The goal of fiscal policy should not be restoration of the economy to its pre-crisis form, but structural restructuring

As one might expect, the restoration of economic growth did not become synonymous with recovery from the crisis. The dynamics remain unstable and largely tied to government incentives rather than natural household demand. The need to maintain a high level of budget expenditures while it is impossible to raise taxes implies an increase in public debt. But the obligations will have to be paid, and paid over time.

The governments of the world's leading countries are faced with a difficult and fundamentally important choice for the prospects of global development. This is a choice between tightening fiscal policy and continuing fiscal stimulus. The first path will contribute to macroeconomic recovery in the long term, but its immediate result may be a recession and loss of power by the ruling parties. The second path will support current economic growth, but is fraught with problems that will take a decade, if not longer, to navigate.

The “austerity vs. stimulus” debate is gaining momentum among economists and politicians. Both sides actively refer to John Maynard Keynes, who once proposed stimulating economic policies. To Keynes's credit, he never recommended its use on the scale that, under the cover of his authority, was used in the 1970s, when President Nixon declared himself a “Keynesian.”

This discussion, in my opinion, does not accurately reflect the real problem. Its main drawback is in the attempt to find a solution in the logic of business as usual, that is, in an attempt to restore the pre-crisis rules of the game, the pre-crisis growth model - and the successful continuation of the pre-crisis economic policy. The question comes down to what is better to sacrifice to weather the current troubles - economic growth or financial stability.

In fact, this debate at the national level reproduces the logic of behavior of large enterprises: you have to wait, get and restructure loans, and then everything will go on as before.

The key problem of this approach in both cases is the actual rejection of the modernization component of the anti-crisis policy. The expectation of a recovery in growth, whether at the micro or macro level, pushes governments to maintain stability as much as possible and avoid anything that would undermine their electoral position. This is especially noticeable in the economic policy of the United States, where important midterm elections will be held in the fall, which is why the administration is slow to tighten policy, demanding the same from its G20 partners.

Meanwhile, the problem lies deeper. The great crisis, as it was in the 1930s and 1970s, carries with it a powerful modernization charge. This is not a cyclical, but a structural crisis; overcoming it requires reaching new levels of competitiveness, new economic and technological solutions.

The recovery from the crisis is not reflected in the growth figure, just as its beginning did not coincide with the beginning of the recession. The question is about a new growth model and a new model for regulating socio-economic processes - now, apparently, on a global scale. This requires responsible, conservative fiscal policies—policies that encourage renewal rather than helping traditional businesses maintain their place in the market.

What needs to be stimulated is not growth itself (short-term, of course), but structural renewal. This is not a naked appeal or a beautiful phrase. If we recall the experience of post-communist reforms, in most countries of Central and Eastern Europe (including the former USSR), liberalization and stabilization measures became the basis for structural reforms that ensured the revival of these countries.

The choice between tightening and stimulating does not come down to the question of whether expansionary or conservative fiscal policies are preferable. The main thing here is the signal to economic agents - whether they should be maintained or modernized. Hard budget restrictions, with all their socio-political problematics, create conditions for renewal, while soft budget restrictions, mitigating current problems, lead to a severe structural crisis in the future. The Soviet Union opted for incentives in the mid-1980s. The result is known.

The author is the rector of the Academy of National Economy under the Government of the Russian Federation, editor-in-chief of the journal “Economic Policy”

Stimulation or modernization