Comment by woodandsteel | Hacker News Reader

Comment by woodandsteel | Hacker News Reader

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The reason I included this link is because Putin in his governance of Russia has followed the general economic strategy he presents in his doctoral dissertation, and so the document helps us understand the reasoning behind his decisions.

As to codified policy, Putin is an authoritarian ruler in a country with little rule of law, and so he does what he wants, no matter what the laws happen to say.

ivan_gammel, I strongly suspect that you are quite aware of all of this, and are attempting to mislead readers as to what Putin is up to and why.

Let me make one more comment. Putin believes that the road to becoming an advance industrial power is first spend a half a century focused on natural resource extraction, and only then turn to developing advanced industry. I think he is here trying to emulate his interpretation of the economic history of the UK and the US.

But this mistaken, and in two ways. First, in the US and the UK mineral extraction and industrial development proceeded in parallel, not sequentially. Secondly, more recently countries have industrialized by focusing on industry directly, and especially exports, as in the cases of Japan, China, and South Korea.

I think part of the problem here is that Putin greatly mistrusts industrialization that is successful enough to compete on global markets, because it requires independent commercial enterprises, and he is an authoritarian who wants to retain control of the economy, and this is much easier when you are focused on natural resource commodities.

In any case, the whole matter of Putin and his economic views just illustrates the general problem that Russians have never figured out how things work in the modern world, and are always trying to do things in ways that are still half back in the authoritarian, agrarian ways of their past. As a result they get off on paths that succeed for a few decades, but eventually stall out.

It's so sad, Russia could be such an amazing nation if it could just get on the right track.

There's something else here, too. For thousands of years, national wealth and power were largely based in natural resources such as agricultural land and gold mines. In the industrial revolution, new natural resources, especially fossil fuels, were added, but wealth and power shifted mainly to manufactured goods. That is why you can have great industrial powers like Japan, China, and South Korea that are relatively poor in natural sources. And it is why Russia, even though it has natural resources far beyond any other nation, is about 10th in the size of its economy.

The problem with Putin is his mind is still partly back in the pre-industrial era, and so he only half gets this. He knows Russia has to industrialize, but he still sees natural resources as being much more important than they really are, and so he is simply on the wrong economic track.

A key case here is petroleum. It accounts for half the Russian government's tax revenues, and it is central to Putin's plans and investments. But thanks to the renewable energy revolution, based on manufactured technologies like PV cells and giant wind turbines, in half a century petroleum will be largely replaced, and so worth very little. But Putin doesn't get this, which is why so little effort is being put into renewables.

First of all, Russia is already post-industrial state and it experienced multiple industrialization waves in its history - from colonization of Urals (there were the biggest manufactures in the world in XVIII century and there's a special term for that amazing period of history of Urals region - Mountain Manufacturing Civilization introduced by Russian writer and historian Alexey Ivanov), to industrialization in late XIX century (with such projects as Trans-Siberian railway and production shifting to European part of Russia), to industrialization by Stalin in 1930s and finally industrial expansion of 1950-1980s. It's all in the past now, not least because Russia lost most of its industry in competition with China and hi-tech manufacturing to the West. Indeed, Russia is a petrostate now, but it still has large industrial capacity, to name some in which there's some good progress - aerospace (how many nations are capable of creating new civil and military aircraft designs?), arms, automotive (very hot sector with big investments and non-stop race on building new plants). It's not feasible and already too late to compete with China or emerging economies like Vietnam in light industries or consumer electronics, but some targeted efforts to join global manufacturing chains are already paying (e.g. did you know that sapphire glass for Apple products is made in Russia?)

Putin's mistake is not that it applies XVI century resource extraction approach to finally get industrial economy (which is not true because of above), but that it applies command-administrative methods of XX century to build post-industrial economy. He is more interested in playing war games, than writing economic strategies - this job is left to his advisers, and there's ongoing competition to fill that position between liberals like A.Kudrin and communists like S.Glazyev. These bureaucratic battles did not produce any document that could be fully implemented, so significant progress could be visible in only some technical fields, which are far from politics (hence very smart Central Bank, Federal Tax Service or Ministry of Informatization and Communications).

I generally agree with your analysis. I would just add that Putin applies a command-economy approach because he is an authoritarian, and authoritarianism goes with agrarian society, whereas industrial societies do best, over the long term, if they are democratic. And this is true of Russian society as a whole. It looks at the world through the war-orientation of agrarian societies, rather than the more international peace and mutual economic-benefits that fits with liberalism and modern technology.

> Russia is already post-industrial state

> Russia lost most of its industry in competition with China and hi-tech manufacturing to the West.

Congratulaions, you've managed to contradict yourself in one paragraph.

A post-industrial state is one which was dominantly industrial, and has moved on to some other primary basis for its economy, usually because it is engaged in international trade and its comparative advantage is no longer in manufacturing but some other area.

Usually, this shift in comparative advantage is reflected in industrial work moving overseas to competitors whose comparative advantage is in that kind of work.

So, the two sentences you quote as a supposed contradiction actually support each other, rather than contradicting each other.

> A post-industrial state is one which was dominantly industrial, and has moved on to some other primary basis for its economy, usually because it is engaged in international trade and its comparative advantage is no longer in manufacturing but some other area.

In case of Russia it wasn't so, they still struggle to get back to Soviet level of industrialization after USSR fell apart.

> In case of Russia it wasn't so, they still struggle to get back to Soviet level of industrialization after USSR fell apart.

The US keeps struggling to maintain or restore its previous level of industrialization, too, even though its unmistakeably a post-industrial state; there's a lot of emotional attachment to industrialization as a source of economic output that lingers even in post-industrial states, so struggling to restore it is a common response to dissatisfactory economic experiences even in post-industrial states. If Russia were struggling to get back to Soviet-era aggregate or per-capita economic output, that would be a difference -- and there certainly was a time, throughout much of the 1990s, where that was the case. But its not now (though Russia has seen a precipitous output drop since the peak in 2012, so it might be a thing again in not too long.)

(Russia may be in a situation now -- especially with the recent drop -- where living conditions for the masses are as bad or worse than in the late Soviet era, but that's orthogonal to the economy being post-industrial, and more about the distributional features of the economy than anything else.)

Here is the wikipedia explanation of the term "post-industrial"

"In sociology, the post-industrial society is the stage of society's development when the service sector generates more wealth than the manufacturing sector of the economy"

https://en.wikipedia.org/wiki/Post-industrial_society

That doesn't apply to Russia, so ivan_gammel was using the term in an unconventional manner.

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