Of course, it’s an exaggeration — to say that our economy needs saving, but the situation is really difficult, to put it mildly, both in connection with the pandemic and due to the fact that another, very complex, deep economic crisis has hit the world and, of course, did not bypass the Russian economic system either. The discussion analyzes the tasks and the national plan of economic recovery.

Panelists:

Aleksey Leonidovich Vedev, Head of the Financial Research Laboratory of the Gaidar Institute, Doctor of Economics 

Dmitry Evgenievich Sorokin, Vice-President of the Free Economic Society of Russia, Head of the Department of Economic Theory of the Financial University under the Government of Russia, Corresponding Member of the Russian Academy of Sciences

Roman Sergeevich Golov, Member of the Presidium of the Free Economic Society of Russia, Head of the Department of Management and Marketing of High-Tech Industries of the MAI, Member of the Expert Council on Higher Education under the State Duma Committee on Education and Science, Editor-in-Chief of the journal «Economics and Management in Mechanical Engineering«, Doctor of Economics, Professor

Sergei Dmitrievich Bodrunov, President of the VEO of Russia, President of the International Union of Economists, Director of the S.Yu. Witte INIR, Doctor of Economics, Professor

Bodrunov: Alexey Leonidovich, the Government’s plan is only about stabilizing the situation but also about supporting individuals, enterprises, and businesses at the stage of overcoming the crisis, achieving long-term structural changes in the economy. And it is clear that there are certain stages of this plan. Can you tell us if you have analyzed the results?

Vedev: I took a small part in creating this plan, analyzed it a lot and, in general, criticized it, in part. What I like about this plan, and we are now referring to the plan as of July 30, which was announced by Prime Minister Mishustin, and so far it has not been changed to any significant degree. I liked this plan because it contains a fairly large number of various activities. And it is important. It is not only about financing the economy. It also includes tax holidays and grace periods — completely different measures that, in my opinion, are very useful, and I think it is very important to monitor how effective some of the measures will be and how ineffective others will be. 

Now the things I didn’t like. We have black swans arriving this year. And I would still divide those black swans into two flocks, because they are different. One black swan is the coronavirus. It is, in fact, a force majeure circumstance. This means that we just have a crisis, we dropped down, and someone has to pay for it. Better, of course, if it comes from public money. Because our sources are either the state, businesses or households, the population.

Bodrunov:  Actually, there are no other sources.

Vedev: Yes, we have no other sources. Therefore, since this is a force majeure, it is better, of course, to compensate for it from some savings, from public money. In this regard, I believe the recovery program is quite a compromise, because it provides both grace periods and benefits, i.e. it somehow mitigates the consequences, compared to America and Germany which simply spend colossal amounts of money directly. 

The second flock of black swans is, firstly, a drop in oil prices, and, secondly, a slowdown in the growth of the global economy and, accordingly, a decrease in demand for Russian exports. And the third problem, which, in fact, has never left us and which was discussed in the fall of 2019, is the low GDP growth rate. And as soon as we restore our economy — I mean, when we reach the level of the year 2019 — the problem of entering the trajectory of sustainable growth will not go away. And from this point of view, I believe the main flaw in the government’s economic recovery plan is that it is necessary to divide the measures into two categories. The first ones are recovery measures which will then go away. And the second ones are incentives. They are different. For example, I do not believe that the coronavirus black swan will bring any structural changes to the economy. Perhaps those changes will arise due to the fact that the population will be more cautious because, frankly, I do not see any other stimuli for restructuring the economy.

Bodrunov: If you look at the plan for economic recovery, to some extent you can agree, because it is cautious, and it is very good that there are many complex things that make it possible to make financial injections more effective. But at the same time, there is no focus on a more or less rapid take-off after the economy recovers. The plan has a stabilization of the situation by the end of the 20th, and then recovery at the beginning of 2021. Then a transition to sustainable growth, but this does not mean to rapid growth. On the one hand, it is clear why this is so. Because we cannot predict what will happen next, how the situation in the global economy will develop in the next month, two, three, five or six months, because that black swan called the coronavirus continues to flap its wings. And who knows if there will be a second wave, a third wave, if it will mutate, if it will further influence people’s decision-making: to work or not to work, to invest in business or not to invest: our entire economic life depends on many things. And the society is waiting for a decision from the government, and such decision must be made. Therefore, of course it clear where the caution comes from. But, on the other hand, a crisis is still an opportunity. It would be nice to foresee those opportunities so that they could still allow us to proceed a little faster than just a snail’s pace. You know, risks are also a very important thing. He who does not take risks, as the famous saying goes, does not drink champagne. I would like this champagne to come to our economy at least by the 2020s. So, under these conditions, is it realistic to expect specific results from the implementation of this plan in any areas, industries, perhaps even sensational results? Or are we going nowhere or just sitting there and waiting?

Vedev: I think we just sit there and wait. And I would also like to draw your attention to a particular problem. It’s the problem of statistics and short-term forecasting. And in this connection, of course, I have a lot of questions that need answers. Because, I believe, it is an extremely important problem: we must correctly measure the patient’s temperature, blood counts and so on in order to effectively apply treatment. According to estimates, this year the Russian economy will contract by 4-4.5%, while the American and the European economies are predicted to contract by about 12-20%. Most likely, this forecast is based on the state of large and medium-sized enterprises. Russia’s small businesses will most likely be additionally taken into account using some coefficients in mid-2021. That is, we have a picture that everything is fine. But few people believe in this picture. At the same time, if we have, roughly speaking, a 100 trillion worth of GDP, then a 4% drop equals 4 trillion, which is well within the compensation offered by the government plan – so there is no problem. 

But, most likely, a situation may arise, and it is a structural one, when all compensation goes to large and medium-sized enterprises, which are well off anyway, and small businesses, of course, will suffer. With each crisis, the share of state-owned enterprises is growing in Russia. Many specialists understand that one of the key tasks of ensuring a high growth rate is, of course, privatization, i.e. a decrease in the presence of the state, a decrease in the number of large state-owned, clumsy, low-performing companies of which there are quite a few. But the situation is now developing in such a way that the positions of state-owned banks are strengthening in Russia, the positions of state-owned corporations are strengthening and, in general, the plan is largely aimed at supporting them.

Bodrunov: You know, this trend fits into the general understanding of the situation, which I would consider not particularly promising, although it seems to be understandable in the short term. Probably, the Government proceeds from the assumption that it is necessary to stabilize the situation, steadily increase the pace and, in this regard, remove anything that may cause fluctuations. Therefore, let’s give more state control over the banking system, more state control over the economy as a whole, over industry, in particular, especially in the infrastructure sectors, and so on and so forth. On the one hand, yes, there is something in this. At the same time, they often nod at China and say: look, the largest Chinese corporations — they are all state-owned. But I can say China also has a powerful non-government sector, and it is, as it were, the second leg on which the Chinese economy stands. This second leg allows them not only to stand, but to walk. This second leg, i.e. the non-government sector, should also be stimulated, of course. Granted, we always turn to the government in a crisis situation, but we do it perforce, because there is no second leg.

Vedev: Back in the day when I was an official with the Ministry of Economic Development I worked with the Center for Strategic Research, and we prepared our proposals for entering the growth trajectory. Most of those proposals were not accepted. And in this context, it seems to me that those proposals should now be taken into account in terms of further recovery. Because according to my forecast, we will reach the level of 2019 at the end of 2022 or at the beginning of 2023. We are experiencing a typical protracted crisis. And I don’t expect any quick rebound, particularly due to the situation abroad, not only the domestic situation, plus a change in the behaviour of the population which will become more cautious, and so on. This is a very sticky crisis.

Bodrunov:  Yes, not only business is cautious in this situation, not only the government is cautious, but also the population, because, on the one hand, there is no certainty about what will happen next, on the other hand, people are not sure about the future economic situation. First, there has been a reduction in income, already the Ministry of Economic Development announced that incomes fell by 8%. Given the fact that there was a 5% decrease over the previous 5 years. And the Government measures should have included, among other things, decisions aimed at moving forward, at development. It would give optimism to both business and the population. Therefore, it seems to me that the next adjustments to the plans will need to show those decisions at the very first signs of stabilization. And, perhaps, we should allocate some funds to it, actual funds, we do have certain reserves.

Vedev: The first signs of stabilization have already appeared …

Bodrunov:  Yes, they have.

Vedev: Our foreign exchange reserves exceeded $600 billion — also a bizarre record…

Bodrunov:  In spite of the difficult situation.

Vedev: Yes, despite the rainy day — a bizarre record. And what is probably also important, compared to the fall of 2019, the positions of the economic ministries have become more alike. You will remember that the Ministry of Finance insisted on a surplus budget. This meant that the Ministry of Finance was going to extract more money than it was prepared to spend. Accordingly, the Central Bank insisted on 2-3% actual rates, now, of course, they are already talking about a zero percent rate. The rhetoric has also completely changed in favor of a policy of budgetary and monetary incentives, which is probably also quite important. And the Ministry of Economic Development, and I would praise them for that, has proposed a set of various measures to regulate the economy. How all this will work is not known yet, because the key issues have not yet been included in the plan.

Bodrunov: Alexey Leonidovich, how do you assess the measures included in the plan from the point of view of the planned expenses? Let me see: Europe spends about 10% of its GDP; according to all the estimates we have we spend about half that. Can you tell if those funds be enough to solve the priority tasks if not to stabilize the economy?

Vedev: Nobody knows it yet. But I’m optimistic in that I see the government’s willingness to increase those expenditures. And to increase direct spending and combine support measures – maybe tax holidays will be extended to the 3^rd and the 4^th quarters. I think that such measures will be promptly considered after analyzing the effectiveness of each measure.

Bodrunov: So, then maybe we should consider this situation with expenditures as follows: let’s not assume that if, relatively speaking, we have sent 5% of our GDP, then nothing else is needed. We should consider it as a first confident step, that we are spending the money now, but there are some other tasks as well, we have just talked about it, for which more money will be required. And there’s no room for any reduction. Recently, the President gave an instruction, and probably a very logical one, to reformat the national projects. A new government was appointed, we had great hopes that everything will be fine from now on, and then, like they say in that movie, bad things happened again, and black swans flew in. It was logical to issue an instruction for reformatting the projects. However, we are now pondering how to do it taking into account the national plan for economic recovery, taking into account the need to accelerate the economy further and taking into account the fact that in terms of time, the goals of national development should be achieved within the same timeframe as before. How could the reformatting have been achieved?

Vedev: Everybody seems to partly misunderstand the key goal of the national projects. 27 trillion rubles for the national projects seemed like a lot for a 6 year period. But it’s 3-4 trillion a year. And investments in fixed assets are worth 20-21 trillion, many times higher. And the main role the national projects should have played, in my opinion, was the role of a multiplier to stimulate investments, private and otherwise. It is wrong to think that the national projects will solve problems. There is simply no money to solve all the problems. I think that the national projects, like infrastructure projects, they should have been implemented in the most important areas, maybe the riskiest ones, maybe the least risky ones, but in any event the most important ones and the least recoupable, that’s what public money should have been spent on. For example, roads are usually always public and not private.

Bodrunov:  Yes, and the state of our rather powerful businesses is such that only the government can be the driver and the main financial agent which would spend its own money and attract private investment for this public task. Neither the Russian budget nor the private sector have such funds as the US budget, so it is necessary to choose what to spend on. You definitely noticed that the national project is not a panacea, it is a trigger. Imagine I’m an entrepreneur. I need hope as an entrepreneur, I need an understanding of where to invest. I need an understanding of the general economic situation, the exact situation. If we are talking about returning to the goal of going further than 3% growth, then this goal can be achieved only when hope is revived in people, when there is confidence that we are investing correctly. And if we are, it means that the economy is growing and I am investing in the right sector. And then businessmen will ask the following questions: what does the government think about the national projects, where does it direct its gaze, what does it pay attention to? And maybe there will be investments, maybe there will be some kind of support, maybe there will be some benefits, and so on and so forth. What do you think about it?

Vedev: At this point I’d like to make a short comment on growth. I would like to remind you that from 2008 to 2019 we had the average growth rate…

Bodrunov:  Of 1%.

Vedev: 0.8%. And taking into account 2020, it will be even lower. Therefore, when we talk about reaching a 3% growth, can you imagine that our ultimate goal is to quintuple the growth rate.

Bodrunov:  Yes. But what else can we do?…

Vedev: Yes. One needs to understand that this is a difficult task. From the point of view of the government, I think that there is probably a clear understanding that growth will be driven by investments in human capital…

Bodrunov:  As a matter of priority.

Vedev: As a matter of priority. I think that the success in vaccine development will be an additional incentive to increase investment in education, health care and so on. I don’t like campaigning, but you might recall we’ve already had a biotechnology campaign, a nanotechnology campaign, now we are in the middle of a digital economy campaign. But, objectively, it is generally a worthy goal in which you can invest, you can dole out benefits, create conditions for the growth of IT companies. I do not expect any revolutionary reformatting of the national projects. But, without a doubt, it will be taken into account that a number of industries have suffered greatly, all our oil production is moving to a different price category, and the $45-55 per barrel corridor is here to stay, including all the other prices associated with it, I mean gas and everything connected with it. A new reality has emerged. And the fact that the demand for Russian exports, commodities will potentially decrease is also a reality.

Bodrunov: It is an objective situation, yes.

Vedev: And, of course, we also need some money, apparently, to reformat those industries. Oil production dropped 15% in July.

Bodrunov: Yes, and not only because of the OPEC+ deal, the deal was made for a reason.

Vedev: Demand is shrinking, of course.

Bodrunov: Yes, global demand for energy resources is shrinking. And I would like you to listen to the opinion of another of our experts, Dmitry Evgenievich Sorokin, and yet another expert from the aviation industry, Roman Sergeevich Golov.

((врез))

Golov: Of course, we consider the reindustrialization of the economy to be the main driver. The fact is that since the Soviet era we have formed a solid groundwork. And our task, as economists, is to try to use this groundwork effectively. This reindustrialization should be based on the 5th and 6th technological modes. Unfortunately, at present the share of those technological modes, the 5th and the 6th, in the Russian economy it is not high enough. The digitalization of the Russian economy can be considered as the second driver. The digitalization process has been going on for quite a long time. And the pandemic served as a kind of another impetus, an impetus for the intensification of the digitalization of the economy in all areas. And the third driver, which, in my opinion, is also quite important and relevant, is the increase in the energy efficiency of the economy.

Sorokin: At this point we need to talk about drivers that will help overcome stagnation, which is much a more difficult task, because in science it is easier to get out of a crisis than to get out of stagnation. Nowadays they say that in order to solve the problems facing the economy, the economy needs to be retooled. They have been saying it for years, our entire history points to it: Peter the Great, Stolypin, Witte, GOELRO (the state commission for electrification of Russia) celebrates its 100^th anniversary this year — those are all leaps in technological makeover. It is no coincidence that the well-known May presidential decree proclaims from the outset that we need a technological breakthrough. I’ll say it again: we have everything for it. But there is also a fourth factor — the factor of trust and the factor of honesty. It is not an economic problem, it is a broad social science problem, and it is impossible to solve it in six months or in a year. But util it is solved, until the factor of honesty and trust comes into play — no other drivers will work. This has been proven by the history of Russia and other countries.

Bodrunov.  As you can see, dear viewers, opinions differ, but generally we can probably say that everyone is waiting for the recovery of our economy, we hope that it will stabilize on a decent level in the coming years and will continue to grow because economic growth means higher incomes of the population. It is something that can be invested in human capital, in development, in solving social problems. And it’s the most important thing for the national development goals which our President spoke about and which are set before the Russian society today. I thank you, Alexey Leonidovich, for participating in our program. All the best and see you again.

Interview with the RAS expert, President of the Free Economic Society of Russia, Director of the S.Yu. Witte Institute of New Industrial Development Sergey Dmitrievich Bodrunov

What will the world economy be like after the coronavirus pandemic: what major economic and business changes are coming? Is it appropriate to compare the current situation with the Spanish flu and the First World War? How did coronavirus reveal contradictions in the modern economy? And why is Russia’s reaction to the crisis more painful than the world’s? These and other questions are answered by Sergei Dmitrievich Bodrunov, Doctor of Economics, Professor, Expert of the Russian Academy of Sciences, President of the Free Economic Society of Russia, Director of the S.Yu. Witte Institute of New Industrial Development. 

— During the MAEF online session, you said that long before the pandemic the modern market model had been showing signs of exhaustion and was in need of deep transformation. Please explain your point of view.

— The economic model that exists today in the world is based on free market economy, private property and profit as the main result of business activity. It means that it is not focused on satisfying people’s needs, their real needs, but rather on making profits – by any means and at any cost. Including through the satisfaction of people’s needs, but only partially. Hence the foisting of so-called simulative, fake needs, which are often easier and more effective to satisfy in terms of capital. Capital is being poured into such areas, while investment in the real production sector is declining. Thus, an increasingly significant portion of the product of economic activity, which requires real resources, is becoming simulative. This model has been increasingly losing the ability to cope not only with the cyclical nature of economic development, but also with the whole range of fundamental and deeply inherent contradictions. On the one hand, it is about maximizing profits. On the other hand, profits come from satisfying the needs of people. But at the same time, solving the problem of maximizing profits leads to the fact that the needs of people are satisfied to the extent that they can be satisfied with maximum possible profit. It means that social inequality and the stratification of society will only be growing in the future. The part of the population that is supposed to pay (i.e. the main stratum of the population) is constantly paying, but less and less. And the group that receives the financial product of the economic is activity consolidating their incomes and is becoming more closed and elitist. Today we can observe this process quite clearly.

      In general, a situation like this has always been observed since the establishment of the current economic model. But at certain stages, the problem was more or less mitigated due to scientific and technological progress, which at times shifted the economic component towards better satisfaction of people’s real needs. And so, at the times of transition to a new technological mode, it was possible to mitigate those contradictions. However, the current transitional stage to a new, sixth technological mode is fundamentally different from the previous ones and is characterized by the fact that the current state of scientific and technological progress, given the specifics of its technologies, prevents this problem from being solved within the framework of such a model. It would seem that the achievements of modern scientific and technical progress are already such that they, to a certain degree, make it more or less possible to feed, clothe and keep people warm and to create acceptable living conditions everywhere in the world. But the reality is different. On the contrary, global capital uses scientific and technological progress, which advances “with acceleration”, in the framework of such a model as an instrument (a very expensive one and inaccessible to the majority!) serving its essential goals. In practice, for better siphoning off money from the real sector to financial and intermediary markets and the like. And for impoverishing the population segments that do not have wide access to capital and resources. For the stratification of society. For the impoverishment of ever greater population strata. The model that is functioning today, results not in mitigation, but in exacerbation of the main contradictions and leads into a dead end. The poor are getting poorer, and the rich are getting richer. Sooner or later, it will end either in a social explosion or in the exhaustion of the model itself. That is the situation, therefore, the current model needs to be transformed, which would change the attitude and fundamental approaches to meeting the needs of people.

The latest crises which have been constantly intensifying are different from the crises that occurred in the initial stages of the development of capitalism. They are not overproduction crises; they are based on a different problem.

— Is it true that coronavirus triggered and showed more clearly the contradictions of modern economy? And why?

— The modern economy is not just global and exhausted; it is also very interdependent. It is an important feature of the modern economic model. And the pandemic just exposed this high degree of interdependency. If an important link is missing from the development, production or logistics chain, then a problem will arise and spread across all technological and production areas. When such events as the pandemic occur, they may switch the development of the economic situation to the negative side.

— The global economy after the coronavirus pandemic: what is it like?

— Of course, changes are coming – not dramatic, but noticeable.

 First of all, changes are expected in the application and development of new generation technologies. Humanity is always moving towards new knowledge to meet more new needs. And new knowledge, as a rule, turns into new technology if we mean real needs of people. New technologies, like sublimated knowledge, create a new idea of ​​life, of the world. A new reality. In some cases, it happens more rapidly, dramatically, in others – less.

   I am sure significant changes in the application and development of new generation technologies will occur in labor. Already, many companies are declaring that they will abolish office jobs. They will switch to remote work. Many positions will be reimagined in terms of production management.

Changes are expected in education. A few years ago, I was invited as a professor to one of our universities. I suggested, given my work schedule, to conduct part of the classes remotely. The administration didn’t allow me to do this. Today, no one will object. The pandemic taught everyone to accept distance learning. I think that remote technologies in education will advance rapidly.

     The current situation in education can be compared with that during the times of Gutenberg, when printing was invented. There was also a big discussion back then: is it necessary to print books, or should the professor share his knowledge in person? As it turned out, knowledge can be shared remotely, through a book. Moreover, at any distance, both in space and in time. And this greatly accelerated the process of education and the process of accumulating knowledge. Today, online education is, to a certain extent, a new “typography”. And we will be observing even more accelerated implementation of remote technologies. In my opinion, this will lead to a surge in man’s knowledge of his environment and to an even greater revolutionization of scientific and technological progress.

     In general, it is important to understand that knowledge is not only knowledge of the world, but, from the point of view of economics, it’s the main resource of society’s next development stage – I call it the new industrial society of the second generation. Today, in contrast to the previous stages when there were other main resources (e.g., energy), it is knowledge that has become the main economic resource. And therefore, the consumption and processing of knowledge must increase. Hence the development of appropriate technological tools.

   Next is scientific knowledge. If we take, for example, contacts between scientists and conferences, where particular scientific models and theories are being discussed, we already conduct most of those interactions online.

Unmanned systems technologies, over-the-Internet control and robotics will feature in the production of real sector goods. Everything that was supposed to appear by 2030-2040 will make its appearance 5 or 7 years earlier.

And finally, changes are coming to the fields of culture, tourism, knowledge of the world, and to the household. For example, the Internet of things is developing very fast. Both in production and in everyday life, it will make a significant contribution to changing our worldview and life.

— Is it appropriate to compare the current situation with the times of the Spanish Flu and the First World War? Or is the current situation unique?

— There is a commonality between past and current events. Both crises are the consequences of a generally accepted and, in fact, continuing economic model of society. There are also some external common features. Coronavirus, as well as Spanish flu, caused a global pandemic. If compared with the First World War, the war contributed to the spread of the Spanish flu due to movements of human masses and the acceleration of the movement of goods. Naturally, all this contributed to the spread of the epidemic. At present, transport has been rapidly developing for many years. Every ten years, the amount of goods transported almost doubles, and movements of people have increased astronomically. In addition, the cause of the current crisis is also of an epidemiological nature. There is a kind of similarity between the current situation and the situation that existed a century ago. But the current pandemic is not as horrible as the Spanish flu; in those days people were dying in the millions, now there are significantly fewer victims. I won’t say if it is connected with the difference in the “maliciousness” of the viruses, but it’s certainly connected with the fact that the level of our knowledge, our understanding of the world and, accordingly, medicine and technology has changed. 

    As for Russia specifically, the difference between the current crisis and what was happening at the beginning of the 20th century is that it’s associated with a reduction in oil and gas prices – the main resource of Russia’s present-day economy. A war has broken out in the oil market, which gave it a heavy shock. So, one of the “fathers” of the current domestic crisis is the shock to the oil and energy markets. And, like in a “perfect storm”, it was augmented by a pandemic and a halt in economic activity. It’s what makes the current situation different from what happened a century ago.

    Today, in addition, we observe that these two problems coincided with others that have already been in existence. In recent years, there has been a slowdown in the growth rate of the world economy; many problems of various nature have arisen, which stem from the economic model in which we currently exist. And it also affects our economy. Therefore, the current crisis is more serious than the one during the Spanish flu.

— Has the coronavirus epidemic affected the growth of the Russian economy more than the decline in oil prices?

— It seems it has. The Russian economy as a whole is in a rather difficult situation. For many years, for various reasons, the economy has been struggling, with a relatively insignificant growth over the last decade. There is a problem with demand — the main factor that affects the “resolution” of the crisis. The stagnation of the population’s income continued for many years, and as a result we lost 5-6 years in terms of income. Before the epidemic, household incomes increased by nearly 1% compared to the last year, and when compared with what they were five years earlier, they are 5.5-6% lower. Demand being as it is, the private investor cannot actively invest in economic entities, in the development of sectors that fill the market. On the other hand, if there was a need for development, there would be investments, even if the conditions were not very comfortable for the investor and the institutions were not particularly developed. It’s the second problem with our economy. Russia has very weak investment activity: insufficient funds are invested in the real sector of the economy, in the new sectors.

— Is it true that the Russian economy reacts more painfully to the pandemic crisis than the world at large?

— Yes, it will have a greater effect on Russia. The domestic economy slowed down due to the crisis at a time when there was no active growth, and we were just starting to get rid of the problems that I mentioned above. Hardly had the first steps been outlined, when the entire economy came to a standstill.

    On the other hand, we can mention some pros. Russia has the resources to resolve this situation safely and even outperform its competitors – because they also have certain problems. In particular, we have ample gold and foreign exchange reserves. Advances in technological development have also accumulated: some of our industries have developed quite well in recent years. Thus, we have gained some technological footing. Russia is rich in natural resources, and therefore, even with a decline in growth, we can still provide ourselves basically with all the resources we need.

Another important feature that bothers us more than helps us is the situation with the sanctions. The sanctions that were imposed on us as a result of a fairly independent economic and political line have greatly affected our economy. At first, we observed an economic slowdown, but later, while trying to solve these problems through import substitution and the development of new economic areas and markets, we managed to achieve some good results in several sectors of the economy. Thanks, among other things, to counter-sanctions, for example, in agriculture, in the nuclear industry, partly in mechanical engineering, in the field of certain types of armaments and military equipment of a defensive nature. So, I think there are pros and cons here. Those peculiarities affect the current economic situation.

— Do you agree that due to the coronavirus pandemic and its consequences, Russia’s GDP may fall by 10-20%?

— I would say that the predictions of a decline in GDP both globally and in Russia are more like fortune-telling on coffee grounds. That’s why I opted against giving my own predictions at the Moscow Academic Economic Forum (MAEF). I can make mistakes very easily. In this matter, it is important to take into account the numerous factors affecting the economy, including factors with many unknowns. For example, we do not know the “behavior” of the main trigger – how the pandemic will develop. It is impossible to say how long it will continue, whether there will be a second or a third wave, how many people in which sectors of the economy will be affected, and so on. As I noted earlier, the Russian and global economies are interrelated, and the loss of one or two of their elements may lead to a global collapse. Therefore, it will be very difficult to say what will affect us and how.

   Recently, we held a similar discussion at the expert session of the VEO. We heard different numbers. For example, the most optimistic one is a 3.5% drop in GDP this year. There was also a pessimistic scenario — 12% or more. However, few experts admitted that those figures mattered less than the structural changes that, even with a decrease in absolute values, can provide greater satisfaction of the real needs of people while reducing simulative needs. I mean that people’s real needs do not occupy the entire structure of GDP. Moreover, in a crisis, what we need most is meeting the real needs. That’s why we should focus on this, not on GDP growth at any cost, when developing a strategy for overcoming the crisis and identifying promising areas of development.

  On the other hand, some say it’s less important, and it’s necessary to ensure a GDP growth instead, and then “we will be happy”. And that the pandemic today can lead not only to a decline in GDP growth, but also to its acceleration. For example, there will be a need for new scanners, special temperature meters, disinfecting devices and tools, and they will have to be produced, operated, and all this will contribute to a GDP growth. But then it means that any catastrophe that occurs will increase GDP, instead of reducing it, and a major catastrophe will result in a significant increase. For example, consider destruction of a hydroelectric power station. We will then take our time to carefully restore it. As a result, thousands of jobs will be created, and a lot of money will be spent. All that will contribute to an increase in GDP. But do we really need this kind of GDP? What do we need jobs for: to restore destroyed property or to generate more electricity through raising the hydroelectric power station output? I would opt for the second alternative. Therefore, the point of view that a pandemic will give us a «countable» increase in GDP does not carry a good humanitarian component. What we need is a “humanitarian growth in GDP”, development, and solving social problems.

— What areas of the economy will be most in demand after the coronavirus?

— These are the many areas in which the technologies prompted by the current pandemic are in demand and will be reproduced and developed. I cannot name them all. I’d better name the factors that will affect this.

The demand for remote work methods and supporting mechanisms and technologies will sharply increase. The level of production automation will go up, and the demand for unmanned technologies, cognitive technologies, including artificial intelligence, Big Data, neural networks, etc., will be much greater.

In my opinion, the demand for what I call » technologies of trust» will increase too — those are technologies that allow you to remotely verify documents, requests, financial and accompanying transactions, information flows, such as blockchain, etc. Those factors will affect many areas of the economy.

The main task is to identify not so much specific areas of the economy as the trends of technological development (they may be new, completely unknown to us today) and those factors that will influence the development of the new technologies. It’s an important point to take into consideration. Those factors need research, and should be used as a basis for future economic decision-making.

— What is the main lesson humanity will have learned after the coronavirus pandemic?

— In my opinion, having tasted sweet fruit once, man will never give it up, even if it has some negative narratives. The pandemic has just showed not only those narratives, but also new opportunities. «Online presence» in the economy, in everyday life has a lot of advantages. And first of all, it saves time and money. Economically, it’s what’s most important, so it will definitely be developing further. But, on the other hand, online presence does not completely replace face-to-face communication, which also has its advantages.

  In general, we, humanity, have learned very hard lessons. First lesson: we did not know the world as much as we imagined we did before the pandemic. Time has not yet come for us to get on our high horses. Today, the planet’s best minds are struggling with the problem of developing vaccines and studying the coronavirus. That task proved to be not so simple for the global community. We see that many medical technologies and many technological solutions associated with the production of devices for the treatment of patients are far from perfect.

   There are many such examples, and not only in the field of medicine or research into the causes of a pandemic. There are many other related aspects to this question. For example, we are starting to understand that it is very likely that we have been incorrectly solving the spatial model of population distribution, we have been computing flows of people, goods, etc. without taking into account certain emerging factors. Many things will have to be reformatted.

   The economic model in which we live is designed for individualism — for individual consumption, for the primacy of individual interests of individuals, groups, and countries. And just the most important lesson we have learned today is that those interests are subordinated to the «solidarity interest.» Society is increasingly realizing that only by joint efforts can serious problems that arise during such a crisis be overcome. We need to develop an economy of solidarity, rudiments of the future economy of the next generation industrial society, noonomy, which were visible before the pandemic and which we barely began to study. Actually, we should have started doing it a long time ago.

On this occasion, we at the Free Economic Society, together with the S.Yu. Witte Institute of New Industrial Development made preparations for a big discussion. The St. Petersburg International Economic Congress (SPEC) devoted to the economy of solidarity was scheduled for March. But due to the current situation, it was postponed to a later date when we will be able to gather scientists and discuss the problems of the development of society in this vein.