by Michael Roberts
It’s almost exactly 100 years to the day (on the modern
calendar) since the revolutionary insurrection in St Petersburg that led
to the Bolshevik wing of the Russian Social Democrats gaining control
of the major organs of power and establishing the rule of workers
Soviets.
There has been much written about the ‘Russian revolution’ since and
in past few weeks and months. As this is a blog about economics, I
shall just make a few notes about the economic foundations of the
revolution and the ‘experiment’ of a planned, non-capitalist economy in a
poor country amid the world of capital.
In hindsight, that the Russian people decided to end the 370-year
rule of the Ivanov monarchy in 1917 was no surprise. The world was
changing: capitalism was becoming dominant and, with it,
industrialisation. An absolute monarchy sitting on a peasant country
that was industrialising in the cities was an anachronism. What was
unique was that the Russian people went on to establish a republic and
eventually a state where capitalism and imperialism had no control
within just a few months.
The objective conditions for change were ripe. Russia was a poor
country. It had great resources but these were ‘locked in’ by the vast
size of the country and the extreme climate. Even in 1914, 85 per cent
of the population were still peasants. Peasants had to
practise subsistence farming. Economically, the vast majority of the
population contributed very little to Russian society. Rural peasants
had been emancipated from serfdom in 1861, but the land was still owned
by a few: 1.5% of the population owned 25% of it.
Workers too had good reasons for discontent: overcrowded housing,
long hours at work- usually as much as 10 hours a day, six days a week-
very poor safety and sanitary conditions, harsh disciplines, and maybe
worst of all, inadequate wages with concurrently rising inflation; a
recipe for economic turmoil. In one 1904 survey, it was found that an
average of 16 people shared each apartment in St Petersburg, with as
many as 6 people in each room.
But from the 1890s, under a succession of Tsarist ministers railways
were built, foreign investment attracted and landholdings partially
reformed. Economic growth rates averaged 9 per cent from 1894–1900.
These were huge rates of change, even though most industrial investment
was wasted on armaments because Tsar Nicholas II wanted to protect
Russia’s position as a great power in competition with Japan in the east
and Germany in the west.
The Witte years of economic reform from 1890-1905 brought some
certain modernization and industrialization with them, but this
expansion was uneven and depended on foreign capital, mainly French bank
loans. Then there were five consecutive years of bad harvests from
1901-1905. And the defeat by Japan in the 1906 war was the straw that
broke the camel’s back and sparked the 1905 revolution – the dress
rehearsal for 1917.
From 1905-1914, the economy grew at an annual rate of growth of 6%.
Between 1890 and 1910, the population of St Petersburg doubled from just
over a million and Moscow experienced similar growth. This created a
new proletariat, a much more dangerous threat to Tsarism than the
peasantry had been. From 1911 to 1914, political discontent grew.
The First World War only added to the chaos; the vast demand for war
supplies and workers caused more strikes, at the same time as
conscription stripped skilled workers from the cities, and had to be
replaced by unskilled peasants. The war brought famine due to the poor
infrastructure of the railways and the need for supplying soldiers at
the front. Ultimately, the soldiers themselves turned against the Tsar,
bringing him down and with the formation of a republic eventually under
the Bolsheviks the war was ended through an agreement on harsh terms
with the Germans.
In the two years following the Revolution, there was an economic
catastrophe. By 1919, average incomes in Soviet Russia fell by half that
of 1913, a fall that had not been seen in Eastern Europe since the 17th
century (Maddison 2001).
Worse was to come. After another run of disastrous harvests, famine
conditions began to appear in the summer of 1920. An average worker’s
daily intake fell to 1,600 calories, about half the level before the
war. Spreading hunger coincided with a wave of deaths from typhus,
typhoid, dysentery and cholera. In 1921, the grain harvest collapsed
further, particularly in the southern and eastern grain-farming regions.
More than five million people may have died prematurely from hunger and
disease. Russia suffered 13 million premature deaths from conflict and
famine. This was one in ten of the population living within the future
Soviet borders in 1913. And all this while a savage civil war raged as
invading foreign armies and reactionary domestic forces tried to
displace Soviet rule.
Eventually, after the victory of the Soviet government in the civil
war and the stabilisation of the regime, economic performance,
particularly after the New Economic Policy reforms from 1924, began to
pick up.
And then during the period up to 1945, there was a dramatic rise in
GDP per capita with industrialisation under the planned economy. That
accelerated after 1945 and up to the 1970s. Indeed, from 1928-1970, the
USSR was the fastest growing economy except for Japan!
And even compared to the Third World, its performance was remarkable.
In 1952, the Soviet Union was only behind Ireland and Western Europe
as a whole. By 1975, the USSR had a higher GDP per capita than Mexico,
Latin America, Colombia, South Korea and Taiwan.
The success of the Soviet extensive growth model in the 1950s and
1960s was undeniable. But a phase of economic stagnation began in the
1970s. The attempt to move to a new regime of intensive accumulation to
one based on high productivity growth failed. And the militarization of
the economy because of the cold war used up valuable productive
investment potential. The Russian elite tried to alter the economic
model to one relying on the export of resources, rather than develop industry
and technology. The economy became a one trick pony.
The attempt of Perestroika to build ‘market socialism’ and dismantle
the plan was the final straw. Gorbachev’s reforms disrupted the system
of planning and distribution and provoked chronic excess domestic demand
and in the need for foreign imports.
With the collapse of the Soviet state, the wealth acquired by Soviet
state managers during the Perestroika allowed them to take advantage of
the ‘shock therapy’ reforms in the 1990s, turning themselves into what
we now call the Russian oligarchs.
The ‘shock therapy’ introduction of capitalism led to the worst
peacetime collapse in a major economy since the Industrial Revolution.
By 1998, Russia’s GDP was 39% below its 1991 level.
As the Russian economy imploded, the opposite was happening in China,
where the relaxation of restrictions on private capital development was
combined with state control and planned and state-led heavy
investment. In the subsequent 16 years China has enjoyed the greatest
economic growth ever seen in human history.
The Russian capitalist economy eventually recovered with global
commodity price boom after 1998, but by 2014, Russia’s average annual
GDP growth was still only 1.0%. Life expectancy in capitalist Russia
has now been surpassed by the Chines economic model.
One key lesson that we can draw from the Russian experiment is that
it could not succeed indefinitely in the face of world capital. Marx
and Engels remarkably anticipated the eventual failure of the Russian
Revolution. Marx thought that successful communist revolution
presupposed the existence of an integrated world economy.
“The proper task of bourgeois society is the creation of the world market
… the colonisation of California and Australia and the opening up of
China and Japan would seem to have completed this process. For us, the
difficult QUESTION is this: on the Continent revolution is imminent and
will, moreover, instantly assume a socialist character. Will it not
necessarily be CRUSHED in this little corner of the earth, since the MOVEMENT of bourgeois society is still in the ASCENDANT over a far greater area?”
And yet Marx also saw that the socialist transformation would not
have to wait for each national capitalist economy to ‘mature’. As he
wrote, “If the Russian Revolution becomes the signal for a
proletarian revolution in the West, so that the two complement each
other, the present common ownership of land may serve as the starting
point for communist development.”
Unfortunately, the revolution in the West did not materialise. While
the planned economy succeeded in transforming the lives of millions,
Russia was isolated, surrounded and very quickly the regime itself
degenerated into a totalitarian dictatorship and finally into a corrupt
capitalist autocracy far from the aims of the revolution of 1917.
These are just a few notes. For a comprehensive description of how a
socialist society might operate based on a commonly owned and
controlled economy, see Ernest Mandel’s treatise, In defence of socialist planning.
And for a compelling arguments on the feasibility of a planned economy
delivering the needs of people, see Cottrell and Cockshott’s paper, Socialist planning after the collapse of the Soviet Union.
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1 comment:
Again, thanks for posting M. Roberts. I learned a lot from one short article. And your article on Peggy Noonan was enlightening too. The face of Trump in the photo is emblematic. "Nut", it fits. And the bin Salman look, confused? Whose party is this? What is that little glowing ball they are fondling or touching? Couldn't be the real "world". It's a golf course they want to score holes in one. Back to M Roberts. I recommend Tolstoy's short novel The Counterfeit Coupon for a glimpse into the quality of life in pre-revolutionary Russia. And Los de Abajo, The Underdogs, by Mariano Azuela about the Mexican revolution, which happened at the same time, for a glimpse into the mentality of the combatants. It's a fun book. Percolating upwards into consciousness is the capability of the ordinary person, the worthiness of dignity and honor and a fair chance in life for this no-man. The morons think they can hold on, divide and conquer, it won't last. The pressure is on, too many fair minded people around. The world will be shaped by success and openness and friendship. The opposite can't hold on. I like the Noonan piece where she said they are isolated from the (sorrowful) world they created. Not for long.
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