Where is the way out?

Garry Jacobs visited Ukraine before. The chief executive officer of the World Academy of Art and Science (WAAS), chairman of the World University Consortium, business consultant, writer and full member of the Club of Rome describes his first encounter with Kyiv as an incredible adventure. He arrived here at the invitation of his close friend, the late Bohdan Hawrylyshyn, 30 years ago. The Soviet Union was on the brink of collapse. Any minute now, Ukraine, as well as other Soviet republics, was to have a huge window of the free world’s opportunity opened wide to it. And the task of the team then including Jacobs was to warn of the threats that awaited Ukrainians in the pragmatic world of big money and big interests. “We held conferences and seminars to convey that not everyone was to be trusted or listened to. Even then, it was evident that you were given advice that did not work in our Western nations, and it would not work for you either,” said Jacobs. In 1991, he was offered a contract in Moscow. He worked in Russia until 1994. He recalls this period with incredible inspiration and... regret, because “I did not succeed in what I wanted.” Afterwards, he went to India and had a huge success. His project created 1,000 jobs in a poor district.

Today, Jacobs lives in California where he writes books and research papers focusing on the social and psychological process of growth and development, as expressed on the level of personality, organization, nation, and international community. Actually, it was the “zone of growth” and the “way out of the bottom” for Ukraine that the expert discussed in an exclusive interview with The Day.

“THE ENTIRE COUNTRY IS A LABORATORY”

You mentioned that you worked in Moscow in the early 1990s and saw what transformations the former Soviet republics were experiencing. In your opinion, could Russia go a different way then? Or to the contrary, Vladimir Putin was the only option for the Russians? And what do you think, when did we make a mistake here in Kyiv? With what, when, and how did we launch the “disaster scenario”?

“Nobody knows how the Soviet Union and its inheritance should have been disposed of. There is no research-supported or experience-supported path of transformation from communism to the free world. And it pains me greatly that this story of our mistakes cost people their lives and broken careers. It is easy to think now that this or that reform should have been done better.

“And by the way, I do not think that the problem is with you. It is not clear at all that the Americans would have done it better. We have made so many mistakes already...

“What we need to know about those 1990s is that it was a time of extraordinary challenges. Then the countries were born and reborn. You had to create governments, laws, a new economy, a new society.

“What is happening now? We have had many generations of democracy in the West. In parallel, we have had Brexit in England. Turkey is returning to authoritarian rule. Hungary votes for right-wing extremists. Shifts are occurring in many different places around the world. So, what is happening to governments, then?

“We thought 30 years ago that we had a model in which a market economy in a democratic society was the universal answer. But what is happening to our democracy? The ideals of democracy are based on what we call liberal democracy. Democracy relies on a system including a number of cultural values, respect for individual people, and individual freedom. We built a social system on that foundation, relying on the system of elections and transmission of the abovementioned values.

Photo by Ruslan KANIUKA, The Day

“There is a complicated machinery of democracy in America at present, and we have spread it for decades wherever we can, because everyone should have democratic elections. But should a democratic election be held in Iran, a theocratic regime will be elected, which will immediately ban everyone and everything that honors something other than the Quran. Illiberal democracy exists in the world as well. This is a kind of democracy that uses the mechanism of democracy against the basic, fundamental values for which it has been established.”

Your experience in the Soviet Union and after it cannot be compared to anyone else’s. But this is the past. And it is the future that is important for you. What will you do now?

“I will give one example of our life in the US. I think it can be useful to you. How and what our children are taught, is determined not at the state level, but at the local one in the US. Each community decides by itself what type of education they want to introduce: this is our school for our children, we pay taxes, we have to decide. And now we have many experiments. Of course, there are many trials and errors, but this allows us to choose the best option. It is like in a laboratory... The entire country is a laboratory. We need this process of experiments and innovations.”

IDEOLOGY MAKES THE ECONOMY “BLIND” AND VULNERABLE

You can afford it... The Day’s editor-in-chief Larysa Ivshyna summed up once the advice we give to our reformers in power: “the exit is at the entrance.” And I am asking you about that time as an eyewitness, not to write history. The frank analysis of such experts as you is part of the information on which we need to recreate the true history of our sickness and finally start treatment. Once president Leonid Kuchma’s economic advisor admitted while sitting in our editorial office: “We did everything we were told by the World Bank.” So, does it mean that the advice was such that it deliberately put us on the road to the disaster scenario, which led us to two Maidan protests, the war, the loss of territories and lives? Or was it merely some “statistical error” made by our consultants?

“I do not think that they intended it to fail. But maybe I am wrong. Perhaps someone really did it deliberately. But for sure, people in the US did not want the Ukrainians to fail. And when I went to Moscow, the Russians were extremely friendly. I wanted to help them. But they went the wrong way. And it is true.

“The problem is that when you believe in a certain ideology, you think you are doing a good thing when you give people your advice on how they should live. First secretary Nikita Khrushchev advertised the enormous miracles of communism around the world, and one journalist asked him in France: what would you do if you had more free time? And Khrushchev replied: I would speak even more about the benefits of communism. Perhaps he really believed that it was the best system.

“No one cause is responsible for all the challenges that you have to deal with today. There were cases of bad advice, because people did not understand you. You did not know about our system, and we did not know about you.

“There is a more fundamental problem. Who will benefit most from changes in any society that is experiencing them? Are they the ones most prepared for them? Or those who did not know anything about them? For example, when the personal computer was invented, large corporations in rich countries could use this technology because they were prepared: they had the money, better educated personnel, better social system... So who benefited more when the old government system broke up in your country? Who were the ones who had the most knowledge and power at that time? It was people who were in the Communist party that had ruled the country, they knew each other, knew how it all worked. And the collapse of the USSR was a signal for them: freedom has come, let us work for ourselves. I do not say that was right. But you have experienced it, and are still experiencing, for who benefits from capitalism? People with more money.

“All the traditional social institutions crashed in the 1990s: the army, the intelligence services, the KGB, the party. There was chaos. And it was the bold and insolent who succeeded amid it.”

“A CENTURY AGO, OUR GREAT INDUSTRIALISTS DID THINGS WHICH WE WOULD DEEM ILLEGAL TODAY”

 The trouble is that they have not advanced past the 1990s in their management practices in 25 years, and they hold the entire country hostage to this type of behavior. What do you think, what prevents Ukrainian oligarchs from finally emerging from the stage of primary capital accumulation and evolving into, say, transnational companies? Your own big capital in America, too, is not entirely ethical by origin.

“I think that they are too busy trying to snatch as much as they can and protect their wealth from competitors.

“Managing a company is very hard. Stealing assets is simple. Buying a minister, a legislator, and then stealing a subsidy from the budget is very simple.

“Do you have to wait until the oligarchs change of their own accord? I do not think so. They are riding high. They have succeeded. This type of behavior has made them rich and successful, why would they change? However, it has failed to make the country, the Ukrainian people successful. Isn’t it better to help Ukrainians to change?

“People know what the oligarchs are doing. You have democracy. Then why are you still sending the forces they support to parliament? One of the reasons is inactivity. It is easy to go down the path of blaming others. However, it is better and more useful for one to try to become a positive example.

“You are right to think that in the US, and in all countries without exception, the history of big capital’s emergence is far from being ‘bright’ and ethical. A century ago, our great industrialists did things which we would deem illegal today. But we thought then, ‘they are rich, so we need to respect them.’ It is only now that we have passed laws that protect us from being ashamed of our past. No one has ever faced a more complex challenge than yours. I do not think you have failed, but there is still a lot of work ahead. And you have many opportunities to make Ukraine a strong and beautiful, livable country. All the millions of Ukrainians who have gone ‘overseas’ will come back here then.”

“YOU SHOULD CHANGE YOUR APPROACH TO EDUCATION”

One path to salvation, which is proposed, among other people, by our reformers, is to open markets, to invite foreign businesses here, get foreign experts to join the government, as they are allegedly clean, not corrupted (although we have already discussed this notional purity and what it has taken to be achieved and maintained). In a word, their path to salvation involves becoming even more open to the world. What will you say to this?

“I do not think that attracting multinational companies and recruiting highly-paid foreigners can be the answer to all your key problems.

“Having close ties with the world is advantageous, but one needs to have a mind of one’s own to manage it properly. What you are proposed is to throw the doors wide open so that everyone can come. You know who will be the first to seize on such an option. Decent people will not come, that is for sure...

“There is one rich man in southern India who has become almost a saint. And he ordered the management of his companies once: give all the money to the poor. The chief manager answered: how can I do this, when you have so many assets? The ‘saint’ said: open the doors and let them stay open all the time, so that people themselves will come and take what they need and as much as they need.

“It is absurd, right?

“Developing Ukraine’s human resources is much more important than ‘opening the doors.’ You really need to change your approach to education. You must develop people so that they are not obedient members of the ‘communist system,’ make your employees into entrepreneurs, and your businesspeople into innovators. People in Ukraine should learn to think. This is the skill that the Soviet Union tried to extirpate at a great human cost, including through the collectivization, repression, and manmade famines. That is where your ‘way out’ is. If you succeed in changing the education system, politics will change as well. The next generation of Ukrainians will not need foreign companies. They themselves will be better than the latter. You are a very smart nation.

“As for multinational companies, they are far from being job creators in the US, as it is rather small firms that do this. And these small firms are innovative, enterprising and creative. About 250 trillion US dollars have been invested in financial assets globally. A total of 85 percent of this money is used for financial speculation. This has nothing to do with investing in the real economy, creating jobs, or producing goods and services. Companies are among the biggest offenders in this regard today. I think we have to change priorities and say: money should be used productively to benefit society. Let people get a profit from them, that is normal. This is a way to stabilize financial markets and reduce speculation that affects prices of commodities, real estate, etc. This direction is viable. However, the existing system does not move towards that objective, so it is time to change it.

“Therefore, you do not need giants now, with their ingrained habits, ‘skeletons in the closet’ and ‘unwieldy bodies,’ since it is much wiser to reproduce the entrepreneurial culture of Israel. They called their strategy ‘the startup nation.’ It is cool, is not it?”