The State should recognize, and the Government should finally understand, that the "secret" of the supply and demand economy lies not in private ownership, but in competition.
The transformational processes that took place in Kazakhstan and aimed at reforming the national economy did not lead to the expected results. Moreover, a deeply layered system of corruption was formed in the country and, as a result, the economy of the plutocracy was built.
At a meeting with big business, President Kassym-Jomart Tokayev spoke objectively and honestly about the key problems of the socio-economic development of the republic.
Of course, the "pain points" noted by him were known earlier, but the Head of State presented capacious, non-trivial assessments that caused a positive reaction in society. He emphasized that "the dissonance between the declared socio-economic agenda and the actual state of affairs has gained critical mass," calling for "lessons to be learned and urgently start working together to build a new economic policy for the new Kazakhstan."
A small ex course is appropriate here. As you know, in Kazakhstan, and in almost all other post–Soviet countries, reforms were carried out on the recommendations of international organizations - the World Bank and especially the International Monetary Fund. According to the figurative expression of Academician V. Polterovich, they were based on the idea of "transplantation of institutions" from developed countries, primarily Europe and the USA.
There are two well-known approaches to economic reform. The first is a radical one, involving the implementation of the maximum number of reforms in the shortest possible time, called SLP – stabilization, liberalization, privatization. It was based on the recommendations of the Washington Consensus.
According to many prominent economists, Nobel laureates (J. Stiglitz, L. Klein, V. Leontiev, J. Tobin), as well as internationally recognized Russian scientists (S. Shatalin, V. Polterovich and others), reforms based on SLP in almost all states of Latin America, Central and Eastern Europe, and state economies The CIS turned out to be unsuccessful or, at least, ineffective. Kazakhstan is no exception here.
The second approach – partial transformations and their gradual deepening – is called ICU (institutionalization, competition, management). China has chosen this path of reform, followed by Vietnam. China's successes are undeniable. Vietnam began exporting rice two years after the start of the reforms. Before that, domestic consumption of such an important product for the Vietnamese was heavily dependent on imports.
Now our country has a unique opportunity to build a fundamentally different development model based on the new economic policy (NEP). The question is legitimate: what needs to be done to develop and implement a NEP adequate to modern challenges and realities? I will share some thoughts.
it is clear that the socio-economic development of the republic has accumulated a host of problems waiting for an objective, adequate solution. First, the basic principles of the ICU approach should be used in the development and implementation of the NEP.
I think it is necessary to conduct a meaningful analysis of the existing institutions in order to: a) to preserve those that are necessary for a new economic policy; b) to get rid of those that hinder normal development and/or are created to please the plutocratic economy. Of course, this significantly affects the legislative framework, the need for a critical analysis of which is also beyond doubt.
Secondly, it is necessary to create a transparent and effective competitive environment. On the one hand, the best resources will be acquired from artificially created monopolistic as well as uncompetitive enterprises and companies; on the other hand, it stimulates the development of the real sector, entrepreneurship, including small and medium-sized enterprises. As a rule, competing enterprises and companies become the driving force of production, employment and exports. Their creation, as the experience of a number of countries has shown, will be more effective than the privatization carried out in our country, often in private.
Thirdly, professional and, as a result, effective management, in which the leading role belongs to the Government of the country and regional government bodies. An important caveat should be made here. Adam Smith argued that "under certain conditions, the behavior of individuals pursuing their own interests leads to the common good as if they are guided to it by an invisible hand." But, as noted by the authoritative Indian economist K. Basu, "... conservative popularizers distorted Smith's idea and prevented our understanding of how the economy works, why some economies fail and others succeed, and what the nature and role of government intervention may be." Smith's thesis about the "invisible hand" of the market, taken out of context, has long been turned into a "corrupt" hand of the market by domestic poorly educated ersatz "managers".
It seems to us that now the Kazakh economy needs the "invisible hand" of the state, whose role will be to create effective institutions and enterprises.
First of all, we are talking about laws, rules, the framework of economic activity and the social system. The prerogative of the Government, which is identified with the state, is the development of the NEP.
It includes the following organic components (policies): macroeconomical, industrial, foreign trade, investment, social, employment policy, regional, agricultural, scientific and technological, innovative, monetary, tax, integration...
Each of the constituent segments of the NEP should contain the following provisions: an in-depth analysis of the current situation from 2001 to the present; identification of key problems in the development of a certain sector of the national economy; a critical analysis of current programs in each of these areas of the economy.
In particular, a new look at the national projects developed and approved last year is needed, as well as an analysis of the existing legislative framework in each area. Next, it is necessary to determine the priority direction of development of each sphere with justification and expected results; specific proposals on these components of economic policy. What is especially important, these components of the NEP should be organically linked to each other, for example, industrial, scientific, technological and innovative, etc.
Unfortunately, a weak, often unprofessional and plutocratic government creates a kind of power vacuum that facilitates the transfer of resources to corrupt corporate and clan structures.
On the contrary, a strong government and regional authorities should create conditions leading to the construction of an effective supply and demand economy. Effective support is needed for both public and private property. It seems that this is the role of the "invisible hand" of the state. The experience of many countries has shown that the "policy of non-interference" of the state proclaimed by the libels of the so-called "shock therapy" has not justified itself.
The State should recognize, and the Government should finally understand, that the "secret" of the supply and demand economy lies not in private ownership, but in competition. This opinion is shared by many of the most authoritative foreign economic scientists who were mentioned at the beginning of the article.
Neoliberal theory and its adherents consider economics, in the figurative expression of J. Stiglitz, "through the lens of "free" markets." In reality, in his opinion, "the truth is exactly the opposite: achievements in the field of economics over the past 70 years directly indicate the limitations of free markets."
It is necessary that the income received from the export of hydrocarbons, ferrous and non-ferrous metals be spent not on the import of products that can and should be produced in Kazakhstan, but on means of production for the modernization of technologically backward enterprises. It is necessary to get rid of the Harlem education system, which is blindly copied by officials far from this sphere.
There is no doubt that it is necessary to significantly raise the importance of science, which should play a leading role in the development of productive forces. Very serious changes are needed in the field of social relations. First of all, they are aimed at reducing income inequality and forming a full-fledged middle class.
We have repeatedly written both in scientific publications and in the media about the difference between GDP and GNI – gross national income (see, for example, the article "Asymmetries and challenges of global development" in the KP dated 08/12/2016).
The difference between GDP and GNI represents net factor payments, the main component of which is income from investments, and a much smaller share is accounted for by net wages paid to foreign citizens working in a certain country. Naturally, most of this salary is repatriated from the host country.
GNI is one of the key indicators of economic development. It can be significantly less than GDP if a significant part of the income received in the country is legally exported from it by foreign companies or citizens. On the contrary, if the citizens of a given country own a large number of securities of foreign companies or governments and receive income from them, then GNI will be greater than GDP. For most countries of the world, GDP and GNI differ slightly and are often considered interchangeable.
Source: kazpravda.kz
The transformational processes that took place in Kazakhstan and aimed at reforming the national economy did not lead to the expected results. Moreover, a deeply layered system of corruption was formed in the country and, as a result, the economy of the plutocracy was built.
At a meeting with big business, President Kassym-Jomart Tokayev spoke objectively and honestly about the key problems of the socio-economic development of the republic.
Of course, the "pain points" noted by him were known earlier, but the Head of State presented capacious, non-trivial assessments that caused a positive reaction in society. He emphasized that "the dissonance between the declared socio-economic agenda and the actual state of affairs has gained critical mass," calling for "lessons to be learned and urgently start working together to build a new economic policy for the new Kazakhstan."
A small ex course is appropriate here. As you know, in Kazakhstan, and in almost all other post–Soviet countries, reforms were carried out on the recommendations of international organizations - the World Bank and especially the International Monetary Fund. According to the figurative expression of Academician V. Polterovich, they were based on the idea of "transplantation of institutions" from developed countries, primarily Europe and the USA.
There are two well-known approaches to economic reform. The first is a radical one, involving the implementation of the maximum number of reforms in the shortest possible time, called SLP – stabilization, liberalization, privatization. It was based on the recommendations of the Washington Consensus.
According to many prominent economists, Nobel laureates (J. Stiglitz, L. Klein, V. Leontiev, J. Tobin), as well as internationally recognized Russian scientists (S. Shatalin, V. Polterovich and others), reforms based on SLP in almost all states of Latin America, Central and Eastern Europe, and state economies The CIS turned out to be unsuccessful or, at least, ineffective. Kazakhstan is no exception here.
The second approach – partial transformations and their gradual deepening – is called ICU (institutionalization, competition, management). China has chosen this path of reform, followed by Vietnam. China's successes are undeniable. Vietnam began exporting rice two years after the start of the reforms. Before that, domestic consumption of such an important product for the Vietnamese was heavily dependent on imports.
Now our country has a unique opportunity to build a fundamentally different development model based on the new economic policy (NEP). The question is legitimate: what needs to be done to develop and implement a NEP adequate to modern challenges and realities? I will share some thoughts.
it is clear that the socio-economic development of the republic has accumulated a host of problems waiting for an objective, adequate solution. First, the basic principles of the ICU approach should be used in the development and implementation of the NEP.
I think it is necessary to conduct a meaningful analysis of the existing institutions in order to: a) to preserve those that are necessary for a new economic policy; b) to get rid of those that hinder normal development and/or are created to please the plutocratic economy. Of course, this significantly affects the legislative framework, the need for a critical analysis of which is also beyond doubt.
Secondly, it is necessary to create a transparent and effective competitive environment. On the one hand, the best resources will be acquired from artificially created monopolistic as well as uncompetitive enterprises and companies; on the other hand, it stimulates the development of the real sector, entrepreneurship, including small and medium-sized enterprises. As a rule, competing enterprises and companies become the driving force of production, employment and exports. Their creation, as the experience of a number of countries has shown, will be more effective than the privatization carried out in our country, often in private.
Thirdly, professional and, as a result, effective management, in which the leading role belongs to the Government of the country and regional government bodies. An important caveat should be made here. Adam Smith argued that "under certain conditions, the behavior of individuals pursuing their own interests leads to the common good as if they are guided to it by an invisible hand." But, as noted by the authoritative Indian economist K. Basu, "... conservative popularizers distorted Smith's idea and prevented our understanding of how the economy works, why some economies fail and others succeed, and what the nature and role of government intervention may be." Smith's thesis about the "invisible hand" of the market, taken out of context, has long been turned into a "corrupt" hand of the market by domestic poorly educated ersatz "managers".
It seems to us that now the Kazakh economy needs the "invisible hand" of the state, whose role will be to create effective institutions and enterprises.
First of all, we are talking about laws, rules, the framework of economic activity and the social system. The prerogative of the Government, which is identified with the state, is the development of the NEP.
It includes the following organic components (policies): macroeconomical, industrial, foreign trade, investment, social, employment policy, regional, agricultural, scientific and technological, innovative, monetary, tax, integration...
Each of the constituent segments of the NEP should contain the following provisions: an in-depth analysis of the current situation from 2001 to the present; identification of key problems in the development of a certain sector of the national economy; a critical analysis of current programs in each of these areas of the economy.
In particular, a new look at the national projects developed and approved last year is needed, as well as an analysis of the existing legislative framework in each area. Next, it is necessary to determine the priority direction of development of each sphere with justification and expected results; specific proposals on these components of economic policy. What is especially important, these components of the NEP should be organically linked to each other, for example, industrial, scientific, technological and innovative, etc.
Unfortunately, a weak, often unprofessional and plutocratic government creates a kind of power vacuum that facilitates the transfer of resources to corrupt corporate and clan structures.
On the contrary, a strong government and regional authorities should create conditions leading to the construction of an effective supply and demand economy. Effective support is needed for both public and private property. It seems that this is the role of the "invisible hand" of the state. The experience of many countries has shown that the "policy of non-interference" of the state proclaimed by the libels of the so-called "shock therapy" has not justified itself.
The State should recognize, and the Government should finally understand, that the "secret" of the supply and demand economy lies not in private ownership, but in competition. This opinion is shared by many of the most authoritative foreign economic scientists who were mentioned at the beginning of the article.
Neoliberal theory and its adherents consider economics, in the figurative expression of J. Stiglitz, "through the lens of "free" markets." In reality, in his opinion, "the truth is exactly the opposite: achievements in the field of economics over the past 70 years directly indicate the limitations of free markets."
It is necessary that the income received from the export of hydrocarbons, ferrous and non-ferrous metals be spent not on the import of products that can and should be produced in Kazakhstan, but on means of production for the modernization of technologically backward enterprises. It is necessary to get rid of the Harlem education system, which is blindly copied by officials far from this sphere.
There is no doubt that it is necessary to significantly raise the importance of science, which should play a leading role in the development of productive forces. Very serious changes are needed in the field of social relations. First of all, they are aimed at reducing income inequality and forming a full-fledged middle class.
We have repeatedly written both in scientific publications and in the media about the difference between GDP and GNI – gross national income (see, for example, the article "Asymmetries and challenges of global development" in the KP dated 08/12/2016).
The difference between GDP and GNI represents net factor payments, the main component of which is income from investments, and a much smaller share is accounted for by net wages paid to foreign citizens working in a certain country. Naturally, most of this salary is repatriated from the host country.
GNI is one of the key indicators of economic development. It can be significantly less than GDP if a significant part of the income received in the country is legally exported from it by foreign companies or citizens. On the contrary, if the citizens of a given country own a large number of securities of foreign companies or governments and receive income from them, then GNI will be greater than GDP. For most countries of the world, GDP and GNI differ slightly and are often considered interchangeable.
Source: kazpravda.kz