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Have you heard the rolling German-accented “I TOLD YOU SO” from up above the other day? I am almost certain I did. What day? September 14, 2010 – the day when the United Nations Conference on Trade and Development published a report (see the link here), in which the cause of the ongoing crisis was finally attributed to the global wage-productivity gap or, in other words, the crisis of over-production. For the last couple of years, the author of Das Kapital must have been laughing so hysterically up in heaven at all the mind-boggling explanations of the nature of the crisis that the Pearly Gates have probably run out of valerian drops to calm him down. Ironically, his name is not mentioned in the report. For academic circles and the business community, his economic concepts are still a taboo although the crisis has already spurred tremendous interest in alternative schools of economic thought.

The underlying cause of the crisis is recognized to lie in the sphere of commodity-money relations rather than in the financial sector, the most important conclusion being that this is not a financial crisis, but an economic one, which has, first and foremost, to do with supply and demand of commodities rather than availability of credit. The global wage-productivity gap, as it turned out, has been caused by – globalization!!!

My, oh, my!!! What a surprise for neoclassical economists! The miraculous remedy for the world’s economic problems of the 1970’s has turned into a major economic problem itself. But let me address that a bit later.

The report has dealt neoclassical economists a blow in the face by destroying their commonplace concept that capital and labor as factors of economic growth are separate and interchangeable. “Employment performance in [Europe and the United States] cannot be explained using a neoclassical labour market model in which labour and capital are substituted at a given level of output according to their relative prices. Such a model is based on microeconomic reasoning and ignores the macroeconomic factors that determine the demand for goods and services, and labour.” (p. 82). The report recognizes the dialectically dual nature of wages and salaries as they raise a business owner’s costs at the time of production while boosting his or her profits at the time of consumption. “Labour compensation has a dual character. On the one hand, it constitutes the largest proportion of production costs…On the other hand, labour compensation determines, to a very large extent, the level of demand of private households.” (p. 88). I hope I do not need to explain what that entails. “In addition to playing a key role in employment creation, wage incomes are also closely related to the dynamics of real productive investment and innovation. This is because profits drive investment, and the level of profits is fundamentally driven by demand rather than by a reduction in production costs.”(p. 93).

In other words, it is solvent demand that determines the possibility of further reproduction of capital. Not free market, not cheap credit, but solvent demand. I addressed that point in one of my recent articles (see the link here) – thus further ability to invest capital depends on previously paid wages as those determine demand and bring about profits. Countries, whose national economies were too poor to generate sufficient demand, and thus profits, had no other choice but resort to foreign demand on outside markets. And this is how it is related to the wage-productivity gap: “… if wage growth does not keep pace with productivity growth, the expansion of domestic demand and employment creation will be constrained, and that this constraint can only be lifted temporarily, if at all, by reliance on external demand.”(p. 77). As countries entered the globalized economy, they had to apply downward pressure on domestic wages in order to compete with low-cost imports from countries like China. And this is where the problem began – “…globalization implies that 1.5 billion workers in developing and emerging-market economies which have a small endowment of capital have been added to the existing workforce for producing goods on world markets, thereby disturbing previous labour market equilibriums and exerting downward pressure on wage levels…” (p. 77). Both emerging economies and developed countries like the US, the global consumer of last resort, had a hard time finding sufficient demand for the ever-increasing supply due to rising global productivity. In developed countries, that resulted in households relying more and more on debt to sustain their existing consumption levels. The developing ones, due to meager domestic demand, were even more eager to explore external markets for profit-making opportunities.

“Indeed, the adoption of export-led growth strategies based on the advantage of labour costs appears to have changed the nature of competition between countries. This has led to calls for protectionist measures against goods produced under low-wage conditions, and to attempts in industrialized countries to prevent an increase in wages or even reduce them in order to withstand such competition. These responses are misguided. They are based on textbook neoclassical theory, which posits that relative factor price equalization through trade is possible under perfect competition. More importantly, models used in this context fail to recognize the critical role of effective demand in shaping both current economic activity and future growth possibilities, because they do not grasp the complex dynamics of investment, productivity growth, wage formation and employment.” (p. 78).

In other words, globalization has not only failed to resolve the crisis of over-production (or over-accumulation), but exacerbated it by taking it to the global level. The first contradiction of capitalism remained unaddressed – capital owners, totally unaware of the true fundamentals of the global economy, believed they were chasing the golden calf, figuratively speaking, but they were only chasing its shadow.

While productivity was sky-rocketing, wages in most countries remain stagnant. I also wrote about that in one of my articles (see the link here) with a reference to the International Labour Organization, which on November 3, 2009 also pointed to years of stagnating wages relative to productivity gains as one of the reasons for the crisis. The solution suggested in the above-mentioned report is going to strike free-market fundamentalists dumb the very second they hear it – “…distribution of the gains from productivity growth…” (p. 85).

Boom! I can already imagine heart-attacks among radical right-wingers, who, by some weird coincidence, happened to be reading my article. People, if you believe in free market, stay away from my scribblings – they are going to hurt!

To drive the nail further into the coffin of laissez-faire capitalism, let me share the rest of the passage I have just quoted: “Whether or not aggregate demand rises sufficiently to create net employment depends crucially on the distribution of the gains from productivity growth, which in turn is greatly influenced by policy choices. The policies generally adopted over the past 25 years have sought to keep wages low, and have served to translate productivity gains either into higher capital income or into lower prices. They are based on the assumption that the demand for labour will behave in the same way as the demand for most goods (i.e. the lower the price, the greater the demand). But keeping wages low in order to generate higher profits is self-defeating, because without a stronger purchasing power of wage earners, domestic demand will not rise sufficiently to enable owners of capital to fully employ their capacity and thereby translate the productivity gains into profits. A potentially more successful strategy would be one oriented towards ensuring that the gains from productivity growth also accrue to labour: wages rising in line with productivity growth will cause domestic effective demand to increase and nourish a virtuous cycle of growth, investment, productivity increases and employment over time.” (p.85).

Did I hear it right? Did they actually use the word "distribute"? So where is the enthusiasm for a self-regulating economy? Where is the euphoria for reckless lending practices and anticipation of enormous profits as soon as the government gets off your back? Where is the servile veneration for the “golden” calf on the corner of Bowling Green Park and Wall Street? Gone!!!

Political economy has prevailed again. The report confirms that the existing economic model is unsustainable. That long-needed sustainability, it is believed, can only be achieved through stimulating domestic demand by making sure that wage growth rates keep pace with productivity growth rates. “Therefore, in developing countries, as in developed countries, the ability to achieve sustained growth of income and employment on the basis of productivity growth depends critically on how the resulting gains are distributed within the economy, how much additional wage income is spent for the consumption of domestically produced goods and services, and whether higher profits are used for investment in activities that simultaneously create more employment, including in some service sectors, such as the delivery of health and education.” (p. 87).

But there another inconvenient truth revealed in the report – the one about the United States’ inability to act as the consumer of last resort for the global markets. “It is becoming clear that not all countries can rely on exports to boost growth and employment; more than ever they need to give greater attention to strengthening domestic demand. This is especially true today, because it is unlikely that the United States’ former role as the global engine of growth can be assumed by any other country or countries.” (Overview, p. 1).

Boom! Another set of free-market fundamentalists has just received their share of heart-attacks and is being transported to the nearest hospital. What is it saying? Did I hear the word "former"?

“In the United States, a downward adjustment of consumption will be unavoidable unless wages grow strongly, which seems unlikely. For almost 10 years before the financial crisis, personal consumption in that country had been rising considerably faster than GDP despite a decline in the share of labour compensation in GDP. Greater consumer spending by reducing savings and incurring debt was possible in a financial environment where credit was easily accessible and where a series of asset price bubbles created the illusion of increasing household wealth. But with the collapse of the United States housing market, households were forced to unwind their debt positions and cut consumer spending. This trend is set to continue. Consequently, the world economy cannot count on the sort of stimulus provided by the United States in the same way as it did prior to the crisis.” (Overview, p. 10).

Wait! Is it "the Oracle of Omaha" being carried in a stretcher to an ambulance car?

“More importantly, the increase in United States household consumption was largely debt financed. Facilitated by easy consumer credit, lax lending standards, a proliferation of exotic mortgage products, the growth of a global market for securitized loans and soaring house values, burgeoning household spending created strongly growing household debt and led to a sharp decline in the United States household savings rate to almost zero. The ratio of debt to personal disposable income reached an all-time high in 2007, exceeding 130 per cent.” (p. 41).

Can you hear the sirens? Oh, that must be Alan Greenspan in that ambulance car passing by.

“Buoyant consumer demand in the United States was the main driver of global economic growth for many years in the run-up to the current global economic crisis…Given that before the crisis household consumption in the United States accounted for about 16 per cent of global output and that imports constituted a sizeable proportion of that consumption, this would imply both a reduction in world output and a decline in other countries’ export opportunities. From 2000 to 2007, United States imports as a share of its GDP grew from 15 per cent to 17 per cent, boosting aggregate demand in the rest of the world by $937 billion, in nominal terms. Moreover, as a result of global production sharing, United States consumer spending increases global economic activities in many indirect ways as well (e.g. business investments in countries such as Germany and Japan to produce machinery for export to China and its use there for the manufacture of exports to the United States). In short, the future path of United States consumption spending has macroeconomic implications, not only for economic recovery in the United States but also for global growth.” (p. 43-44)

To top it all off, there are two more quotes for you: “…the United States consumer demand is likely to shrink – not just grow slower” (p. 44), and “It is unlikely that the sharp decline in United States imports of consumer goods could be compensated by an increase in consumer spending and associated imports of consumer goods by China or any other developing country.” (p. 45).

Now you can make conclusions for yourselves.

“And it came to pass, as soon as he came nigh unto the camp, that he saw the calf, and the dancing: and Moses' anger waxed hot, and he cast the tables out of his hands, and brake them beneath the mount. And he took the calf which they had made, and burnt [it] in the fire, and ground [it] to powder, and strawed [it] upon the water, and made the children of Israel drink [of it].” (Exodus 32:19-20).

Boris Anisimov


This is a translation from Russian of an article by Nikolay Starikov, who addresses problems of Russia’s national economic development within the current global financial system. The article is not structured as logically as I usually prefer and the author’s suggestions require further analysis, but still it provides some fresh, out-of-the-box thinking, the main feature of which is the realization that the highly-promoted global financial system of our time prevents national economic development of entire countries.

What is it? Why? What for? There are a lot of questions. Let us answer them one at a time.

Why is it so vital to raise the issue of nationalization of the Russian monetary currency? To all appearance, it is already ours. But the point is that it is just that, an appearance. After World War II, bankers from the Anglo-Saxon world have created a very peculiar financial system, which contradicts any common sense. These days, we are witnessing its inevitable collapse. The essence of what Americans offered the world is very simple – since most of the gold stockpile “migrated” to the US after the war, the post-war economy was to be built on the basis of the dollar. This meant that only the dollar (and the British pound, but to a lesser degree) would be backed with gold while all other currencies of the world would have no gold content. They would be convertible into gold through their exchange rates to the dollars and pounds. So dollars would now serve as a scale to weigh currencies one with another. In order to make that happen, the entire world would have to accumulate dollars and pounds rather than gold. A particular country wound now be authorized to issue its national currency in proportion to the dollars and pound in its reserves. In a similar way, paper money would previously be backed with gold reserves, but as of 1944 the US and the UK displaces gold with their own currencies.

The dollar and the pound became key currencies (or global reserve currencies according to the modern terminology). What was the result? All other currencies became secondary at once. But the main outcome of the Bretton Woods arrangements was the ability to clone the American financial system throughout the world. The private Federal Reserve System monopolized the issue of US dollars in 1914. Now, since 1944, the right to print money in other countries was shifted from the government into the hands of private central banks. On the surface, the bankers’ logic was flawless. Since there would be little or no gold sitting in countries’ reserves, it would be easy to prevent any swindling in the form of an unsecured money supply. While gold, which is easy to count but hard to move around, ends up sitting in a “basement”, currency reserves can be stored on a correspondent account in a bank. Is there a better way of making sure that Norwegian krones or Mexican pesos are secured with dollars? Who would be the controller? Neither Norway nor Mexico can be objective in this matter. There is a need for independent bankers. In fact, quasi-independent is a better word since, while being independent from Norway and Mexico, their central banks are part of a system that controls the whole world. In other words, the US and Great Britain placed their people in each country in order to control adherence to international financial agreements. A central bank independent from a national government has thus become a norm, which had never been the case before. There would always be a state treasury with money being issued by the government rather than some quasi-independent entity. Thus, the pillars of the current financial system have been placed, and it is that same system, whose agony we are witnessing right now. The functional agents of the system are the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD).

Any IMF member-country must ensure an instant exchange of all the national currency for the dollars and pounds from its reserves. This rule must be observed at any time. Otherwise, you will not be admitted into the IMF. You will not be counted among the “civilized” nations. It is important to remember that.

This is how the system works:
• Russia sells some commodity on the global market;
• $100 enters the country;
• The central bank buys these dollars at the currency exchange;
• These dollars enter the central bank’s reserves;
• RUB 3,000 enters the Russian economy.

The parity is thus observed. What if the price of that commodity climbs up? Russia now receives $110 instead of $100. The parity is disrupted, and the central bank needs to correct the situation. It lowers the dollar exchange rate, buys dollars cheaper and injects into the domestic economy a smaller amount of rubles per each incoming dollar. Quite the opposite occurs when the price of the commodity drops down – the central bank ends up raising the dollar exchange rate. In any case, there exists a strict correlation between the money supply inside Russia and the dollar supply coming from outside. Thus, we are quite vulnerable. We are not fully independent. In today’s world, a very ridiculous financial system is in operation. Several countries in the West are printing colorful pictures on pieces of paper considered money, which are used to purchase real goods while the rest of world collects them. So who is going to prosper in this case? The answer is obvious. And this situation is considered normal. Those who print money have the face to teach democracy and economics to those who work for that money. And there is another aspect to it – countries are obliged to live within their means. Russia, for example, spends what it has earned. Should needs increase (e.g. pensions have risen, new military equipment has been purchased, construction projects for the Sochi Olympics have been started), then new sources of funding must be identified. The country ends up entering international markets and earning additional dollars to print more rubles in order to pay out pensions or settle accounts with factories for completed orders. Without more dollars, the country cannot print more national currency.

In other words, countries of the world have to live within their means while the US and countries printing reserve currencies can afford living within their needs. Should a need arise to pay out pensions, build factories, assist “young democracies”, they simply print more money. To be exact, they borrow that money in exchange for their treasury bills, but that does not make any difference because no-one in the US is thinking about cutting their spending on wars, benefits and grants. On the contrary, the spending keeps growing to match the actual needs. The ever-expanding US national debt in the US is a perfect illustration – it is around $13 trillion. It was less than $10 trillion two years ago. How long can this madness continue? Ask yourself this question. How long would you be able to continue spending beyond your means? But Russia is obliged to be strict in preserving the parity and live within its means. The Russian central bank will be watching very closely. So is the Russian central bank a governmental agency or not? Partially, it is. Just as much as the Russian leadership is partially free in their actions. As the central bank lowers the refinancing rate today, it continues guarding the dollar parity. Ideally for the system, the central bank must not be state-owned, but in reality the authorities have it under their control. It is noteworthy that the authorities have given up the idea of “nationalizing” the central bank. So there is some kind of equilibrium – the central bank is “obedient” as long as there are no attempts to make it a full-fledged governmental office. But it is time to move on because a country that ties its money supply with external markets and some other country’s currency leaves its economy bound hand and foot. We are obliged to sell our commodities and accept dollars in order to simply have rubles in our own economy. That is why countries of the world line up for access to US markets even though it may entail dumping practices and forcing local populations to live from hand to mouth.

We are robbed twice. First, we are robbed when we sell our products on THEIR markets for THEIR prices. With the printing press at their disposal, the bankers control the money supply. By means of futures, they are capable of inflating or deflating prices on any commodity. Second, we are robbed when we, having received THEIR currency, are obliged to enter THEIR markets and purchase for THEIR prices what we need. On markets you cannot control, you tend to be robbed twice. It is akin to a peasant from a countryside, who is prevented from selling his potatoes himself and ends up selling his produce to a middleman for nothing but peanuts. Then he goes to another middleman and buys something paying the full price for it. You might ask why we have agreed to such a system. Why do we sell on such a market? Because there is no other market in the world. It is the only one, and those are its rules. We have “consented” to them after the collapse of the Soviet Union by joining the IMF and signing its enslaving agreements. Do you remember the monetary shortage at the time of Mr. Gaidar’s reforms? The reason for it was in the fact that the country could not print its national currency because it had no foreign currency. Think of the news we were hearing back then – the IMF approved a loan of several million dollars for Russia. That meant there would be money to pay pensions and liquidate public sector salary arrears. While IMF’s loans are in dollars, pensions are paid in rubles. What is the correlation between the incoming dollars and the domestically circulating rubles? Now you know. And all this constant talk of inflation in case more rubles are printed is nothing but a smoke screen for the system that sucks blood out of Russia and the entire world. As for the currency board (which requires a national currency to have a fixed exchange rate with a foreign currency), there is another destructive aspect.

Preservation of backwardness.
For example, Russia has sold its commodity to the amount of $100 on the global market. This allows us to print RUB 3,000 to construct a new pen factory. Let us pretend that the construction cost is exactly RUB 3,000. While the construction period is 3 years, there is an urgent need for pens now. What is Russia forced to do? It ends up buying pens from abroad for 3 years spending $30 a year. As a result, instead of $100, we are left with only $10. The construction period will have to be extended because we will have to be buying pens in subsequent years otherwise we will have nothing to write with. So this is how the process of modernization gets dragged out forever and ever. But that is us – they do not have such a problem. The USA and Great Britain recently joined by Europe can simply print necessary amounts for R&D, new technologies, or anything else. They are under no obligation to “save” their dollars or pounds – they can use their computers to come up with as much money as they need.

Under the current global market system, Russia is doomed to lag behind. Thus, we cannot be possible be content with such a system. As much as a soccer team, into whose goal a referee keeps awarding penalty kicks, cannot be content with him. Such a referee should be dismissed from the game. Similarly, it is time to change the global economic system. The time has come. There was a reason for the question posed above about how long one can continue spending beyond one’s means. How long will you be able to take out loans in exchange of your IOU’s? Sooner or later, the borrowing will have to come to an end. The same is true for the world economy. Both the US and other so-called “developed” countries live in this vicious system – they simply print more money when it becomes necessary. They are not in any way better than Greece. They are all bankrupt. The US, for example, is responsible for the largest debt ever while carrying the burden of a global superpower. So the United in its current form (economy-, politics- and probably territory-wise) is bound to disappear – it is only a matter of time. The collapse of the vicious system of printing money “out of thin air” is eminent and predetermined by the system itself corrupting entire nations and continents by turning them into consumption machines financed by debt. The US and their satellites are eminently bound to grow weak and get off the stage. There is no point in forecasting exact dates in this regard – instead, we should look into what is going to happen after that. As we all know, nature does not tolerate vacuum. The same can be applied to the field of finance. In order to prevent a major global economic breakdown stemming from the collapse of the dollar system, alternatives must be considered.

Things can only develop in three possible ways:
1. All countries may want the dollar status for their currencies. There will arise several reserve currencies with chaos and wars as a result of their rivalry.
2. Only one country may replace the dollar with its currency. For that country, it will entail a quick rise to prosperity and high living standards followed by a quick decline.
3. No currency may be able to attain the dollar status. This is the most acceptable variant, which implies that all countries on this planet will be living within their means.

Russia must set the example for that third variant, which is the most acceptable for the entire planet, whose resources are on the brink of being depleted as a result of this mindless consumption race occurring in countries capable of printing reserve currencies. The golden standard will be of no avail either. Trust in gold is not that different from the trust in the dollar. Besides, both the dollar and the global stock of gold are currently in the same hands.

What must we do?
We must nationalize the ruble. What does it mean? It means that we must separate the internal markets from the external ones. Today’s ruble is not entirely ours since the set of factors that conditions the ruble emission is not under our control. Think again about the example of the pen factory and the lack of funds to finish its construction since most of the funds ends up being allocated on purchasing pens from abroad. Let us do the same math again, but in new conditions. Given that the supply of rubles is no longer tied to the amount of the Russian Central Bank’s dollar reserves, the solution is obvious and simple: the dollars will buy pens from abroad, while the rubles will finance construction of facilities for manufacturing such pens domestically. In this exact way, China has separated its internal markets from external ones, and the results of such a policy are pretty evident – the Chinese are able to manufacture goods and sell them abroad. Even though they sell their products cheap, they still have means to finance further development. Why are they able to sell their products cheap? Do they not have bills to pay? Yes, they do, but domestic prices in China are meager. That is why the Chinese work for a pay that no American will be willing to work for. Should domestic prices in China rise to the world market level, the Chinese economy will be done for. This explains why the West keeps on insisting that China should allow the yuan to appreciate thus making it more expensive as compared to the dollar. As the yuan goes up, so will salaries, wages and prices in dollars.

Thus, the first step for Russia is secession from the IMF and others similar institutions designed to keep the entire world in bondage. The dollar noose must be cut. Now the amount of printed rubles will not be determined by how many dollars we have but by the actual needs of our economy. How can we calculate that? In exactly the same way as the United States calculates the amount of dollars needed for its economy. Just as the European Union does the same. The best justification would be that from now on Russia issues rubles based on the value (in rubles) of all natural resources explored on its territory. It is quite amusing that subsequent steps are no rocket science; they are dictated by common sense itself. Since we are breaking down the disadvantageous system, we have absolutely no need in the central bank in its current form, but we do need a financial regular. Under any regime, it was the Treasury that performed this function. Let it remain the same now regardless of the official name. It may continue to be called the Central Bank. If the essence is changed, there is no need in changing plaques.

The second step will be the nationalization of the central bank and amendment of laws regulating its functions and performance. Now the central bank will be responsible for the money in circulation and the stability of the national currency. The second step must occur simultaneously with the first one. Next comes the third one.

The third step will be to trade Russian goods for rubles only. Do you want to buy our oil or gas? Be my guest, here is a Russian currency exchange for you! No compulsion, no coercion, but pure and simple market economy. Go ahead and change your dollars for our rubles.

Let me provide several explanations. This “revolution” must be carried out when the US is the weakest, but prior to the actual collapse. What will be the reaction from the international community? Laughter and ridicule, most likely. They will not be eager to buy for rubles. But we can wait. One may refuse to buy French cheese for 150 years and bring France’s cheese-making industry to its utter ruin. But as for Russian oil and gas, one can do without them for not more than a month or even less. They have nowhere to go – they will have to comply sooner or later. That is when the ruble will become a currency backed with real assets. And those shooting for the dollar’s fame and honor would be in quite a fix since there had already appeared a real rather than virtual currency. Who would be interested in a new currency backed by nothing? Now let me calm down the troubled minds of the most suspicious – I do not mean another iron curtain. Nobody would be closing down currency exchange booths. If you need dollars, go ahead and buy them in Russia for Russian rubles. But you are not going to need them soon. Why? Is there anybody in Europe, who buys dollars when leaving the EU or keeps his or her savings in them? No, there is not. They take their euros and travel with them. Should the need arise, they can exchange them for local currencies of whatever countries they visit: the US, Russia, Egypt, etc. Only the most eccentric Germans will think of opening a dollar bank account in Germany. In exactly the same way, the need for foreign currencies inside Russia would come to naught and we would start travelling with our rubles in our pockets while the rest of the world would be willing to accept and exchange them because our rubles would buy them our natural resources and goods. For the ruble, this is exactly the path to full convertibility, which we have been talking about for so long but have been unable to achieve. And it is not going to until Russia starts trading with the rest of the world for rubles.

In other words, the nationalization of the ruble is the fastest and simplest way towards its full convertibility and strengthening. But we must understand that the nationalization of the ruble is only a vehicle rather than a destination. What does Russia need? A technological breakthrough. This will require purchasing technologies. Why does everybody sell those for dollars only? Because it is for dollars that one can buy real assets throughout the world. As soon as we start selling real assets rather than virtual ones, there will appear demand for our currency and the ruble will appreciate. Other countries will start stockpiling rubles just like they stockpile dollars to purchase US treasury bills. The ruble cost of technologies will be less, and that makes purchasing them much easier. And what is the most important is that we will be the ones to print rubles in quantities we will find necessary. This is what will provide the funding for the long-awaited technological breakthroughs, domestic R&D projects, and purchasing specialists from abroad. The technological modernization of Russia is impossible without attracting industrialists from the West. There was not a single time in our history that we carried out a modernization without any assistance from the West. Peter the Great used to invite foreigners. As a result of Stalin’s talks with the US, it was foreign specialists that used to work on most major industrialization projects under initial 5-year plans according to foreign designs until our own science was able to bring about domestic breakthroughs. So what is it that can encourage western technologies to come to Russia?

China attracts them with cheap labor. Do we have anything to offer? Only cheap natural resources. In the current situation, due to the dollar connection we end up raising prices for domestic consumers up to worldwide levels, while exactly the opposite must be occurring. Sounds paradoxical, doesn’t it? Who officially owns the deposits of natural resources in the Russian soil? The Russian people do. So the oil deposited deep below belongs to the entire society. But if some oil company extracts that oil and delivers it to the surface, the company miraculously ends up owning that oil and pays all possible taxes on it. And that is where the core of the problem gets lost entirely. The owner – the Russian people represented by the elected government – gets paid only a portion for its property. The contrary must be occurring. The provisions of our Constitution must be filled with substance again – it is the government that should be hiring an oil company as a contractor to extract the oil rather than allow the company to simply pay taxes on the oil, which miraculously changes its public status. When all the extracted oil in Russia becomes state-owned, the government will have full control in determining its domestic price. While the external price (in rubles) depends on the world market, the domestic price can be WHATEVER as long as extraction and processing costs are covered. As for profits, the government can easily go without them for a while. And all this will attract western industrialists to build factories here in Russia. Why will it be profitable to them to work in Russia? In fact, it will be profitable to anybody who will own or be willing to build an industrial enterprise in Russia regardless of their citizenship.

Simply because the domestic price on energy resources (oil, gas, etc.) for industrial enterprises must be significantly lower than the world market. The owner is entitled to selling his/her commodity at any price. Nobody can take away that right from him/her. But only one common owner in the form of the government can do that. This is how the Chinese government was able to provide cheap labor. This is the fourth step out of the mess that we are in now. Cheap energy, cheap raw materials, and cheap fuel are our competitive advantages, which are not being implemented because we are stuck in the current financial system, and we should get out of it as soon as possible. What I am suggesting here is not a ready-to-use program, but a set of theses, each one requiring further detailed analysis. But, if challenged by anyone anywhere, I am ready to defend each one of them as well as the need for development in the above-mentioned direction. I am convinced that these actions are right, but we can only talk of a general direction at this point. In spite of that, we must understand that actions aimed at pulling Russia out of the crisis can be of worldwide significance for further development of mankind currently entangled in the financial cobweb. Let us summarize the sequence of actions, remembering that they will work only if their entirety and order are preserved.

The nationalization of the ruble is the path to Russia’s prosperity.
The nationalization of the ruble is the decoupling of the ruble from world reserve currencies. Our national currency must become fully independent and cease to be a reflection of the foreign financial system.

• Step 1 is to secede from the IMF and others similar institutions designed to keep the entire world in bondage
• Step 2 is to nationalize of the central bank and amend of the laws regulating its functions and performance.
• Step 3 is to trade Russian goods for rubles only.
• Step 4 is to significantly reduce prices on Russia natural resources for all those who will be developing industrial production inside Russia. The way to accomplish this is to comply with the Constitution of the Russian Federation, which states that the interior of the Russian soil belongs to the Russian people, i.e. the Russian Government.

Just as the theater of the absurd is hardly conducive to staging a classical play, the current financial setting is hardly conducive to the wholesome development of our country. And we should not be afraid to correct the errors of the past. The ruble is waiting to be nationalized…

The original article in Russian can be found at