The Fruits of Civilization (25-1) Russia


Politically, the Russian Empire at the turn of the 20th century was regarded as one of the great powers. Yet it was economically weak, and only a few years from a humiliating military defeat from upstart Japan.

While in gross measures Russia loomed large, behind only the United States, Germany, Britain, and France, its per-capita productivity was wretched.

Russia was still a predominantly agrarian nation. Half of its national product was agricultural, and 2/3rds of its labor force toiled in the fields. Primitive technology and lack of capital meant abysmal productivity. The institutional shackles of serfdom still weighed heavily, having only been legal removed in 1861.

Russian industrialization in earnest started with railroad construction. In the 1880s, French entrepreneurs persuaded the tsarist government to build a railway line between the coal fields in the southeastern Ukraine region and rich iron ore deposits 500 km to the west, near Kryvyi Rih in central Ukraine. Blast furnaces at both locations turned Russia into a prodigious producer of pig iron in the 1890s.

After a brief burst of economic vitality, the 19th century closed with Russia in a slump. This was followed by disastrous defeat in the Russo-Japanese War of 1904–1905; then, on its heels, the 1905–1906 revolution.

Though the revolution was suppressed, it prompted both political and economic reforms. The most important economic boon was agricultural reform, initiated by Prime Minister Pyotr Stolypin. His aim was to stem peasant unrest by creating a class of market-oriented land holders.

While the Russian economy underwent substantial change in the half century leading to the 1st World War, it still lagged far behind the more advanced Western nations, most notably Germany. This contributed to its defeat in WW1, setting the stage for the revolutions of 1917.

Food shortages were created by the government introducing hyperinflation through the massive printing of rubles. Food production had held during the war, but the market system had been ruined by inflation, and so distribution to the cities failed.

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Stalin’s industrialization drive was a statistical success and otherwise an atrocity. From a low base, the Soviet Union managed an estimated annual per-capita growth of 5% 1928–1938: an astonishingly rapid rate at a time in which income elsewhere grew 1–2% per year, owing to the capitalist Great Depression.

Soviet per-capita growth came partly from having fewer people: political repression killed 10 million, and 10 million died in the 1932–1933 famine. Moreover, Soviet industrialization was a planned exercise in extreme environmental destruction – a course which China would later follow in a more chaotic way.