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On the Basic Preconditions of Non-Neutrality of Money in Economic Theory

On the Basic Preconditions of Non-Neutrality of Money in Economic Theory

Journal of Institutional Studies, , Vol. 13 (no. 1),

Based on the experimental calculations carried out with the help of the shifting mode reproduction model, as well as on the theoretical studies of Marx, Schumpeter, Keynes and his followers - representatives of the post-Keynesian direction, two conclusions were made in the article. First, that non-neutrality of money takes place in both short- and long-term periods, and second, that each of these periods has its own basic preconditions for non-neutrality. For the short term, it is a "phenomenon of nominal rigidity", and for the long term, it is a "phenomenon of capitalization of money". The thesis is justified that the "phenomenon of nominal rigidity" manifests itself mainly within the framework of the existing production, when the economic growth caused by the increase in money supply is achieved by increasing capacity utilization and engagement of idle labor. Accordingly, the "phenomenon of capitalization of money" manifests itself through the conversion of issued money into investments in fixed capital and, through the growth of this capital (and capacities), affects the GDP growth. It is shown that behind the two considered basic prerequisites there are fundamentally different theoretical approaches. Behind the short-term "phenomenon of nominal rigidity" there is an orthodox vision of economy focused on the equilibrium pricing mechanism. Behind the long-term "phenomenon of capitalization of money" there is a heterodox vision related to the mechanism of money circulation, emission and economic growth caused by it. It has been concluded that in case of probable increase of competition between these theoretical approaches it is unacceptable if short-term basic preconditions of non-neutrality of money are used in the analysis of long-term processes and long-term preconditions are used in the analysis of short-term growth cases.

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Institutionalisms in Economics: What are Behinds Their Variety?

Institutionalisms in Economics: What are Behinds Their Variety?

Journal of Institutional Studies, , Vol. 13 (no. 1),

The institutional approach in economic science arose, as is known, more than a century ago and is now called "the original institutional economics." In the middle of the last century, an alternative version of this approach emerged, called the "new institutional economics". Over the past forty years, in the institutional approach, it has been declared the creation of a significant number of new economic institutionalisms, such as cognitive, critical, monetary, “incomplete”, “new new”, generic, post-institutionalism, post-Keynesian, and legal institutionalisms. This article is devoted to the analysis of the main provisions of the listed above institutionalisms in economics, in order to answer the question whether they are alternatives to the previously created original and new institutional economics, or whether they clarify some details in these basic institutionalisms. The study showed that the most developed part of the institutionalisms that have arisen in recent decades expands the fields and methods of research within either the original institutionalism or the new institutional economics, without suggesting the grounds that would go beyond the foundations of the named "basic" institutionalisms. Based on this, the article concludes that the growth in the number of institutionalisms indicates the development of "basic" institutionalisms, and not that they have exhausted the research opportunities inherent in them.

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Force of Invisible Hand, Labor, and Just Price: Basic Principles of Sorting and Matching Under Wage and Price Dispersion

Force of Invisible Hand, Labor, and Just Price: Basic Principles of Sorting and Matching Under Wage and Price Dispersion

Journal of Institutional Studies, , Vol. 13 (no. 1),

If the consumer realistically evaluates the efficiency of his efforts on labor and search, the purchase any quantity demanded will be optimal. Under equilibrium price dispersion suboptimal satisfying purchases represent corner solutions. A buyer who does not claim the optimal purchase either leaves the market or buys optimally. The invisible hand stops the buyer’s search in time and at the place where and when the purchase price allocates his time optimally between labor, search, and leisure and thereby maximizes the utility of his consumption-leisure choice. The producer does not know how much time the consumer has spent on search and what is his willingness to pay. But it is enough for him to know the quantity demanded in order to accurately determine not only the price but also the meeting point. His working time is divided between the actual production and services, for example, the delivery of goods, which saves the consumer's leisure time. A virtual frontier of production possibilities arises where the manufacturer optimally sells goods and leisure to the consumer. Any point on the frontier represents the trade-off between the time spent on search by the consumer and the time spent by producer on the delivery. Sorting sellers and buyers by their industry and diligence, local markets segment the production opportunity frontier. The force of the invisible hand, i.e., the rate of mutual interest, is increasing with seller’s productivity and buyer’s wage rate. The matching occurs at the just price level, which provides the market equilibrium. This price optimizes the distribution of the buyer's time between labor, search, and leisure, and the seller’s time between production and delivery; it equates the producer’s marginal costs with his average cost and maximizes the buyer's consumption-leisure utility. In every local market, a just price also equates the seller’s markup with the actual buyer’s purchasing power. The concept of just price proposed in this article is consistent with both the theory of marginal utility and the labor theory of value.The transformation of producer’s time into consumer’s leisure time discovers the rate of their mutual interest or their gravitation, where its force is directly proportional to the product of quantity supplied and quantity demanded, and inversely proportional to the product of times the parties to the transaction have spent on it.

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Changes of Government and Economic Development: is There an Interconnection?

Changes of Government and Economic Development: is There an Interconnection?

Journal of Institutional Studies, , Vol. 13 (no. 1),

The article is devoted to the analysis of interrelation between economic growth and change of government in the regions of Russia. The authors hypothesize that there is some correlation between them. In order to test the hypothesis, the quantitative analysis based on the data of 82 subjects of the Russian Federation was used. It was discovered that there is some interconnection between change of power and previous economic dynamics. This tendency has the higher significance during the period of indirect election of governance (2005–2012) At the same time, such economic indicator as GRP per capita is less interconnected with change of power. In other words, a regional recession or stagnation is much more likely to lead to a change in leadership than the low (compared to the national average) level of GRP itself. In addition, after the change of leadership in the short term, the dynamics of regional development is somewhat improving. In addition, after the change of leadership in the short term, the dynamics of regional development is somewhat improving. Apparently, these findings could be applied to the national level, but in this case, there should be additional discussions also about change of governance of executive power and legislative authority. It should also be borne in mind that effective regional leaders are often transferred to the federal level or to other, less successful regions within 2-3 electoral terms.

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Russian Resource-Extraction Companies: Conservation of Enclaves of Wealth VS. Movement Toward Integrated Economy

Russian Resource-Extraction Companies: Conservation of Enclaves of Wealth VS. Movement Toward Integrated Economy

Journal of Institutional Studies, , Vol. 13 (no. 1),

The article is devoted to the comprehensive assessment of the Russian resource-extraction companies’ readiness for the development of the domestic markets, which is an important condition for the formation of an integrated national economy. Currently, Russian economy development is mainly due to the functioning of the export and raw materials sector. This phenomenon leads to the emergence of enclaves of wealth, which do not have any impact on the development of the rest of the economy, and they are connected through short vertical value chains with global markets of raw materials and low added value commodities. Methodological approaches of the study are represented with the concept of dual enclave economy, the concept of global value chains and the concept of discrete structural alternatives. Annual reports of companies and business groups are the primary sources of data. Apparatus of the theory of fuzzy sets and the algorithm of fuzzy inference of Sugeno-0 order were chosen as research methods. The fulfilled analyses show that State-owned enterprises and companies that affiliated closely with the State are characterized with high level of readiness for the development of domestic markets. At the same time, private resource-extraction companies demonstrate medium and low levels. It is concluded that high level of readiness of State-owned enterprises is linked with the implementation of the «coercion to innovations» public policy. This policy consists in the need for companies with state participation to adopt innovation development programs, which included increasing the budget resources for R&D, implementation of innovation activities and the modernization of industries. Furthermore, companies/business groups with state participation invest significant resources in fulfilling quasi-public obligations to the population in the regions of economic activities. This is one of the conditions to obtain various privileges and benefits provided by the State (for instance, exclusive access to new hydrocarbon deposits). At the same time, the question about «soft» methods to involve Russian resource-extraction companies/business groups into innovation process on the domestic markets is still open.

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Which Manufacturing Enterprises Have Received Advantages in Access to Government Orders After the Crisis of 2014–2015?

Which Manufacturing Enterprises Have Received Advantages in Access to Government Orders After the Crisis of 2014–2015?

Journal of Institutional Studies, , Vol. 13 (no. 1),

This paper, based on two surveys of manufacturing enterprises in 2014 and 2018, analyzed the characteristics of enterprises receiving public orders, as well as the dynamics of changes in access to public procurement after tightening external conditions for the Russian economy against the backdrop of international sanctions and the 2014–2015 crisis. The analysis showed that in 2016–2017 in the manufacturing industry, almost half (45%) of large and a third of medium-sized firms had public contracts. However, among the small firms that took part in the survey, only 22% received public contracts, despite the declared policy of supporting small businesses. In contrast to 2013, in the post-crisis period there were no significant differences in access to public procurement for enterprises with and without state participatio n. Along with this, the state began to impose more requirements on the disclosure of information on the structure of ownership by enterprises. Membership in business associations gave advantages in access to public procurement for medium and large enterprises, but this effect was absent for small firms. In general, against the background of international sanctions and the crisis of 2014–2015 for all types of enterprises in the post-crisis period, the scheme of complementarity of direct and indirect instruments of state support has been preserved, and for small enterprises, the manifestations of the "model of exchanges" between government and business have become more significant, thus small enterprises providing assistance to the regional and local authorities in the social development of the region, more often received public orders.

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Paradoxes of The Russian Digitalization Programs

Paradoxes of The Russian Digitalization Programs

Journal of Institutional Studies, , Vol. 13 (no. 1),

The Russian Federation is in the process of forming an «information society», which includes information and computer technologies as its external attributes. The process of informatization is developing in three main areas-education, work, and interaction between government and civil society – based on national programs, primarily «Electronic Russia» and its continuation. However, their implementation in Russia is characterized by a number of contradictions between the real tasks of ensuring sustainable development of the Russian Federation and formal settings for the growth of formal indicators of Informatization. As a result, the Russian Federation may fall further behind the technologically developed countries of the world, both in terms of the level of information support for the economy and public relations, and in terms of the level of information technologies development themselves. To remedy the situation, it is proposed to take measures to change the practice of goal-setting, to serve the interests of production, public administration and social needs.

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The Ways to Come Over the Institutional Traps of Higher Education and Science Sphere

The Ways to Come Over the Institutional Traps of Higher Education and Science Sphere

Journal of Institutional Studies, , Vol. 13 (no. 1),

The present paper is devoted to the Russian ineffective higher education and science institutions functioning study and analysis. We consider such institutions to be institutional traps, which are identified as sustainable inefficient rules and practices with the negative impact for education and science sphere reforms and transformations. The lack of the methodology base for regular institutional monitoring is one of the reasonable issues to institutional traps study. Such institutional monitoring should consist of qualitative and quantitative studies to find out the higher education and science sphere representatives points of view on the reforms results. To find out the solution and to improve the research methodology we used in-depth interview surveys and focus group discussions with lecturers and scientists of the Southern Federal University. This methodology let us to improve the institutional traps study and to design the way to come over the difficulties and barriers considering the ideas and experience of the sphere representatives. The responders involved in the present research were suggested by the six following institutional traps to discuss: the metric's trap, the trap of raising level of bureaucracy, the trap of shortage of financing, the quality of education decline trap, the trap of staff capacity and the electronization and digitalization trap.

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