Menshikov goes even further, however. He argues that it is logically without foundation to question figures when we are uncertain as to their actual amounts. It is as if we must decide if a heavy load can safely make it across a bridge. When informed that the weight of the cargo may in fact be twice what is recorded, and that the load-bearing capacity of the bridge may be half of what is reported, Menshikov would argue that the cargo should pass anyway: if we are not certain of the degree to which the figures are inflated we cannot question the safety of the trip. I don’t think Menshikov’s logic makes for a good safety engineer; I certainly will avoid his bridges. I don’t see why this logic is any more satisfactory for studying economics.

Menshikov’s argument seems to be that measuring value added at world pricesis of no relevance. He is correct to state that no matter how inefficient is manufacturing, Russia must have a comparative advantage in some activity. But in that case Russia’ comparative advantage may not be in manufacturing. If Russian manufacturing uses energy less efficiently than foreigners do, then the theory of comparative advantage says it should export the energy and import the manufacturing goods. At world prices it may be that manufacturing is not competitive, and that it can only survive if value is redistributed from elsewhere. This can take the form of protective tariffs or of the virtual economy.

There are too many confusions in Menshikov’s comments on opportunity cost to discuss here. The key issue between Menshikov and myself appears to be over the causes of the crisis in Russia. Menshikov sees the output decline due to lack of demand. I see it as the result of too many inefficient producers that cannot compete in an open economy. Without protection, Russia exports commodities and imports consumption goods. Menshikov sees an increase in nominal spending leading to an increase in output as consumers buy the output of Russian industry. I see an increase in nominal spending leading to increased purchases of imports and a resurgence of inflation. Menshikov sees an increase in credits to these industries leading to a revival of production. I see an increase in credit to these industries leading to more unusable production. The Russian government may be about to conduct the experiment. We will learn from the outcome of that.