On June 5, Oleg Vyugin, Chairman of the Board of Directors of MDM bank, gave a lecture in the EUSP’s Conference Hall. The idea for the lecture came about from observing how various countries promote their own economic interests: why some achieve their proclaimed goals while others do not, pointing out that there is no single answer to this question.
On June 5, Oleg Vyugin, Chairman of the Board of Directors of MDM bank, gave a lecture in the EUSP’s Conference Hall. The idea for the lecture came about from observing how various countries promote their own economic interests: why some achieve their proclaimed goals while others do not, pointing out that there is no single answer to this question.
At the beginning of the lecture, the speaker discussed the traditional example of the Soviet Union, the reasons for which collapse are still questioned by many. One common explanation of what happened: “The economic system could not withstand global competition.” But we can look at this event in terms of contradiction between politics and economic interests. In certain periods, economic policy in the USSR was fully determined by political interests: society believed that the denial of private property and planned economy was advantageous, capable in the long term to create good living conditions. But, rather quickly, most of the population stopped believing in such a mechanism, and the imposed ideology became merely a tool of manipulation used to retain the power of the party elite. As a result, there was a lack of motivation for constructive activities among citizens that in turn led to the spread of an unproductive economic structure spread in which resources were used very ineffectively (80% of industry worked for the production of defense products). In its last years, the USSR decided to introduce private ownership in the sphere of small business and to grant citizens rights to own private property while maintaining a planned economy. This, however, came too late and the attempt was unsuccessful. The circle of people whose economic interests did not contradict the development of the soviet ideology in terms of equality and the absence of private property became too limited that finally determined the collapse of the USSR. After the collapse, the economic interests of various groups better corresponded to politics, which ensured positive dynamics within the Russian economy up until 2012.
A period of stagnation that followed also has different explanations, and here the speaker again proposed to look at what is happening in terms of contradictions between economic and political interests: has another decrease in the proportion of citizens whose interests correspond to current political decisions occurred? He mentioned several factors that contributed to the geopolitical events of 2014: 1) around 2007, a process began in which capital was concentrated in the hands of state and quasi-state companies, which reduced levels of competition and took resources away from more efficient non-state companies, and 2) there was a serious reversal in favor of unproductive expenditures (the Decrees issued in May 2012, escalating weapons costs). These events slowed down of economic growth, wherein problems of the effective use of resources intensified not only in the governmental sector—overregulation began to limit free competition within the private sector as well. As a result, entrepreneurial activity decreased within the Russian economy, investment volumes lowered significantly and the development of small businesses practically stopped.
At the same time Russia has many resources for economic growth that rest underused: accessible education, and high potential for improving labour ethic and the business environment. For now, the response to contemporary challenges in competing for intellectual resources within the country is limited, which leads more likely to short term rather than long term gains. In a contemporary world of universal globalization, a country’s existing advantages should be used (natural resources, already developed areas of the economy). The country will be able to move forward only when its politics reflects the interests of its most strategic groups (IT specialists, for example). When constructing the image of the future, universities should become main agents and have funds for research activities, public heath and other public and non-governmental institutions are also of great importance, concluded Vyugin.
Alena Skolkova
