Today, 1 of the most popular shortcuts in planet and Russian media is GDP (GDP). Which means National Product taxation (*)
Almost no 1 can uncertainty that this is the most crucial macroeconomic indicator, reflecting the state and dynamics of the improvement of the national economy. Almost no 1 besides questions the axiom that GDP is simply a compass that allows the country to decision in the right direction. The greater real GDP growth (i.e. adjusted for inflation), the more successful the economy is.
Meanwhile, neither Russian nor abroad state government nor the papers of global organisations have a clear definition of the real economical sector. Anyone who uses the word "real economical sector" (or simply "real economy") in his own way understands the boundaries of this sector.
Some include all sectors of material production: mining and industrial processing, agriculture and forestry, construction, as well as part of transport and communication for material production.
Others add to the real sector the production of any key services. For example, transport and communication serving the population. Trade in consumer goods as well. Ittp.
Others say powerfully that the real sector is the full economy but the financial sector (the provision of various types of financial services).
Unfortunately, at the level of the Russian government and its individual departments (Ministry of Finance, Ministry of economical Development, etc.) there is an atmosphere that can be expressed with the words ‘the rings for each sister’. They say that we have a "market economy" in Russia, and that its "invisible hand" (Adam Smith's idea) will set its priorities.
And the state should be at the hand of this "invisible hand" and not interfere in the management of the Russian economy. And for more than 30 years, the “invisible hand” has ruled the Russian economy, setting more than unusual priorities.
These peculiarities are peculiarly striking erstwhile comparing Russia's current "market" economy with the alleged "order-resolution" economy of the russian Union. Incidentally, in russian times the priorities were clearly defined, taking into account strategical objectives (listed in organization programmes and five-year national economy improvement plans).
In particular, the rule of accelerated improvement of the ‘A’ manufacture (production of means of production) was maintained in relation to the ‘B’ manufacture (production of consumer goods). The scope of industries, which can be called "real sector", has besides been clearly identified and given a circumstantial priority. It is actual that these industries were referred to differently as ‘production industries’ or ‘material production industries’.
In russian times, we had no GDP. The ‘gross social product’ (GSP) index was then utilized in a akin value. As an example, I will give data on the number and structure of GSP for 1980 according to the data of the Central Statistical Office (GUS) of the USSR. The full GSP value of the year was 1078.5 billion rubles.
But this is the contribution of major industries to the creation of GSP (mold rubles; in brackets – share in %): manufacture – 685.5 (63.6); agriculture – 152.6 (14.2); construction – 103.4 (9.6); transport and communication – 47.6 (4.4); logistics, supplies, trade, etc. – 89.4 (8.2).
It is worth noting that according to the russian statistical institution in 1980 the manufacture constituted about 1 3rd (32.6%) of all officially employed (working) persons in the russian state. These are the shares of another sectors in full employment (%): agriculture – 10,4; construction – 7.3; transport – 9,2; communication – 1,4; logistics, buying and trade – 8.6.
As you can see, the contribution of GSP manufacture was almost twice as much as the share of manufacture in full home employment.
Participation in the GSP was besides higher than participation in employment in sectors specified as agriculture and construction. However, in the transport and communication sectors and in the logistics, supply and trade sectors, the image is the opposite. This is explained by the fact that according to estimates of the Central Statistical Office of the USSR not all those employed in these sectors formed GSP (about half).
In total, these industries, which can now be called the "real sector of the economy", accounted for about 65% of the full number of employees in the USSR in 1980. Given that not all transport, communication and trade and supply were active in the creation of the GSP, the real russian economy represented no more than 60% of full employment in the country.
What about the another 40%? From the point of view of russian discipline and economical practice, they were citizens who were crucial for the interests of the state, but did not make a social product but redistributed it (such as part of trade and material and method supplies) or consumed it.
It was wellness care, culture, physical education and sports, education, public administration, science, ensuring public order, etc.
Since the first day of the existence of a country called the Russian Federation, the alleged "market economy" began to be built there. This influenced, among another things, the methodology of the statistical account of the social product. From the GSP indicator we went to GNP (gross national product) and GDP indicators. But there are no revolutionary changes here.
However, a extremist change was the transition to a fresh methodology for measuring social product. These industries, which in russian times did not make but simply redistribute and consume social products, have now been raised to the rank of creating social products.
They had previously performed any state-wide functions, now they "provide services", services are sold and purchased and have monetary value. This is what the GDP ratio takes into account.
For example, a individual who had previously worked in a ministry, hospital, school, city office or cultural centre ‘serviced’ alternatively than ‘serviced’. Now specified an worker is active in marketplace relations, providing "services" to the population (and sometimes business), receiving his government salary. And this wage is the monetary value of his contribution to GDP creation.
It is not hard to imagine that this method of expanding Russia's GDP (as well as any another country) is frequently simpler than, say, expanding steel, coal, oil, cars, bread, meat, textiles and many another things that are usually included in the real economy.
Today, the real economical sector in our country is under expanding pressure. precedence was given to industries outside the real sector. They are usually referred to as the ‘service sector’. I propose that they be given a mirror name: "an unrealistic economy". What is produced by this "unreal economy" is besides called GDP. However, I propose to decode this not as "gross home product", but as "gross home foam". (**)
The Russian statistical service is utilizing this "pine" to make an illusion of real economical growth. Kind of surreal. By the way, another variant of the name: "surreal economy".
In the last full year of the russian Union (1990) material production, i.e. production of goods (mining and processing industry, agriculture, forestry and fisheries, construction, etc.) was liable for 65.1% of the social product. In the first year of existence of the Russian Federation, this percent was already 48.4%. As early as 1997, he fell to 43.0%. In 2004, to 41.0%.
Here's Rosstat's latest data. Image based on the results of the first 4th of 2024. The real sector (understanding material production) generated 32.3% of Russia's GDP in the first 3 months of that year.
Of which (%): mining manufacture – 10,4; manufacturing manufacture – 13,4; construction – 3,2; electricity, gas, steam and air conditioning; water supply; sewage; waste collection and distribution – 3.2.
Thus, more than 2/3 (67.7%) of full GDP present forms the service sector. The biggest manufacture in this sector is wholesale and retail trade – 12.4%. It's almost as much as the full manufacturing industry. And in terms of the share of trade in full employment in the Russian economy, it is even higher than the full processing manufacture (15.3% versus 14.0%).
Isn't that economical surrealism? Isn't this the theatre of absurdity? You can laughter at the theatre sometimes, but you want to cry here. due to the fact that there is an unspeakable violent Western collective war against Russia. In the conditions of this war, economical mobilisation is needed: firstly, to substitute imports (achievement of economical self-sufficiency); secondly, to strengthen our defence capabilities. How can we effectively wage war by employing more people in trade than in all industries?
This is besides where there is activity specified as “real property transactions” (mainly real property services). It turns out that this activity generated 9.5% of GDP in the first 4th of this year. Almost as much as the full mining (10.4%). Isn't that surreal?
The financial services and insurance sector generated 4.4% of GDP. I'm certain he made a contribution to the pocket of financial oligarchs. However, statistical accounting techniques have been designed to reflect this contribution in GDP statistics.
Yes, of course, our citizens have rather a wide scope of extramaterial needs. They request education, wellness care, culture, public order, etc. But why turn all this into services? In this case, these are no longer the functions and duties of the State (and they are detailed in the Constitution of the Russian Federation), that is trade.
All these functions in russian times were provided from the state budget. Therefore, education, culture, wellness care in the USSR did not make a social product, but consumed it.
In our country, according to Rosstat, in the first 4th of this year (as referred to in 2024 – PZ) education contributed 3.3% to GDP and wellness care – 3.4%. And the more educational and medical institutions will draw money from their customers, the more they will contribute to the country's economical growth. This policy is not only dangerous but besides murderous. In pursuit of GDP growth, the state is increasingly commercialised and privatised with its conventional functions. This is simply a political threat.
I see a peculiarly advanced hazard in figures that characterise the share of government officials in GDP. According to Rosstat, the sector called "Public Administration and National Defence, Mandatory Social Insurance" was liable for 8.1% of GDP. Behind this figure is simply a gigantic sum of government money that was spent on supporting officials and backing the military. I will not question or justify these expenses now. But according to the logical russian methodology of statistical accounting for social product in this case, we are not talking about the creation of GDP but about its consumption.
So for over 3 decades we have been surviving with a defective compass called "GDP". It does not separate between sectors that make GDP and those that consume it. Consuming is much easier and nicer. designation of consumption as production. The russian economical textbooks rightly called this "double counting". And the state in all possible ways suppressed specified "double counting". And now he encourages it in all possible ways.
However, any consumption that is regarded as creating a fresh value requires money. And that money is taken from the vault. But all year more and more are being taken out of our pockets. First for medical services, then for educational services, and yet for all another services. In pictorial terms, we have entered the way of building a commodity-monetary relation (more precisely: service-money) with the state. Yes, GDP will grow happily, but at any point the state will completely disappear. In a word, dishonest GDP statistic can lead us to a dead end.
Written by W.J. Katasonov
SOURCE: https://reosh.ru/valentin-catasonov-lukavstvo-Russian-economics-vernyj-put-k-smerti-gosudarstva.html
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(*) In Poland it is similar, and so the conclusions may be similar. Additionally, in Polish statistic (and not only in it) it is not sufficiently distinguished in GDP what is the national share and what abroad factors of production. Therefore, the better indicator is GNP (National Product Tax)
see:https://mfiles.pl/en/index.php/Product_National_Brutto
(**) W. Katasonów's remark is correct and reflects the essence of the substance and shows a tendency in the structure of economical statistic besides in countries of Europe and America, and thus it is full defined to apply besides to the Polish economy and Polish macro-economic statistics. This besides shows socio-economic structural trends, where client and neo-feudal attitudes are spread on the 1 hand in the form of expansion of the sphere of occupations and budget positions served by external, frequently privatised services. On the another hand, over-consumption – financed not only from individual income but very frequently from loans. Both of the above mentioned processes are financed by the booming banking and parabanking sectors, which are the largest beneficiaries.
(translation and footnotes – PZ)
