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Global economic crisis and its impact on Russian economy
Dmitry Scherbenko iff 2-3
Chapter 1. World crisis: the essence and substance 6
1.1 The essence of economic crisis 6
1.2 Reasons of crisis appearing 10
Chapter 2. World crisis and its impact on economy of Russia 15
2.1 The main stages of the world crisis of 2008 — 2009 years. 15
2.2 Impact on Russian economy 18
2.3 Methods of world crisis discharge 24
Economical crisisses are an integral part of world economy developing. They have an important impact on economical, political and social spheres of our life. Economical crisisses in some sense represent the points of bifurcation, when are defined potential directions of civilization developing (as a rule to many decades in advance).
Not without reason when characterizing the duration of economical crisis a great number of scientists talks about “faith in the nearest changes” and about “crossing of events”, that underlines a plurality and alternativity of further development ways.
Research of world economical crisis is very important, it gives us more detailed picture of understanding the processes including spatial, taking place in the world economy during evolution process.
The goal of research is to analyze the specific of a world financial crisis, its chanels and their impact to financial sphere of Russia and methods of reaction of governmental financial policy to results of crisis.
Regarding to this goal there are following tasks:
To understand the essence of a global world crisis.
To view the main positions of science schools explaining the appearing of economic crisisses.
To analyze the impact of world financial crisis to a financial sphere in Russia.
To view methods of reaction needed by governmental finance policy to results of crisis.
Therefore in the first chapter there will be viewed some theoretical aspects of economical crisis.
In the second chapter there will be shown an impact of a world crisis to Russian economy. Moreover, there will be discussed the main methods of reaction of discharge the crisis effects.
In the conclusion there are drawn the main conclusions obtained as a result of the current work.
The methodic is based on using of dialectical logic and system approach. During the process of research there were applied scientific methods and practices: analyze from common to a particular (deduction) and synthesis, comparisons and groupings.
To analyze the newest domestic works out in researched area, one of the most resources are magazines “World economy and international relations”, “Economical questions”, “Russiand economical magazine”, “Expert”, “Money and credit”, bulletin of foreign commercial information(BIKI). There were used also international periodic like "The Economist", "Financial Times", "The Wall Street Journal Europe".
During the research the author tried to use works of Russian and foreign researchers of integration problems in the sphere of world economy and world finances. Works of scientists devoted to working out mentioned above problems helped to give more exact explanations while scientific analyze and researches in this area.
Chapter 1. World crisis: the essence and substance
1.1 The essence of economic crisis
There is no common understanding of crisisses of social and economical system development in a modern literature. During a long period this conception was more ideological, but not real factor of working of the economical policy of producing development.
The term «anti-crisis management» appeared not long ago. It is believed that the reason of its appearing is reforming of Russian economy and gradual entering of Russia to critical developing zone. Today many experts understand that to draw the economy from crisis is not only the new type of management is the anti-crisis management. There is below an order of practice1.
Objectively we can characterize crisis via a multitude of correlated situations rising complexity and risk of management. Moreover, there are possible crisis moving, its prophylactic and stabilizing or transformation to another kind, exit from crisis but this doesn’t exclude this repeating in the future. Not only economy developing process functions cyclically, but also nature that bears different crisis situations.
К. Marx proved that the source of crisis in a public development is economy based on private property and influencing on the structure and collision of interests. Therefore politics and ideologists in our country draw a conclusion that social and economical formation moving private property excludes the possibility of crisis appearing. Therefore in the recent time there were used terms like “growth difficulties”, “development problems”, “stagnation” they substituted the term “crisis” but at the same time they reflected the same effects and processes.
If we will translate the term crisis, it comes from Greek and means a turn, result – a sharp breakup, hard transformation. It could also mean “result, solving the problem (for example, military)”. The modern meaning of this word is mostly popular among doctors, under crisis they mean the most important part during the illness. In this sense we can talk about “crisis” when illness becomes harder or transforms to another illness or comes to a dead end. For example, such formulation given by Kozellek sounds like following: crisis is “a point hardly being measured, when as result can be death or life”.
In XVII-XVIII centuries the term crisis became popular for deascribing processes in society like military or political crisisses. Moreover there was used the direct meaning of crisis taken from medical language.
At last, in the XIX century this conception came into economy. “Classical” economical conception being formed in the that times, means not desired and dramatic phrase in capitalistic economical system characterized by fluctuation and negative effects. But current term doesn’t include different schemas and stages of development and functioning of economy. Therefore classical term of crisis was substituted by the term “economical crisis”. About economical crisis, according to Mechlap, we can talk if “appears not wished state of economical relations, that can’t be extrapolated critical conception of various stratas of society and producing branches of economy”. Sombart defines economical crisis as “negative economical effect, when appears a danger for economical life and reality”.
According to academician E. S. Varga, “crisisses mean temporary (to the moment) forced solving of existing contradictions of expanded production”2.
John М. Keyns has characterized an effect of crisis as unexpected and sharp transformation grooving trend to lowering, when under condition of inverse process there is no such sharp transformation.
Russian scientist in economical area Tugan-Baranovskiy viewed crisis as a definite effect of economical conjecture. Crisis looks not as an explosive but as undulating, it represents a sum of two waves “growing” and “lowering”.
Now we can view crisis as a breaking point between “growing” and “lowering” waves as ending stage of growing phase and it is an initial phase of economical cycle.
Long time «The classical» understanding of crisis took place in a scheme of conjecture theory of economy developing. As cyclical scheme of Schpithoff, this conception includes following stages: lowering – first rising – second rising - peak - lack of capital – crisis.
Scheme Developed by Harvard in the beginning of this century includes: Depression - Recovery - Prosperity - Financial Strain - Industrial Crisis3.
Classical cycle of social production includes for main phases.
The first phase – crisis (lowering). Lowering of producing volumes and business activity, price lowering, overstocking, unemployment and bankruptcy growth. It should be mentioned that there is difference in the grade of negative impact of economical crisisses on different branches.
There is a lowering in some spheres involved in producing day-to-day goods in quite small dimensions. In the same time when negative economical situation occurs consumers can stop buying an equipment or domestic appliances waiting to the appropriate moment.
Therefore the lowering of production in metallurgy, heavy engineering or spheres of fridges or autos production could be represented more than light and food industry. There is a definitive difference in crisis reaction to monopolized and not monopolized sectors of economy. If in highly monopolized spheres during the crisis prices are almost not lowered while producing volumes are lowering. Another situation is in spheres with low concentration of capital we can see rapid price lowering when producing volumes are lowering not so rapid. In other words, monopolies with help of their economical force with rather smaller expenditures can feel crisis4.
The second phase –s depression (stagnation). We can view it as a phase (more or less lasting from 6 months to three years) it is important that economical life is able to adopt to changed conditions. So it comes to phase of balancing. For this phase it is typical uncertainty and chaotic actions. Trust of an entrepreneur to conjecture is hardly able to re-establishment, he looks around and doesn’t want to risk by investing his means into business, however prices and conditions are in a process of stabilization. This phase is characterized in many cases by lowering of percent norms.
The third – enlivening. This is a stage of re-establishment. Taking place investments, prices are growing, producing, employment and interest rates. Enlivening covers, first of all, branches supplying with producing means. Being incented by success of others, new enterprises are being created. In other words enlivening ends by pre-crisis level according to macro-economical indicators. Than begins new, more active than earlier rise.
The forth – rise (boom). This phase shows an accelerating of economical developing in innovation area, appearing a great number of different enterprises of material and non-material goods, sharp rise of investments, stock prices and other equities, interest rates and salaries. In the same time begins tension of bank balances and good reserves are growing. A growth of economy directing economy to the new level that prepares the base for new periodical crisis5.
Mentioned above definitions of crisis are characterized on the macro-level. In the micro-economy there is a definition “enterprise crisis”. To wide extent it means the process that endangers existence of the enterprise.
A definition “enterprise crisis” in the modern economical literature describes different phenomena from simple obstacles in functioning of enterprise via different conflicts to destruction of enterprise that can be characterized as catastrophical6.
Further, enterprise crisis we can understand as not planned and not wished, process limited in time which is able to hinder or make impossible functioning of the enterprise.
Our contemporary, professor E. M. Korotlov gave the complex definition of enterprise crisis: «Crisis – is an extreme intensification of contradictions in developing; growing danger of bankruptcy or liquidation, miscoordination in economical and financial activity; brake up point in changes processes». Or, «crisis means a breakup, any qualitative change in a process, transition from existing state to another, qualitative different in the main indicators».
In this sense a transition from stability to improvement or worsering are crisis situations in developing of a system. In other words, improvement of organisation’s state is also crisis and not understanding of this fact leads to euphoria, groundless confidence that growth will continue.
As a result we can see “unexpected” sharpering of contradictions, not ability of leaders to structural changes, necessity to change marketing strategy within changed conditions with limited resources, time deficit etc. Any change in some parameters both: positive and negative leads to opposite changes in its parameters.
So, crisis is a normal state of any system. Contradictions appear, sharp and solve. According to dialectical law, quantitative changes lead to qualitative. There are no dead ends, there are contradictions. A moment of solving of a contradiction is a crisis.
1.2 Reasons of crisis appearing
From the point of view of reasons of economical crisis, they are quite different. There is a great number of objective premises. The enquiry is that an influence to the same factors of productivity cycles during different periods of time is different; moreover, its display in different countries has its own specific.
Many economists bind the duration of a cycle view together with scientific and technical progress. An active part of capital obsoleses during 10-12 years. That demanded its renewal and it was a stimulus of economic recovery. As a bench mark we can see a substitution of equipment and technology and renewal of the basic capital is called a material base of economical cycle.
The next shortering of cycles’s period (from 10-11 years XIX century to 7—8 years in pre-war and 4—5 years in after-war years in XX century). It is viewed together with accelerating of renewal periods of the basic capital under the influence scientific and technical progress in a modern world7.
К. Маrx had his own system not only to reasons defining duration of cycles but also to the nature cyclicity. The principal difference from the point of view of Marx, there is a reason of cyclicity of capitalist producing – the nature of capitalism itself, the contradiction between social character of productivity and character of awarding of its results.
The representatives of neoclassical and liberal schools have different reasons of economic crisisses, not relating them to the nature of capitalism. Many of them suppose that the reason of crisisses is underconsumption by population tat leads to overproduction.
A consequent representative of underconsumption theory was Joann Robinson, the leader of Keynsianism. A medicine against crisisses is consumption stimulating.But appeared lack of consumption (purchasing capacity) is a result but not a reason of crisisses.
Nearer to Marx’s theory are the economists, viewing the reason of crisisses a disproportion or disbalance. Crisisses are caused by lack of correct proportions among spheres and chaotic actions of entrepreneurs. The disbalance theory can be good combined to another popular point of view to crisisses like result of internal conditions – political, demographical and natural.
F von Haiek is a supporter of a market freedom and violent opponent of governmental intervention, he thought that crisisses of overproduction appears because of overfinancing from government (cheap credits, inflation of demand)8.
There is a psychological theory of crysis. According to J. Shumpeter. Each phase corresponds to definite psychological picture, forming an attitude to investments. Panic and disorder of crisis state lead to stagnation of investments and good mood under conditions of rise simulate a fever. «Changing situations» form irregularity of investing market.
To the moment there is a great number of different theories giving an explanation to economical crisis. P. Samuelson in his book “Economics”, for example, as one of the most popular cycle theories mentions the following9:
Monetary theory explaining cycle by expansion of bank credit (Houtry etc.);
Innovation theory explaining cycle by using important innovations in production (Shumpeter, Hancen);
Psychological theory explaining cycle as a result of covering the population by waves of pessimistic and optimistic moods (Pigoy, Bedgegot etc.);
Underconsumption theory, showing the reason in too big part of income directed to reach and thrifty people in comparison to that what could be invested (Gobbson, Foster, Ketchings etc.);
Overinvesting theory, the supporters suppose that the reason of recession is mostly over- than underinvesting (Haiek, Mises etc.);
Theory of solar spots – weather – harvest (Gevens, Moore).
In estimation of these points of view we could mention that the reasons have been changed in time together with changes of in social and economical reality. Therefore it is important to pay attention to point of view of Russian economists, they give three stages of changes of opinions to economic cycles.
The first stage covers the beginning of XVIII century to the middle of 30-s years of XX century. During this period prevailed opinions that economical crisisses either impossible under conditions of capitalism (J. S. Mille, J-B. Seid, D. Ricardo) or they view this as a casual character and that system of free competition can overcome them itself (J-Sh. Siesmondy, R. Rodbertus, K. Kautskiy)10.
The second stage covers period from the middle of 30-s to the middle of 60-s, XX century. Viewing of this period is connected to works of J. M. Keyns and, first of all, his conclusion that economical crisisses (more exactly stagnation) are inevitable under conditions of classical capitalism, they represent a result of nature of this market. Keyns was one of the first among western economists who declared that capitalist market includes different manifestations of monopolism and is combined with governmental regulations, therefore prices and salaries are inflexible.
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