Addendum
Economic myths die hard because they are enshrined in the textbooks and practices of capitalist economists, repeated endlessly by bourgeois politicians, and unquestioningly endorsed by the corporate media.
By Patrice Greanville
Although Russia finally transcended the “savage capitalism” phase imposed by US-advised and fully-owned Boris Yeltsin in the 1990s, the influence of neoliberal charlatans persists, constituting a powerful 5th column in today’s Putin government. Below, an eloquent example of their thinking, corroborating their willingness to push for further capitalist “solutions” to the problems of Russia. This is something that Putin sooner or later will have to deal with, as capitalism is a disease that only worsens over time.
Note that, in the below excerpt, the “experts” are considering, in typical capitalist fashion, only the issue of “profitability”, and “productivity” (extracted labor surplus) with no interest whatsoever in how the firm’s operation affects the society at large. All are members of the Russian “Atlanticist” elite, trained and educated by “Western” economists, usually in Ivy League schools, and deeply embedded in the US-controlled dollar economy. In his regard the participation of the Gaidar Institute, named for one of the most notorious “alumni” of the US economic advisors that descended on Russia like veritable ideological vultures upon the overthrow of communism, is telling. The conclusions are fully to be expected. The use of “econometrics” confirms the capitalist pretension to make economics into an impartial “science”, divorced from politics and class struggles, something the founders of this discipline would have frowned on regarding it as charlatanism. The paper was sponsored and published by The Russian Journal of Economics (www.rujec.org). People curious to see the original, or of the masochistic type, can download the paper here. (Bold ours).—PG
State ownership and efficiency characteristics
Alexander Abramova,*, Alexander Radygina,b, Revold Entov c, Maria Chernova
Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia
Gaidar Institute for Economic Policy, Moscow, Russia
Russian Academy of Sciences, Moscow, Russia
Abstract
This study examines the influence of state participation in the ownership structure of companies on their financial efficiency using a sample of 114 largest companies in Russia. As an indirect indicator of efficiency, we used a variety of financial indica tors: revenue per employee (gross margin), return on equity, profit margin and debt burden. The effects of direct and indirect state ownership are considered separately. Using econometric analysis, we conclude that the dominance of the block of shares owned by the state has a negative effect on the performance characteristics, and its increase is associated with an increase in the debt burden of the companies.
According to our criteria, state-owned enterprises (SOEs) perform worse on average than private companies. The mechanism of how changes in the “real sector” affect profitability is examined particularly closely. The study shows that a change in the profitability of pri vate companies is characterized by a significant dependence on the movement of labor productivity characteristics. At the same time, for SOEs, a similar correlation was not revealed. These companies demonstrated no visible relationship between their profit ability and performance characteristics. The study shows that increases in the size of direct government ownership lead to lower labor productivity and profitability; the impact of indirect ownership is seemingly, more complicated.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
The article quotes the Gaidar Institute, that is the oligarchs who hollowed out Russia and in the process of privatizing, threw a huge number of Russians into poverty. Great work, guys! Now compare the F-35 from Lockheed Martin, a trillion dollar boondoggle designed in a highly efficient way, to fleece the American public, with the Russian Federation’s military contractors which seem to have the ability to make rocket engines and aircraft that far outperform their privately owned US counterparts. And meanwhile $21 trillion missing from Pentagon expenditures, and trillions more missing from private insurance company costs of health insurance, and… Read more »