The Age of Treasurers

How are Mishustin's technocrats similar to the mercantilists of the 16th century

There is some disappointment in the responses to the new government. Some experts and the general public still hope to see in Russia signs of a process of modernization, albeit an authoritarian one. However, the vast majority of regimes that justify their rule by the desire to develop the country ultimately succeed precisely in authoritarianism, and not in modernization.

The exceptions are mainly Asian economies - South Korea, Singapore, Taiwan and China. In these countries, the authorities paid serious attention to economic growth, including through the development of the education system, copying, and then the creation of more sophisticated technologies and large-scale export expansion.

However, usually authoritarian regimes show more than modest results. They annually build a certain number of roads, hospitals, schools, implement not-so-successful programs to help exporters and industry, sponsor individual creative teams and donate equipment to research centers. All these are examples of modernization, but its pace is a little faster or a little slower than that of a tortoise.

The point is not only that such regimes exist primarily for the sake of power and the benefits that it brings them.

The modernization process is extremely complex, and neither economists, who have been studying its details for decades, nor even politicians, often have a sufficient understanding of how it works.

For example, the economic policies of Korea and Taiwan differed quite markedly from what was considered the "gold standard" in their respective decades.

To analyze authoritarian modernization, economists use an approach that is literally—and therefore clumsily—translated as “benevolent central planner.” We are talking about a dictator whose goal is to maximize public welfare. It is he, the ruler, and not the market, who controls the processes that result in economic growth.

This tool of economic analysis was shaped by a limited number of historical episodes—in particular, the post-war reconstruction of Japan and Germany and, to some extent, the development of the early Soviet Union, although in the latter case modernization was not associated with the growth of wealth—to which the vast majority of histories of autocratic rule it does not matter. The planner may not be benevolent enough, that is, not care too much about the public interest, and most importantly, not have a proper idea of ​​​​how to achieve high rates of economic growth. Finally, the reforms themselves can weaken the power of the autocrat if the situation in the reformed area worsens rather than improves.

Disillusioned with the reforms and afraid of negative results, the authoritarian ruler, absorbed in seeking rent, most often moves too far away from the image of a “benevolent central planner”, and the hopes of experts and society for this course become inadequate.

As a result, the modernization efforts of the ruler go to the periphery in the list of his priorities, while authoritarianism becomes the main destination. The economic basis of the latter is not public welfare, but the size of the state budget and its management. The most important tasks are occupied by the careful collection of taxes and the accurate financing of priority budget expenditures in every sense.

To fulfill such goals, not reformers are invited as technocrats - specialists in various areas of management - but experts who are somehow connected with the budget.

Ministers responsible for the use of the budget or filling the state treasury.

To some extent, this is reminiscent of good old mercantilism - the idea of ​​economic policy that was established in the 16th and 18th centuries, before the advent of the principles of classical political economy. Part of this policy was the desire to accumulate gold and silver, including to fill the state treasury, which would make the life of the monarch more convenient. In that era of negligibly slow economic growth, treasurers, not reformers, played key roles.

Therefore, from the point of view of applied economics, rather boring observations of the mechanisms of the functioning of the state budget await us in the coming years. And this is quite natural: the Russian authoritarian modernization of the last decades, like hundreds of similar historical episodes, has not been very successful in progressive transformations.