Photo: Oleg Yakovlev/RBC

The cyclical crises that Russia has faced in the past are usually overcome when the resulting bubble is deflated. The current systemic crisis will not go away on its own; a transformation of the entire economic policy is required.

The usual model doesn't work

In 2000–2008, there was progressive economic growth, which allowed GDP to almost double over a decade. The average annual growth rate was about 7%. However, as we approached the pre-crisis level, signs of exhaustion of the existing model of economic growth appeared.

This model was based on a constant accelerated growth in demand (thanks to the rapid rise in oil prices and the influx of petrodollars) while lagging behind in the growth of labor productivity and product competitiveness. Institutional reforms, begun and successfully implemented in 2000–2003, gradually began to wind down. The quality of institutions did not play a significant role in the presence of growing financial capabilities of the state. Despite undoubted macroeconomic successes and socio-political stability, it was obvious that the economy remained vulnerable to external shocks and could not make a qualitative breakthrough. The global crisis that began was of a systemic (or structural) nature and was comparable in scale and consequences to similar crises in the twentieth century—the 1930s and 1970s. Structural crises are unique, i.e. the experience gained in overcoming each of them has limited value in new conditions. And yet, there are a number of qualitative characteristics that allow them to be classified in the same class, i.e. These crises can be compared with each other, their characteristics taken into account, but anti-crisis policy recipes cannot be transferred from one of them to another.

Systemic crisis

We can highlight the following features inherent in systemic crises. Firstly, the crisis is associated with serious institutional and technological changes, with a change in the technological base. These changes are taking the economy to a qualitatively new level of efficiency and labor productivity. Updating the technological base in terms of the latest achievements of science and technology is considered the most important condition for successfully overcoming the crisis. Technological renewal is associated with the transformation of demand for many industrial and consumer goods, and especially for investment and fuel and energy products. Naturally, this will affect the prices of most goods on the market and will lead to new equilibrium price levels, which will also entail a change in political configurations.

Secondly, this crisis is inseparable from the financial crisis.

Thirdly, the crisis is based on imbalances in the organization of economic life. These imbalances are associated with profound technological shifts, i.e. with the advent of fundamentally new technologies (some economists call this a new technological order). Therefore, the way out of the crisis involves the transformation of the production base of leading countries based on the strengthening and development of these new technologies.

Fourthly, geo-economic and geopolitical imbalances are accumulating. In modern conditions, the most obvious example of such an imbalance will be the changing roles of developed and developing (rapidly developing) countries. Entering a path of more balanced growth (in terms of savings and spending, exports and domestic consumption, income and spending) turns out to be a key problem.

Fifthly, the formation of new currency configurations: a new world currency (or new world currencies) appears. In the twentieth century, this was a radical change in the role of gold, the rise of the dollar, and after the 1970s - the strengthening of the bi-currency nature of international payments. In the new conditions, the question arises about the prospects of the dollar, euro, yuan, as well as the role of regional reserve currencies.

Sixth, the crisis is long-lasting - it covers approximately a 10-year period, which can be described as a turbulent decade. This means, on the one hand, that it itself can be divided into stages within which certain individual problems of a sectoral or regional nature dominate, and on the other hand, that no single characteristic can be considered the only criterion for deepening the crisis or overcoming it .

Seventh, the fight against a crisis is always accompanied by the adoption of powerful and not always adequate anti-crisis measures. That is, an attempt to solve new problems using old methods leads to the accumulation of additional difficulties and further aggravates the crisis, both economic and, in some cases, political.

Stages of crisis

Thus, the problem of exit strategy arises and time is required not only to overcome the crisis, but also to eliminate the consequences of fighting it. All these factors taken together explain the fundamental difference between a systemic crisis and a cyclical one. A cyclical crisis is cured by time; it does not imply a change in policy, but is overcome by itself when the bubble that arose during the boom period is deflated. The systemic crisis requires a significant transformation of economic policy based on a new philosophy of economic life.

Russia's passage through the modern global crisis falls into several stages. At the first stage, the most acute for the global economy (2008–2009), the Russian economy developed in parallel with the rest of the developed world. Some problems manifested themselves more severely here, some more mildly, than in other countries.

The main macroeconomic difference in Russia was the presence of budgetary balance and high inflation. This made monetary stimulation of the economy impossible and significantly limited the possibilities of fiscal stimulation. In essence, Russia faced the risks of stagflation, which required an anti-crisis program that was significantly different from the programs of other developed countries. At the second stage (2010–2013), when the situation seemed to have stabilized, oil prices and the country’s gold and foreign exchange reserves almost recovered to pre-crisis levels, the business as usual ideology prevailed.

In other words, in fact, an attempt was made to return to the model of economic growth of 2000–2008, based on stimulating demand. True, the need to transition to a new growth model was officially recognized.

The third stage began in 2013, when signs of slowdown appeared. The slowdown was the result of the interweaving of several factors: the lack of institutional and structural reforms for a number of years, a decrease in investment activity, growing geopolitical tensions and deteriorating foreign economic conditions.

As a result, by the beginning of 2015, Russia again found itself under the influence of several crises at once - structural, cyclical and external shocks (falling oil prices and the introduction of financial sanctions). Each of these problems can be addressed through responsible economic policies. However, their superposition on top of each other creates serious difficulties, since it is necessary to take not just different, but sometimes diametrically opposed measures.

The key crisis influencing the current situation in Russia is the global crisis and the directly resulting need to transform the existing model of economic growth in Russia. The decline in economic growth that began in 2012 once again reminded us of the need for structural and institutional reforms. External shocks, despite their importance, play a secondary role, aggravating the situation, but at the same time creating additional opportunities for anti-crisis maneuvering and institutional renewal.

The point of view of the authors whose articles are published in the “Opinions” section may not coincide with the opinion of the editors

Why the crisis won't end on its own