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In the focus ECONOMY
China was drowning never succeeded in establishing a market
in the mud until it economy, on the contrary, it has always
reached for the “magic searched for the solution in a centralized,
wand” – the market. It command economy in which there is no
is exactly the market competition and in which the authority (the
reforms (and not the tsar, the communist party or Putin) holds
cultural revolution of everything in its hands.
Mao) that are the main
driving force of the Here, some of you may say: OK, but there
Chinese economic boom. are contrasting examples, look at China. No,
When China allowed for the case of China only confirms my point.
entrepreneurs, stock That same China was drowning in the mud
exchanges, trade with until it reached for the “magic wand” – the
the world etc., it started market. It is exactly the market reforms
to grow with double digit (and not the cultural revolution of Mao) that
growth rates are the main driving force of the Chinese
economic boom. When China allowed for
development of USA and Russia in the last entrepreneurs, stock exchanges, trade with
200 years. In 1815, Russia was big, strong the world etc., it started to grow with double
(or, not so strong) empire, while USA was a digit growth rates.
young state, like a baby trying to learn how
to walk. At that time Russia had semi-feudal And truly, is this the obvious answer
economy, and 100 years later got stuck in to the million dollar question – How to
the monstrous experiment with the buildup get to a prosperous society? Of course, I
of communism. Opposite to this, from the have no illusions that Macedonia is the
very beginning, USA chose the right path same like USA, but that does not mean
– establishing a market economy, and step that the benefits from the market are only
by step (but with big steps of seven miles) it privilege for the large countries (just think
reached a level Russia can only dream about. of the negative example of Slovenia, which
What can we infer from this “natural” believed naively that guided by the “wisdom”
experiment? Imagine, 200 years ago America of the state it can create a competitive
was a wilderness with almost no economy, economy). When I am thinking about this
whereas Russia was a state with all the issue, I just can’t explain to myself how
symbols. Using soccer terminology, at that could we possibly be missing this simple
time Russia led by 10 to nothing. But, if you truth? Actually, with this articleI have not
compare thesecountries today (or 50, 100 “discovered America”, because Adam Smith
years ago) what will be your conclusions? wrote about the benefits from the marketby
That meager, almost non-existing American the end of the 18th century! A large number
economy has turned into a giant, the largest of my colleagues-economists, however,
economic power in the world. often fall in the following trap: whenever
the economies get in bigger recessions,
Why am I referring to this as a “natural” preoccupied by the current economic
experiment in a sense used by Milton difficulties, they look for a solution in a
Friedman? This example enables us to larger state intervention, believing naively
isolate the factor that had a decisive that it will solve the problems. The state can
influence on the end-result – the big actually solve only the short-term, cyclical
difference between the two economies. problems, but by limiting the market it
That factor is obvious – the market! In this only undermines the long-term productive
example we have two big countries with big capacity of the economy. At the end, “due” to
population and large natural resources, and the sizable state intervention the economy
two countries that started from a different loses its vitality and gets stuck in a long-
starting point (200 years ago Russia was by term stagnation.
all means more advanced than USA). The
only (big and crucial) difference between the I strongly believe that this is the key
two countries is in the fact that Russia has problem of Macedonia: we fool ourselves
if we expect that the state will provide
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