Turbulence in the Russian economy. A.N. klepach, o.v. Dobrocheev - ensemble of economic waves or turbulent hypothesis of economics Global economic turbulence
Over the years, economics has gradually moved away from the real world towards formalized axioms and mathematical models that have little correlation with reality. Economic commentators try to fill this gap to the best of their ability, but, lacking sufficient scientific knowledge, journalists often follow fashion and become too absorbed in current affairs. As a result, the serious mysteries of the economic development of advanced countries in the period after the end of World War II have not yet received any detailed coverage.
Economist and historian Robert Brenner challenges this state of affairs. In The Economics of Global Turbulence, he describes the troubled post-war history of the global system and reveals the mechanisms of overproduction and excessive competition that underlie its long-term crisis since the early 1970s.
Turbulence (uncertainty) becomes the main parameter in a control system of any scale. It arises as a manifestation of the relative speed of specific processes. In this case, the economic system may lose stability. In this sense, turbulence is the property of the constituent elements of any process to acquire relative speed.
Analysis of modern economic processes allows us to conclude that the cause of turbulence is the manifestation of the relative speed of individual elements of the system while maintaining the maximum speed of propagation of interaction in it. Phenomena such as a gap in the pace of interrelated processes, such as supply and demand, production and consumption, savings and investment, determine the turbulent (unstable) state of the economic system.
The modern world economic system demonstrates global turbulence, i.e. crisis phenomena: the contradictions accumulated over the entire period of its existence were exposed. The features of the modern global crisis are not new. They were also typical for the financial crisis of 2008, which was brilliantly emphasized by the famous Russian scientist Yu.M. Osipov in the following thesis: “The current... world crisis,” notes, “is precisely one of not just economic crises, but, namely, crises of the economy itself, moreover, one of the crises going back to the general crisis of economism, i.e. e. the crisis is already in the era of the general crisis of economic civilization, the same crisis that, on the one hand, is generated by the general crisis of economic civilization, and on the other, with the help of which economic civilization is trying to overcome its general crisis.”
Current events in the economic and political arenas eloquently indicate the beginning of the stage of manifestation of market failures (fiascoes) on a planetary scale, which are the cause of increasing turbulence in the system of economic development of advanced countries. The study of turbulence in the system of socio-economic processes is a complex problem. It covers the entire sphere of the reproductive process: production, distribution, exchange and consumption. The reproduction process model represents a complex web of interconnected economic actions. If there is a gap between the phases of reproduction, then turbulence in economic development inevitably arises. If we want to understand turbulence, it is necessary to understand the essence and significance of market failures as an essential element in market relations. To do this, you should analyze the reasons for their appearance.
The results of turbulence are economic cycles, inflation, unemployment, insufficient infrastructure development and other phenomena that reflect an unfavorable economic environment for the coordination of sellers and buyers, such as increased corruption and economic crime. All these questions are the subject of research in modern economic science. The solution to this problem becomes especially relevant at the moment, when the process of globalization is actively developing, accompanied by world crises, and there is a need to quickly and competently make accurate decisions in the face of changes in the internal and external business environment.
January 10, 2012
1.Economic crises and macroeconomic equilibrium: introduction to the problem
The history of the development of the world economy shows that financial and economic crises almost always occur suddenly, catching governments, households, small and large businesses by surprise. Just yesterday, a seemingly prosperous economy suddenly begins to crumble before our eyes, like a house of cards or dominoes set in a cascade. Until recently, well-sold goods and services suddenly cease to be in demand, the population and enterprises begin to radically change behavior and consumption patterns, banks sharply limit lending, real estate becomes cheaper, markets collapse, and unemployment rises.
Of course, economic crises associated with crop failures, epidemics or wars have always existed. But they had reasons that were understandable to everyone, and by eliminating them, it was possible to achieve the restoration of the economic system.
However, starting from the beginning of the 19th century, the economy in industrialized countries became more complex, the scientific and technological revolution significantly increased labor productivity and intensified international trade, ensured mass production and significant development of credit and financial markets. The economic disruptions have become even more painful and widespread. Problems have emerged that no one had heard of before - the so-called crises of overproduction (see Fig. 1).
Thus, the economic crises of 1825 in England, in 1836 in England and the USA, and in 1841 in the USA became powerful shocks for the economic systems of these countries. And the crises of 1847 and 1857. covered entire groups of countries and took on an international character.
The destructive effect of crises became not only a signal of some serious breakdowns in the market system and economic relations, but also an impetus for active research into this new economic phenomenon. The best representatives of scientific thought began to develop various concepts and approaches to the theory of crises, put forward hypotheses of the origin and development of crises, as well as ways to minimize the destructive consequences of these difficult transition states. Looking ahead, we note that it has not been possible to completely solve this problem to this day, an eloquent confirmation of which is the powerful global financial and economic crisis of 2008-2010.
The main issues regarding economic crises, both before and now, remain the following questions:
a) what causes crisis phenomena, what are the causes of crises?
b) is it possible to predict the approach of a crisis in advance?
c) how to overcome the crisis with the least losses?
In order to answer the questions posed, economists from different countries had to revise many past ideas about the functioning of economic systems, develop theories of macroeconomic equilibrium, stationary and transition states, and find new cause-and-effect relationships between economic, technological and social phenomena.
First, let us turn to the formation of the theory of economic equilibrium. The category of equilibrium served as a certain basis for the analysis of failures in macroeconomic systems. Its appearance in the studies of economists is quite logical and understandable, since in life we encounter equilibrium and cases of imbalance quite often. A child, playing with balls, notices that on a flat table the balls are in equilibrium if no external force acts on them. As soon as you push the table a little or tilt it, the balls lose their static balance and begin to move. Equilibrium will be stable when the ball is in the hole or within the concave surface (see Fig. 2).
From the point of view of illustrating equilibrium, our examples are indicative, but they are not suitable for modeling economic systems, since economic processes are dynamics, movement, and not static, rest. Therefore, economists began to move on to the consideration of dynamic equilibrium systems. There are also enough of them in everyday life - a spinning top that a child spins, or a bicycle that a young man rides - these are also equilibrium systems. But as soon as they stop, they immediately lose their balance.
Economists have noticed that an economic system in which the processes of production, exchange and consumption are relatively constant is also in an equilibrium state. True, here we are seeing quite heated discussions about the period of equilibrium. Thus, a day for D.H. Robertson is a period too short to manage the income received, a week for J. Hicks is a period during which price changes can be neglected, [i] the “long-term period” of J. Keynes is a time “in during which we will all die."
The problem of plasticity and the lack of a clear divide between the short-term and long-term periods persists to this day, sometimes transforming into a philosophical one - what does “long” or “short” mean in relation to time periods, “many” or “little” in relation to quantity, etc. It is quite possible that the economy can also be viewed as a system in a constantly maintained transitional state with an arbitrarily chosen starting point. One interesting theory in this regard is the concept of inflating financial or price bubbles. But we will talk about it a little later.
2. Economic cycles and explanations of crises
At the heart of any science are certain initial principles and patterns that scientists are trying to discover. Sometimes these laws and cause-and-effect relationships cannot be discovered for centuries, but after clarifying the structure of certain systems, establishing the laws to which they obey, everything seems obvious, and we think with a smile and slight bewilderment why it took so much to discover this phenomenon time?
Thus, for centuries, humanity has used the geocentric (Ptolemaic) concept of the structure of the Universe; For entire millennia, people did not know about the systemic and pulmonary circulation; had no idea about the periodicity of the properties of chemical elements discovered by D.I. Mendeleev. Economists of modern times tried to comprehend the essence of the categories “cost”, “value” and “utility”, believing that it was necessary to highlight the fundamental principles of production, distribution and exchange, based on the simplest economic systems - for example, on “Robinson's economics”.
However, simple models and diagrams could not explain the economic crises that in the 19th century assumed increasingly threatening proportions and drew many countries into their orbit at once. Practice has posed new big challenges for economists, which began to be solved on the basis of a wide variety of approaches. Let's look at the main ones.
Solar economic model. The famous English economist W. S. Jevons (1835-1882), who was an unusually versatile and talented person who studied many sciences - including meteorology, chemistry, statistics - put forward a very interesting theory of economic cycles, the appearance of which he linked to changes in solar activity . Jevons noted that crises in the economy do not have a clear time frame and can vary widely from 5-6 to 10-15 years. Based on the fact that periods of solar activity also have a certain spread of 7-15 years, he suggested that our luminary has a corresponding effect on the weather and agriculture, on the yield of most crops. Fluctuations in yields affect prices as well as people's sentiments. Periods of excessive optimism are followed by phases of fear and panic, which is a fundamental prerequisite for the unfolding of a crisis.
It should be noted that this theory was supported and developed by the Russian scientist A.L. Chizhevsky (1897-1964), a man of enormous talent and encyclopedic knowledge. He graduated from commercial and archaeological institutes, wrote poetry, paintings, and conducted scientific experiments. In his dissertation “Study of the periodicity of the world-historical process” (1918) and the later work “Physical factors of the historical process” (1924), Chizhevsky, based on the collected data, tables and figures, shows how solar activity and the location of the planets (he was very respectful of astrology) influence wars, revolutions and public moods.
Monetary model. Proponents of the monetary model explain fluctuations in the business cycle and economic crises by monetary factors. The first to link fluctuations in economic growth with gold reserves was the English economist J. Kitchin. In his opinion, short cycles of 3.5-4 years arise in the economic system when the movement of capital and gold reserves in the country begin to change significantly.
Kitchin established a certain 40-month pattern in the fluctuations in the financial indicators of Great Britain and the United States and decided that this cycle (later named after him) was associated with capital movements. Since the monetary circulation of these countries was based on the gold standard, the amount of money in circulation was closely related to the gold reserves in the Central Bank.
If there were enough gold holdings in the country, then money was cheap and the bank interest rate was low. Entrepreneurs willingly took out loans to expand their businesses. As a result, employment and equipment utilization grew with some lag, and more goods were produced. At some point in time, there was an overproduction of goods and demand fell. Prices were falling, and economic actors were becoming more uncertain about the future. Gold was hoarded and kept until better times. The depression phase began (see Fig. 3).
Goods that had fallen in price in the country began to be sold better for export, the trade balance improved, and gold flowed into the country from outside. The recovery phase began. The situation improved, households and firms began to spend more money from their savings. The economic recovery accelerated and developed into a boom. Then the cycle repeated.
M. Friedman was also a supporter of this concept in its modified version. He attributed the occurrence of economic crises to the incorrect monetary policy of the monetary authorities. Having studied the background to the development of economic crises in the 19th and 20th centuries, Friedman showed that the money supply in circulation did not correspond to the real needs of the economic system. In this regard, the market economy did not regulate itself and an economic decline occurred.
Investment model. The French doctor and economist K. Juglar (1819-1905) put forward his theory of business cycle pulsations with a period of 7-11 years. As we see, doctors from France, continuing the tradition of the court physician and chief physiocrat Francois Quesnay, continue to enrich economic science.
The meaning of Juglar's explanations of crises comes down to the investment component of economic processes. From making a decision to invest to creating a new business, the distance is quite large,” says Zhuglyar. To this period of time should also be added the phase of reaching the designed capacity of the newly created enterprise.
Thus, the following algorithm emerges. At a certain stage of the economic cycle, entrepreneurs and people who want to become them begin to become economically active, believing that now is the opportune moment for this. Taking advantage of a bank loan, economic entities expand existing production or build new capacities. Since there is no coordination in decision-making between them, and there is no planned principle in a market economy, excess investments in any sectors of the economy lead to excessive production. An imbalance arises and demand quickly falls. There is no one to sell newly produced products, entrepreneurs' profits are sharply declining, and the share of unprofitable enterprises is growing. There is nothing to repay loans taken from banks. Along with the bankruptcy of enterprises, commercial banks also become insolvent, losing both their own capital and customer funds. The crisis is spreading to trade and foreign partners. The circle closes, and the economic cycle is reproduced again at a new level.
Demographic and infrastructure models. The main model of this type is considered to be the construction of S. Kuznets (1901-1985). Kuznets cycles or rhythms have a period of 15-25 years. Such a long duration of these cycles is explained by the long-term processes of resettlement of peoples and the construction of infrastructure for immigrants.
Demographic cycles are linked by Kuznets with migration processes and movements of large masses of people to places with better economic conditions. This topic is close to Kuznets, since he himself was born on the territory of the Russian Empire and emigrated to the USA in 1922.
It takes quite a long time for migrants to settle down, since for normal living they need housing, furnishings, and a workplace. A new construction cycle is being formed. Thus, waves of migration, inflow and outflow of labor, are associated with people's expectations.
In addition, some economists believe that long cycles overlap with medium and short cycles. Research has revealed that cyclicality and crises appear at different time intervals according to the so-called three-cycle pattern, when general fluctuations are determined by three cycles of different durations. Long oscillatory processes of 55 years were called long waves by N. Kondratiev, superimposed on the Zhuglar and Kitchin cycles. The folding harmonics interact with each other, forming a common cyclic process.
Exchange model. Some economists explain periodically occurring economic crises by the negative expectations of subjects of the economic system, which are associated, first of all, with the securities market and the stock exchange. When these expectations are high, industrial stocks are overvalued. As soon as security holders have doubts about the reliability and appropriateness of these investments, they begin to dump (sell) their securities. The process of closing positions on the stock exchange takes on an avalanche-like character, the balance between the spheres of circulation and production is disrupted, and a crisis arises.
It was according to this scenario that the most powerful crisis of the twentieth century took place - 1929-1933. In October 1929, panic began on the New York Stock Exchange, all trading participants sought to sell securities; There were practically no buyers. As a result, the securities depreciated and the owners of these securities (including many commercial banks) were ruined. Their bankruptcies led to a wave of mutual non-payments; bankruptcies spread to other companies. The crisis has become global.
Economic crises continue today. The crisis of 1998 was the most serious in its political, economic and social consequences for Russia. The crisis began in the Asian markets - in South Korea, Malaysia and Singapore. Foreign holders of securities issued by issuers from these countries began to hastily sell them due to a loss of confidence. Russia, as an emerging market, was also included in the list of countries with an unstable economy, which resulted in investors dumping government securities - GKOs in the amount of 20-25 billion dollars. As a result, a deep devaluation of the ruble occurred (the ruble depreciated 4 times), Unemployment increased significantly, small and medium-sized businesses suffered, and the standard of living of the majority of Russian citizens decreased.
The first global financial and economic crisis of the 21st century, which erupted in 2008-2010, is, in our opinion, not yet completely over and may follow a double-bottom scenario followed by a protracted recession. We will dwell on its individual features below.
[i] See: Blaug M. Economic thought in retrospect. – M.: “Delo Ltd”, 1994. – P.346.
By that time, the German astronomer Schwabe had established that the increase in spots was observed with a cyclicity of 7-11 years. Such cyclicity, as practice has shown, was observed for many phenomena - in the intensification of locust breeding, in the alternation of dry and waterlogged periods, in the occurrence of plague epidemics. Thus, Jevons linked the cyclical development of economic crises with natural phenomena that led, for example, to crop failure, which, in turn, led to an imbalance in the economy and the emergence of a crisis.
What does a macroeconomist need to know today? Judging by the current situation in the world, there are only two answers to questions. When does a particular economic entity experience a crisis, and what to do about it? And if you look more broadly, there is only one question - about the regulated trajectory of socio-economic development. Those. about patterns and critical factors of long-term macroeconomic changes.
This is hard to believe (Western economists, for example, have been unsuccessfully trying to understand this for at least the last 50 years), but the most constructive idea for resolving the main issue of macroeconomics was proposed in 1962 by Kolmogorov. Analyzing the economic statistics of that time, he discovered that the spectra of fluctuations in financial and hydrodynamic flows were similar to each other.
However, since then, economic science has not been able to fully develop his hypothesis. And answer critical questions that fluid dynamics science has already answered. For example, about the transition of sustainable development into crisis, about its duration and small impacts that can change the trajectory of development.
Let us therefore look at the main issue of macroeconomics from the point of view of the knowledge accumulated recently by hydrodynamics. First, however, let us once again formulate the topic of discussion.
STATEMENT OF A QUESTION
For macroeconomics, in contrast to microeconomics, the main problem of regulation is not the indirect nature of control actions (typical of all economic systems), but the large lag period between the control action and its consequences. The Russian economy, for example, began to feel the first systemic fruits of market self-regulation only 20 years after the start of democratization in the USSR. And the American economy also took more than a decade to recover from the Great Depression of the 1930s.
And today the problem of macroeconomic regulation is no less relevant than 70 or 20 years ago. Because generally accepted methods and tools of macroeconomics cannot confidently assess the scale of the global crisis unfolding since the beginning of the 21st century. Directly opposite assessments from authoritative experts about the imminent end of the crisis or an even deeper plunge into it have been appearing constantly over the past 10 years.
In this situation, knowledge of the patterns of long-term macroeconomic changes acquires exceptional importance. Those. knowledge of the relationship between control actions and the scale of the response to them and the period of onset of this response. Or, in a more general form, knowledge of the mechanism for forming a long-term trajectory of socio-economic development.
In search of ways out of this situation, some economists began to turn again to the works of Keynes and the cyclists, more closely analyzing the least understood and, accordingly, the least previously cited provisions of their theories. They began, for example, to recall Keynes’s exceptional assessment of the role of an extraordinary personality in economics or the fundamentally physical nature of Kondratiev’s long-wave cyclicity.
The consequence of this has been the widespread development in recent decades of research on the economic interpretation of the theory of self-organized criticality by Per Bak and Kan Chen.
For the same reason, for almost 50 years, now intensifying and now fading, there has been a discussion of the Kolmogorov hypothesis among the scientific community of the West. The interest in the incomprehensible, but promising, in their opinion, hypothesis of such behavior of hydrodynamic and financial flows is so great that Alan Greenspan, who permanently headed the US Federal Reserve for 17 years, called his latest book “The Age of Turbulence.”
Interest in this Russian version of complexity theory, if you like, has also manifested itself in Kolmogorov’s homeland in recent decades. The turbulent model of long-term socio-economic changes is most comprehensively reflected in the hypothesis of social turbulence.
BASIC PROVISIONS OF THE HYPOTHESIS
Subjects of macroeconomics belong to the class of very large physical systems, the natural form of existence of which is turbulence.
Over the past few decades, scientific understanding of turbulence has expanded significantly. Today, this word means not only chaos or upheaval, but also, at the same time, the processes of natural self-organization of a very large system of particles into stable (dissipative) structures of a physical, biological, social, economic or intellectual nature. In the first case, these are vortices, Benard cells or coherent laser radiation. In the second - organisms and communities of organisms, in the third - socio-economic systems ranging in size from the family to the state and the global world as a whole, and in the last - these are thoughts, or more broadly, all intellectual projects and the technogenic and social structures produced by them, which Vernadsky called one in a general word - the noosphere.
The state of large macroeconomic systems is determined by at least two independent parameters: the degree of freedom of behavior of the subject and the volume of its economic activity.
The main regulated parameter in such systems is the degree of freedom of economic activity (i.e., the proportion of degrees of freedom out of the total number available to the subject), and the main result is the volume of economic activity.
Objectively measured criteria for freedom of economic activity are the frequency of economic events occurring or the degree of diversification of business activity. The higher they are, the freer the behavior of the economic subject.
The number of degrees of freedom of behavior of an economic entity has several qualitative expressions and quantitative measurement indicators. These are passionarity, frequency of events, intellectual capital, degree of education of society, number of discoveries and inventions, etc. The volume of economic activity also has several forms of expression and measurement. This is the growth of GDP or GRP, physical volumes of energy production or consumption, volumes of financial and material flows, etc.
REGULARITIES OF TURBULENT DEVELOPMENT
Basic patterns
1. Changes in the state of a macroeconomic subject over time occur cyclically. The peculiarity of the turbulent understanding of this phenomenon is that extremely high-frequency economic fluctuations occur chaotically, and extremely low-frequency ones (long waves of the economy) occur naturally. Thus, the magnitude of the long cycle of oscillations of a macroeconomic system is proportional to its area or population to the power of 1/3
2. The production volumes of an economic entity change asymmetrically over time, as shown in Fig. 1.
Rice. 1. Theoretical graph of changes in production volumes (V) by phases of a long development cycle
This asymmetry, according to the theory of social turbulence, reveals the essentially crisis nature of the existence of all very large systems, including economic systems. (Note, for comparison, that crisis-free development is described by harmonic waves.)
The asymmetry is clearly reflected in the dynamics of development of not only economic but also biological systems in that at first growth is slow and unstable, then, in the middle of the cycle, fast and unshakable, and the cycle ends with a sharp decline in production during its last 20%.
3. Very large systems are also characterized by an asymmetrical relationship between the dynamics of growth in the size of the economy and changes in the number of its degrees of freedom or, in other words, the social activity of the masses, or the uncertainty of the behavior of an economic subject, etc. This is manifested in the fact that in most of the long cycle of natural development, an increase in production volumes is accompanied by a decrease in the degree of freedom of economic activity, as shown in Fig. 2 and 3.
Rice. 2. Theoretical dependence of the degree of freedom of economic activity (frequency of economic events) on the volume of economic activity
Rice. 3. Theoretical graph of changes in the degree of freedom of an economic entity (E) and production volumes (V) by phases of a long development cycle
Additional patterns
Subjects of macroeconomics are unique social atoms that exist in a stable form for quite a long time. They, like physical atoms, are characterized by a number of stable physical, social and economic states, the quantitative levels of which are described by the exponential law, first discovered by Kuzmin and Zhirmunsky in physical and biological systems.
The total number of degrees of freedom of behavior available to an economic subject is limited by the physical dimensions of the system. The larger the size of the subject, the more available degrees of freedom and characteristics derived from them, such as the long cycle period, maximum volumes of economic activity, population size, etc.
For example, the long cycle of Russia with a territory size of 17 to 22 million square meters. km. is from 75 to 80 years, and the USA and China with a territory of about 10 million km. sq. – 60 years, the world economy as a whole, covering almost the entire land surface of the Earth – about 140 years.