Over the weekend, the lectures in “neoconomics” have been held for the first time over the last two years. During the lectures, the audience asked various questions such as why did the new interpretation of macroeconomics and, respectively, the crisis theory appear in Russia rather than the US, the UK, Germany or anywhere else. We have answered that question in one way or another, but it makes sense to address it one more time.
So let me remind you that the respective discipline – since its emergence in the late 18th century – has been called “political economy” for quite a long time. For one hundred years, its authors recognized that they were dealing with a social science, which is fundamentally connected with the interests of a large group of people who paid a close attention to its development so that it does not become adverse to their interests. It is hard to imagine a similar situation in mathematics. It did exist in physics, but it was of a particular nature and had a positive impact on the science itself – the enormous investments in science when nuclear arms were being developed.
The problems obviously start with Marx, who was the first one who proposed a thesis that the duration of capitalism was in essence limited, and who substantiated the mechanism of class struggle. Few people would be interested in such a scientific discovery besides experts, but the creation of communist parties and the emergence of the USSR did awfully frighten the capitalist world. So it began a campaign for a fundamental change in all social sciences with a purpose of finding (or fabricating) evidence of capitalism’s eternal existence. This effort resulted in the emergence of what we now call “economics”, while “political economy” was expelled from the academic curricula so that there would be no remembrance of it. By the way, such a transition took only two decades in Russia – do you happen to know any university or college that teaches political economy these days?
As part of the above mentioned effort, various economic and sociologist schools have come into existence (e.g. Monetarism and Keynesianism), and we now have the privilege of witnessing their combat with one another. But these schools are still based on the same common language developed over the last 100 years. It does not envisage any concepts of Marxism or political economy in general, which are capable of grasping the fact that the paradigm of technological progress can be limited in time.
It must be noted that the whole framework of the main economic school of our time, namely monetarism, was to a large extent created to address a particular issue. In the 1970’s, when the issue of money became the only way out of the economic calamity, there was a need to justify the precedence of the financial elite, which forms a separate group among the modern-day capitalist elite. It was their interests that the monetarist theory was developed to protect. After the implementation of Reaganomics focused on the credit-driven boosting of consumer demand, principles of Monetarism began to spread across the world.
And this is the root of problems we are witnessing now. At the same time, we realize that the objective issue which underlies them is the fact that the economic model based on the paradigm of technological progress has come to its end. But the common language of Western economists and their adherents does not allow for temporal finiteness of the model. Many decades ago it was made that way on purpose as part of the effort to fight Marxism. For this reason, neither monetarist nor Keynesian versions of that common language are adequate to reflect the actual causes of the on-going crisis.
Note that Marxism faced a similar problem. Let me remind you that Adam Smith in the 18th century described that technological progress is about intensifying division of labor, which in turn requires market expansion (even Pushkin in his Eugeny Onegin mentions some things in this regard). But at that time this was not yet a topical matter. It became very critical in the late 1800’s and early 1900’s, when the three technological zones of the time (i.e. Britain, Germany, and the United States) were no longer capable of extensive expansion thus bringing about reduction in capital efficiency. This resulted in a crisis, which was later repeated in the 1930’s, the 1970’s and is going on now.
Besides, it was Rosa Luxemburg who was defending Adam Smith’s position, while Lenin was her opponent. The reason for Lenin’s opposition lay to a large extent in political subtleties of a situational nature rather than in the uniqueness of his views on economic processes (he had never been an economist). As a result, Rosa Luxemburg’s works received no further attention in the USSR. And the theory (which could have helped the USSR to come out victorious in the Cold War, which the Soviet Union was close to winning in the early 1970’s) was developed mostly by efforts from Mr. Oleg Grigoriev in early 2000’s. The main point of the theory is that further intensification of division of labor is impossible in the conditions of globalized markets. In other words, we have returned the theory to its starting position, initially outlined by Adam Smith and later abandoned in the late 1800’s and early 1900’s for ideological and political reasons.
But the underlying issues are still there. In particular, the language of “economics” still refuses to allow for the “end” of capitalism. So its very framework will never allow one to arrive at conclusions similar to ours. This explains why we are witnessing a very peculiar thing – five years ago adherents of Western schools of economics would call our conclusions lunatic, but things have changed now. They acknowledge that our description of the crisis is generally correct, but they are absolutely clueless as to how we came up with such conclusions since there are certain intermediate points in our conclusions, which their scientific language cannot describe
The consequences of this are quite interesting. First and foremost, we must realize that the Western schools of economics will never be able to describe the on-going crisis and respective solutions properly since that will demand to dismantle their own fundamentals and think outside the boundaries. The historical experience shows that it can take not less than decades to do that. So the economic science will be developing outside the Western world within the next several decades.
Besides, if the West wants to play a serious role after the crisis, they will have to provide an objective description of their problems – in other words, they will have to take a look from the outside. But that requires people who view things outside their own paradigm. From the civilizational point of view, that means the West must expand their fundamental principles even though they may be required to sacrifice some of their identity. It is a matter of life and death for the West, but it is evident they are not quite ready for that.
It must be mentioned that, for example, inviting us over to, say, Harvard to work will be of no avail because we are going to face nothing but obstructions from the Western scientific community. Consider the way our theories are treated in such institutions as, say, New Economic School (NES) in Moscow, Russia. I regularly refer to it as a totalitarian sect because we must understand that, as a clone of Western institutions, it has no other option but to strive to “outpope the Pope”. Any attempts to “implant” us as researches in Western think-tanks will lead to similar results – there must be parallel scientific schools, but that is only possible, in the broad sense of the word, outside the West.
In conclusion, I would like to mention that our research on the theory of the crisis is only part of the necessary work to be done because it is not enough to simply grasp fundamentals. It is necessary to create a new scientific language capable of describing the modern world as a whole. To me, that seems to be the primary goal for social sciences today.
Read the Russian original here