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Rethinking the centralised role of state: Expert Opinions

Andrew Zimine, CEO of Exscudo, explained the key principles of a new decentralized economic model

The key characteristic or principle of how the new economy functions is rethinking the fundamental basics and people’s mentality. Such as, for example, the role of state. On the one hand, state intervene actively into the economic processes, trying to mitigate industry restructuring and downturns, on the other hand, it introduces the artificial limitations for the growing industries. The clear example is the oil industry, where almost 70% of the carbons stands for government taxes and duties. In other words, state strives to redistribute goods and resources as they see fit, and is doing this not always effective. This results in defaults and global crises: one of the latest examples is the mortgage crisis which had affected almost all regions of the world. That is, state tries to play the role of manager, or the economy supervisor (Keynesian model of management). In fact, the best litmus test, indicator and regulator is the market itself. As many years of practice have shown, uncontrolled market reaches the balance sooner of later and further on reacts adequately to the impact of external factors or situation change. At the same time, market is cold and pragmatic, it has no place for social programs or moral aspects. These problems should have been entrusted to the state, which should serve its citizens and take care of respecting their rights and freedoms, but do not interfere in the economy.

In fact global economy development is restrained by the artificial limitations of regional governments. Barriers are created by different legislative acts and requirements of custom services, which also can be implemented not effectively enough or be ineffective by their nature. Just take a look at how effectively people are building their relations and archive early result in a small department or a guild. And what will happen if every person will be moved to a separate room and will be given different conditions for communication/interaction with other colleagues – how much longer will it take to achieve the result?

The same is happening with the global economy right now. However, in the last decade we saw some progress and people’s willingness to simplify the mechanisms and tools of interaction in the international space. New economic model will give a huge booster in the development of the global economy and will make all its participants people from one common space, not people from different rooms.

Considering what the new decentralised model brings to consumers and mass market, I ought to mention first of all, the fair price, as now state is artificially creating beneficial conditions for its producers and making barriers for external companies, that is, interferes into the market laws, disturbing the price balance and affecting the quality of good/service for the end customer.

Secondly, it is the fastest access to any good or service on market. We should not be scared by globalization thinking that, for example, Ikea will capture the entire worlds’ furniture market – there will always be a local producer who will produce goods meeting the requirements of the region, who not only will know the market, but also will transmit the cultural values with his/her goods (in this case, furniture), which Ikea cannot do, because the presence on different markets has its limitations.

Thirdly, what is important is the highest possible quality. Imagine you have not two or three producers who can make a cartel agreement, but 200-300 producers for whom it is much more difficult to negotiate. As price competition is the last competition type producers will compete in quality to win and keep the clients.

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