Publication in Russian on the Zen blog
https://dzen.ru/a/Zp_DmguzJTkpLjbn
History, Philosophy and Economics. The Influence of Psychology on Economic Development.
The Time of Troubles in Russia began after the reign of Ivan the Terrible, and it is no coincidence that this coincided with the creation of the first secret police in Russia. This publication examines the influence of the culture of fear on the consciousness of Russians and, ultimately, its influence on the development of the Russian economy.
Let's talk about the Russian economy as it relates to the secret police and the Russian mindset. There are interesting dynamics in Russian culture and in the Russian mindset that come into play in the past and manifest themselves in the future. Many people believe that the secret police are powerful and very widespread in the country, and that they cannot be broken. Let's start with history. I'll give you a short history of the secret police in Russia, and then I'll tell you what's going on and how that relates to the economy in a very specific and interesting way.
I'll tell you a metaphorical story about a high school student in the '80s. This boy goes to an English boarding school, a boys' boarding school in New England. And this boy is very interested and fascinated by Russian history and Russian culture. This is the Cold War period. An American boy gets a wonderful opportunity to visit the Soviet embassy in the United States. Inspired, he gets on a bus and comes to New York, and on a tour he meets the ambassador and people who explain the Soviet position. This is the position of the USSR and Russia in the world. The boy leans back in his chair, listening to all this nonsense, accidentally knocks over a bookshelf, which touches the switch of the filmstrip. The Soviets gasped, but quickly turned it back on and quickly put the bookshelf back in place, and the American boy manages to notice the bugs and listening devices sticking out of the wall, and being an unbearable child, he took one of these devices and said: "Comrade, everything is fine. Comrade, relax." The ambassador and the Soviets were not delighted with this joke, but the children from the classroom laughed for a long time. At the end of the lecture, the boy apologized that he was just joking, took a brochure from the table "The Truth About Afghanistan", the Russian version, and left the room. But it was clear that the ambassador and the Soviets were not prepared for such behavior of high school students from America. But what I want to note in this story is that everything was controlled, even children on a school excursion. From those times, we will move to a new time in St. Petersburg, where we will meet a high-ranking official. Before meeting the official in a secret room, they briefly explain to you that everything is being watched. This is the FSB - it is like the KGB 2.0, but a much more sophisticated structure from the times of the Soviet Union. This is the story. It all begins with the times of Ivan the Terrible. In 1565, the Russian Tsar creates the oprichnina - a special type of troops with special powers, the Tsar's bodyguards, a detachment to fight enemies and traitors to the state. These are people ready for any terrible things, they wore black clothes, rode black horses and terrified ordinary people. This marked the beginning of the mentality and collective unconscious in Russian history. In 1881, Alexander III, after the terrorist attacks and the murder of his father, took the place of the emperor, carried out a reform to organize the security service. Well, in 1917, after the revolution and then under Stalin, the KGB was created - the State Security Committee. In 1995, the KGB was replaced by the FSB. In the 90s, Russia was largely under the control of the mafia and bandits. The FSB brought order and cleaned Russia of gangsters and mafiosi. But in exchange for this magic, the FSB seizes power and centralizes this power. The price for this is surveillance of the Russian people. And if you are now in Russia and ask someone on the street about politics, want to talk about it, then they will answer you that "we are little people." And this "we are just little people" is widespread in Russian society.
Let's turn to the specialists in the field of ornamental gardening. These specialists grow and create beautiful and pleasing to the eye compositions of plants. The Russian mind is very much like such an ornamental plant grown in a pot, it is pruned, it is shaped. And there is nothing wrong with the Russian person if you bring it abroad into free culture, but in the context of the Russian secret police and Russian culture, the Russian mind is well cultivated and is in its place, like an ornamental plant in a pot. This plant grown in a pot may even bear a small fruit from time to time, but if you plant this plant in the field, you will get an abundant harvest. A free mind is a productive mind. Let's consider this plant from the point of view of economics. When you have tangible and mobile capital, and you take it and turn it into fixed capital, which is used to produce capital goods, the entrepreneur looks at it from an intertemporal point of view, he cares about profitability now and also about fulfilling plans in the future, because the production of consumer goods is a very important process. This is a multi-stage complex process in a capitalist economy, if you have a lot of fears and restraint, and "we are small people", then taking a bucket to get water from a stream, you will carry it every day, but if you have fewer fears, you will be able to plan for the future, your time horizon will increase, and you will be able to use the capital passing through time more comprehensively, maybe you will build a trough or even a pump, or better yet, a water supply system, and use it instead of a bucket. Thus, the formation of capital in free enterprise is a timeless dimension that goes back to the psychology of the entrepreneur. How does this relate to Russia today? If people are pruned and grown in every possible way, like plants in a pot, they will not produce normal fruits. But if these plants are transplanted into a large field, the economy will grow. The secret police, the FSB, is an unstable model of society. Many people are involved in this multi-level protection of the secret service. State security is maintained by a dynamic and diverse middle class economy, where people's minds are psychologically cut off and people live in the shadows and in fear. This model cannot be maintained forever. During a serious crisis, a terrible time will come - a time of turmoil, as it was in history, when everything fell apart in Russia, when False Dmitry was put on the throne, but then the Romanovs came to power. They are like boys compared to today's top oligarchs, who also built their monarchy in modern Russia. The secret police did not work under Ivan the Terrible, it did not work under the communists, and the FSB will not be able to support the Russian economy due to the fact that people live in fear, this is the beginning of the crisis. If you read about the formation of capital in any economy, you will find psychological and intertemporal components that are crucial, and if there is no freedom, if you live in fear, if you cannot express yourself in very dynamic and diverse ways, then the economy will not be able to prosper and will eventually collapse on its own. So now, at this time, there is great hope that Russia will enter a new time of change, but also a new time of turmoil, repeating the story of Ivan the Terrible.
In times of great change, entrepreneurs take big risks, succeed, and fail. The linear systems of communism, capitalism, and industrialization are incapable of change and adaptation. They always failed at the inflection points.
The Russian Central Bank rate is 16%. This is extremely high. By comparison, the "high" rate that Americans complain about in the US is 5.5%. The reason why Russia has such a high rate is because inflation in Russia is out of control. This is because the military will be paid 5 or even 10 times more than the average salary. This is a huge inflationary pressure that hurts those who work in the real economy: the private sector, whose salaries do not keep up with inflation. The spiral in Russia will get worse: the middle class will be poor, and the poor will become poorer.
The USSR collapsed in 1991 and lost 15 republics, followed by a period of economic chaos. The war is currently draining the civilian economy and monetary reserves of the Russian Federation to the military by 35%. Part of the 2024 federal budget is devoted to defense and national security. If Russia accepts long-term poverty and backwardness, it will look stable. But in the meantime, terrible internal conflicts are likely.
You have to look at history to understand why things are the way they are in Russia. The belief that reality must be managed by a huge security apparatus is rooted in Russian history. Based on the fact that such a model has failed many times before, it will fail again, because this model is not a template for success.
Persistent economic uncertainty, a critical attitude towards wealth, cynicism towards entrepreneurship. An authoritarian and repressive, ever-growing, obstructive bureaucracy, arbitrarily applied laws - all this hinders economic activity and wealth creation. This mentality is unfortunately very deeply rooted in the country and I don't think it will go away anytime soon, it will only get worse.
Тайная полиция в России. От Ивана Грозного до Николая Второго (Сергей Степанов, Чарльз Рууд)
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Publication in Russian on the Zen blog
https://dzen.ru/a/Zp_DmguzJTkpLjbn
