups, and different views on same issues. And why must Medvedev or Putin take exactly our advice and not take for example the concept by Gaidar, Chubais or Auzan?  

Q: This is the market, competition of ideas.

A: Struggling for being in favor with the top person in the country is not competition of ideas. Competition is good for political forces and parties with their programs, including their ideas of social-economic development. And the citizens, who may not be very good at understanding political and economic matters, should be able to make their choice of this or that party. For example, if this time they place their trust with liberals, and the liberals are not answerable to their hopes – inflation growing, pension system not working and so forth – then at the next election they will just vote for another party, social-democratic one, for example. By the way, I consider my views to be social-democratic. 

This is the safest means of correction of economic policy and, as a rule, it affects positively the social-economic situation. Take the Eastern European countries where really working competitive political system was created after socialist camp collapse. Those countries have had nothing like our default crisis of 1998.  

Q: Judging from the last presidential campaign, there is absolute lack of political competition in our country?  

A: Yes, there is. To me personally, Dmitry Medvedev seems to be rather good, but the lack of real contest leaves you with a bad taste in your mouth and a feeling of have been had. Of course, this is very bad for the country. It doesn’t need a well educated dictator whom everyone, including the scholars, would focus on. I would hate trying to pass my economic report to the president through his “driver’s relatives”, hoping that the president would read it, would understand everything and would do what he reads in the document. 

Q: Political competition did exist in the 90’s. But was there a strong political force to offer alternative concept of the social-economic development? 

A: Unfortunately, by the early 90’s our society hadn’t developed rational-pragmatic concept of the minimal painful transformations. Frankly speaking, the society didn’t need such a concept. Our intelligentsia and people masses had a false attitude inclined to unlimited liberalism. But when you go up too quickly from slavery to freedom you get caisson disease and lose your wits. People got to believe it would suffice just to turn away the communists and everything would get in good order by itself. This idea was the foundation of the Yeltsin and his young-reformers team’s economic policy. They decided that differently from socialism - that had to be built up - capitalism was just the matter of permission, after which the market would lead us to the “sunny side of the street”. That resulted in absolute anarchy where, naturally, the strongest won. The strongest was oligarchic capitalism. Now it has been replaced with bureaucratic capitalism. Both kinds obviously proved to be anti-social: two thirds of our people are still struggling to survive on their own. As for the rest – wealthy, rich and super-rich – they are more homagers than citizens.          

Q: And what about Russians’ love for the “strong arm” and their craving for “paternalistic state”? 

A: Demand for “strong arm” really exists. This is a reaction to the mess of the 90’s. As for paternalism, it’s only talked about by those who managed to get access to the state means, using this rhetoric. In reality, our people do not count on anyone and do not expect anything from anyone. The words “reform”, “democracy” and “freedom” irritate our people most of all. To my mind, this is the worst defeat by the post-soviet society. I don’t like the term but really our society is “atomized” today. A person just goes away deep into one’s own private life where he/she hopes to have individual good luck.  I know many young, well-educated and rich businessmen. They are wiling to go to Marseilles to fan for Spartak or to go collectively on safari in Africa. But along with that their collective and civil self-actualization leaves much to be desired.        

Q: So if Medvedev wants to be up to the social expectations, it’s better for him to give up the idea of making a reform?  

A: What reforms are you talking about? Everyone knows that we need independent courts and we need to reduce our bureaucratic apparatus. These are right and obvious things, no more. It’s nonsense to hope that people after some painful reforms will change at once and begin to do wonders. That’s gibberish.  

We’ve been making deep transformations for twenty years and along with that we say that we cannot set about unpopular measures.

Q: So what the economic policy by the state should be like?

A: In our report we have tried to ground the thesis about necessity of strategic planning, while saving the democratic liberties given to us by Gorbachev. Preservation and development of democratic institutions does not exclude the mobilizing function by the state in the innovative renewal of the domestic economy.  

Q: Can our state mobilize the society for achieving some constructive goals, and not only struggle against internal and foreign enemies?

A: Yes it can, if we mean as a constructive goal the stopping of processes of de-intellectualization and spiritual degradation. It’s state that is to be engaged with restoration of education, public health, science and culture – this is what happens in civilized world. We must spend big money on it and must not be afraid that the money would be stolen. Not all people are thieves. There are a lot of young and talented young people willing to work for their country. They just do not feel to be in demand at the moment.   

Q: So you suggest investing our petroleum dollars in human capital?

A: Of course. Differently from my colleagues, “provincial” liberals, I reckon this to be bliss, not curse. If we don’t reverse the situation in present “fat” years, we are more likely to fail to do this in “thin” years.  

Q: In the mean time, in the three-year budget our spending on education, public health, science and culture is growing with the slowest pace, and Medvedev and Putin spoke for lowering taxes which wouldn’t help making our budget bigger. 

A: I reckon it to be ungrounded the cuts of state spending and reduction of tax load on business. Everyone who want to succeed in business today, they just do it no matter what the tax rate is – 30% or 50%. 

Q: And if we do not lower the taxes, how else the state would be able to help small- and middle-sized businesses?

A: There is an investment fund in Israel. It works like Hollywood – it gives money to everyone, clearly realizing that 97% of the investments would fail, and 3% will return and that profit will be many times more than charges that might seem to be unrequired. This is the stake made at the creative potential. It is risky but very effective.    

Q: Talking of campaigning promises. Initially, Medvedev was presented as a “social-oriented” deputy prime minister, but during his official campaign his emphasis got shifted to macro-economics. It’s enough to remember his four “I’s”: innovations, investments, infrastructure and institutions. Why is it so?     

A: This is natural. Why did he refuse taking part in TV debates? There one must analyze difficult problems and respond to reproaches. Of course it’s easier to say things that sound nice and in a modern way and do not relate to people’s lives directly. It’s been 17 years that same economic policy is carried out in our country. To my mind, the policy is ineffective. Thanks god, we still can get profits out of our innumerable natural resources. But such a policy has led domestic human capital to the state where it is very difficult to deal with constructive tasks. This is why Medvedev restricted himself to rhetoric instead of setting concrete goals. However, it’s about time now when we passed from words to deeds.     

Q: The rhetoric could have been useful too, if the presidential candidate instead of doubling GDP had promised closing the gap between rich and poor which is expressed now with unacceptable factor of 16.

A: I shall repeat that the fewer specifics we talk about, the better for Medvedev. And from the PR point of view, the four “I’s” is just a brilliant campaigning move.

Q: Well, now with the election being over, will it be Medvedev to do something for prioritizing the social sphere or it will be Putin’s responsibility in his capacity of prime minister?

A: The character of their future interaction is the biggest mystery of today. I don’t think that Putin is so naïve to believe he will be able to control the top person from the position of prime minister. There has never been any precedent, except cases where one of the rulers was weak-minded, under age etc. At a certain stage Medvedev will start to reflect anyway and ask himself a question: “Who am I? What am I doing? Is my function only meeting kings and presentation of credential?” In such a situation constructive objectives wouldn’t matter much and the urgent issue would be settling the real configuration of power. It’s not the task only for the both men, but also for their entourage. And that seems to be very difficult.

P.S. Tuesday Prime Minister Viktor Zubkov and economic development minister Elvira Nabiullina met the members of academic community at the Academy of national economy. Alexander Dynkin, director of the Institute of the World economy and foreign relations, Yaroslav Kuzminov, rector of Higher School of economics, Alexander Nekipelov, vice-president of the Russian Academy of sciences, and other experts offered their variants of strategy of development of the country up to 2020. However, the idea of refusing making a fetish of the GDP growth and concentrating on social aspects did not get either to Mr. Zubkov or to Mrs. Nabiullina. It appears that the concept of development, that is to be prepared by May by the Putin’s order, will be maturing separately in the cabinet ministers.