**4. Public values behind state capitalism in Belarus**

State capitalism cannot function in Belarus without public support thanks to income equality and moderate income growth. In 1990, the inequality index (GINI index from 0 to 1, with 1 signifying extreme inequality) in Belarus was 0.24, in 2000 it was 0.23, in 2010 it was 0.27, and in 2018 it was 0.25. That number looks even better when juxtaposed with those of other countries featuring high levels of state involvement in the economy. For example, in Russia in 1991, it was 0.26 before rising to 0.44 in 2018; in China, it was 0.33 in 1990 and 0.47 in 2018. While the average monthly salary in Belarus in the 1990s came to a few tens of dollars, by 2006 it had grown to 271, and in 2014, it reached a 25-year high of 595 dollars; in May 2020, it was 476 dollars.

Public support consists of the variety of values, and it is a double-edge sword how the values influence on the economy and the economy influences on the values in Belarus.

#### **4.1 Influence of values on the economy in state capitalism of Belarus**

Belarusian matrix of values' impact on the economy is complex, both random and orderly.

The *randomness* is expressed in doublethink, swaying between collectivism and individualism, emotionality and restraint, the past and the future, short- and long term, conservatism, and liberalism [28]. In the theory of behaviorism, the first decision is usually considered irrational and incorrect (the so-called "halo effect"), while the second one is rational and more accurate. In the case of Belarus, both decisions look irrational, and the Belarusian state capitalism itself is akin to a set of anomalies. A decision can be affected by the unpredictable specific context, case, mood, fatigue, hunger, time of day, previous meeting, another person's statement, personality, association with the surname of the person in question, or something else that cannot be foreseen. All these are situational factors of the value matrix. Because of constant reflection and adaptation, the national features of psyche and local behavioral practices replace the classical economic theory and world practices, playing the priority and effective role in the Belarusian state capitalism.

The *orderly* influence of the Belarusian matrix on the economy is reflected in the perceived influence of a range of cultural, economic, and other factors on the matrix itself and, thus, on the economy. Such factors are difficult to weigh and

**79**

*State Capitalism in Belarus: Behind Economic Anemia DOI: http://dx.doi.org/10.5772/intechopen.93606*

Belarusian, distinguishing it from other societies.

ism includes the following.

decreasing incomes of the population.

88% respondents gave that answer [30].

ments, and tourism to Russian-speaking partners.

government or private ownership [30].

prioritize depending on their impact on the Belarusian economy. These are the "tectonic plates" of the Belarusian behavioral economics, which overlap and move with time. They form the overall information and cultural environment, in which decisions are made, the values, which are shared by the public and combine into the cultural matrix, the unifying factors, which nowadays make the Belarusian matrix

Memory of the war: according to a sociological survey of 2013, 89.6% of Belarusians called the Great Patriotic War the main historical event for Belarusians [29]. The memories and fears of the war trigger the desire to seek protection from a strong leader and provide the basement for state capitalism. In 2010–2014, 58% of Belarusians worry about the war involving in the country [30]. Belarus preserves the inert military mentality of the strong role of the state and paternalism. This leads to increased control over businesses, maintaining the traditionally high budgetary expenditures on poorly performing enterprises, accompanied by the

Family orientation: it forms the dualism of collectivism and individualism. It narrows the circle of trust, range of partners, limits behavioral practices, and restrains social identity. In addition, such features as paternalism and orientation to the Soviet past are formed under the influence of Belarusian family orientation. During economic slowdown, family values have become stronger. In the period of economic growth in 1999–2009, from 78 to 81% Belarusians considered their families as very important in life. In 2010–2014 when economic growth declined,

Language: Russian is the main spoken language, the language used for writing documents and the language of thought, while the Belarusian language is not so popular for many in the country. In 2010–2014, 83.3% of Belarusians speak Russian at home, while only 6.5% speak Belarusian [30]. Russian largely determines many Belarusian features, for example, the orientation to the Soviet past, hence the orientation to scale, to short-term planning and paternalism, as well as individualism in the form of isolation from the rest of the world. The use of the Russian language in the Belarusian economy predetermines the orientation of its foreign trade, invest-

Sense of ownership: in Belarus, the collective memory, orientation to the Soviet past, orientation to scale, and paternalism, dull the sense of ownership. It affects the public's attitude to large state-owned enterprises as features of heritage and culture, which then constrains their privatization and restructuring. In general, the Belarusians sense of ownership is very polarized with no strong attitude toward

Fears: in Belarus, phobias explain the roots of state capitalism. The fear of losing earnings, say because of their depreciation due to inflation, exceeds the willingness to earn more, which creates a greater propensity to save than to invest. The fear of losing a job with a change of owner, following the example of Russia in the 1990s, creates a cautious attitude toward privatization. In 2010–2014, 56% of Belarusians were afraid of losing their jobs [30]. The fear of the future and disappointment in the present forms the orientation to the past in the search for answers. The fear of punishment, both inherited and learned, serves as a habitual motivation in the paternalistic regime.

**4.2 Influence of the economic anemia/growth on the public values in Belarus**

Recent economic anemia in Belarus has transformed public values. It no longer raises the question *how* the state capitalism restores the high level of economic

The range of valuable factors that orderly influences on Belarusian state capital-

#### *State Capitalism in Belarus: Behind Economic Anemia DOI: http://dx.doi.org/10.5772/intechopen.93606*

*Public Sector Crisis Management*

decision-making out of the hands of individuals, engendering trust, and building respect. Authority has to be delegated to ministries, departments, and sections in keeping with the principle that simpler problems can be solved farther down the food chain. Dividing up the regulatory and economic functions of state agencies needs to happen, putting ministries in charge of industries and more general areas

The state would be wise to deprioritize the letter of the law when it comes to monitoring compliance with the rules governing business (something that is undoubtedly important in an institutional economy). As it sets up institutions and oversees the development of the economy, most important is for Belarus to ensure currency and financial stability by prioritizing tax- and currency-related crimes (though punishing them cannot be used as a means to other ends). Relaxing control, especially over small and medium business, would create space for them to experiment, try new approaches and methods, test new suppliers and clients, and breathe life into the economy. Once changes have been made to economic struc-

State capitalism cannot function in Belarus without public support thanks to income equality and moderate income growth. In 1990, the inequality index (GINI index from 0 to 1, with 1 signifying extreme inequality) in Belarus was 0.24, in 2000 it was 0.23, in 2010 it was 0.27, and in 2018 it was 0.25. That number looks even better when juxtaposed with those of other countries featuring high levels of state involvement in the economy. For example, in Russia in 1991, it was 0.26 before rising to 0.44 in 2018; in China, it was 0.33 in 1990 and 0.47 in 2018. While the average monthly salary in Belarus in the 1990s came to a few tens of dollars, by 2006 it had grown to 271, and in 2014, it reached a 25-year high of 595 dollars; in May 2020, it was 476 dollars. Public support consists of the variety of values, and it is a double-edge sword how the values influence on the economy and the economy influences on the values

tures, control can be adapted to those new forms and fully reinstated.

**4.1 Influence of values on the economy in state capitalism of Belarus**

playing the priority and effective role in the Belarusian state capitalism.

The *orderly* influence of the Belarusian matrix on the economy is reflected in the perceived influence of a range of cultural, economic, and other factors on the matrix itself and, thus, on the economy. Such factors are difficult to weigh and

Belarusian matrix of values' impact on the economy is complex, both random

The *randomness* is expressed in doublethink, swaying between collectivism and individualism, emotionality and restraint, the past and the future, short- and long term, conservatism, and liberalism [28]. In the theory of behaviorism, the first decision is usually considered irrational and incorrect (the so-called "halo effect"), while the second one is rational and more accurate. In the case of Belarus, both decisions look irrational, and the Belarusian state capitalism itself is akin to a set of anomalies. A decision can be affected by the unpredictable specific context, case, mood, fatigue, hunger, time of day, previous meeting, another person's statement, personality, association with the surname of the person in question, or something else that cannot be foreseen. All these are situational factors of the value matrix. Because of constant reflection and adaptation, the national features of psyche and local behavioral practices replace the classical economic theory and world practices,

without responsibility for the economy on the micro level.

**4. Public values behind state capitalism in Belarus**

**78**

in Belarus.

and orderly.

prioritize depending on their impact on the Belarusian economy. These are the "tectonic plates" of the Belarusian behavioral economics, which overlap and move with time. They form the overall information and cultural environment, in which decisions are made, the values, which are shared by the public and combine into the cultural matrix, the unifying factors, which nowadays make the Belarusian matrix Belarusian, distinguishing it from other societies.

The range of valuable factors that orderly influences on Belarusian state capitalism includes the following.

Memory of the war: according to a sociological survey of 2013, 89.6% of Belarusians called the Great Patriotic War the main historical event for Belarusians [29]. The memories and fears of the war trigger the desire to seek protection from a strong leader and provide the basement for state capitalism. In 2010–2014, 58% of Belarusians worry about the war involving in the country [30]. Belarus preserves the inert military mentality of the strong role of the state and paternalism. This leads to increased control over businesses, maintaining the traditionally high budgetary expenditures on poorly performing enterprises, accompanied by the decreasing incomes of the population.

Family orientation: it forms the dualism of collectivism and individualism. It narrows the circle of trust, range of partners, limits behavioral practices, and restrains social identity. In addition, such features as paternalism and orientation to the Soviet past are formed under the influence of Belarusian family orientation. During economic slowdown, family values have become stronger. In the period of economic growth in 1999–2009, from 78 to 81% Belarusians considered their families as very important in life. In 2010–2014 when economic growth declined, 88% respondents gave that answer [30].

Language: Russian is the main spoken language, the language used for writing documents and the language of thought, while the Belarusian language is not so popular for many in the country. In 2010–2014, 83.3% of Belarusians speak Russian at home, while only 6.5% speak Belarusian [30]. Russian largely determines many Belarusian features, for example, the orientation to the Soviet past, hence the orientation to scale, to short-term planning and paternalism, as well as individualism in the form of isolation from the rest of the world. The use of the Russian language in the Belarusian economy predetermines the orientation of its foreign trade, investments, and tourism to Russian-speaking partners.

Sense of ownership: in Belarus, the collective memory, orientation to the Soviet past, orientation to scale, and paternalism, dull the sense of ownership. It affects the public's attitude to large state-owned enterprises as features of heritage and culture, which then constrains their privatization and restructuring. In general, the Belarusians sense of ownership is very polarized with no strong attitude toward government or private ownership [30].

Fears: in Belarus, phobias explain the roots of state capitalism. The fear of losing earnings, say because of their depreciation due to inflation, exceeds the willingness to earn more, which creates a greater propensity to save than to invest. The fear of losing a job with a change of owner, following the example of Russia in the 1990s, creates a cautious attitude toward privatization. In 2010–2014, 56% of Belarusians were afraid of losing their jobs [30]. The fear of the future and disappointment in the present forms the orientation to the past in the search for answers. The fear of punishment, both inherited and learned, serves as a habitual motivation in the paternalistic regime.

#### **4.2 Influence of the economic anemia/growth on the public values in Belarus**

Recent economic anemia in Belarus has transformed public values. It no longer raises the question *how* the state capitalism restores the high level of economic

growth in Belarus. Now it faces new dilemma *if* the state capitalism is capable of doing that. If public values behind economic anemia have changed dramatically, then it would mean that the issue of state capitalism efficiency has moved from economic to sociological and political fields of science.

Belarusian's public values could be compared in different time periods of economic growth and economic anemia (**Table 2**). There is no strong evidence that people are looking for solutions of economic problems in the ownership of business. More likely they see other reasons of economic anemia in Belarus rather than private vs. state ownership of business, as the two are interconnected in the country. Moreover, Belarusians prefer the government to take more responsibility during hard times and less the people themselves. When economic growth is high, people also have high confidence in the government. But when economic growth is low, the public confidence in the government is decreasing. So it is easy to see that economic growth fluctuations in Belarus are reflected in the public opinion on the responsibility of the government and its state capitalism.

Some more observations of Belarusians public values behind economic anemia could be added that influence on the business climate and the health of society. So important for economic growth trust is decreasing during economic slowdown. In 2010–2014, the answer "most people can be trusted" has been decreased from 41 to 33%, and the answer "need to be very careful" has been


**81**

**Author details**

Minsk, The Republic of Belarus

\*Address all correspondence to: kvrudy@gmail.com

provided the original work is properly cited.

and brought state capitalism existence to new crossroads.

Belarus State Economic University, Professor at the Department of World Economy,

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

Kiryl Rudy

*State Capitalism in Belarus: Behind Economic Anemia DOI: http://dx.doi.org/10.5772/intechopen.93606*

64 to 61% in 2010–2014 [30].

GDP, and foreign direct investments.

per year during last decade.

**5. Conclusions**

increased from 50 to 60%. The values of such qualities like tolerance and respect for other people has become less important during economic anemia falling from

Economic anemia in state capitalism transforms public attitude toward political system (**Table 2**). In the case of Belarus, the popularity of strong leader political system has been decreasing during low economic growth. People increase their good attitude to the experts making decision political system, but not so much. When Belarusian's state capitalism tries to use force pressure to solve economic problems, it also makes political system ruled by army absolutely unpopular. Finally, the main transformation of public values behind economic anemia is the strong rise of popularity toward democratic political system. It brings the doubts about the future of the current mode of state capitalism in Belarus without reforms.

Belarusian state capitalism is the hybrid regime of transition economy. Currently it covers only half of GDP, half of employment, and around 60% of banking assets and banking capital. It is based on the high level of public expenditures to GDP, medium level of tax burden, and wide range of state-owned enterprises. There are plenty of underdeveloped financial instruments in Belarus that could support its state capitalism nowadays, like banking system, financial market, monetization of

In 1996–2010, state capitalism boosted high economic growth in Belarus on the level of average 7% per year. But it was also accompanied by high inflation, current account deficit, and currency crises. In 2011–2019, Belarus faced some traps on the way of its economic growth: "debt trap," "middle-income trap," "social burden trap," "resource curse trap," "conflict neighbors trap," and "forceful pressure trap." They all lead to the economic anemia in the country on the level of a little more than 1%

Belarusian state capitalism exists because of public support, based on economic equality, and the rise of incomes. During economic growth such public values like the memory of the war, family orientation, language, sense of ownership, and various phobias supported state capitalism in Belarus. But, during economic anemia, the fall of incomes, the public attitude to political system has changed dramatically

#### **Table 2.**

*Public values and economic growth in Belarus, % of total respondents [30].*

increased from 50 to 60%. The values of such qualities like tolerance and respect for other people has become less important during economic anemia falling from 64 to 61% in 2010–2014 [30].

Economic anemia in state capitalism transforms public attitude toward political system (**Table 2**). In the case of Belarus, the popularity of strong leader political system has been decreasing during low economic growth. People increase their good attitude to the experts making decision political system, but not so much. When Belarusian's state capitalism tries to use force pressure to solve economic problems, it also makes political system ruled by army absolutely unpopular. Finally, the main transformation of public values behind economic anemia is the strong rise of popularity toward democratic political system. It brings the doubts about the future of the current mode of state capitalism in Belarus without reforms.
