CC BY
1COMPETITIVENESS OF SOCIO-ECONOMIC MODELS IN THE LIGHT OF NEW
CHALLENGES OF THE 2020S
Galina A. Rodina
Yaroslavl State Technical University, Russia E-mail: galinarodina@mail.ru
Abstract. The paper discusses ways out of the crisis, in which the world economy has plunged in the late 2010s, accelerated by the COVID pandemic and the consequences of measures taken to overcome it. Crises of this kind not only change the supremacy balance between countries, but also raise questions about the effectiveness of socio-economic models, the competitiveness of which is ultimately ensured by the cultural codes embedded in the foundation of national models. The paper considers the prospects of maintaining the leading position of Anglo-Saxon cultural code models, strengthening the position of Han cultural code models and the chances of the domestic model based on the Russian cultural code.
Keywords: competitiveness, socio-economic models, formational approach, civilizational approach, cultural codes, Anglo-Saxon cultural code, Han cultural code, Russian cultural code.
JEL codes: A12, F01, P51
For citation: Rodina, G. A. (2021). Competitiveness of socio-economic models in the light of new challenges of the 2020s. JOURNAL OF REGIONAL AND INTERNATIONAL COMPETITIVENESS, 3(2), 62-71. Retrieved from http://jraic.com/index. php/tor/article/view/32/25
DOI: 10.52957/27821927_2021_2_62
Introduction
To paraphrase F. Engels, competitiveness is winning the «war of all against all». It is possible to produce the most competitive product, organize the most competitive enterprise, and create the most competitive national economy. What is the time limit of these «wins»? Obviously, a competitive economy is a more resilient product than a competitive product or service. In some industries, competitors are willing to offer customers their analogs of a successful new product just a few months after it becomes available. Therefore, companies worried about maintaining their leadership position should «run very fast» and introduce a new product number 2 at a time when competitors are dumping their version of number 1 — literally 2-4 months later.
It will take more than one year to build a competitive economy. However, in this case, borrowing is also possible. Was it not the success of Roosevelt's New Deal, under which later Sir J.M. Keynes summed up the theoretical framework, that predetermined the triumphal spread of Keynesian recipes of economic prosperity among most developed countries for several decades?
If we cast a bridge from the Great Depression of 1929-1933 to the Great Recession of 2008-2009, we again find similarities: Different countries had not so different selection of the most competitive program to overcome the global crisis of the 2000s-2010s. The program were mainly about the expansion of the macroeconomic policy means used to stabilize and stimulate the economy, represented by a whole arsenal of non-traditional means: helicopter money, negative interest rates, which was hard for macroeconomists to imagine before, as was the fact that such a massive injection of money into the economy would not unwind inflation. The emphasis is on the importance of financial stability. It was the financial destabilization in the market of non-traditional financial instruments (derivatives) that gave impetus to the Great Recession. All banks of the world started to use developed standards of new prudential policy. In other words, countries at different levels of economic development applied identical macroeconomic policies of fiscal and monetary easing, simply to slow down the output decline and create conditions for its exit. Despite the protracted
nature of the recovery from the Great Recession, widespread macroeconomic policies should be recognized as competitive: by the end of the second decade of this century, the crisis had been overcome.
And here is a new crisis born of the COVID pandemic and the measures used to overcome. This crisis is exogenous, i.e. unrelated to economic dynamics. An answer to the biggest question of the 2020s remains unclear: to what extent is the economy prepared to respond to this non-economic challenge?
Such a shock crisis often not only changes the trajectories of countries and their relations with each other, but also tests the socio-economic models themselves. Their competitiveness is ensured in such situations by those factors which are difficult to borrow and impossible to form within a short period of time. We are talking about cultural codes and archetypes, unconsciously forming society's picture of the ideal world underlying the cultural core (or rather, cultural-spiritual-religious core, or matrix) of this society and responsible for its self-identification (Rodina, 2009a; Rodina 2009b; Rodina 2009c; Rodina 2011a; Rodina 2011b).
We assume that the 2020s is the time to revise the existing socio-economic models from the perspective of their competitiveness. The reason for such revision is the search for answers to the new challenges of social development. Do the existing socio-economic models, or, more precisely, their matrices, give the opportunity to carry out the necessary reforms determining the trajectory of society's development before the next bifurcation point, and will society have enough strength and wisdom to avoid the degeneration of these reforms into a purely technical «invention of methods»? If one manages to slip between these Scylla and Charybdis, then another level of novelty will emerge — when these techniques give birth to new meanings, give the model the necessary competitiveness, and take society to new planes of development.
Sources and methods
We have all emerged from the epistemological principle of Marxist philosophy of the primacy of matter and the secondary nature of consciousness, which is brought into shape in our study in the recognition of the primacy of social being and the secondary nature of social consciousness. Social being acts as a set of material social processes that exist independently of the will and consciousness of an individual or society as a whole, and social consciousness is a reflection of social being. From the complex sum of social phenomena, historical materialism singles out material relations because people must eat, drink, clothe themselves, have housing, etc. before engaging in science, politics, philosophy, religion, etc. It is true that «in the historical process, the determining moment in the historical process, ultimately, is the production and reproduction of actual life. ... If anyone distorts this position in the sense that the economic moment is the only determinant moment, the statement turns into a nonsensical, abstract, meaningless phrase» (Engels, 1965). And yet the economy is primary, culture is derived from it, and therefore secondary. But is it?
Culture, once formed, begins to act as a relatively independent variable among the factors of social life. The classic interpretation (the culture of the people is formed and functions primarily depending on the economic and political circumstances) experiences a paradigmatic turn, which manifests itself in switching the notions «economy» and «culture» around. Mathematically, it looks as follow: from the formula K = f(E, P) we move to the formula EP = f(K) (where K is culture; E is economics; P is politics; f is a function indicating the nature of interdependence of the specified quantities). The reference points for evaluating any values are, on the one hand, social experience and, on the other hand, the archetypes of a given culture that have been formed during the survival of an ethnos, nation, clan, etc. (Danilevsky, 2019). The system of archetypes can be described as an immune system, a protective layer of a particular culture that preserves its identity, defining the national identity. By the latter we mean the cultural code, which is a product of geography, national language, and history of the people who have lived for a long time in a certain territory, in a certain climate and who build certain patterns of response to the challenges of time, based on their worldview and their place and sometimes mission in this world. It is a peculiar set of rules for survival and development
These stable rules can help search for the most competitive answers to the challenges of time, or they can inhibit and even block this search (Rodina, 2008a; Rodina, 2011c; Rodina & Stepanova, 2020).
Study
Socio-economic models can be viewed in two frames of reference: formational and civilizational.
The specifics of any one social formation are determined by property relations. This approach can be considered relevant as long as it is acknowledged that modern socio-economic systems are capitalist at their core (Rodina & Brillante, 2020). This could be «late capitalism» (Buzgalin &Lenchuk, 2020, p. 119). Or a capitalism in the last stage of structural crisis, i.e. at the stage of the termination of its existence due to the launching of the mechanism of self-liquidating geopolitical quasi-monopoly (Wallerstein, 2015). It matters not that I. Wallerstein gave this capitalism no more than 30 years before its historical demise — as long as it is capitalism, its essence is unchanged.
Cultural codes are at the heart of a particular civilization. Four basic civilizations can be distinguished in the modern world, based on which 11 cultural codes have been preserved (Figure 1).
The model of Euro-Atlantic civilization «mixed» with the Anglo-Saxon cultural code continues to demonstrate the greatest competitiveness.
The distribution of countries by Human Development Index (HDI) can be interpreted as an aggregate indicator of the competitiveness of socio-economic models because, in addition to living standards, it includes the level of education and life expectancy, and in 2020 — the amount of carbon dioxide emissions and resource consumption of countries as well, which is designed to adjust the HDI with the pressure of civilization on the planet. It was based on 2019 estimates and published in December 2020. We limited ourselves to the first thirty, in which about 80% of the countries develop according to the Anglo-Saxon cultural code (Table 1).
Figure 1. Scheme of cultural codes of modern basic civilizations
Source: Pereslegin, 2021
Table 1 — Distribution of countries by HDI in 2019
Rating Country Rating Country Rating Country
1 Norway 11 Finland 21 Liechtenstein
2 Ireland 12 Singapore 22 Slovenia
3 Switzerland 13 United Kingdom 23 Republic of Korea
4 Hong Kong 14 Belgium 24 Luxembourg
5 Iceland 15 New Zealand 25 Spain
6 Germany 16 Canada 26 France
Rating Country Rating Country Rating Country
7 Sweden 17 USA 27 Czech Republic
8 Australia 18 Austria 28 Malta Malta
9 Netherlands 19 Israel 29 Estonia
10 Denmark 20 Japan 30 Italy
Source: Human Development Report, 2020
We extend the Anglo-Saxon cultural code to Germany, Austria, and France, which have lost their national uniqueness in recent decades and whose cultural codes have lost competition to the more successful Anglo-Saxon one.
The following value orientations conditioned this success:
1. Power can rest on the physical, spiritual, or other superiority of the individual over another individual.
2. Politics is a type of conflicting social activity that is built on the principles of fair play and equality of citizens before the law.
3. Recognition of the individual as the main subject and source of politics, the attitude to the state as an institution dependent on civil society, the guarantor of individual rights and freedoms.
4. Individuals' preference for multiple forms of political life, an adversarial type of participation in power, pluralism, and democracy; preference for a complex organization of power (presence of parties, pressure groups, etc.)
5. The primacy of general State laws (codified law) over private rules and regulations of conduct.
6. Understanding freedom as a «perceived necessity», i.e. the power of the law.
7. Liberal-market orientation as the most organic form of the listed values, declared universal and in this sense common for the humanity (Rodina, 2008b).
These meanings allowed the carriers of the Anglo-Saxon cultural code to become the beneficiaries of the liberal model of globalization, which still follows the principle «the rich get richer, the poor get poorer», which resulted in the increased differentiation in the world economy and the elimination of almost all competing cultural codes (Rodina, 2020).
In other words, the Anglo-Saxon cultural code provided its bearers with power over the world.
Will the models of Euro-Atlantic civilization in the Anglo-Saxon version retain their competitiveness in the face of new challenges associated with digitalization and exacerbated by the COVID-19 pandemic? Or will other socio-economic models prove to be objectively more suitable for the solution of urgent problems, and other cultural codes become the drivers of global growth? They should not only prepare the transition to the sixth technological mode, but also provide conscious management of the development of society, because it is now obvious: the only way to deal with threats such as the COVID pandemic is by working together.
The new world economy should be based on the mechanisms of personal responsibility of citizens for the improvement of society's well-being. S.Yu. Glazyev believes that this requires a transition from the AngloSaxon cultural code to an Eastern one, with China and India as the core (Glazyev, 2020, p. 15, 17).
Eastern models have a unique set of values:
1. The divine origin of power, unrelated to any human merit.
2. Politics is an ascetic, inaccessible activity, subject to a code of heroic conduct and to the principles of divine government.
3. Recognition of the primacy of elites and the state in politics, preference for state patronage over the individual; recognition of the priority of community and group leaders over the individual; the dominance of the values of corporatism.
4. The individual prefers executive functions in political life and collective forms of political participation devoid of individual responsibility; they gravitate towards an authoritarian type of government, simplified forms of power organization, and the search for a charismatic leader.
5. Priority of local rules and customs (local law) over formal state regulations.
For a long time it was believed that the «rice culture» countries, precisely because of their cultural
code, would not integrate into the sixth technological mode, because they lacked creativity and personal responsibility (moreover, the manifestation of individuality was considered indecent).
But when Chinese goods filled the world, it turned out that rice culture is the same as assembly production. That is, modern assembly production has laid down the traditional patterns that existed in the rice culture.
And it also turned out that tapping into the innovative development potential depends not so much on the culture as such, as on the directional shift of socio-cultural characteristics, which can be done through educational and cultural policy. That's where the Eastern cult of education comes in handy!
Unexpectedly in demand was the focus on improving the well-being of society, traditionally inherent in Eastern cultural codes, but injected with personal responsibility of citizens for the growth of this well-being in the form of the social control system implemented in the PRC since 2014. A person builds their own reputation throughout their life by ensuring a positive balance of good deeds.
«The social credit system includes: compliance with the country's laws and traffic regulations; credit history; tax payments; human behavior at home; his social media activity; structure of consumption of goods and services. Eventually, the deeds of the Chinese inhabitant are formalized and become calculable, which is able to create convenience and organization in human life» (Yudina & Sulemonova, 2021). The digitization of Chinese behavior takes the form of rating points, which is not perceived by citizens as a «digital concentration camp» or a «violation of their privacy» because the cultural code prescribes the evaluation of the individual by society (as opposed to the Anglo-Saxon cultural code, which is based on the evaluation of the individual by themselves). Social Credit categorizes residents into five categories (from «AA» to «D»), similar to Standard & Poor's 10-tier credit rating scale (from AAA to default). High scorers can count on various benefits, while low scorers are subject to various kinds of restrictions (Table 2).
Table 2 — Distribution of preferences and sanctions according to the social control system in the PRC
Preferences Sanctions
• Lending at preferential rates. • Leasing goods and services without collateral. • Hospitalization in a hospital without bail. • Placement of photos on billboards. • Praise. • Deprivation of the right to hold positions in state and municipal service bodies. • Refusal to apply for any job. • Denial of social security. • Biased inspection at customs. • Denial of air tickets and berths on night trains. • Denial of seats in luxury hotels and restaurants. • A ban on the education of children in expensive private schools.
Source: Galiullina et al., 2018
In other words, the Chinese (Han) cultural code gives its bearers power over forms of organization and activity.
Since the experience of applying the system of social control has not yet been accumulated, the attitude to this system is ambiguous. People feel mostly neutral or negative. We see Social Credit as the implementation of a global trend towards an increasing role of the state in all spheres of human life, which is likely to generate a conflict between the state and the individual. Nevertheless, we are inclined to qualify the system of social control as an infant of a new competitiveness of socio-economic models, taking into account the transition from an industrial society to a digital one, prosperity of which, as we noted above, depends on the creation and development of mechanisms of personal responsibility of citizens for the improvement of the welfare of society. It is worth to note that the success of any model is determined by two main factors: the ability, first, to fit into the main trends of technological development and, second, to use one's own cultural code for mastering these trends (or, at a minimum, to «negotiate» with it so that it does not block the aforementioned course).
It is difficult to imagine the implementation of a social control system in today's Euro-Atlantic civilization,
which means that the Chinese socio-economic model acquires additional competitiveness on the way to the social state. It has already manifested itself in an effective program to combat the COVID pandemic and its consequences: the Chinese economy, virtually the only one among the major economies, ended 2020 in the black. According to China's National Bureau of Statistics, the country's GDP grew by 2.3% last year (National Economy Recovered Steadily in 2020 with Main Goals Accomplished Better Than Expectation, 2021).
Of course, we are most interested in the prospects of Russia's inclusion/exclusion in the ongoing socioeconomic transformation. To do this, it is necessary to define the specifics of the Russian cultural code:
1. «Russia is a game of nature, not of reason,» wrote F.M. Dostoyevsky in Demons. Our cultural code is more predetermined by geographical and climatic factors than others:
— large chronotopos, predominance of risky farming zones with low productivity and insignificant surplus product, which results in disregard of material benefits and orientation to minimize risk rather than to maximize the result;
— strong dependence on weather conditions, which are unpredictable, creating a weak link between labor efforts and the end result, but often requiring short-term extra efforts to overcome unforeseen circumstances; hence the desperate creativity and «ability to rise to his feet after a fall» (Kliuchevskii, 1990, p. 65);
— expectation of sudden and abrupt changes, combined with the belief in a miracle, and hence a preference for contemplation instead of activity (this is where the famous Russian 'avos' (counting on a miracle) comes from);
— the «boundary» between Europe and Asia (West and East), between sedentarization and nomadism, which is fraught either with the ultimate synthesis of disconnected extremes («omnipresence»), or with the ultimate polarization of the whole, i.e. split, which gives the mentality itself a stable quality of «semantic indeterminacy» (Kondakov, 2003, p. 542).
2. The duality of the Russian cultural code follows from this «boundary» and extremity: a system of checks and balances, giving rise to «mutual support» with a very fragile balance, which constantly keeps society on the verge of disruption, and often even explosion (Lotman, 2002). Such a society is set up for expectation of sudden and abrupt changes, readiness for the forthcoming change of way of life and world outlook.
3. Communitarianism: values go back to communal collectivism and impose the priority of group justice over the principles of individual freedom, and, ultimately, the dominance of the state in the regulation of social life over the mechanisms of self-organization of society (Rodina, 2017).
4. It is not just the state with a preference for state patronage over the individual that is recognized as primary in politics, but a tightly centralized state, where there is not only no political freedoms, but no need for them.
5. Understanding freedom as will, i.e. of arbitrariness.
6. Features of the Russian language:
— the breadth of the semantic spectrum of language, which makes it possible to connect the unconnected (Nalimov, 1989). Again, this brings us to the point of meaninglessness, indiscipline, and creativity;
— lack of differentiation between Perfect and Continuous tenses, which results in «unfinished» thinking, projecting, and reforming.
7. Setting the course to extremity and mobilization efforts together with communitarianism, spatial extent, predominance of cold temperatures, domination of intangible values over material consumption conditioned the image of the Russian as a human pioneer (this is where Russian cosmism came from). Yes to discoveries, no to harnessing. There is a widely spread phrase attributed to an American manager: «If you need one unique thing, order from the Russians, if you need 10 identical ones, order from anyone but the Russians.»
In other words, the Russian cultural code gives its bearers power over space.
Indeed, the duality of the Russian cultural code contains the potential for both forward movement and a transition to stagnation. The extent to which our society today is prepared to meet the challenges of the 2020s can be judged by the Future Readiness Index, which was explored twice — in 2017 and 2019. This is an
assessment of the competitiveness of 20 countries according to 10 criteria based on statistical indicators and expert opinion (Table 3).
Table 3 — Country ranking (based on the results of the readiness index calculation), points
Rank Countries 2019 year 2017 year
1 USA 1.00 0.96
2 Germany 0.93 1.00
3 United Kingdom 0.88 0.94
4 Japan 0.87 0.90
5 Republic of Korea 0.74 0.75
6 EU 0.74 0.75
7 Canada 0.71 0.71
8 France 0.70 0.62
9 Australia 0.66 0.68
10 China 0.63 0.57
11 Italy 0.48 0.45
12 Russia 0.38 0.33
13 Turkey 0.23 0.14
14 Argentina 0.18 0.10
15 Brazil 0.17 0.10
16 Saudi Arabia 0.16 0.11
17 India 0.15 0.17
18 Indonesia 0.13 0.00
19 Mexico 0.12 0.16
20 South Africa 0.00 0.07
Source: Future Readiness Index Report. September 2019
Russia is not in the top ten countries, it took the 12th place (and even that at the expense of security, but not at all economy, resources, and ecology that advance the development), which makes us question the competitiveness of the Russian socio-economic model.
Can certain features of the cultural code be «replaced» or «adjusted» to the urgent needs of social development? Attempts to install cultural codes alien to us were made repeatedly (take, for example, Gorbachev's Perestroika), but invariably ended in fiasco. Much more constructive is a different approach, the essence of which can be described by the legendary Pele: «Why are you berating our defense? Our offense will score more goals anyway.» You have to make your strengths work. «The best and most lasting changes are those that come from improving morals, without any violent upheaval,» were the words written by A.S. Pushkin in The Captain's Daughter, «And those who are plotting impossible coups in our country are either young and do not know our people, or they are hard-hearted people, for whom another man's head is half a kopeck, and their own neck is a kopeck.» It means that the most urgent task of reforming the Russian state and society is the powerful development of national and historical consciousness by strengthening the processes of production and circulation of all kinds of socially significant information, which should bring the educational and cultural policy from the «residual» to the priority position. Only this way can provide radical changes in the core of our culture without the devastating consequences necessary to «launch» the mechanisms of competitive restructuring of society.
Conclusion
The third decade of the 21st century is a time of testing and possible revision of existing socio-economic
models for their competitiveness.
We consider the main criterion of the new competitiveness to be the ability of cultural codes to «open the way» to the formation of mechanisms of personal responsibility of citizens for the improvement of society's well-being in the conditions of digitalization.
This makes the problem of transformation of socio-economic models relevant and opens prospects for the formation of a new competitive leader.
We predict, on the one hand, a decline in the leadership of the Anglo-Saxon cultural code and models based on it; on the other hand, the increase of the competitiveness of the Han cultural code.
The Russian cultural code has a good chance to implement the strategy of advanced development, if it is possible to activate its strengths
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© Galina A. Rodina, 2021
Received 12.03.2021
Accepted 22.04.2021
