There's more to come. Khazin, Mikhail Leonidovich World crisis in Russia

Alexander Meshkov

First you have to fall. However, no one wants to fall and talk about it. But how then can we develop a new model of economic development? Moreover, the old liberal model and financial capitalism have exhausted themselves, says Mikhail KHAZIN, a well-known scientist and president of the Neokon expert consulting company.
Mikhail Khazin.

– Recently I came across the book “1968”. The world celebrated the anniversary of the events that took place in the eurozone and the United States, but, in my opinion, there was no serious research into what actually happened 40 years ago. But we were talking about a change in the socio-economic paradigm. The Western world has been rocked by a serious crisis, not inferior in scale and depth to the current one - when, in the words of the center-right Nicolas Sarkozy, the former president of France, a system has emerged “where everything is given to financial capital and almost nothing to the world of work.” True, at that time the reasons for the crisis were of a socio-psychological nature; people were seeking “self-realization” and a high quality of life. Now the basis of the new crisis is economic; the existence of the financial and monetary system, which was created in Bretton Woods at the end of World War II, is in question...

– In my opinion, parallels should be drawn with another time. But first things first.

From the point of view of the functioning of the current economic model, the current crisis is understandable; it has clear outlines. Over the past 30 years, first in the United States and then throughout the world, a system of demand stimulation has been in place, which has allowed the Western economy to develop in an expanded manner. It was built on the principle of increasing demand due to increasing debt. Households and corporations borrowed and spent funds. States did the same, increasing social spending. This model reduced aggregate demand, because not only borrowed money had to be returned, but also interest.

There was constant refinancing of debt. But such a system can only exist if the cost of the new loan is less than the old one. This model continued until the world's lender of last resort, the US Federal Reserve, cut rates. In 1980 it was 19%. But by the end of 2008, in December, the Fed discount rate became zero. That's it, the model has exhausted itself, a crisis has begun.

– But crisis phenomena appeared even earlier – in the early 2000s...

– You understand: when you refinance a debt, financial “bubbles” inevitably inflate somewhere, and sometimes they burst. This is, firstly. In addition, you need to understand that the rate on a real loan stopped even earlier, that is, refinancing became impossible somewhere in 2005-2006. Then a break followed. Today, the expenses of households in the West are greater than their income. They call different numbers. According to our estimates, this gap is approximately 25% of GDP. This means that in the modern West people spend more than they earn.

Given the current situation, consumption levels will fall. Global GDP will also fall. It will decrease by more than 25%, because when demand falls, income also falls. Today there are two options for changing the situation. First: maintain demand at any cost. The United States of America is following this path. They are increasing the budget deficit, taking advantage of the fact that theirs was smaller than that of Italy and Greece. President Obama increased the budget deficit by one trillion dollars per year. All this money goes to support social programs.

– What does he expect when the money runs out?

– As far as I understand, the key moment for Obama is the elections. As soon as he wins or loses, the crisis will take on new contours. The United States calls on Europe to tighten its belts, but at the same time gives money to Greece and Spain to refinance their debts. The main problem is that if you stop paying them today, the financial system will collapse. Why? Because these debts are not of someone, but of banks. Therefore, mass bankruptcy will begin. Of course, some money can be given to banks, but here another problem arises. In the context of increasing non-repayments, the cost of insuring financial risks changes: it increases sharply. And bankruptcy occurs along a different line. That is, in fact, it will no longer be possible to keep the global financial system in a more or less stable state in the next 3–5 years. The question of when it will “fall” is not of an economic nature, but of a political one.

– When will “hour X” come?

– This will depend on the behavior of different countries. Mrs. Merkel said, for example, that while she is alive, Germany will not pay the debts of Spain and Italy. Other states could pay these debts. But the problem is that in Europe you cannot pay for something if Germany does not pay. You cannot collect money from some family for hungry children by explaining that their mother is on holiday in the Canary Islands.
Chicago. November 16, 1930.

This is the global model. Therefore, the crisis caused by the fall in aggregate demand associated with the inability to refinance debts will continue. It started in 2008. But then it was “flooded with liquidity”, and the crisis became slower, similar to the early 1930s in the United States. There it lasted a little less than three years, from the spring of 1930 to the end of 1932. The rate of decline was approximately 1% of GDP per month, and it all ended in the “Great Depression.” How will the crisis end this time? We have not yet finished moving down the trajectory of decline; we have passed about 10-12% of this path (in the world). Not more. And we still have to fall and fall.

– But if these trends extend to Russia, then the budget will have to be cut, some programs will have to be cut....

– In relation to Russia, we are concerned, first of all, with oil prices. During periods of high emissions, prices always rise faster. The last major issue was on February 29, when the European Central Bank printed half a trillion euros. This gave about a three-month impetus to the rise in oil prices, and in May they went down. If neither the US nor Europe starts printing money, the price of oil could drop to 60-70 dollars per barrel, and then, of course, we will have a complete “ah” with the budget.

Option two – if money is printed, the price of oil will rise, but not as much as we would like. But at the same time, inflationary processes will begin in the world. And since the Russian economy is import-oriented, the country will have very high consumer inflation. She's already quite big.

As we see, the economic prospects in our country, taking into account global trends, are not rosy. Perhaps, due to inflation, we will have to somehow compensate for social expenses that cannot be cut. That is, it is possible that a gap will appear in the budget.

“We just breathed a sigh of relief: we paid off government debts...

“I wouldn’t be overly happy about this.” After all, we actually converted government debts into corporate debts. And what's the point? Previously, the state was a debtor, now it is Gazprom. Are you ready to bankrupt Gazprom? Me not...

– At the current growth rate (some economists talk about the “inertial path of development”), we will not be able to catch up with developed countries in the coming years and even decades, since they will not stand still either. Therefore, they started talking about the need for a “technological breakthrough”. Note: “national projects” were also preceded by discussion...

– National projects became an attempt to compensate for the previous omissions of the government in the 90s, to patch up the hole that formed in the economy as a result of the “brilliant” policy of Gaidar’s followers, who invested practically nothing in the sectors of the national economy. As for the “technological breakthrough”. To begin it, we need to really imagine what goals we are pursuing and what kind of world we live in.

We have been writing and articles about the job crisis for 10 years. It is becoming more and more obvious that we are right, that the economic models and processes that we describe take place, but have you heard our findings voiced by those who make decisions? I was invited to speak in Kazakhstan at an economic forum and in Uzbekistan at a public economic event. But in Russia, all discussions on the topic of the crisis are not welcome. We proceed from the logic that it will not happen. The liberal economic school has a complete monopoly on truth, which does not even have words to describe this crisis; she cannot admit that she was wrong about something, that she doesn’t understand something. These gentlemen simply ignore many of the real processes taking place in the economy.

– Academician Glazyev, developing his theory of technological structures, notes that we, one might say, slept through the fifth structure and used copies. But there would be no happiness, but misfortune helped. “In backward countries, as a rule, there are no significant production capacities of an obsolete technological structure and the resistance of socio-economic institutions to their destruction is relatively small, which... facilitates the creation of production and technical systems of a new technological structure,” the scientist writes. He says that we have more opportunities to master the new, sixth technological structure. And he names such “growth points” as nanotechnology and molecular biology. And other economists say: they say, it is necessary not only to create “growth points”, but to develop the entire national economy as an integral organism...

– All the same, without “growth points” economic development does not work; the only question is whether there is one or a hundred of them. It is clear that it is easier to move one growth point. But it's not that. The whole theory of “growth points” works in a situation of general economic growth. We have now entered a period of long-term decline, when innovations do not pay off. For this reason, financing innovative processes is fraught... They cannot survive on their own. This is a big problem and I don't know how to solve it yet. I do not rule out that we (the whole world) are facing quite serious technological degradation. About the same as in Russia in the 90s.

– During the time when there was a “Great Depression” in the West, we scraped out everything we could, but thanks to the equipment acquired abroad or the equipment made on its basis, we industrialized...

– What did Stalin do in the 1930s? In fact, he solved the problem set by Stolypin. Then, at the beginning of the 20th century, economic progress was associated primarily with mechanical engineering. But for its smooth operation, it was necessary for someone to buy the products of this industry. An individual peasant could not buy a tractor. This was within the power of wealthy, wealthy peasants. That is why Stolypin wanted to form large farms based on the kulaks. And as a result, he predetermined the subsequent civil war in the village. His program ended in failure. But Stalin did it differently: he created collective farms. A superstructure appeared that became a consumer of mechanical engineering products. And this program ended in success.

– You probably want to say that in relation to modern conditions the situation is now different...

- Absolutely right. In the 1930s, innovation was mechanical engineering, and today it is nanotechnology. But how do you get a person who doesn’t have the money to buy a bun for his child to buy some kind of nanotechnology product? That's the whole problem. Innovation will never happen in a falling market.

The Americans in the early 80s introduced a demand stimulation program only because they had a crisis in the 70s, and they could not launch a new wave of innovation during those years. That is, what we call information technology today. But when they began to stimulate demand, they used this wave - they destroyed the USSR and won. But the trouble is that today this tool for stimulating demand has already been exhausted.

– Why are you so sure that the economic decline cannot be stopped and the global crisis will last until it has passed its entire trajectory? Is humanity really so powerless that it cannot master rational forms of labor organization?

– Few people here pay attention to the fact that there are two economic sciences in the world. One is called political economy, it was invented by Adam Smith at the end of the 18th century. Then it was very actively developed by Karl Marx, after which it acquired pronounced Marxist features. And the West, as an ideological alternative, decided to come up with another economic science called “economics.” So, in those places where political economy says “yes,” “economics” says “no,” and vice versa. Political economy believes that capitalism is finite, for this reason “economics” says: capitalism is infinite. And in principle, it does not consider the concepts from which the finitude of capitalism follows.

But the end of capitalism was not invented by Marx, but, oddly enough, by the same Adam Smith. This social system appeared in the 16th-17th centuries. Contemporaries, observing the economy, drew attention to the fact that development under capitalism means a deepening division of labor. And then Smith took the next step: he explained that if there is a closed system, then in it it cannot rise above a certain “bar”. Any economic system at some point reaches such a level of division of labor that it needs to expand in order to develop further. Hence the conclusion: when markets become global, capitalist development will stop. For Smith and even for Marx, this was an abstraction, but today we live in a world in which global markets rule the roost. Therefore, innovation cannot pay off for economic reasons. Because for them to pay off, they need to expand markets, but this is not working.

– There are two options for the development of post-industrial society – favorable and unfavorable. As I understand it, you are leaning towards the second of them...

– No, my opinion is that post-industrial society does not exist at all. I'll explain what's going on. Imagine you had a factory where all the people worked together. Then it was divided into workshops, which were located at a great distance from each other, and as a result, the plant management decided that it had built a separate industrial region - a post-industrial society. But it exists only thanks to the presence of workshops. Therefore, as soon as there is a crisis in those workshops, the entire so-called “post-industrial society” falls apart... These are fairy tales that were invented in order to retroactively justify the super-incomes of the highest quintile groups.

– You always talk only about the economy. However, according to some scientists, the lack of education of our society in matters of morality and its unpreparedness for drastic socio-psychological changes led to depopulation in the 90s and other negative consequences. Some even believe that society should be governed more by sociologists, psychologists and educators than by economists and lawyers...

– I’m not a sociologist, I deal with economics and talk about what I’m responsible for. One thing is obvious to me: our society does not accept liberal ideology with its complete lack of morality. Either the existing system will collapse, or society itself will be destroyed. One out of two.

– But the “economy of knowledge”, “economics of development” open up new prospects for people, opportunities for its improvement and reform...

– Maybe, but when they start to destroy, there is no time for knowledge and no time for education. I really want to eat. When there is nothing to eat, people begin to get nervous.

– As one German writer said: “To the rich, talk about bread seems base. It’s because they’ve already eaten.”

- Like that.

– It turns out that we have now reached a stage of development when some primary needs, which seemed to have been overcome long ago, and society was solving issues of spiritual development, self-improvement, “self-realization”, quality of life, etc., again become dominant.

- Yes, it is true.

– How to solve them?

– It is impossible to solve them within the framework of modern financial capitalism.

– But isn’t world social thought really exploring various options for humane development?

– All Western theories are built within the framework of liberal ideology (economics is only part of it), and it is forbidden to talk about the end of capitalism.

– But the list of different directions is not limited to them alone. There are thinkers whose works have a social connotation. John Galbraith, for example.

– Galbraith died quite recently, his works date back to the 1950s and 1960s. He was, of course, a brilliant economist, and today the ideological “mainstream” does not welcome him very much. American Joseph Stiglitz, a heretic demoted from the World Bank, is also trying to do something, proving that he is an honest person, that not everyone has sold out for money. For this he is constantly subjected to moral and ideological pressure.

Yes, there are people who are trying to get out of the quagmire. So we are trying too. But in order to do something, you need to look at life soberly. The main question today is: what will be the model of economic development and how far we will fall as a result of this crisis. You see, talking about development until we fall is pointless.

– And how to rise and find strength for further development...

- This is the model we need. But first you have to fall. And no one wants to fall. Nobody wants to say this out loud. A modern politician cannot say: tomorrow we will live worse than today. This is impossible. He must say: no, we will live better.

– Nowadays there are probably fewer pessimists among religious leaders than among economists. Predicting the end of the world...

– Don’t confuse the end of the world with a crisis.

– A crisis from which we will eventually emerge.

- Of course, we will get out.

The famous Russian economist and publicist Mikhail Khazin spoke on his personal website about the zugzwang of the world economy and the impending acute systemic crisis.

According to the expert, there is a fairly important and pressing problem in the world today – the issue of money. The difficulty lies in the fact that the release of the money supply forms a zugzwang, in which one has to choose the lesser of two evils. Sometimes emissions help, but they can also hinder economic growth.

Khazin believes that the issue can be implemented not by distributing cash, but by creating new debts. In this case, there will be practically no problems, and new money will be created in the economies of states, which will be available to consumers, and inflation will be minimal. In general, the world system worked like this from 1981 to 2008, and then from 2009 to 2014. However, former US President Barack Obama stopped the emission in 2014, and Trump started it again. Why this was done, we need to figure it out.

The expert explained that there are two circuits in the economy: real (production of goods and services) and financial. Since the economic system of any state is adaptive, it is possible to increase the financial sector in it relatively realistically and by quite significant amounts. The transition itself may be painful, but then everything will return to normal and the system will function. But if one wants to change the share of the financial sector again, problems will arise again, even if it is to return the economy to a more “natural” state. This occurs due to the specifics of independent financial markets, since transitions are possible only when assets are transferred to the real sector. In other words, markets exist only if it is possible to purchase something for money and with long-term stable demand for products.

Free financial markets influence all prices in the state, causing them to constantly rise. If the market for luxury goods grows, then the cost of products in ordinary goods markets also increases. That is, as the share of financial markets grows, income in commodity markets must also increase, otherwise the population will become impoverished. The fall in overall demand will not be offset by elite demand, since it is smaller in volume.

In such a situation, they sometimes resort to stimulating public demand and economic growth through the issue of money. When forming debts in the first couple of years, it is possible to avoid inflation. The state economy can easily adapt to excess funds. However, the attracted assets form new financial markets and lead to even higher prices. Prices can be stabilized by a new issue aimed at maintaining private demand, but this process will lead to an increase in inflation, at a very high level of which the economic system cannot exist, since it is impossible to predict the results of work for a long period.

Today, a critical situation has arisen in the global economy, since it is clear that all possibilities for recycling emissions over the past 20 years have been exhausted. The world is on the verge of a global acute systemic crisis. In this situation, there are two ways out, but neither of them is ideal and leads to certain negative consequences. The first is to stop stimulating private demand so that it reaches an equilibrium state with consumer incomes. But this will lead to a socio-political crisis. The second is to continue stimulation while inflation is rising sharply. In this case, we can expect a severe financial and economic crisis. The only question is which of two evils is the lesser.

Mikhail Khazin

Black swan of global crisis

* * *

Preface

Professionals involved in solving crimes have a wonderful expression - “Lies like an eyewitness.” It is connected, as is clear, with the fact that people remember the past very, very selectively; they remember well moments that remind them of something important to them, and easily forget what does not evoke emotions. They very easily “glue together” different memories under the influence of external forces (radio, television, conversations with others), succumb to the influence of stronger people, and tend to create a “virtual reality” that justifies their not the most beautiful behavior...

In general, it is very difficult to restore the real picture of events even from the observations of direct witnesses (who need to be asked repeatedly, and sometimes face-to-face confrontations are held, in which different “virtual realities” have to be verified, double-checked and clarified). And if we are talking about restoring the real picture in conditions when certain forces are purposefully clouding it even after several years... Here the task becomes much more complicated.

You can give a lot of examples. One of the key periods that allows us to understand what is really happening in the economy today is the 70s of the last century. And, if we recall the studies of the 80s, which I became acquainted with back in the USSR, I always proceeded from the fact that this was a period of permanent crisis in the Western economy. But since the late 70s, one of the directions began to prevail in Western economic science, which gradually monopolized its position (conventionally, it can be called liberal fundamentalism). And in accordance with this direction, crises are of only one type, the so-called cyclical, the peaks of which are sometimes called recessions, and the duration of these recessions is limited (relatively, say, 24 months).

I specifically do not clarify the meaning of these terms in the “mainstream” sense, since this, as you will see below, does not have much meaning. This is simply one of the ways to describe reality, and today we can safely say that it is not the most successful, since a number of phenomena of today’s reality simply cannot be described within the framework of this terminology.

The important thing is that the reality of the 70s did not fit into the “mainstream” theory, which for some time has been claiming the absolute truth. And, as a result, its adherents constantly rewrote methods of statistical data processing in order to prove that the theory cannot be wrong. In the end, they achieved success (as legend has it, Stalin once said: “It doesn’t matter how they vote, the main thing is who counts!”), Today in all textbooks (monopoly) it is written that the 70s were just two near recessions, separated by a brief period of growth. However, this is not a completely alien phenomenon to science: my programming teachers explained to me in the 70s that a program is rewritten until it begins to produce results acceptable to the authors.

Let us also recall that since the beginning of the twentieth century there have been two economic sciences in the world - political economy and economics, which are in a fiercely competitive relationship. After 1991, political economy found itself in a terrible corner, but (in our country) it survived - and then a crisis began, which, as it turned out, cannot be described in the language of economics (in any case, there is still no theory of the modern crisis in the “mainstream” ), but it is described perfectly on the basis of political economy.

Actually, our theory, created on a more or less full scale just at the time of the development of the first events described in this book, and built not on economics, but on political economy, suggests that the crisis of the 70s, like the crisis of the early twentieth century , like the Great Depression, like the current crisis that began in 2008, is a phenomenon fundamentally different from what is described by such a “cyclical” term as “recession” (or, in the language of political economy, a crisis of overproduction). This, in reality, is a structural crisis associated with a decline in the efficiency of capital in the conditions of the impossibility of expanding markets. And, accordingly, attempts to fit it into the patterns of recession lead to the fact that various kinds of roughness and inconsistencies inevitably come to the surface. In theoretical works this is not so important, but using such a theory to explain real problems in a crisis is simply unacceptable.

The trouble is that each such roughness in itself is an insignificant phenomenon and not very memorable. For example, I have noted many times that US statistics showed in their official figures economic growth (or a decrease in unemployment), which was accompanied by a decrease in the length of the workweek or capacity utilization. Or else - when the indicators of the GDP deflator (which is fundamentally important for calculating GDP, which is why it is always underestimated) “jump out” from the segment formed by the indicators of consumer and industrial inflation. Both are clear indicators of falsification of statistics, but it must be borne in mind that US statistical agencies are constantly revising statistics in retrospect in accordance with the most “advanced” methods, and for this reason, returning to past figures, very often you see a completely different picture, than what it was just a few months ago.

And if you add massive propaganda to this (for example, the government’s constant howls about economic growth and success in social support for the population, as happens in our country), then it becomes even more difficult to understand what is happening and how. Even I, with all my understanding of economic processes and, in general, the management mechanisms of government, must constantly make quite serious efforts to remember exactly how things were in a given period. In reality, and not within the framework of a varnished and reduced to the “only true” picture. It’s easiest to give examples from the mid-90s, when I was directly involved in many processes (and even managed to stop some outrages), and then followed the events quite closely.

We can recall, for example, the history of defaults in 1998. There were two of them: banking and sovereign, and the first could not be avoided, since the government, using budgetary funds, had for a long time maintained an overvalued ruble exchange rate, and it was bound to collapse as soon as the budget ran out of money. But declaring a sovereign default, that is, refusing to pay obligations denominated in national currency (the notorious GKOs), was something new in world financial history. From the point of view of the country’s interests, this was a crime, but the team of organizers of the default (Chubais, Dubinin, Aleksashenko, Zadornov, Kudrin and Ignatiev) proceeded from personal and corporate interests.

From the point of view of the state, I repeat once again, it was a crime, but almost all of its participants, with the exception of Aleksashenko, succeeded quite well after the default. Which is natural, since their power group (in the terms of the book “Stairway to Heaven”) remained in power. But they don’t want to remember the real development of the situation at all (the time for criminal liability, unfortunately, has already passed, but political liability has no statute of limitations), and therefore you will almost never hear the word “default” mentioned in the plural in relation to the events of 1998. From the point of view of the liberal political team, this event should be firmly forgotten.

Many more examples can be given. In particular, almost everyone who received an economic education within the framework of liberal economic theory (and today, let me remind you, it has almost a monopoly on the truth in economic theory) knows for sure that the only currency for which defaults have never been declared is U.S. dollar. All attempts to dissuade them and remind them that in the last century alone the United States declared default at least twice (in 1933 and 1971) end unsuccessfully: their textbooks simply say that these events (the closure of the entire banking system for several days, the so-called bank holidays, a sharp devaluation of the dollar against gold and, finally, the abandonment of the “gold standard” on August 15, 1971) do not constitute a default. The people who experienced these events, of course, would hardly agree with such statements, but a modern reader is unlikely to be able to familiarize themselves with their opinion.

Any entrepreneur (not to be confused with corrupt businessmen who manage the finances of specific officials) needs to have an objective picture of the development of events in order to more or less successfully manage their business. He can analyze it in different ways, but if there is no understanding of the current situation, then the chances of success are illusory. The trouble is that any picture of the development of macroeconomic and political economic processes requires an understanding of the history of their development. And, as stated above, those who control the relevant expert and political institutions are trying to distort this real picture and present it in the most beneficial way for themselves.

The last time we talked with the famous Russian economist Mikhail Khazin was in the spring of 2013, when there were no signs of trouble. But even then he said that a “tedious and protracted” crisis awaits us.

And he turned out to be right.
In general, crises, that is, situations when it is necessary to somehow resolve a heap of accumulated contradictions, are his specialization. Mikhail Leonidovich considers the applied task of his theoretical research to be the creation of a kind of map with the help of which businessmen and politicians can chart their path. The map that Mr. Khazin drew for the participants of the regional forum “Business Territory 2019” is, rather, a political map of the world. But this information can be very useful in order not to fall into panic or euphoria with every news about a change in the exchange rate or the announcement of new sanctions.

– Now our entrepreneurs are in a state of high uncertainty. Political cataclysms, cessation of growth... Can you propose some kind of strategy for the business community of the region, give your recommendations?

– Today, entrepreneurs feel like a driver in a thick fog. I can't tell a business how to behave. This is impossible. I can only show you some kind of map: if you go there, then this will happen, if in the other direction, then this will happen. But where to go, entrepreneurs must choose on their own.

– In our region there are representatives of both small and large businesses, people of different political persuasions, from different sectors of the economy, on a variety of platforms asking the authorities: what is your strategy, where is the region moving, what comes first? But officials somehow avoid answering...

– There are no ideas in general in the system of executive power. Even the federal government doesn't have a strategy at all. Why do liberals need a strategy? The invisible hand of the market will do everything. But this is also not a strategy, and for a captain who has no goal, no wind will be favorable. What is the point of talking about regions, capitals, their interaction when there is no understanding of where and why we are moving? It is even less so at the regional level. In the system of relations that has been built over 25 years, regions do not have the right to vote. Therefore, it makes no sense to expect anything from your officials. In fact, in Russia there are ideas. Here we have an obvious advantage over other countries, since we have preserved alternative trends in economic science. If there is a request, then it is possible to quickly implement these ideas.

– When you were going to Kirov, did you somehow study our economic realities or did you deliberately distance yourself from them?

– I am fundamentally not interested in this issue. About your region, I can only say that when I learned that Nikita Belykh became your governor, I realized that there would be no prospects for business in the region.

– More than three years have passed since his arrest...

– I haven’t seen anything new yet. At the federal level, it is noticeable when a reversal occurs in a particular region. Yes, I understand perfectly well that after the Whites your order is poor. First you need to get it right, which may take a long time, but after that you need to come up with new ideas.

– In general, at the local or regional level, do the authorities have any levers to change the situation, or is this basically impossible in Russia?

– This is a difficult question. In fact, quite a lot can be done to develop a business in a particular region or even in a city. I have such experience. I wrote a development program for the city of Aktyubinsk in Kazakhstan. True, more than 10 years have passed since then. However, many ideas from there can be adapted for Kirov. But this is consulting work. You need to sit down and do this seriously.

– Now in our region, when it comes to national projects, the first thing that flashes is the construction of kindergartens, schools, quantoriums... People of the right-wing conservative persuasion have a question: “Okay, they built it, but at whose expense will the region maintain it?”...

– We should not forget that if you do not have such social infrastructure, then people must spend money on it themselves. When it appears, additional funds are freed up, which the population can spend more efficiently. Yes, when building a kindergarten, we put nannies out of work, but at the same time we get a pronounced positive effect of scale, plus we take funds out of the shadows.

– Could there be a shortage of such services or an accelerated rise in prices for them, including, for example, medicine - is this not only a problem in Kirov or Russia, but a global trend in general?

– Any product or service can exist on the market in three states. The first option is luxury. In fact, the buyer of one unit must pay for everything necessary to create it. Roughly speaking, in addition to directly consulting a diagnostician, you must pay the full price for the tomograph. The second option is a regular product. The necessary equipment to provide this service has already been purchased, which creates conditions for a sharp drop in the markup. The third state is when a product or service becomes an infrastructure. In this case, the state assumes responsibility for maintaining supply, and the markup may even become negative. In the USSR, education, medicine, etc. were infrastructure, now they have become a commodity and are gradually turning into luxury hotels, when in order to receive a normal education you need to spend about 400 thousand rubles a year per child. Another example: in the USA, telephone communications and the Internet are classic goods. But in our country they have become infrastructure even without the direct participation of the state. At a certain point in time, communication services became an infrastructure when consumers began to give preference to subscription fees. Therefore, they cost us significantly less than in America.

– About models and their predictive power. When you gave an interview to Navigator 6.5 years ago, you precisely identified two very important things: the protracted nature of the crisis and the oil price corridor. How did you manage to foresee the development of the situation so accurately? Do you have a forecast for the next 6-7 years?

– In 2013, when we talked, there was already a theory, although without some details. Actually, I made my predictions based on it. According to my theory, we are now dealing with the last crisis of capitalism, but this does not mean that humanity is heading towards the end of history. Economic models do not last forever.
But this condition complicates predictions. We are now approaching the bifurcation point. That is, to a state when the entire world economic system will go into a chaotic mode. From this point you can “fly” in any direction. If we reach this point within the next six years, it will be simply impossible to make a forecast.
I can only imagine how the situation will develop if everything goes more or less orderly. In this case, by 2023 we will approach “a new Yalta or Bretton Woods.” That is, to some kind of agreement between the winning forces in the global confrontation. It will have to legitimize the new state. Most likely, the new status will be similar to the situation before World War I, when the world was divided into several fairly independent currency zones.
Over the next 20-25 years, these groups of states will begin to build their reproductive contours. That is, they will create those industries that did not exist, since they developed in other regions of the world in accordance with a single global system of division of labor. The second challenge will be to adapt existing industries to reduced demand.

– That is, there will be industries in which, despite the shocks, there will be growth. Whereas in other sectors, at best, one will have to be content with existing demand.

- Yes something like that. I can assume that there will be only one region in the world where there will be economic growth - this is the Eurasian economic zone. A stable situation or even a slight rise is possible in Latin America, if it gains independence, and in India. Regions such as Europe, China, North America, Africa and the Middle East are facing declines.

– By the way, as I understand it, Eurasia is not only the EAEU. Also in 2013, you predicted a rapprochement with Turkey, which was hard to believe at the time.

– Naturally, this is not only the post-Soviet space, the EAEU. We are already seeing steps in Turkey’s Eurasian direction. Iran and Japan may also join it. The forecast for Japan has not yet come true, but both we and they are objectively moving towards this. This is the general outline. But such a forecast will be realized if the situation develops within the framework of the regular scenario. And then, in 20-25 years, wars may begin. I think that these will be conflicts between peripheral states of different zones, or a new Cold War. In these conflicts, there will be a process of enlargement of zones, the same as we saw in the 20th century. It will take 50-70 years.
There is another option: a noticeably more efficient economic model will be formed in some currency zone. In this case, we will see a clear dominance of one of the regions of the world. By the way, during the Cold War we did not observe such a situation. The USSR and the USA competed on approximately equal terms. Their crisis began earlier, in the 70s, but they were able to group and propose Reaganomics, maintaining the system by expanding consumer credit. Our elites chose to capitulate.

– We have already looked ahead almost a century. For local business circles this is interesting, but of little practical use. Maybe you can tell us about your vision of some specific industries? Which area has the most interesting prospects?

– I don’t specifically deal with investment issues. I'm a macroeconomist. Yes, I am considering the development of individual industries, but this is a macroeconomic, not an investment interest. And while there is no demand, I try not to go into details. But if there is a request, then it will be possible to consider specific industries, their role, their prospects in a particular territory. Again, as part of consulting work.

– By the way, more about industries. There is now a loud debate about investing the surplus of the National Welfare Fund. What area will this money go to?

– So you want me to tell you now which of the lobbyists will be cooler later, when it’s all over? (Laughs) Let me tell you openly and honestly: no one will offend Igor Ivanovich Sechin [Rosneft].

– Do you think it will work? The Central Bank continues to object to this form of investment by the National Welfare Fund.

– Elvira Nabiullina promotes the IMF’s position. It can be briefly formulated as follows: “Money withdrawn from Russia should under no circumstances be returned back to Russia.” That is, she will do everything to prevent NWF money from entering our economy under any circumstances. Of course, if a different decision is made, she will not go anywhere and will be forced to comply. And who in this case will be the main beneficiary... There are different opinions on this matter.

Biography

Mikhail Khazin is the son of leading researcher Leonid Grigorievich Khazin. My father studied the theory of stability at the institute. Mother taught higher mathematics in . Khazin’s grandfather Grigory Leizerovich received the Stalin Prize in 1949 for his participation in the creation of the Moscow air defense system with the official wording “for the development of new equipment.” Mikhail Khazin’s younger brother, academician of the Russian Academy of Arts Andrey Khazin, was a member of the Federation Council, a professor at the State University - Higher School of Economics, and currently the head of the department at Moscow State University.

Khazin was born in Moscow on May 5, 1962, graduated from the mathematics class of school No. 179. By his own admission, he dreamed of studying at Moscow State University, but was forced to enter Yaroslavl State University in 1979. In his second year, he transferred to the Faculty of Mechanics and Mathematics of Moscow State University, from which he graduated in 1984 with a degree in statistics (Department of Probability Theory). By assignment he ended up working with Alan Grivtsov, where he worked on theoretical substantiation of applied problems in chemical physics from 1984 to 1989. On the website of the Physical Institute named after. Lebedev provides annotations of several works by Khazin on statistical physics.

In 1992, he headed the analytical department of ELBIM Bank, and in 1993 he moved to public service. In 1993-1994, Khazin was an employee of the working center for economic reforms under the Government of Russia. Since 1994 he worked in the Ministry of Economy, in 1995-1997 he headed the department of credit policy of the ministry. According to Khazin, in 1996 he was supposed to become deputy minister (at that time the ministry was headed by Yevgeny Yasin), but the appointment was blocked by Yasin’s first deputy, Yakov Urinson. Disagreements with Urinson arose due to Khazin’s report, prepared for the November board of the Ministry of Economy on non-payments, in which Khazin argued that “a reduction in the money supply in Russian conditions does not lead to a decrease in inflation, but to an increase.” From 1997 to June 1998 - Deputy Head of the Economic Department of the President of Russia. He is a retired active state adviser of the Russian Federation, III class. Khazin believes that he was fired from the civil service “for his categorical unwillingness to compromise,” and adds that after his dismissal he “was not allowed to travel abroad for ten years.”

From 1998 to 2000 - a private consultant, then until 2002 he worked in the audit and consulting company "Modern Business Technologies", since the end of 2002 - president of the expert consulting company "Neocon", specializing in strategic forecasting and relations with government agencies (GR ) . At the same time, Khazin, together with Oleg Grigoriev and Andrei Kobyakov, developed a theory of the modern economic crisis, which was reflected in the book “The Decline of the Dollar Empire and the End of Pax Americana,” co-authored with Kobyakov in 2003.

From the fall of 2002 to the spring of 2015, he was the president of LLC Expert Consulting Company Neokon. In 2015 he founded the Mikhail Khazin Foundation for Economic Research.

Khazin is a member of the expert council “Economics and Ethics” under the Patriarch of Moscow and All Rus'.

In 2016, he joined the Rodina political party and participated in the 2016 State Duma elections.

Economic theory

Describing his work in the civil service, Khazin says that he considered his main task to be “to understand how the economy really works and to eliminate problems in the path of economic growth” in Russia. In October 1997, the economic department sent a report to the president in which it predicted the development of the crisis in Russia in the summer of 1998 under the current financial and economic policy.

In his annually published forecasts, Khazin consistently develops the theme of the inevitable global economic crisis. Its main theses include the impossibility of continuing to stimulate final demand and expand markets, a decline in financial and economic indicators, a decrease in the level of division of labor and the collapse of the world economy into several currency zones.

Khazin, together with the head of the economic management department Oleg Vadimovich Grigoriev, after leaving public service, continued to study the causes of the default. In 2001, while studying the interindustry balance of the United States, Grigoriev put forward the concept of technological zones. By the end of the year, the main points of the theory had already been formulated and the scale of the expected crisis was visible. Khazin himself sees the main problem of the crisis as the loss of the middle class, which is the basis of the socio-political stability of society. Khazin believes that the main cause of the crisis is the exhaustion of final demand, aggravated by excessive stimulation of consumer demand and uncontrolled emission of the dollar.

After the crisis, according to Khazin, the US dollar will cease to be a global currency, but will become a regional one, other regional currencies will be: the euro and the yuan; it is also possible - Indian rupee, dinar, ruble and some currency of Latin American countries.

Khazin opposed Russia's entry into the World Trade Organization (WTO). He expressed his position at the V International Congress “Open Russia: Partnership for Modernization” on March 25, 2011.

Public performance

Many Russian media, including the RBC-TV channel, Expert and Itogi magazines, slon.ru, Izvestia and Komsomolskaya Pravda newspapers, and the Interfax information group, call Khazin a famous Russian economist. According to Professor Dmitry Ognev, Khazin’s performances combine lively language and accessibility to a wide audience.

Khazin actively opposes the ideology of neoliberalism and plays the role of the economic “Cassandra” of globalism and the world financial system. He consistently propagates the idea that the West and the American-centric world economic system are doomed for objective reasons by the finitude of capitalism.

In 2000, an article by Khazin and Grigoriev was published in the Expert magazine, in which they forecast an economic crisis in the United States, expected in the same year and leading to a drop in average consumption in the world by 1.5-3 times.

On September 10, 2001, at the Expert magazine forum, he warned about the high probability of major terrorist attacks against the United States (http://web.archive.org/web/20040814162047/http://www.expert.ru/tmp/konfold/my18900.htm )

In October 2008, Khazin described the long-term and large-scale nature of the global financial crisis; according to estimates arising from his theory, he predicted: “as a result, the US economy will decrease by at least a third. The world will fall by 20 percent. After this, the planet will face 10-12 years of severe depression. In the USA and Europe, I think many will live from hand to mouth. And the car will become a luxury item." Explaining these words in an interview with Pozner, Khazin talks about the deliberate sharpening of the topic, that he needed to challenge the then dominant “liberal” idea of the unshakable state of the US economy as a “City on a Hill”.

At the end of 2009, speaking to Ural businessmen, Khazin predicted that the current global economic system would inevitably collapse, the middle class would cease to exist, the WTO would collapse in 2-3 years, but thanks to this, Russia would have a chance to survive - because all countries will soon have to start from scratch.

In his forecast for 2012, Khazin predicted “the beginning of a powerful emission in the United States, which is almost impossible to avoid. More precisely, it is possible in the event of a tightening of monetary policy, but such a scenario is unlikely before the elections in the United States. So, as soon as the emission is launched (at the latest - in the early summer of 2012, so that it could have a positive impact on the result of the US presidential election, for Obama, of course), energy prices rise sharply and strongly - perhaps up to 150 $200 per barrel. At this moment, many representatives of the Russian elite and managers will have the feeling that happiness has returned, but this prosperity will not last very long. Then, after 3-5 months, a powerful inflationary wave will begin.”

In 2013, Khazin made a forecast about the development of the economy of Kazakhstan: “I think it will be possible to maintain 5-7% economic growth even against the backdrop of a global recession. And the world economy will “fall” the same way it “fell” in the United States during the Great Depression - by about 30-35%. The GDP of Japan and the EU countries will “fall” by approximately 50%. US GDP will “fall” by somewhere between 55% and 60%.

Khazin regularly appears as a presenter or guest expert in programs of the Russian News Service and Echo of Moscow radio stations. According to 2013 data, he heads the TOP-7 invited guests of the radio "Echo of Moscow", most often appearing in the program "Credit of Trust", and was also the most popular presenter of RSN with the program "Economy in Russian" (in the last issue of 2013 there was announced his departure from the program). Khazin regularly performs in the genre of “answering listener questions live” and gives comments on the topic of the day on RSN and Ekho Moskvy. Khazin was also a repeated guest of the “Vis in Peace” program on Voice of Russia radio.

In 2007, Khazin hosted the program “Five in Economics” on the Spas TV channel, which was the only weekly economic program on Russian television at that time. As part of this program, Khazin conducted an hour-long interview with Lyndon LaRouche, which was broadcast on May 18, 2007 and was widely discussed on the Internet. In 2011, RBC-TV launched a series of programs, hosted by Viktor Gerashchenko, Mikhail Khazin and Sergei Aleksashenko. The involvement of famous economists, according to RBC Holding, made it possible to expand the audience of the channel. Khazin hosted the program “Dialogue with Mikhail Khazin.” Khazin is also one of the experts on the television program “However” on Channel One.

Khazin’s articles are published by many newspapers and magazines, including Komsomolskaya Pravda and Expert. Until 2009, he was one of the authors of the “Profile” magazine, after 2009 - of the “However” magazine. Khazin repeatedly communicated with readers of the newspaper “Arguments and Facts”, gave forecasts and answered questions. Interviews with Khazin and quotes from his speeches were published in media outside Russia: Lithuania, Azerbaijan, Ukraine. Khazin is one of the authors of the information and analytical service “Russian People's Line”.

In his review of the book “The Decline of the Dollar Empire and the End of the Pax Americana,” Pavel Bykov notes the enormous amount of background information, systematically presented and deeply researched. He notes that the authors of the book present their vision of the history of the development of the US economy, which is accompanied by a forecast of further events with many scenarios.

At the beginning of 2009, Forbes magazine columnist Leonid Bershidsky believed that “Khazin’s economic forecasts, which mainstream economists laughed at, have recently tended to come true, people are beginning to listen not only to him, but also to those whom he advertises - carriers of even more unambiguous ethical judgments."

In 2009, Khazin’s article “In three years, famine will begin in Eastern Europe” was published in the newspaper “Special Letter”. Vladislav Inozemtsev, in a special interview, criticized Khazin’s article, noting that the article “has some truth and some very serious exaggerations.” Thus, Inozemtsev notes a number of incorrect statements by Khazin, in particular that after the war the United States bought more than it sold, and that there will be famine in Eastern Europe in three years. Khazin Inozemtsev attributes the last judgment to “a symbiosis of alarmism and incompetence”

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