Wednesday, February 19

Philosophy and ideology in crisis management  The Russian Federation in cooperation with China.

Google+ Pinterest LinkedIn Tumblr +

Annotation.
The article examines the problems of the development of philosophy as a worldview paradigm, its relationship with the ideology of society, the genesis of the formation of the philosophy of insolvency in China and Russia. The features of ideological attitudes towards the institution of insolvency (bankruptcy) of the two countries and their implementation through the adoption by the state of an appropriate regulatory framework are analyzed. The author analyzes the process of interaction and mutual influence of legal approaches to the settlement of the insolvency institution of the People’s Republic of China and the Russian Federation, identifies common features and certain fundamental differences, and highlights common goals in the ideological approaches of both countries, indicating the presence of common economic interests. It examines how the balance of interests of the debtor and creditors in Russia and China is maintained, and reveals the nature of legislation – from neutral to moderately pro-credit.

Keywords: philosophy, ideology, insolvency, economic crisis, crisis management, philosophical approach in China, Russian philosophical school, ideological approach to crisis management, debtor, creditor, conflict of interests, legal regulation of the institute of insolvency, interaction between the Russian Federation and China.

The modern market economy is a complex mechanism of interaction between various economic entities: from individual entrepreneurs and individuals to the largest corporations and industries, in which each economic entity affects the stability of the entire mechanism and is bound by various obligations and contracts. That is why the problem of insolvency and the effectiveness of crisis management does not lose its relevance. In turn, this necessitates the use of the most effective methods and methods of resolving insolvency relations, developing a philosophy and ideology of crisis management, taking into account current trends in economic development.

Philosophy, referring to such a form of social consciousness that develops universal principles of being in general, as well as the peculiarities of human cognition and attitude to the world around him and phenomena, allows us to create a common system of ideological principles and rules in relation to socio-political, socio-economic, moral, value and aesthetic, cognitive features of the development of society [10, p. 47]. Philosophy, being a theoretical form of consciousness based on a rational approach to social reality and knowledge of the objective laws of the development of the world as a whole, should be distinguished from ideology, which is a system of ideas and views that expresses quite specific ideological ideals of a certain social stratum of society. Consequently, the philosophy in anti-crisis management, which is a system of views on this socio-economic phenomenon, allowing to create a theoretical and methodological basis for the redistribution of financial flows and the improvement of economic entities, largely determines the ideology of anti-crisis management, especially in the case of insolvency of an economic entity, expressed primarily in the developed system of norms and rules of regulation of this institution, established by states and expressing the interests of certain groups of society.
The essence of the economic crisis is a significant mismatch of production and consumption, which leads to an imbalance in the functioning of the entire economic system. The lack of proper proportions between sectors of the economy (at the macro level) or between individual divisions of an enterprise, organization (at the micro level), spontaneous actions of management structures lead to a crisis and the need to introduce anti-crisis management at all levels. Unprofessional, imperfect management in the current period of development of the Russian economy as a whole, and individual enterprises in particular, often leads to the onset of such crises and acutely poses the problem of forming effective management structures and developing an ideological basis for crisis management.
Crisis management can be attributed to a microeconomic category that arises at the level of a specific economic entity, and characterizes the relations that have developed within this entity. Therefore, M.V. Koshkarev quite reasonably defines anti-crisis management as a system of forms and methods that allow performing anti-crisis procedures with respect to a particular company [5, pp. 11-12].
It is possible to determine the various stages of the application of forms and methods of crisis management. The first stage is the use of forms and methods of anti-crisis management during the normal stable development of an economic entity (for example, the use of forecasting methods, analysis of the main trends in the development of an enterprise in order to identify problems that may lead to a crisis). The second stage is the use of forms and methods of anti-crisis management during the period of unstable development of an economic entity (for example, determining the main imbalances in the development of an enterprise, the phenomenon of defects in management decisions, determining the main directions for overcoming the crisis that has arisen). The third period is the use of forms and methods of anti-crisis management during the crisis state of an economic entity (taking all measures that are defined by legislation on bankruptcy prevention, implementation of rehabilitation). The fourth stage is the use of forms and methods of anti-crisis management during the period of insolvency of the enterprise (for example, making effective management decisions promptly, based on complete and objective information, allowing you to perform all necessary actions in accordance with the objectives of a specific bankruptcy procedure) [8, pp. 56-65].
The most interesting is the consideration of the philosophy and ideology of crisis management at the stages of crisis and the emergence of insolvency. The philosophy of bankruptcy in various countries has its own characteristics and was formed under the influence of various social processes in accordance with its economic development during this period.
The philosophy and ideology of crisis management in Russia and China have their own peculiarities. The principles of the development of the institute of insolvency in the Russian Federation and China can be presented in the form of the following scheme.

Figure 1. General principles of the development of the institute of insolvency in the Russian Federation and the People’s Republic of China

The Russian Federation and China are developing their insolvency legislation taking into account not only the requirements of modern economic development of society, but also the historical features of the formation of the philosophy and ideology of this institution, its legal consolidation at different stages of the development of public relations.
If we give a general description of the philosophical ideas of Russia and China, then we can note the following conceptual difference in understanding the world: Chinese philosophy has a more practical orientation, and is aimed not at knowing the world and explaining the main phenomena and processes, but developing methods to achieve harmonious existence in the world, without abstract reasoning and explanations. As Fr. quite rightly believes. However, the development of Chinese society as a whole and individual economic processes follows the path of generalization and use of practical experience, including the experience of foreign countries [2, pp. 38-41]. The Chinese leadership is pursuing the idea of developing its own way of economic development, not blindly copying the experience of the West and Russia, but using it taking into account its own philosophy and ideology. Russian philosophy is more focused on the theoretical understanding of the main phenomena in the world, the search for explanations and causes of certain phenomena, which is more in line with Western philosophy and its interpretation as the love of wisdom, the so-called “love of wisdom”. This cognitive orientation of Russian philosophy allowed for a deeper study of the main economic and social processes in society, including the development of basic ideas and methods for analyzing the institution of insolvency.
An interesting feature of the development of the institution of insolvency in China is, first of all, the absence of personal punishments, and initially the development followed the path of property punishment. There were no corporal punishments, bankruptcy was more considered as a problem of inharmonious development of economic relations and, to a lesser extent, personal guilt. While the European ideology regarding the institution of insolvency was developing in the opposite direction.

A peculiar philosophical approach in China with an emphasis on personal responsibility gave rise to the idea of the impossibility of personal (individual) bankruptcy, since any person is obliged to be responsible for all actions independently, including his debts. I. Xu quite rightly notes that initially, historically, not only the concept of personal bankruptcy did not exist in China, but and bankruptcy of an individual entrepreneur [15, pp. 86-88]. Hence, the formation and development of the insolvency institute in China was carried out only as an institution intended for legal entities. In the modern period, the ideological approach of the state to bankruptcy is also based on the doctrine of bankruptcy of legal entities, protection, first of all, of creditors, and to a lesser extent protection of the interests of debtors. Thus, the Law on Bankruptcy of Enterprises of 08/27/2006 (which entered into force on 06/11/2007) only bankruptcy of a legal entity by filing an application to the People’s Court [6, p. 169]. The issues of conciliation procedures have not been sufficiently resolved, there is no pre-trial rehabilitation of enterprises, and out-of-court conciliation procedures. Thus, it is possible to define the institution of bankruptcy in China as more moderately pro-credit.
I.I. Strelkova notes that modern Chinese legislation is increasingly becoming susceptible to novelties regulating bankruptcy in other countries, such as the United States and Russia. For example, a bankruptcy trustee in China carries out its activities according to almost the same rules and schemes as a trustee in the United States [13, pp. 77-79].
In Russia, the Western philosophy of bankruptcy has been more widely accepted, suggesting the existence of a conceptual idea of “personal guilt” for the insolvency that has occurred, and hence the ideology of the state about the need to use a system of punishments, including personal ones. For example, according to the Judicial Statute of 1649, slavery was actually provided for – the return of the debtor to the creditor “before redemption”, that is, the term was indefinite, the main condition was the repayment of the debt in full. In accordance with art. 204 of the Judicial Statute, personal punishments were also applied to the nobility – beating, and again until the debtors were fully satisfied. Later, Russian bankruptcy legislation gradually moved away from the principle of personal punishment for bankruptcy. Nevertheless, in the legislation of the 19th century, such punishment as imprisonment of the debtor was preserved, for example, in Article 2 of the Code of Institutions and Charters of the Russian Empire, prison castles or prisons in cities where defective debtors were to be held were also among the methods of detention. According to N.G. Shurukhnova legislation of the Russian Empire of the late period (ser.19th century – beginning. 20th century.) was quite loyal to debtors who became insolvent innocently, by coincidence, and cites Article 232 of the Instructions to the Caretaker of the Provincial Prison Castle in 1831, which explicitly states the need to distinguish the severity of the maintenance of debtors and a more lenient attitude towards debtors who became such without any fault of their own. Subsequently, starting from the 30s of the twentieth century. In Russia, the institution of insolvency was practically not regulated in legislation, and the institution of bankruptcy was not officially recognized. It was only with the beginning of the reform of Russian society and the formation of a market economy in the 1990s that the first legal norms appeared providing for the possibility of bankruptcy in court (for example, the Law of the RSFSR of 12/25/1990 No. 455-1 On Enterprises and Entrepreneurial Activity”) [16, pp. 81-84].
Prior to the adoption of Federal Law No. 127-FZ dated October 26, 2002 “On Insolvency (Bankruptcy)”, the current norms reflected the evolution of socio-economic processes in Russian society: from the ideology of providing guarantees to owners during the privatization of enterprises (Bankruptcy Law of 1992) to the ideology of initial accumulation and preservation of capital in a stagnant economy (Law on The new bankruptcy Law reflects the ideology of protecting the rights and interests of the owner, as well as the investor, in conditions of stable functioning of the market economy. Currently, there is a tendency to balance the interests of the owner and the debtor, that is, to achieve more harmonious relations in the event of a conflict of interests of insolvency entities.
In general, the Russian insolvency institute is currently characterized as neutral, since rehabilitation or liquidation procedures are applied based on the results of a fairly neutral monitoring process, during which the debtor’s financial situation is assessed and the possibility of restoring solvency is available. However, Russian practice shows that liquidation procedures are most often used, and therefore some authors, for example Popondopulo V.F., Silina E.V., Koshkin V.A., quite rightly believe that the trend in the development of Russian legislation is a moderately procreditor position, since the balance of interests of creditors and debtors is gradually shifting towards protecting the interests of creditors [9, pp. 51-53]. We believe that in this case, Chinese legislation has an impact on Russian legislation, as there is a gradual process of convergence, and the expansion of economic cooperation implies, among other things, a change in bankruptcy rules in the legislation of both countries.
China’s ideological postulates about the need to protect creditors to a greater extent, as well as the idea of bankruptcy of a legal entity as one of the main factors of sustainable economic development, are increasingly reflected in the Russian approach to bankruptcy [1. p. 76].
The main thing in the institute of insolvency is the presence of a conflict of interests between the creditor and the debtor, and the Russian philosophical approach to the institute of insolvency theoretically seeks to preserve a rather abstract balance between these two economic entities as an achievable ideal. But this philosophical approach does not answer what this balance is, whether the goal set by Russian scientific thought is achievable. Whereas the practical application of Russian insolvency rules increasingly indicates a rather balanced ideology of the state, expressed in an effort to protect the interests of creditors as one of the factors of stability in the development of economic relations and the effectiveness of business entities.
Despite the fact that the ideological approaches to crisis management in Russia and China differ somewhat, two common goals can be noted, which indicate the existence of common economic interests.
First of all, this is the goal of a fair distribution of risks between participants in economic turnover through the use of a transparent and predictable mechanism for resolving insolvency issues. The realization of this goal makes it possible to build the confidence of market participants in the monetary system and thereby ensure the necessary economic growth. Different legal systems distribute economic risks in their own way, one legal system is more pro-credit, the other tends more towards a neutral balance of interests, but both of these systems have clear rules for crisis management, sufficient predictability of law enforcement practice, compliance and enforcement of accepted norms.
Fairness in the treatment of participants in crisis management is one of the most important common features of the philosophical approach of the Russian and Chinese schools of philosophy [12, p. 93]. The fairness of the created norms for the regulation of economic legal relations, their use in practice, is one of the foundations for the formation of trust in the state of all participants in the market economy. Do not forget that crisis management concerns the whole collective, and the collectivist nature of each economic entity implies equality in the possibility of applying certain measures (norms) of crisis management, which does not mean equality of all participants, since a differentiated approach to each is possible.
The legislative regulation of crisis management should effectively address insolvency issues, taking into account the possibility of fraud and providing benefits to individuals who are not legally fixed. Collective insolvency proceedings should provide confidence in the fair resolution of conflicts of interest and in accordance with established rules of law.
The second most important goal is to create effective mechanisms to protect the value of debtors’ assets, their maximum concentration and safety in the interests of all participants in crisis management, and above all creditors, as well as the economic system as a whole. Both the rehabilitation and liquidation procedures aim to maximize the value of the debtor’s assets by using various mechanisms (for example, challenging some of the debtor’s transactions concluded before the initiation of insolvency (bankruptcy) proceedings in order to protect the bankruptcy estate) [7, pp. 1-3].
An increase in the value of the debtor’s assets makes it possible to satisfy creditors’ claims more fully and fairly. However, Russian practice shows that in some cases such protection of the interests of the parties, and above all creditors, becomes excessive and affects the interests of bona fide participants (for example, bona fide purchasers of tangible assets). This has a negative impact on predictability and fairness in the legal relations of business entities. This is also evidenced by the activities of the arbitration manager, on the one hand, the fact that he has broad powers, for example, challenging transactions, allows to maximize the value of the debtor’s assets, and thereby increase the bankruptcy estate. On the other hand, arbitration managers often irrationally use their powers, which reduces the effectiveness of competitive procedures, reduces the predictability of contractual relations between participants, and thereby repels potential investors, investment decisions are not made, which in turn reduces the ability to restore the solvency of a bankrupt economic entity.
Economic processes necessitate closer cooperation and interaction with China, as one of Russia’s most important strategic partners. Such interaction presupposes the existence of a theoretical basis and practical developments for more effective anti-crisis management. One of the most significant differences in the approach to the institution of insolvency is, as noted above, the absence of norms in Chinese legislation governing the bankruptcy of citizens. The ideological orientation of anti-crisis management in China involves the implementation of the doctrine of insolvency of a legal entity, and this implies some difficulties for both Russian citizens and Chinese citizens [3, pp. 158-161]. Due to the fact that the mechanism of bankruptcy of individuals is being implemented in Russia, there is a problem of applying Russian legislation to foreign citizens.
Under Russian law, it is possible to declare foreign citizens bankrupt, and the concept of cross-border bankruptcy based on the norms of international law is also used.
The ambiguous attitude of the Chinese state towards the bankruptcy of citizens is based on a number of reasons. One of the most important reasons is the socialist way of society and the use of planned economy methods in regulating social processes. An equally important reason is not so much a special socialist worldview as the deep philosophical prerequisites of traditional legal consciousness. Thus, the Confucian legal ideology is based on the postulate of the obligation to repay debts and the responsibility of the next generation for the debts of their relatives, which directly contradicts the Russian legal ideology, according to which, when undergoing bankruptcy proceedings, a citizen is released from debts in full [6, p. 169]. The ideological postulates of the civil procedure institution of limitation of liability in insolvency are not perceived by Chinese civil society, legal ideology is not inclined to develop measures to improve the debtor’s situation, believing that the debtor should be responsible for all his actions. However, due to the fact that more and more often individuals create companies of the same person, entering into credit relations, the PRC also turns to Russian practice. Taking into account world and Russian practice is one of the factors in the development and adoption of the Personal Bankruptcy Regulation in the Shenzhen Special Economic Zone on 08/31/2020 and entered into force on 1.03.2021. [14] Already in 2021, the first decision of the Shenzhen court on the adoption of a bankruptcy restructuring plan for Chinese businessman Liang Wenjin was made [4].
The absence to date of nationwide legal mechanisms for bankruptcy of citizens creates problems in economic relations both within the country and at the interstate level, for example, relations with foreign participation, including with Russian business structures, are insufficiently regulated, which hinders China’s integration into the international economy, reducing the potential for interaction between Russian and Chinese business structures.
So far, there are no precedents for recognizing the decisions of Russian bankruptcy courts, including individuals. However, the bankruptcy procedure involving Chinese legal entities is already reflected in Russian courts. So, in 2005, the Supreme People’s Court of the People’s Republic of China considered it lawful to refuse recognition of the Ulyanovsk Region Arbitration Court on the grounds that the Russian Arbitration Court did not notify the Chinese side through the Ministries of Justice of the Russian Federation and the People’s Republic of China, another notification is not appropriate in the opinion of the Chinese side. It should be noted that the differences in deadlines create significant difficulties for the consideration of bankruptcy cases and proper notification of the parties. Thus, the period of notification and its consideration by the Chinese side under the legislation of the People’s Republic of China is six months, whereas in the Russian arbitration procedural legislation there are no such deadlines, cases are considered much faster [11, pp. 15-19].
Such a difference in legal approaches to resolving insolvency issues necessitates not only changes in legislative norms, but also making some adjustments to the ideological postulates of crisis management, building a new worldview concept of insolvency that would take into account the strengths and weaknesses of philosophical trends and legal schools of both countries.

Nikita  Zelenchenkov

Executive Director of the Slovo i Delo Creditors’ Rights Protection Fund

List of literature

1. Bozrikova E.D. The history of the development of bankruptcy legislation in the Russian Federation and foreign countries // Justice. 2023. No. 4. pp. 76-95.
2. Borokh O. The influence of ideology and politics on modern economics in China // World Economy and International relations. 2019. No. 10. pp. 30-41.
3. Kareva T.Yu. , Sonin V.V. Problems of cross-border bankruptcy of individuals in Russian and Chinese legislation and practice // Law enforcement. 2017. Vol.1. No. 3. pp. 158-165.
4. China: the court of Shenzhen issued a landmark decision on personal bankruptcy // [Electronic resource] URL: https://prc.today/kitaj-sud-shenchzhenya-vynes-znakovoe-reshenie-o-lichnom-bankrotstve // (date of access: 12/13/2024). – Access mode: for registration. users.
5. Koshkarev M.V. Theoretical foundations of anti-crisis management and their philosophy in the activities of economic entities // Colloquium-journal. 2019. No. 14 (38). pp. 10-17.
6. Li Lianqi, Bakanova V.A. Research and practice of market bankruptcy in China // Young Scientist. 2023. No. 1. pp. 169-171.
7. Mikhnevich A.V. Oseledko A.N. The history of the development of the institute of bankruptcy in pre-revolutionary Russia // Achievements of science and education. 2018. No. 10. pp. 1-3.
8. Insolvency (bankruptcy in the Russian Federation / Ed. by E.A. Zheleznyakova. Voronezh: Federal State Educational Institution of the Voronezh Institute of the Federal Penitentiary Service of Russia, 2021. 80 p
. 9. Popondopulo V.F., Silina E.V., Koshkin V.A. Bankruptcy regulation system in Russia and China: a comparative analysis // Russian Law Journal. 2024. No. 1. pp. 51-59.
10. Tkachev V.N., Gevlich E. Actual problems of lawmaking on the example of checking the constitutionality of the norms of the Law on insolvency (bankruptcy) // Legislation. 2024. No. 8. pp. 47-52.
11. Tolstykh V.L., Tianyu Ya. The Taiwanese question in international law // Russian Law Journal. 2024. No. 1. pp. 15-19.
12. Ryakhovskaya A.N., Arsenova E.V., Kryukova O.G. Foreign practice of crisis management. M.: Master, 2024. 336 p.
13. Strelkova I.I. Chinese bankruptcy legislation: the main stages of evolution // Legal research. 2017. No. 1. pp. 75-90.
14. The essence of China’s first personal bankruptcy law // [Electronic resource] URL: https://www.chinajusticeobserver.com/a/the-thing-about-chinas-first-personal-bankruptcy-regulation / (date of access: 12/13/2024). – Access mode: for registration. users.
15. Xu I. Legal regulation of insolvency (bankruptcy) in the People’s Republic of China // Jurisprudence.2006. No. 5. pp. 86-91.
16. Shurukhnov N.G. Insolvent debtors: types, punishments, release from imprisonment according to legislative acts of the Russian Empire // Gaps in Russian legislation. 2019. No. 7. pp. 81-84.

Share.

Comments are closed.