Economics of post-soviet post-industrialism (the cases of Georgia and Russia)

The paper investigates the economic problems of the post-Soviet post-industrialism.  Unlike the conventional content of the concept of “post-industrial society,” the deindustrialization of post-communist countries could qualify as “post-Soviet post-industrialism.”  The fact is that in these economies, the decrease in the share of industry was not due to the growth of high-quality innovative services but, rather, an immediate decline in industrial production, in some cases, in the absence of any significant development services of the aforementioned nature.  Following the collapse of the Soviet Union, the large-scale deindustrialization of the Russian (and the entire post-Soviet) economy took place, resulting in many sectors and industrial enterprises (which had laid the foundation for the Soviet economy) being lost.  The reason for this was the phenomenon of “necroeconomy” which combines so-called dead enterprises (because of the inability to produce competitive goods) and is the result of the negation of competition in a command economy.  Naturally, necroeconomy in itself does not exist in a healthy market economy system.  The difference in approaches to government support of necroeconomic enterprises in Georgia and Russia mostly stemmed from the fact that the Georgian state, unlike Russia, possessed significantly limited financial resources, including for the purpose of maintaining these dead enterprises.  In times of the absence of crises in large countries (such as Russia), the problem of necroeconomy is less acute than in relatively small countries (such as Georgia), since necro-enterprises, due to the large scale of their economy, with government support, have the opportunity to compete amongst themselves which creates the illusion of the absence of necroeconomy.  Because of the relatively smaller-scale necroeconomy in 2009; i.e., in the midst of the global financial and economic crisis, the downturn in the economy of Georgia, compared with the decline in Russia, was much more moderate.  In the context of the global financial and economic crisis, measures taken by the governments of Georgia and in Russia did not substantially differ from those that were commonly used in post-communist countries, as well as throughout the world, and are based on the Japanese miserable experience of the zombie economy; i.e., the preservation of non-competitive firms that have turned into such due to the crisis.