News

December 5 – 6: The Conference “Saint Petersburg consensus – a New Economic Policy for the World” took place

On December 5 and 6 in Brussels, at the Russian Center of Science and Culture of the Russian federal agency “Rossotrudnichestvo”, the international non-profit organization “New Youth Policy” presented to a wide audience the “Saint Petersburg consensus – a New Economic Policy for the World”.

Consensus is a means of reaching an agreement on a decision or a contract at international conferences and in international organizations based on a common agreement of the participants. This procedure does not require a formal ballot, if the proposition has not been opposed by at least one participant of the forum. Consensus is also applied as a means of providing unity of positions of countries before voting on discussed issues, which, in this case, is postponed until the end of negotiations [1].

For the first time in the history of international relations, a complete and holistic economic perspective (a new economic policy for the world) has been presented, discussed, and approved by the participants. The Saint Petersburg consensus is positioned as an alternative to the Washington consensus, which was formulated in 1989 by American economist John Williamson.

The new Consensus is named after the location where it was developed – the city of Saint Petersburg.

The conference was attended by representatives of international non-profit organization “New Youth Policy”, representatives of autonomous non-profit organization “Center for Information and Analysis”, specialists and scientists of various fields, and guests from 11 countries: Belgium, United Kingdom, Germany, Kazakhstan, Canada, Netherlands, Russian Federation, Ukraine, Switzerland, Estonia, Finland.

Heated debates dominated the 2-day conference, during which attendees converged on the following common opinions:

1. The Washington consensus, as a concentrated manifestation of bourgeois liberalism and its worldview, is inadequate to life and needs to be replaced.

2. The majority of principles voiced in the Saint-Petersburg consensus are adequate to the current social reality and challenges facing humanity, and the principles, which are currently not being realized in practical governance, require testing and modelling before they are implemented.

3. The Saint-Petersburg consensus should be maximally spread and popularized. Citizens of all world countries should be familiarized with it, since the practical governance built on these principles provides a complex approach to tackling many problems, solving many of them simultaneously, meaning that the effect from implementing the consensus will be multiplicative.

Participants made a common decision to continue working on the principles formulated in the consensus. Below we provide a concise version of the principles of the Saint-Petersburg Consensus, alternative to the Washington Consensus principles: 

The main aim of the economy is the guaranteed satisfaction of essential needs of people and social institutions in an environmentally-safe manner in the succession of generations. This goal is achieved via the control of a set of parameters, which in the Washington Consensus are by declaration left to the control of the “market”.

The conception of sustainable development based on the strategy of population dispersion on the principles of landscape-estate urbanization is the core of the methodology to reach the main aim of the economy. It is based on a rational and complex approach to territorial usage, alternative to the rampant consumption of resources based on the increase of city population (megapolis urbanization). The realization of this conception requires a shift from the monetarist approach to an alternative one.

An organizational-and-technological approach instead of the financial-accounting approach, when the record and planning of the economy are accounted based on natural (physical) units instead of financial units. This leads to the alignment of stable technological chains that are integrated into the biosphere, not an endless pursuit of higher profits. The realization of this requires:

A practice balancing the use of planned and market economies. A plan is an aggregation of the aims of the production system, the means and instruments of their achievement, while the market is only one of the means of achieving these aims. Governance of the aggregated system requires a correct combination of administrative-directive and unstructured methods of regulation and self-regulation of the economic system. Creation of a plan of national development and adjustment of the market mechanism to reach the aims in the plan requires:

Use of metrologically competent balance models of product and financial exchange in the national economy. In particular, use of interindustrial, intersector balance models (input-output models) to pull together the development plans of all sectors into a general development plan will guarantee the realization of the following:

A policy of planned price lowering instead of policy of planned price increase, and strict control of the prices of goods making up the basis of the pricelist, a set of goods on which prices of other goods directly depend; these include raw materials, energy resources, means of production, and others.

Determination of currency exchange rate via an energy pricelist invariant. A pricelist invariant is a product by the quantity of which prices may be expressed for absolutely all other products without any exception.

An energy standard of provisioning a currency’s paying-capacity, determined as:

“Annual production of electric energy” / “Volume of money supply in circulation”.

By agreement, there may be other ways of calculating the energy standard, but binding it with the volumes of the energy, in one way or the other, is obligatory.

International trade based on one of the following options:

First – the member states use one common currency. In this variant it is necessary to control the emission of the common currency, otherwise it will be the same story as with the US dollar. In addition, it is necessary to establish an international institution that will have the right to plan the development, set taxes and allocate subsidies to the member states of the common currency zone. In this case the member states will have to cede a portion of their economic and political sovereignty in favor of such an institution.

Second – the establishment of a fund or consortium where member states make a deposit of their currencies based on the energy standard. Other countries may purchase the currency of another country according to the set exchange rate, in order to enter foreign markets and buy what they need. The energy standard that will be used in transactions is determined by member states in a preliminary agreement.

The second option is preferred, since it maintains a state’s sovereignty.

Ban on interest rate. Interest-free lending instead of usury. A share of company profits for banks-investors who give interest-free loans.

A policy suppressing the generation of artificial demand for essential goods. In other words, the ban on irrational use of resources through stimulation of omnifarious “fashions”, marketing manipulations, and planned obsolescence.

Ban on the creation of markets of goods with fictitious value. Today, by different accounts, the so-called speculative sector of the economy has “value” of up to 500 trillion (!) dollars, and only 50 trillion dollars are covered by real goods. Stock markets, securities, shares, as instruments of speculation, should be left in the historic past, as they interfere with macroeconomic management based on input-output models. A ban on selling securities during 2-3 years after their purchase must be introduced, making speculation impossible or hard to accomplish.

Use of the taxation and subsidization mechanism as an instrument of unstructured configuration of a macroeconomic system toward the goals of state policy, which is expressed in a development plan. There should be a progressive scale of taxation, and tax base should be formed of legal entities only, which will simplify regulation, accounting, and will decrease the amount of people working in revenue agencies.

Grants and subsidies are necessary tools for development of strategically important industries, and a means of support for those industries, which have been affected by natural disasters or managerial unprofessionalism. The distribution of grants is based on concrete indicators of input-output models, excluding the situations when there is too much or too little money.

Provisioning of massive implementation of scientific innovation cycles in their entirety in all sectors of economy and other sectors of social activity within a reasonable time frame. A scientific innovation cycle is a socio-economic process, which begins with the establishment of research tasks in the area of fundamental science, and ends with the implementation of research results — inventions and innovations — into mass-produced goods and services.

Photos from: http://bel.rs.gov.ru/ru/node/1197

[1] — http://dic.academic.ru/dic.nsf/dic_economic_law/6500/%D0%9A%D0%9E%D0%9D%D0%A1%D0%95%D0%9D%D0%A1%D0%A3%D0%A1