Encyclopedia of Russian history Vol 2

463 Pages·2004·10.797 MB·English

by  James R Millar

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E N C Y C L O P E D I A O F
R
USSIAN HISTORY
EDITOR IN CHIEF
James R. Millar
George Washington University
SENIOR ASSOCIATE EDITOR
Ann E. Robertson
George Washington University
EDITORIAL
ASSOCIATE EDITORS
BOARD
Daniel H. Kaiser
Grinnell College
Louise McReynolds
University of Hawaii
Donald J. Raleigh
University of North Carolina
Nicholas V. Riasanovsky
University of California, Berkeley
Ronald Grigor Suny
University of Chicago
ADVISORY BOARD
Marianna Tax Choldin
University of Illinois, Urbana-Champaign
Gregory L. Freeze
Brandeis University
Paul R. Gregory
University of Houston
Lindsey Hughes
University College London
Paul R. Josephson
Colby College
Janet L. B. Martin
University of Miami
Bruce W. Menning
U.S. Army Command and Staff College
Boris N. Mironov
Russian Academy of Science
Reginald E. Zelnik
University of California, Berkeley
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E N C Y C L O P E D I A O F
R
USSIAN HISTORY
V O L U M E 2 : E - L
JAMES R. MILLAR, EDITOR IN CHIEF
Encyclopedia of Russian History
James R. Millar
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Encyclopedia of Russian history / James R. Millar, editor in chief.
p. cm.
Includes bibliographical references and index.
ISBN 0-02-865693-8 (set hardcover) — ISBN 0-02-865694-6 (v. 1) —
ISBN 0-02-865695-4 (v. 2) — ISBN 0-02-865696-2 (v. 3) — ISBN
0-02-865697-0 (v. 4)
1. Russia—History—Encyclopedias. 2. Soviet
Union—History—Encyclopedias. 3. Russia
(Federation)—History—Encyclopedias. I. Millar, James R., 1936-
DK14.E53 2003
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10 9 8 7 6 5 4 3 2 1
EARLY RUSSIA See KIEVAN RUS; MUSCOVY; NOV-
GOROD THE GREAT.
ECONOMIC GROWTH, EXTENSIVE
In the quantitative analysis of aggregate economic
development, modern economists commonly dis-
tinguish extensive from intensive growth. Exten-
sive economic growth comes from the expansion
of ordinary inputs of labor, reproducible capital
(i.e., machines and livestock) and natural resources.
Intensive growth, by contrast, involves increased
effectiveness, quality, or efficiency of these inputs—
usually measured as a growth of total factor pro-
ductivity.
The early development of the USSR was pri- E
marily of the extensive sort. Increased application
of labor inputs came from reduced unemployment,
use of women previously engaged within the
household, diminished leisure (e.g., communist
sabbaticals or subotniki), and forced or prison la-
bor. Increased capital investments were a result of
forced savings of the population, taxes and com-
pulsory loans, deferred consumption, and a small
and varying amount of foreign investment in the
country. Natural resources were expanded by new
mines and arable acreage, most notably the “vir-
gin lands” opened up in semiarid zones of Kaza-
khstan during the 1950s. But shifting resources
from the backward peasant sector to modern in-
dustry, as well as to borrowed technology, also ac-
counted for some intensive growth.
During the 1950s total growth of gross do-
mestic product (GDP) was an impressive 5.7 per-
cent annually, adjusted for inflation, of which
approximately 3.3 percent came from increased in-
puts and only about 2.4 percent from increased
productivity. Growth rates declined to 5.1 percent
during the 1960s, 3.2 percent during the 1970s,
and a mere 1.9 percent during the 1980s. Less than
1 percent of these growth rates came from inten-
sive sources. The increased share of extensive
sources meant that growth could not be sustained
for several reasons. Population growth was slow-
ing in Russia. Most of the increased labor supplies
came from the less educated populations of Soviet
Central Asia, where industrial productivity was
considerably lower than in the traditional heart-
land of Russia and Ukraine. These Muslim popu-
lations did not move readily to, or were not
welcome in, the most productive areas of the USSR,
425
E C O N O M I C G R O W T H , I M P E R I A L
such as the Baltic states. Some economists, includ- kilometers in 1861 to more than 70,000 kilome-
ing Martin Weitzman and Stanley Fischer, attrib- ters in 1913. This development helped to open up
uted the slowdown to the difficulty of substituting the iron and coal resources of the Southern regions
new investments for labor, as well. Depletion of oil (Ukraine) and facilitated the marketing of wheat,
and ore fields also played a role in reduced growth. the major export commodity of the Russian em-
pire. A vibrant textile industry grew in Moscow,
For systemic reasons, the Soviet command
and metalworking blossomed in St. Petersburg.
economy could not develop the new goods, higher
quality, and innovative processes that increasingly Government policy favored the influx of for-
characterized the economies of the developed West. eign capital, primarily from England, France, and
Nor could it keep up with the newly industrializ- Belgium, which were attracted by Russia’s vast eco-
ing economies of southeast Asia, which by the nomic potential. The stabilized ruble exchange rate
1980s displayed higher growth rates, predomi- allowed Russia to join the international gold stan-
nantly from intensive sources. dard in 1897. The expansion of domestic heavy in-
dustries was promoted by government protectionist
See also: ECONOMIC GROWTH, IMPERIAL; ECONOMIC policies such as high tariffs, profit guarantees, tax
GROWTH, INTENSIVE; ECONOMIC GROWTH, SOVIET reductions and exemptions, and government orders
at high prices to insure domestic demand. The min-
istry of finance was the major agent in this strat-
BIBLIOGRAPHY
egy. Bureaucratic intervention into economic matters
Gregory, Paul R., and Stuart, Robert C. (1986). Soviet Eco-
nomic Structure and Performance, 3rd rev. ed. New and bribery were among the numerous limitations
York: Harper & Row. on the development of a modern entrepreneurial
class in Russia. More recent data suggest that the
Gregory, Paul R., and Stuart, Robert C. (1999). Compar-
state was not as pervasive in Russian economic life
ative Economics Systems, 6th ed. Boston: Houghton
Mifflin. as was originally thought. Budgetary subsidies
were modest, and tariffs and indirect taxes were
MARTIN C. SPECHLER levied strictly for revenue purposes and played lit-
tle role in the industrial policy. Russia had active
commodity markets and was active in world mar-
kets. The state did not engage in economic planning,
ECONOMIC GROWTH, IMPERIAL and both product and factor prices were set by mar-
kets. The creation of industrial trusts and syndi-
The economic development of the Russian Empire
cates in the early years of the twentieth century
can be traced back to the reign of Peter the Great
implied the existence of some monopolies in Russia.
(1682–1725), who was determined to industrialize
Russia by borrowing contemporary technology The success of Russian industrialization before
from Western Europe and attracting foreign spe- 1917 was evident, but agricultural progress was
cialists. While military considerations played an more modest (agriculture continued to account for
important role in this drive, they combined with more than half the national product). During the
vast natural resources and large labor pool to de- industrialization era, the share of agriculture fell
velop an increasingly modern industrial sector by from 58 percent in 1885 to 51 percent in 1913.
eighteenth-century standards. The less progressive Russian agriculture was characterized by feudal el-
policies of Peter’s successors lead to a growing gap ements and serfdom that provided few incentives
between Russia and its industrializing European for investment, productivity improvements, or bet-
competitors that became evident in the nineteenth ter management. Russian serfs had to work the
century. Peter’s most significant policy was his landlords’ land (called barshchina) or make in–kind
entrenchment of serfdom in the village, which or monetary payments from their crops (obrok).
was abolished in 1861. After the Crimean War Peasant land prior to 1861 was held communally
(1854–1856), especially during the tenure of and was periodically redistributed. Agricultural re-
the Minister of Finance Count Sergei Witte forms were modest or too late to prevent what
(1892–1903), recognition of the dangers of the eco- many contemporary observers feel was a deepen-
nomic gap bolstered the accelerated industriali- ing agrarian crisis. The Emancipation Act of 1861
zation of the Russian Empire. Large government provided the peasants with juridical freedom and
investments in the rail network development ex- transferred to them about half the landholdings of
panded the transportation network from 2,000 the landed aristocracy. However, peasants had to
426 E N C Y C L O P E D I A O F R U S S I A N H I S T O R Y
E C O N O M I C G R O W T H , I M P E R I A L
“redeem” (buy) their allotted plots of land. The size puts. With respect to structural change, the decline
of land allotments was very small, and backward, in the shares of agriculture (from 58% in 1885 to
unproductive communal agriculture remained the 51% in 1913) and expansion of industry, con-
main organizational form in villages. While the struction, and transportation (from 23% in 1885
production and marketing of grain increased sub- to 32% in 1913) suggests that the Russian econ-
stantially after the Emancipation Act of 1861, the omy had indeed embarked on a path of modern
primary objective of the Russian emancipation was economic growth.
not to create a modern agriculture, but to prevent
Russia’s economic power was concentrated in
revolts, preserve the aristocracy, and retain state
agriculture. In 1861 Russia produced more grain
control of agriculture.
than any other country and was surpassed only
Many observers feel that the agrarian crisis was by the United States in 1913 (123,000 versus
one of the causes of the Revolution of 1905, which 146,000 metric tons). On a per capita basis, how-
necessitated further reforms by the tsarist govern- ever, Russia ranked well behind major grain pro-
ment. The reforms introduced in 1906 and 1910 ducers (the United States and Germany) and was
by Peter Stolypin allowed the peasants to own land close to the level of such countries as France and
and cultivate it in consolidated plots rather than in Austria–Hungary. Russia’s industrial base was
small, frequently separated strips. The Stolypin re- even weaker. In 1861 the country was a minor
forms weakened communal agriculture and created producer of essential industrial commodities such
the base for a class of small peasant proprietors. as coal, iron, and steel, and still lagged behind the
These reforms were considered long overdue, and major industrial powers in 1913. Russia began its
they had a positive effect on the development of modern era with a per capita output that was 50
agriculture. In spite of persistent regional differ- percent that of France and Germany and 15 per-
ences, peasant living standards rose, and produc- cent that of England and the United States. On per
tivity and per capita output increased. Overall, capita basis, in 1913 Russia was a poor European
agricultural growth during the post–emancipation country ranking well below Spain, Italy, and Aus-
period was much like that of Western Europe. In tria–Hungary. The relative backwardness of the
spite of the late removal of serfdom, there is evi- Russian empire is explained by rapid population
dence of significant peasant mobility, and the com- growth and slow output growth in the years be-
pletion of an extensive rail network greatly fa- fore the 1880s. Russia’s output growth figures do
cilitated the marketing of grain. Regional price not paint a picture of a collapsing economy, but
dispersion fell as transportation costs were lowered, rather of an economy that was either catching up
and agricultural marketing and land rents were, in or holding its own with the most industrialized
fact, dictated by normal market principles. countries of the era.
Data on human capital development (in par-
Despite scholarly controversy concerning the
ticular, literacy data) suggest that Russia was still
consequences of active government intervention in
a socially backward nation at the turn of the cen-
economy, the late tsarist era after 1880 is charac-
tury. In 1897 the illiteracy rate was 72 percent; in
terized by the significant acceleration of the output
1913 it was still as high as 60 percent, with ur-
growth rate. Between the 1860s and 1880s the av-
ban literacy almost three times that of rural liter-
erage annual rate of growth of net national prod-
acy. By contrast, in 1900 the illiteracy rate in the
uct was 1.8 percent, while for the period thereafter,
United States was 11 percent. Despite this fact, af-
up to the 1909–1913 period, the rate of economic
ter 1880 investment in primary education rose, and
growth was 3.3 percent. At the same time, Russia
primary school enrollment increased considerably.
experienced significant population growth, which
While Russia’s birth and death rates began to de-
put the Russian empire in the group of poorer West
cline after 1889, birth rates were still at premod-
European countries in per capita terms. Russian
ern levels at the time of the 1917 revolution.
economic growth was largely the consequence of
the relatively rapid rate of growth of population Foreign investment played a substantial role in
(1.6% from 1885 to 1913) and labor force (1.7% the industrialization of Russia, since the domestic
from 1885 to 1913), pointing to the extensive char- production of capital equipment was limited. In ad-
acter of the growth. Less reliable data on the tsarist dition to importing technology and equipment, the
capital stock suggests that roughly two–thirds of Russian economy was also aided by the receipt of
the growth of Russian output was accounted for foreign savings to finance Russian capital forma-
by the growth of conventional labor and capital in- tion along with domestic savings. Russia was a
E N C Y C L O P E D I A O F R U S S I A N H I S T O R Y 427
E C O N O M I C G R O W T H , I N T E N S I V E
large debtor country during the period from 1880 See also: ECONOMIC GROWTH, EXTENSIVE; ECONOMIC
to 1913, receiving significant capital influx from GROWTH, SOVIET
France, England, and Belgium. It accounted for 15
percent of world international debt by 1913. For-
eign capital accounted for nearly 40 percent of BIBLIOGRAPHY
Russian industrial investment, 15 to 20 percent of Abramowitz, M. (1986). “Catching Up, Forging Ahead,
and Falling Behind.” Journal of Economic History 46:
total investment, and about 2 percent of Russian
385–406.
output at the end of tsarist era. The Russian em-
pire was more dependent upon foreign capital in Domar, Evsei. (1957). Essays in the Theory of Economic
both magnitude and duration than either the Growth. New York: Oxford University Press.
United States or Japan during their periods of de- Krugman, P. (1994). “The Myth of Asia’s Miracle.” For-
pendence. The large foreign investments in Russia eign Affairs 73:62-78.
were a sign of confidence in its potential and re- Solow, R. (1957). “Technical Change and the Aggregate
sponded to traditional signals such as profits suf- Production Function.” Review of Economics and Sta-
ficient to offset risk. tistics 39(3):312-320.
See also: AGRICULTURE; BARSHCHINA; INDUSTRIALIZA- STEVEN ROSEFIELDE
TION; OBROK; PEASANT ECONOMY; PETER I; SERFDOM
BIBLIOGRAPHY
Gatrell, Peter. (1986). The Tsarist Economy, 1850–1917.
New York: St. Martin’s Press.
ECONOMIC GROWTH, SOVIET
Gregory, Paul R. (1994). Before Command: An Economic
History of Russia from Emancipation to the First Five
During the first decade of Soviet rule and up to
Year Plan.Princeton, NJ: Princeton University Press.
1929, the Soviet economy struggled to recover
from the damages of World War I, the Revolution,
PAUL R. GREGORY
and the civil war, and then to find its way through
policy zigzags of the young and inexperienced So-
viet leadership. It is commonly accepted that dur-
ing this decade of the 1920s the Soviet economy
ECONOMIC GROWTH, INTENSIVE
more or less managed to regain the level of national
Increases in aggregate economic activity, or product of 1913, the last prewar year. In 1929 the
growth, may be generated by adding more labor Soviet Union embarked upon a strategy of rapid
and capital or by improving skills and technology. economic growth focused mainly on industrializa-
Development economists call the latter “intensive tion. The main institutional instrument used in or-
growth” because labor and capital work harder. der to implement growth was the Five-Year Plan,
Growth is driven by enhanced productivity (higher the key economic tool of the centrally planned sys-
output per unit of input) rather than augmented tem.
factor supplies. Theory predicts that all growth
The record of Soviet growth since 1928 and the
in a steady-state, long-run equilibrium will be
main factors that contributed to it are presented in
attributable to technological progress (intensive
Table 1. The data reflect mostly Western estimates,
growth). Developing nations may initially grow
based partly on Soviet official data following ad-
faster than this “golden mean” rate, benefiting both
justments to conform to Western definitions and
from rapid capital accumulation (capital deepen-
methodology as well as to accuracy. One major
ing) and technological catch-up, but must converge
methodological difference related to the national
to the golden mean thereafter. During the 1970s
product was that, following Marxist teaching, the
many Marxist economists hypothesized that so-
concept of Net National Product (NNP), the main
cialist economies were not bound by these neo-
Soviet aggregate measure for national income, did
classical principles. They forecasted that extensive
not include the value of most services, considered
growth (increased factor supply) would be replaced
nonproductive.
by socialist–intensive methods ensuring superior
performance, but they were mistaken: Growth fell One of the main goals of Soviet communist
below zero in 1989, heralding the collapse of the leadership was rapid economic growth that would
Soviet Union two years later. equal and eventually surpass the West. The pri-
428 E N C Y C L O P E D I A O F R U S S I A N H I S T O R Y
E C O N O M I C G R O W T H , S O V I E T
mary aim was to demonstrate the superiority of developing countries, especially a number of East
the communist economic system and growth strat- Asian and Latin American countries. While many
egy, based on the teachings of Marx and Lenin, over developed market economies suffered from business
capitalism. The goal was needed also in order to cycles and oscillations in growth rates, they expe-
build a sufficient military power base to avert the rienced sustained economic growth in the long run.
perceived military threat of the capitalist world in Per contra the fall in Soviet growth rates proved
general, initially that of Nazi Germany. Indeed the to be terminal. Thus, although during the early
rates of growth of Soviet GNP were initially, dur- decades the Soviet economy grew fast enough in
ing the 1930s and the first Five-Year Plans, excep- order to catch up and narrow the gap with the de-
tionally high by international comparisons for that veloped countries, during its last decades it fell be-
period; this made the Soviet model a showcase for hind and the gap widened. The growth record with
imitation to many developing countries that be- respect to GNP per capita, followed a similar trend
came independent in the aftermath of World War of high rates of growth initially, but declined in
II. While the Soviet growth rates were still high later decades (Table 1). While in 1928 the Soviet
during the 1950s and 1960s, they were already level of GDP per capita stood around 20 percent of
matched or exceeded at that time by countries such that of the United States, it reached about 30 per-
as Germany and Japan, as well as a number of de- cent in 1990, probably the best record in terms
veloping countries. The decade of the 1940s, with of comparisons with other Western economies.
the devastation of World War II, witnessed stag- Throughout the period, the share of private con-
nation at first and slow growth during the recon- sumption in GNP was lower than in most other
struction efforts later. Growth somewhat accelerated nonsocialist countries. Consumption levels did go
in the aftermath of the death of Josef Stalin, but up significantly from very low levels during the
from the 1960s onward the rates of economic two decades or so following Stalin’s death. Also,
growth began to fall, declining continuously throughout most of the period, there were rela-
throughout the rest of the Soviet period down to tively high public expenditures of education and
near zero just before the dissolution of the USSR at health services, which helped to raise the compar-
the end of 1991. Various efforts at economic re- ative level of welfare and the quality of life. The
form in order to reverse this trend largely failed. failure of the communist regime to achieve sus-
As a result, the entire postwar growth record de- tained economic growth on a converging path with
clined further by international comparisons to be- developed countries is no doubt the most impor-
low that of most groups of developed as well as tant reason for the fall of the economy.
Table 1.
Growth, Productivity and Consumption 1928–1990
(AVERAGE ANNUAL GROWTH RATES)
Period/Category 1928–1990 1928–1940 1940–1950 1950–1960 1960–1970 1970–1980 1980–1985 1986–1990
GNP 3.2 5.8 2.2 5.2 4.9 2.5 1.8 1.3
Population 1.2 2.1 -0.8 1.8 1.3 0.9 0.9 0.9
GNP per Capita 2.0 3.6 3.0 3.3 3.6 1.6 0.9 0.4
Employment 1.4 3.9 0.3 1.6 1.8 1.4 0.7 0.1
Capital 5.7* 9.0 0.4 9.5 8.0 7.4 6.2 ..
Total Factor Productivity (TFP) 0.5* 1.7 2 0.4 0.5 -1.2 -1.0 ..
Consumption 3.2 3.5 3.3 5.2 55..22 3.4 1.9 2.2
Consumption per Capita 2.1 1.4 2.5 3.3 3.9 2.5 1.0 1.3
*1928–1985.
SOURCE: Ofer, 1987; Laurie Kurtzweg, “Trends in Soviet Gross National Product” in United States Congress, Joint Economic Committee.
Gorbachev’s Economic Plans, Vol. 1, Washington D.C., pp. 126–165; James Noren and Laurie Kurtzweg, “The Soviet Economy Unravels:
1985–91” in United States Congress, Joint Economic Committee. The Former Soviet Union in Transition, Vol. 1, Washington D.C. pp. 8–33,
1993; Angus Maddison. Monitoring the World Economy 1820–1992, OECD, Paris, 1995; Angus Maddison, The World Economy : A Millennial
Perspective, OECD, Paris, 2000.
E N C Y C L O P E D I A O F R U S S I A N H I S T O R Y 429