The break with the West opens up new prospects for the Russian economy

The military operation of the Russian Federation in Ukraine became the point of an economic break with the West. The United States plans to use against Russia something like economic and a financial blockade in the hope of destroying the country's economy and thus changing the state's foreign policy.

Sanctions and isolation as US policy

The American ideology of suffocation with trade and economic instruments is based on absolutely idealistic messages.

During the period of McCarthyism in the United States, a large-scale falsification of the history of the Second World War was carried out with far-reaching political consequences, the essence of which is not only to exaggerate the importance of the opening of the Western front and the Normandy landings in the overall picture of the war, but also to exaggerate the role of the so-called Lend-Lease. The Americans proclaimed that their deliveries to the USSR played a decisive role in the success of the eastern front. At least in the American historiography of World War II, it is argued that without Lend-Lease, the USSR was unable to defeat Germany and its allies.

This seemingly purely opportunistic-historical concept had a decisive influence on the formation of the American cult of economic power and the possibility of solving almost all issues with dollars. There was a blind love for their own economy, the American market, corporations and their supposedly limitless power.

The idealistic message of the absolute power of the American economy played a cruel joke on the US in industrial policy. They, roughly speaking, deindustrialized America, massively moving production in the 1980s and 1990s to Southeast Asia. Americans, drugged by the theory of post-industrialism, were sure that the essence of their economy was patents, ideas and creativity. And now, when they unleashed a new cold war, they bite their elbows, as they have largely lost their industrial potential. And it is not so easy to restore it when whole generations of office clerks, PR specialists, designers, creatives and bloggers have grown up instead of engineering and managerial personnel.

Another consequence of this idealistic message was the universal policy of strangling rivals and objectionable countries with sanctions. Americans are convinced that the isolation of countries from their "life-giving" market of goods, capital and trade in dollars is like death. However, practice directly refutes these ideas. American sanctions could not cause significant harm not only to the USSR and the Warsaw Pact countries, but were unable to destroy either the PRC, or Cuba, or the DPRK, or Iran, although this was precisely what they were aimed at. Of course, the smaller the country, the more destructive the consequences of the sanctions were, but they did not fulfill their tasks. Sanctions play their political role only in relation to the business communities of countries subject to sanctions, which are deprived of the opportunity to show off in the West, withdraw capital and profit from the speculation of Western goods. But it is impossible to call this “damage” terminal for any country, on the contrary, it contributes to a certain “nationalization of the elites”.

Western isolation of the Russian economy clears the market of goods from Western monopolies and sharply increases the attractiveness of the real sector for domestic capital. The neoliberal concept of the endless pursuit of "investment attractiveness", the essence of which is to turn the country's economy into an appendage of global corporations, is coming to naught.

Threats and prospects for economic independence

The main alarmist argument against isolation is the growing technological backwardness of Russia from the West. He is as stupid as he is hypocritical. The point is to eliminate technological backwardness in an open economy is much more difficult, because your country is constantly saturated with competitive high-tech products from abroad and it is almost impossible to create your own break-even production under such conditions. Local goods are not able to withstand price competition simply because of the ratio of economic potentials with global competitors, who also use cheap labor in poor countries. It is easy to see that all attempts by Russia to create high-tech products from scratch have failed for this very reason. Everything that is now produced in the Russian Federation is technological, there is the development of the remaining personnel and production potential of the USSR.

Some will say that China has managed to eliminate the technological backwardness from the West in a market economy. But, firstly, its economy has never been open, and secondly, the Chinese eliminated their backwardness due to political will, they copied production chains with great difficulty, stubbornly, for years, sent specialists to study abroad, eventually managing to raise the level its engineering and management staff.

There are examples of countries that have eliminated technological backwardness in an open economy, such as Taiwan, Japan and South Korea. But such countries do not actually have sovereignty, they are the strongholds of Anglo-Saxon imperialism in Asia, and their corporations are partly owned by the West. The population of these countries practically does not receive any benefits from the highly developed production located on their territory.

At the same time, one must understand that the world market itself, largely controlled by the United States, is beginning to unravel. First, the objective situation is pushing all the countries that the United States is pushing out of the world market towards mutually beneficial cooperation. For the production of Belarus, Iran, Venezuela, Nicaragua, North Korea, the doors of the Russian market are opening even wider. And in China, a “gold rush” is already beginning over the withdrawal of Western goods from Russia. Second, the Russian market, which is freed from Western corporations, is becoming attractive to a number of countries that value economic benefits over Washington's political cues. Turkey is already rubbing its hands, declaring that it will not join the sanctions. India talks about the prospects for increased trade with Russia. As for the US and Europe's complete renunciation of Russian gas and oil, this is hardly possible, at least for Europe in the short term.

Thus, the future of the Russian economy is not at all as sad as it is portrayed in the Western media. On the contrary, we have received many new opportunities to consciously combine production and trade factors to increase potential and ensure self-sufficiency. Russia has the brightest and most extensive historical experience of industrialization, both in the 1930s and post-war reconstruction of the economy.

The main economic problem today is the complete misunderstanding of the current situation by Russian business. Our entrepreneurs, in the best traditions of temporary workers and businessmen, rushed to profit from the situation, indefatigably inflating prices for all products. There is no doubt that most businessmen have been working for the last month on how to finally withdraw as much capital as possible from the country, and “hide” those that cannot be withdrawn in gold or real estate.

This once again confirms the old political thesis about the anti-people nature of the oligarchic strata. No matter how Vladimir Vladimirovich defends entrepreneurs, it is clear to everyone that in order for them to act in unison with the needs of the people and the country, the state must significantly increase pressure on them.
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  1. Vladimir Orlov (Vladimir) 23 March 2022 09: 40
    Now is the time to return to a differentiated income tax - to take more from the Oligarchs, since they were pressed a little in the West, it became more difficult to run with money ...
  2. Bakht Offline Bakht
    Bakht (Bakhtiyar) 23 March 2022 10: 06
    This once again confirms the old political thesis about the anti-people character of the oligarchic strata.

    There was the Seven Boyars, there was the Seven Bankers. All this ended badly for the state. What else is needed to step on a rake for the third time. In difficult times, only a strong state can become a salvation. And no matter how they scolded him, but there are no options.
  3. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 23 March 2022 10: 18
    What did you want? it was in and after WW2 that Stalin lowered prices.
    And in WW1, prices flew like now, the oligarchs profited.
    No wonder they planted N stronger, so as not to interfere with profiting.
  4. Bulanov Offline Bulanov
    Bulanov (Vladimir) 23 March 2022 10: 35
    Now is the time to squeeze Western sports firms and start producing our own, domestic sports uniforms and shoes. Maybe inventory. The West closes the Olympics for Russia, and Russian athletes support Western sports brands. This is a betrayal. Now the Soviet slogan is becoming clear - "Whoever wears an Adidas T-shirt will sell his homeland tomorrow." And the Soviet sports uniform was excellent. Even astronauts worked in it. And since it is worth starting the development of other International sports competitions instead of the closed Olympics, then for a start you can open Asian or Euro-Asian sports competitions. And for them to start sewing Russian-made sports uniforms. Supply it to all Russian sports teams. With "A/E" brand.
  5. Sergey Pavlenko Offline Sergey Pavlenko
    Sergey Pavlenko (Sergey Pavlenko) 23 March 2022 11: 31
    Now it is necessary to deal with local entrepreneurs (speculators) who are profiting from the situation in the toughest possible way. Sugar has risen in price, and specifically, other goods are also slowly going there, although there are enough reserves in the country ..., there is only one conclusion - these bastards that they unreasonably raise prices - to the nail, in the most severe way: heavy fines and deprivation of trade licenses .. ., stop cashing in on pensioners and hard workers ...
  6. Jacques sekavar Offline Jacques sekavar
    Jacques sekavar (Jacques Sekavar) 23 March 2022 14: 50
    The US policy of strangulation with trade and economic instruments is an effective tool for interfering in the internal affairs of other state entities.
    The transfer of production to other, less economically developed state formations is a politically and economically justified and ambiguous phenomenon.
    On the one hand, it contributes to the development of these state entities - it increases the inflow of investments, employment, the number of nationally qualified personnel, the class of national large owners, promotes transport and social development, which at a certain stage of development is a progressive step for underdeveloped and developing state entities.
    On the other hand, it turns state formations into production factories for the production of certain items (the so-called “banana” state formations) and puts it in scientific, technological and, as a result, political and economic dependence on transnational industrial and financial associations of more developed state formations.

    The policy of strangling competitors and objectionable countries with sanctions, their isolation from their "life-giving" market of goods, capital and trade - death for all state formations of the world without exception, because not a single state formation in the world can produce Everything! The division of labor and specialization take place at all levels, from labor collectives to state education.
    Any state formation can be destroyed both by the use of force and by undermining its economy, but only if this state formation does not have an internal fortress in itself. This fortress relies on the existing organs of coercion - justice, special services, law enforcement agencies, agitation industry, and on the socially accepted way and standard of living, which political and economic sanctions are called upon to influence.

    China managed to eliminate economic backwardness from the West only thanks to the transition to the Leninist path of development in relation to time and conditions through the state system aimed at combining the interests of man and society, first formulated and tested in practice by V.I. Lenin in the New Economic Policy of the 20s of the past century and laid the foundation for the reforms of DengXiaoping. and CPC
    All state entities are engaged in industrial espionage and copying of certain industrial products, send their people to study abroad, but they cannot rise to the level of Western state entities, and remain politically and economically dependent on them.

    The "gold rush" in the PRC over the withdrawal of Western goods from Russia is definitely not yet close.
    Today, China's support for the Russian Federation is expressed in criticism of the sanctions policy of the West, dividing the world into friends and enemies, which harms both our own and enemies, and the whole world as a whole.
    A more definite attitude of the PRC towards the Russian Federation will be at the end of the next party meeting, unless, of course, the USA members do something or something earlier. For example, they will impose serious sanctions against China or provoke something with Taiwan.
    The main economic problem today is that against the backdrop of state regulation of entrepreneurial activity, lending, taxation, pricing, etc., big capital received its main income not on the domestic market, but on the external, European one, which today turned out to be closed.
    The government is taking emergency measures to support the economy, but selectively - some loans at 0,5%, others at 30, relying on large oligarchic capital, and not on the development of small businesses, as in China, where the government promotes big capital to the foreign market and supports small business with an income of up to 3 million renminbi and a staff of up to 300 people. through subsidies, tax exemptions, concessional lending.
  7. boris epstein Offline boris epstein
    boris epstein (Boris) 23 March 2022 17: 06
    Some will say that China has managed to eliminate the technological backwardness from the West in a market economy. But, firstly, its economy has never been open, and secondly, the Chinese eliminated their backwardness due to political will, they copied production chains with great difficulty, stubbornly, for years, sent specialists to study abroad, eventually managing to raise the level its engineering and management staff.

    In addition, China stupidly put on Western patent law and without a twinge of conscience copies everything it sees fit.
  8. qtfreet Offline qtfreet
    qtfreet (Stephen Hawkins) 23 March 2022 19: 08
    Quote from Ivan Fedyakov, founder and CEO of INFOLine consulting agency:

    All talk about import substitution is pure bluff bordering on populism. No full-fledged import substitution is possible. Firstly, there is not a single economy in the world that would live in complete isolation and with complete import substitution. Secondly, we have been actively talking about import substitution since at least 2014. And if we have not carried out import substitution in eight years under favorable conditions, then I don’t quite understand how we will do it under unfavorable conditions. It's like going to some athletic competition, running a marathon and before the start, not shooting in the air, but shooting yourself in the leg and trying to win the competition.

    Without interaction with our European partners, without building ties with them, without restoring ties with them, I see absolutely no prospects for the Russian economy, except for pessimistic ones.

    Let's even assume that China will reject the secondary sanctions that they are now being threatened with from across the ocean so that they do not support Russia. Even if they are ready to trade with us further, we have only four border crossings along the entire length of a large long border. Their capacity will not provide goods, let alone the European part of Russia, it will not provide the necessary goods even to the Urals and Siberia so as not to notice and feel the difference.

    Predictions can be made, but the question is whether they will come true or not. The likelihood that they will come true is now not so great. We can say that there will be high inflation. There are all prerequisites. In March, it will be at least 10% from the beginning of the year, I think even more (according to Rosstat, by March 11, prices rose by 5,62%), by April it will already reach 20-30%. Yes, if we add inflation from April to December to these percentages, then this is inflation at the level of 30-40%. This is a very high level. There has not been such inflation since the 90s, but it will be.

    Naturally, no indexation promised today to pensioners, civil servants, and so on, will be carried out for such a level of inflation. Well, as it were, they will increase by 10-15%. We have 47 million pensioners in Russia. If you and I, as active and capable people, can go and get a second job or just work more actively and earn extra money, then pensioners, unfortunately, do not have such an opportunity. And therefore, a third of the population of our country is now, at least, impoverished. And we already have 20% of the population living below the subsistence level.

    We can now say about the decline in the population's income that it will be at the level of 10% this year. It is possible that it will be more. What is 10%? This is worse than in the pandemic year of 2020, when there was a 7,5% decline in the second quarter. So far, it is at the level of 98, when the decline in real incomes of the population was 12%.

    If this military special operation continues, then with a high probability I can say that there will be a shortage. This is simply a consequence of the fact that we are very deeply integrated into relationships, primarily with European partners, and to a lesser extent with the Americans. This integration cannot be rebuilt overnight.

    Factories are shutting down right now. AvtoVAZ announced that it was going on vacation for a month due to a shortage of components. Accordingly, KAMAZ announced a 40% reduction in production volumes and the transfer of 15 employees to idle mode, but they did not indicate the terms. Idle mode - it is a little worse for employees, because if they have a vacation, then employees receive vacation pay. Idle mode - according to the legislation, 000/2 of the salary, of course, without bonuses, bonuses and everything else.

    The consequences of these actions will lead to shortages. If a plant does not produce equipment for a month, then it will be sold out in a month, and there will be no equipment - then there will be a shortage. If the military operation in Ukraine stops, then we will have a chance to minimize losses, restore some ties, at least lift the logistical blockade from Russia. Deficiency cannot be avoided. It will be, but it will be, relatively speaking, local. If the military operation continues, and the conflict escalates, then the consequences will aggravate exponentially.

    When foreign companies announced the suspension of work in Russia, they stopped supplying here with components that are necessary for the production of final products. But this is half the trouble. The second half of the trouble is that Russia is in a logistical blockade. Now, even if the companies would not announce their withdrawal, they cannot supply products, because the borders are de facto closed. Nothing can be sent to Russia and nothing can be taken out. Well, perhaps only through the pipe or in small batches at all.

    Trucks, ships - this is the main logistics tool for transporting such industrial goods - have now ceased to go. In fact, the border cannot be crossed. And that's a big problem. This isolation that we have now is logistical, it is worse than this sanctions story.

    This logistical blockade, in my understanding, will definitely not be lifted as long as there is a military special operation in Ukraine, as long as millions of Ukrainians stand on the same border in order to escape from this special operation on the territory of neighboring countries. Until the tension that is going through the roof all over the world from what is happening is not removed, until then this blockade will remain. That's all.

    Extremely opposite to what is written in the article. Let's see who is right...