Hrant Bagratyan
Doctor of Economics, Head of the Research and Education Center for Global Development and Megaeconomics, Russian-Armenian University, Yerevan

I read the discussion paper “At the Crossroads” with great attention. I think it’s a very interesting book. For the most part, I do not share the views of the authors. But one thing is certain: this is a good attempt to look at the past, present and future of Armenia and Armenians, putting forward certain behavioural norms and preventing future challenges.

I would like to divide my review into three parts. Firstly, the essence of the civilizational development, the general strategy of the dialectic of socio-economic structures and the evolution of social structures. Secondly, the essence of institutional development and the Armenian historical experience. Thirdly, judgments on the current text.

The Essence of the Civilizational Development, the General Strategy of the Dialectics of Socio-Economic Structures, and the Evolution of Social Structures

I call a nation a people or peoples that have a state. Any other definition pushes us into the abyss of subjective reasoning. From my point of view, every nation is just a contender for civilization. Following the logic of A. Toynbee and S. Huntington, the results of material and immaterial activities of the nations that were also used by others should be considered civilization. The most vivid civilization of nations is manifested in linguistics. The English language borrowed 34 thousand words from the Greeks and only a couple of dozen from the Armenians, ceteris paribus, this is the ratio of civilization of the Greeks and Armenians! After all, the word is the essence behind which there can be a certain material or immaterial product, institution, attitude, etc. The Armenians have created little civilization. The design of Christian churches around the world, the history of Khorenatsi are civilizational products. Many other nations could not do without them (however, our church architecture was adopted from the Assyrians, from Osroene, the first Christian state in the world). Thus, do not exaggerate the civilizational contribution of the Armenians. For the period of independence, in my opinion, the only partial civilizational contribution of Armenia is the land reform. So, by the decision of the meeting of the Intergovernmental Council on CIS Agroindustrial Complex dated July 25, 1995, 6 states (Belarus, Georgia, Kazakhstan, Moldova, Tajikistan, Russia) recognized the success of the Armenian land reform, the applicability of this reform at home. Our studies show that nations, as a rule, live in one civilization, and this is 1000-1200 years. After that, if they do not die out, drag a miserable existence. The Armenians so far have had one civilization - from the 4th century BC.  until the 5th century AD. The rest of the time, we did not create the values that other nations needed. There were separate contributions of individual talents based on the results of other civilizations (A. Khachaturian, Ch. Aznavour and others). But civilizations are being created on their own land, in their own state. In a foreign land it is impossible to create it! Moreover, if you create products that others need, then this gives you the right to use the products of the other civilizations. And that means economic growth, prosperity. According to my calculations, referring also to A. Manandyan and T. Avdalbegyan, after the 5th century, when the per capita GDP (without PPP) was 5,000 current US dollars, the Armenians did not have major civilizational successes. From this point of view, I would revise and edit such paragraphs of the first chapter as “The Shaping of Armenian Ethnic Identity” and “Pillars of National Identity”. Well, how can you prove that the strengthening of the Armenians was due to the "Proclamation of Christianity ..." or the partition of the country? The creation of the alphabet, yes, is a civilizational product. Later I will return to the topic of the Armenian church.

The dialectics of socio-economic structures is spiral-shaped. The mankind walked, alternately centralizing the resources and management, then decentralizing them. These eternal compressions and expansions provide development. The problem is that the civilized countries carry out these transitions evolutionarily, and the non-civilized ones - revolutionarily. The existence of revolutions is an obvious sign of the non-civilized state of the societies. In D. Acemoglu and D. Robinson’s book "Why Nations Fail ..." instead of the words "centralization" and "decentralization" the terms "extractive" and "inclusive" institutions are used. At the same time, an incorrect interpretation of “inclusiveness” is observed - such institutions stimulate the participation of large groups of the population in the economic activity ... Protected private property rights are necessarily part of inclusive institutions ... (p. 101). This is a very half-hearted interpretation of the processes. Enhanced extractiveness, according to Acemoglu and Robinson, is bad. Inclusiveness is good! In the meantime, centralization is regularly increasing in all countries, including Western countries, human progress requires a general increase in extractiveness. For instance, when the United States flew to the moon, there was a sharp increase in the centralization of management and resources. The question is that under centralization, civil societies smoothly, evolutionarily decentralize resources and management. Now, not the Moon, but to Mars are flying E. Mask’s apparatuses. This is the essence of the evolution of socio-economic structures! In this regard, it does not seem useful and appropriate to me to constantly mention the terms of inclusiveness and extractiveness. As we can see, the book of Acemoglu and Robinson is not flawless!

The Essence of Institutional Development and the Armenian Historical Experience

When we want to evaluate the effectiveness or the role of various institutions, we are obliged to compare their condition for the historical period under review with those structures noted by the institutions that, judging by the history of other peoples, at that time provided effective growth and proper level of competitiveness. In this regard, from the middle of the 5th century in Armenian reality, a discrepancy begins between the internal institutions and those reference ones that were supposed to be.

Firstly, Christianity, which initially ensured progress, became an obstacle to development. The tax of 7% or tithe took away from society all the resources for expanded reproduction. Because of this, church estates began to expand rapidly. First, the church went against the royal house, later - the nakharars (ministers). In Western Europe, which adopted Christianity 300-400 years later, this was quickly understood and steps were taken against such a development. The Swedes in their history 3 times took the lands from the church. Henry VIII refused the services and rules of the Vatican (divorce was just an excuse), Peter the 1st in 1702 actually nationalized the church and saved the country. Where the church and the Inquisition won (Spain, Italy and, in part, France), a sharp decline in the pace of progress, a lag began. Napoleon’s historical merit lies in the fact that he deprived the Catholic Church of the status of a large landowner and since the XIX century, widespread economic progress has been achieved almost throughout Europe. 

In Armenia, everything was different. The church gradually became a major landowner, took on the functions of education and health, negotiating in the international arena. From 428 to 652 in Armenia there was no authority other than ecclesiastical. It is our luck or misfortune that during this period no one attacked us. When the land reform was launched in the Russian Empire in 1861, there was nothing to reform in Armenia - all the lands belonged to the church. In Moks and Shatakh, the Armenians converted to the Muslim faith in order to avoid the economic oppression of the apostolic church. Well, the help reached us: Arabs. Fortunately for the Armenians, they captured the country, took away the lands of the Nakharars and Church, and gave them to the peasants in order to receive tribute from them. The economy revived! Soon, at the beginning of the VIII century, they killed all the Nakharar houses’ representatives. The Bagratuni escaped, which gave them the opportunity to recreate an independent kingdom (there were no competitors-nakharars, except for the Vaspurakan and Syunik governors). But they soon did a stupid thing: they began to nationalize the land. The productivity fell, the peasants began to migrate from Armenia (in particular, to Cilicia). The increased spending on luxury, an exorbitant number of churches built ravaged the kingdom. They had to gradually sell everything to the church so that there was money in the treasury. The richened church, naturally, began to search for a new, from its point of view, more powerful master. And found him in Byzantium.

Secondly, the strong church did not allow to destroy, crush large Nakharar, prince houses into the royalty. In the history of Armenia, the line has not reached the royalty. Ivan the Terrible through the oprichnina deprived concrete princes, in France Louis XI managed to weaken the dukes through knights, etc. The Armenian nobles, sepuhs, did not constitute a substantial estate. Vahram Pahlavuni with his army went to Georgia, and others to Cilicia. Therefore, the strong Georgian state of Tamara and David the Builder appeared. And the Cilician kingdom arose on the lands of the Byzantine Greeks, where the system of state ownership of land prevailed.

Thirdly, the Armenian statehood has ceased to exist 4 times in history (not counting the kingdom of Cilicia). Moreover, in the two cases (in 8 and in 1045) the end of the kingdom occurred due to the lack of direct male heirs. In Europe and Russia, this problem was easily solved: instead of a king, there could  be a queen. So here we are, and we dare to blame others for our troubles.

Now, will we continue to rely on the theories of I. Dyakonov or V. Bryusov that the reason for the cessation of the Armenian statehood is the poor geographical environment, the external enemy? The whole Armenian “historical science” is built on such a naive postulate. Are the Romans, Persians, Arabs, Turks, Russians to blame? After all, it is easy every time to explain your failures by an external enemy, to mention the poor location. Or maybe if there weren’t these external enemies, we would have completely disappeared from the face of the earth? In the 7th-9th centuries, when the early Armenian Reformation, the Tondrakians and Paulicians raised their heads, there was a need to move from large princely houses to the royalty, the Armenian church repeatedly called for help of the Byzantines and Arabs with troops. 2.5 million people were killed! So, would the Seljuk intervention be possible if these people remained alive and gave life to new generations?

From the point of view of the theory of civilizations, before the decline of individual countries as a result of an external invasion, a sharp decrease in the civilization of the state necessarily takes place due to the inadequate development of the social institutions in comparison with the requirements of the social structures. In this regard, I would completely edit the first chapter of the book. The discussion paper "At the Crossroads" aims to reload the Armenians, to make us a network nation. Our brief analysis showed that it is necessary to modernize the state, all the attempts to work on a nation mean failure. It is the Armenian state, social systems and institutions that need to be modernized. Do not invent anything supernatural. It is necessary here to apply what has already been achieved by mankind. Just let's first create a normal state, as in Slovakia, the Czech Republic, Croatia, Albania, Georgia, etc. Not to mention the developed states. In the book “The Caucasian Tiger” (2007), the well-known economist of the World Bank L. Freinkman wrote: the Armenian economic reforms of the early 90s (the first generation of reforms) exceeded all the post-Soviet countries, not only the USSR, but also the countries of Eastern Europe. Let’s at least repeat this before thinking how to become a world nation!

Judgments on the Current Text

p. 7 - The important idea that civilizational successes come to where there is a crossroads, trade routes. This is contrary to the "theories" of Dyakonov and Bryusov.

p. 13 - "By the very fact of their existence, Armenians refute Lev Gumilev’s theory of ethnogenesis, which contends that the life cycle of an ethnos does not exceed 1,600 years, and Oswald Spengler’s theory that the cycle is about 1,000 years." You are not right: one and the same people can have several civilizations.

p. 17 and further - The first paragraphs on the role of the church and family structures are not based on an in-depth analysis of the things.

p. 21 - The first paragraph is not very correct! The Arabs introduced a cash tax and did not interfere in anything else! This gave rise to private land ownership: the Nakharars leased land to the peasants. Armenia began to develop! Soon this development gave rise to Pavlikyans and Tondrakyans. Subsequently, the Armenian church strangled them in blood.

p. 26 - An unsuccessful explanation of the fall of the Kingdom of Ani: Hovhannes-Smbat died, and the emperor demanded the execution of the will. It can’t be like that. The Church and Petros Getadarz led the country to poverty. Obviously, people just wanted to get rid of them at least in this way!

p. 27 - I am sorry that the paragraph "Global Network" does not mention Vahan Bayburdyan and his magnificent book about the Armenian trading houses of the Middle Ages.

p. 35 - To talk about Lviv and not write about the 17th century Armenian bank of Yan Martirosyan is a crime. Perhaps this is the oldest commercial bank in Europe (opened earlier than the Bank of England or Riksbank in Sweden). It is located on the Armenian street, behind the Armenian church. There is currently a cafe there. But the owner carefully guards all the old bank furniture, wooden deposit boxes, 17th century bills and bills of exchange.

p. 52 - "Tigran the Great, an exemplary Armenian ruler" - no one even knows why he is great. He began the reign in 400 thousand square kilometers, and finished in 360. Lost Lesser Armenia, Sophene. I never understood the following paradox: the Armenians call him “the Great”, and T. Mommsen and, it seems, E. Gibbon “a coward”.

p. 55 - The conclusion about the disunity of the Armenians is not grounded! For the V – XI centuries, due to a misunderstanding and misinterpretation of Christianity, the Armenians moved away from the global social systems and institutions and paid a lot for it.

p. 57-58 - The monoethnicity of Armenia is a serious problem. Very right! But multinationality can be an even bigger problem. Yet, still it is needed. With such a strict monoethnicity, the nation will be genetically degraded.

p. 58 - It is very correct that the national identity is based on the victory in the Karabakh war. 

p. 64 - Outstanding personalities in the Diaspora are found less and less. Right! Because in the current situation of social institutions in a foreign land, it is impossible and not necessary to create  products of civilization.

p. 65 - “The world will become indifferent toward the Armenians”. What kind of a phrase is this? In a global world, everyone is obligated to think about themselves.

p. 69 - "However, the Diaspora elite, contrary to expectations, did not take part in resolving the fundamental issues of modernizing the state and economic institutions ...". Well, thank God! The source of the sovereignty of the country are citizens and only them. The smearing of civilian institutions in the diasporas will lead to the loss of the state.

p. 71 - The statistics given here regarding the comparison of Armenia and the RSFSR are completely absurd. At the time of the collapse of the USSR, Armenia was 1.5 times behind the RSFSR. Per capita income in Armenia was 2945 rubles, in the RSFSR - 4300 rubles, in Georgia 2760 rubles. and in Azerbaijan 2170 rubles. Among the 15 Soviet republics, Armenia was the seventh in this indicator. The fact is that the current head of the statistics service, moving from the indicator ND to GDP, reduced the data until the year of 1990.

p. 72 - For 70 years, the AAC was not destroyed! The lands, property, were taken from it and thank God! The Russians treated our church in the same way as their own. And it gave us a chance to develop. Remember the movie "Brothers Saroyan". Remember how an officer begs flour from a priest.

p. 78 - The paragraph "The Imperial Legacy: Opportunities and Obligations" is absolutely untrue. The Soviet economy began to plummet beginning in April 1989, when the foreign trade activity was liberalized. It turned out that the whole country was producing not what was needed. What did not we, then rulers, manage to do? The recession in the Armenian economy in the early 90s amounted to 47%, Ukraine - 59%, Azerbaijan 57%, Moldova 69%, Georgia 72% and Russia 44%. And meanwhile we won the war! K. Bendukidze said: in the early 2000s, we repeated the reforms that were carried out in Armenia in the early 90s. In 1994, the first among the CIS countries, Armenia ensured economic growth of 6.9%. I have already noted above the assessment of these reforms by the World Bank. And what happened in the late 80s in the USSR, can be found in Y. Gaidar, "The Collapse of an Empire."

p. 83 - I am sure we do not need comprehensive, nationwide projects. At this stage of development, we rather need not a goal, but rules of conduct.

p. 84 - To the first paragraph of the paragraph “Still the Periphery of an Empire?”: Whatever, the state of Armenia is the first soldier and defender of the new Armenian reality (which, if successful, will become civilization). Neither the Armenian nation, nor the Diaspora, etc., namely the state.

p. 85 - More could be said about the land privatization. For the first time in 100 years, Armenia has been a net exporter of agricultural products.

p. 86 - Don’t just compare the investments in Georgia and Armenia. The remittances are also partly an investment. The problem is also that the Armenian legislation does not establish what constitutes an investment. Part of the remittances, obviously, was spent on the creation of elements of fixed capital.

p. 87 - The third paragraph from above: you’d better find out how many successful farms have emerged over the past 26 years.

p. 102 - It is a shame to bring the WB Gini coefficient for Armenia. Everyone knows this is a mockery.

p.109 - Throughout the work, the words “inclusiveness” and “extractiveness” are mentioned appropriately or inappropriately. Even if I agree with the position of Acemoglu et al., and I as a whole do not share their point of view, only in the third chapter these words are mentioned 24 times.

p. 114 - The chapter "The World in the 21st Century: New Reality" is the most successful in the book.

p.115 - The paragraph "Nation States in a Globalizing World" did not work out. There is really no objective doubt that they will disappear. In the end, if 100 years ago there were 53 states, now it’s 208! In our theory of megaeconomics, where migration is assigned the main role in establishing equilibrium in the global economy, it is argued that only with a national state does a nation get the opportunity to create tangible and intangible assets of civilization.

p. 116 - Global migration is not correctly interpreted: if capital does not go to people, then people go to capital. That is the only way to maintain an acceptable level of economic growth. If not this, then war is inevitable.

p. 144 - I expected more from this last chapter. But the success of chapter 4 was not developed.

p. 145 - "To stop separating the Armenians of Armenia and the Diaspora." The source of sovereignty is citizenship. By what moral law do those who serve in the army, risking their lives, and replenish the country's budget, in their rights, be equated with those that have nothing to do with it?

p. 148 - "Meanwhile, our collective memory still retains the memory of those times when Armenia was experiencing rapid development in all areas of the economy, science, culture." But all this was developed for the USSR? Well, how much are we to cry about it? It was shown that the decline and economic destruction in our country were at a much lower level than in other republics. Why to discuss something that did not depend on us?

p. 149 - "Think to Connect" is an artificially invented paragraph.

p. 150 - "Think to Create" - incomprehensible! What is it for?

p. 154 - "Think to Act" - What is it for when you need to do simple things!

p. 157–166 - Two paragraphs in a row: incomprehensible, romantic, artificial!

p. 166 - "Armenia as a Hub" - half of the paragraph is interesting. Only at the end a lot of boasting!

p. 174–175 - We must learn to be honest about the consequences of the Genocide. There are 3 levels. The first level of recognition is normal. The second level is restitution. This is already difficult. If there is a demand for restitution, then recognition will most likely not happen. Perhaps, after recognition, there may be some restitution over time. The third level is land return requirements. Then we will need to forget about the recognition and restitution. We cannot become a national minority in a state where 22 out of 25 million people are Muslims!

p. 178–184 - An incomprehensible and unconvincing statement for me. I do not understand the arithmetic at the top on page 182. How did you calculate this? As a rule, in Armenia (observation data for 25 years), 2.4 units of investments give an increase in GDP per 1 unit.

And in the end.

I was interviewed by P. Gurdjian on the 2020 program. Now you start up 2031, etc. There is nothing to say, well, interesting. But in your programs, you confuse the macroeconomic policy of the government itself and the latter’s activity in creating tangible and intangible assets. Therefore, you should pay attention to the government reform program of 1992 and the “100 Steps” program of 2009.

Thank you in general for an interesting book.


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