In article <bq2j84pec07fulsmcmj2gdpcmmp2ni6d3g@[EMAIL PROTECTED]
>, James A. Donald
<jamesd@[EMAIL PROTECTED]
> wrote:
> Eugene Holman:
> > Agreed. It is defined by the ability of a significant segment of the
> > society to use the economy to earn enough money honestly to cover
living
> > costs and still have enough money left over for such extras as iPods,
> > caviar, and automobiles, including im****ted luxury ones :-)
>
> That is the desired and expected outcome of capitalism - but that is
> not capitalism
Agreed. But capitalism exists as a theory as well as in various
implementations, none of which fully conforms to the ideal. The present
Russian implementation, quite similar to the American implementation of a
century or so ago, certainly falls within the definition of capitalism as
a type of economic system based primarily on private owner****p of capital
and means of production, a free market in goods and labor, and the
im****tant role in running and maintaining the system played by a large and
stable tax-paying middle class. Russian idiosyncracies include the
relatively high level of corruption, the key role played by the state in
certain sectors of the economy (i.e. railways, natural resources), and the
extraordinary concentrations of wealth in the circles associated with
certain oligarchs who have agreed to stay out of politics and maintain a
low profile as the price for not having the state show too much interest
in how they became billionaires
[http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/6577129.stm].
> Capitalism is an economic system based on private owner****p of
> capital, where economic decisions are the outcome a relatively free
> market in goods and labor.
> <http://www.websters-online-dictionary.com/definition/capitalism>
> gives a good account of what capitalism is.
Contem****ary Russia arguably conforms better to this definition than the
contem****ary United States. The Russian economy is currently based on
private owner****p of the means of production, although there is
considerable public owner****p of the natural resources and means of
distribution. Despite the presence of the state in certain key sectors,
there is far less state regulation of the economy in Russia than in more
developed western economies, for which reason environmental and worker
welfare issues constrain the Russian economy less than they do in more
developed ones. Additionally, in Russia it is frequently possible to
bypass existing regulatory legislation with an appropriate bribe. Russia's
flat income tax regime (13% on all income), the envy of American
conservatives [http://www.heritage.org/press/commentary/ed032403.cfm],
encourages people to earn and spend as much money as they can and has
fueled an expansion of the Russian economy at a phenomenal growth rate of
close to 10% annually
[http://lfpress.ca/newsstand/Business/2008/07/25/6260611-sun.html].
According to the CIA world Factbook
[https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html#Econ]
<quote>
Economy - overview:
Russia ended 2007 with its ninth straight year of growth, averaging 7%
annually since the financial crisis of 1998. Although high oil prices and
a relatively cheap ruble initially drove this growth, since 2003 consumer
demand and, more recently, investment have played a significant role. Over
the last six years, fixed capital investments have averaged real gains
greater than 10% per year and personal incomes have achieved real gains
more than 12% per year. During this time, poverty has declined steadily
and the middle class has continued to expand. Russia has also improved its
international financial position since the 1998 financial crisis. The
federal budget has run surpluses since 2001 and ended 2007 with a surplus
of about 3% of GDP. Over the past several years, Russia has used its
stabilization fund based on oil taxes to prepay all Soviet-era sovereign
debt to Paris Club creditors and the IMF. Foreign debt is approximately
one-third of GDP. The state component of foreign debt has declined, but
commercial debt to foreigners has risen strongly. Oil ex****t earnings have
allowed Russia to increase its foreign reserves from $12 billion in 1999
to some $470 billion at yearend 2007, the third largest reserves in the
world. During President PUTIN's first administration, a number of
im****tant reforms were implemented in the areas of tax, banking, labor,
and land codes. These achievements have raised business and investor
confidence in Russia's economic prospects, with foreign direct investment
rising from $14.6 billion in 2005 to approximately $45 billion in 2007. In
2007, Russia's GDP grew 8.1%, led by non-tradable services and goods for
the domestic market, as opposed to oil or mineral extraction and ex****ts.
Rising inflation returned in the second half of 2007, driven largely by
unsterilized capital inflows and by rising food costs, and approached 12%
by year-end. In 2006, Russia signed a bilateral market access agreement
with the US as a prelude to possible WTO entry, and its companies are
involved in global merger and acquisition activity in the oil and gas,
metals, and telecom sectors. Despite Russia's recent success, serious
problems persist. Oil, natural gas, metals, and timber account for more
than 80% of ex****ts and 30% of government revenues, leaving the country
vulnerable to swings in world commodity prices. Russia's manufacturing
base is dilapidated and must be replaced or modernized if the country is
to achieve broad-based economic growth. The banking system, while
increasing consumer lending and growing at a high rate, is still small
relative to the banking sectors of Russia's emerging market peers.
Political uncertainties associated with this year's power transition,
corruption, and lack of trust in institutions continue to dampen domestic
and foreign investor sentiment. PUTIN has granted more influence to forces
within his government that desire to reassert state control over the
economy. Russia has made little progress in building the rule of law, the
bedrock of a modern market economy. The government has promised additional
legislative amendments to make its intellectual property protection
WTO-consistent, but enforcement remains problematic.
</quote>
Regards,
Eugene Holman
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