Tsarist Russia: 1861- 1913• 1861: Serfdom abolished

• Peasants free after repaying debts• Reforms of 1906 gave peasants small plots of land, allowed to

leave communes• Peasants: 80% of population – Lived in village communes, responsible for each other debts– ½ land in Russia - communal property• Literacy rate: – 40% of population over age 10

National income Per capita Infantmillion rubles, 1913 national income mortality

Russia 20,266 119 237Spain 3,975 199 155UK 20,869 580 108France 11,816 303 112Germany 24,280 374 151USA 96,030 1,033 115

Source: Gregory, 1982, Russian National Income, 1895-1913

•Agriculture produced above subsistence

–Exported ¼ of agricultural output

•1880-1913: industry and population growth

•Growing urban bourgeoisie, working class

•Increase in primary school enrollment

•State subsidized construction of roads

Russian Empire included

• Finland • Estonia • Latvia • most of

Lithuania • Belarus • Ukraine • part of Poland • Moldova • Caucasus • Central Asia

Russian Empire, 1913 •Capital inflows from abroad•World’s largest debtor•Foreign investment

• 20% of all investment• 2% of output

•More dependent on foreign capital than U.S., Japan•Heavy state bureaucracy

• permit requirements, licenses, bribes •1905: Shooting of peaceful demonstration•Govt reform: Constitutional monarchy est.

• national Duma - parliament to be elected•Revolutionary movement

•Russian Social Democratic Labor Party• Bolshevik (renamed Communist in

1918) • Menshevik

•Socialist Revolutionaries•People’s Socialists•Other parties•Many leaders in exile to avoid tsarist

repressions

According to MarxSocialism: “From each according to his

abilities, to each according to his work”• Society run by working class, not bourgeoisie

–state will defend working class interests against those who still have wealth or power and who will attempt to return society to capitalist system

• State ownership of the means of production• Rational planning of the economy• Re-education to eliminate last vestiges of capitalism

Communism: “From each according to his abilities, to each according to his needs“

• Classless society with no exploitation• Withering of the state

–No need for professional armies or police forces –No state machine used by one section of population

to oppress another section • Common ownership of the means of production• No use of production for profit or exchange• Elimination of cash economy• Never existed

LENIN’S CONTRIBUTION: Monopoly Capitalism

Vladimir Lenin (Ulyanov)(1870-1924)

•Imperialism: last stage of capitalism –Advanced states bribe domestic proletariat with share of

surplus buying domestic stability•Imperialist expansion •Markets become monopolized

• Small firms fail and are taken over• Advanced economies need to find new sources of

raw materials / labor– colonize under-developed countries – labor exploited fully in the colonies

–Capitalism can only be overthrown by revolutionary means–Russia is the weakest link–most economically backward nation in Europe– dual economy: semi-feudal agriculture and some advanced

heavy industry – advanced enough not to be colonized itself but not enough

to be a colonizer –Proletariat is not revolutionary by nature- must

be led by bourgeoisie–Need well organized centralized party

Lenin: Socialism cannot survive in one poor underdeveloped country alone- call for world revolution

• Exclusively Bolshevik govt headed by Lenin approved by Second Congress of Soviets– Council of People’s commissars – other parties refuse coalition

• Decree on Peace– Proposed end of WWI with no annexations

• Decree on Land– Abolished landlord and church land ownership– Land, livestock and buildings at disposal of Soviets– Land of ordinary peasants not confiscated

• Decree on the Press– Temporary close if calling for resistance to Workers’ and Peasants’ govt

• Declaration of the Rights of People of Russia– Equality, sovereignty, self determination up to the point of separation,

abolition of national privileges • Decree on Dissolution of the Constituent Assembly

– Was democratically elected with 175 in 715 Bolsheviks – Lenin: counter-revolutionary threat

• Decree on Freedom of Conscience, Church and Religious Associations– Separate church from state– Ban teaching religion in schools– Marx: religion is opiate of the people

First Steps, Nov-Dec 1917

War Communism, 1918‑1921

• Civil war between Bolsheviks (Reds) and non-supporters (Whites)– Petrograd only under Bolshevik control in 1918

• Red Army based upon conscription • Workers militarized, paid equal wages

– Introduced 8-hour day– Movement of workers restricted

• Foreign trade eliminated• Private trade abolished

– State became sole supplier of consumer goods• Forced requisitioning of grain from peasants• Private banks taken over by State Bank • 37,000 smaller enterprises nationalized• Foreign debts repudiated • Free provision of postal services, gas, electricity, public

transportation, rationed food • Cheka secret police formed

– To persecute and breakup counter-revolution and sabotage– Measures: confiscation, confinement, publication of names of

enemies of the people, death penalty applied at will– Renamed OGPU, NKVD, MVD, KGB

• Printed money to finance the war – printing press as a “machine gun that would destroy capitalism”

• Hyperinflation, ruble depreciation – 2 Rubles =$1 in 1914 – 1,200 Rubles =$1 in 1920

• No coordination of nationalized enterprises – bottlenecks

• Destruction of existing markets, money eliminated, barter• Labor flowed out of factories - lack of incentive wages• Farmers refused to grow more grain than for own needs

– Famine, 1921• 1921: Kronstadt uprising of sailors, former supporters

– Call for Soviets without Bolsheviks– “…the working class had hoped to achieve its emancipation. The

result was even greater enslavement …”– Suppressed with blood

Consequences of War Communism, 1918-21

Hyperinflation During Russian Civil War, 1918-1921

Between 1913 and 1921: • Industry, transportation, agriculture fell 80%• Cotton production fell 95%, iron 98%• Cultivated land shrunk by 38%• Harvest yield was 37% of normal• Number of horses and cattle declined 40%Lenin: "We are not civilized enough for socialism” "In order to take two steps forward, we shall have to take one step

backward"

Lenin’s New Economic Policy, 1921-28• Return to private market economy (capitalism) in

agriculture and small industry – No requisitioning of agricultural goods, tax instead

• 1921-23: in goods• 1924-28: in money • accounted for 25% of total state revenues

– Peasants can sell output, lease land, hire labor • Private stores : 75% of retail trade turnover • Private companies: 13% of jobs in industry

– Enterprises can purchase supplies, sell output – Firms formed trusts and syndicates as in 1913

• To facilitate coordination • Control of large scale industries and transportation

(Commanding Heights): coal, iron, electricity, banks– employed 80% of industrial labor

• Use of money reintroduced–New currency based on gold standard–Population encouraged to keep savings in state bank

• Foreign trade re-established–< ½ of 1913 level - consequence of repudiated debt

NEP, 1928• Economy recovered, output above 1913 level

• Agricultural sector grew faster than industry

– Private agriculture produced grain at record levels

• High supply - lower prices– Sharp rise in prices of industrial

products • High demand – higher prices• Peasants respond by producing more

wheat to purchase consumer goods– “Scissor crisis”– Peasants refuse to sell grain

to the state at low state price• Prefer to sell to NEPmen-middlemen at

market prices • Grain shorotages• Sabotage!• NEPmen are enemies of the people!

1926 Labor Force

The Five-Year Plan for Women's Labour: Constructing Socialism and the `Double Burden', 1930-1932. Schrand, Thomas G. Europe-Asia Studies; Dec99, Vol. 51 Issue 8, p1455.

Salary and

Wage Workers

(11.5%)

Collectivist Farmers (2%)

Self-Employed (3%)

Individual Farmers (82%)

Employed (98.8%)

Unemployed (1.2%)

Total Labor Force Composition of Labor Force

• Viewed as policy without direction– Need for more coordination– Market is too chaotic – Growing inequalities• Perceived threats to socialist state• monopoly power of trusts, • rich “kulaks” peasants, NEPmen-middlemen

• Failure to understand market economy by Soviet leaders– Price controls and inflation distorted market incentives – Not enough grain delivered to the state

• Need for industrialization – To establish industrial base to compete with the West– Fear of imperialist conspiracies, expectation of a war

• 1921-8: suppression of “alien elements”• Church, intellectuals, richer peasants

End of NEP, 1921-28

Joseph Stalin (Dzugashvili)

1878-1953

The Political players

Against

Grigory Zinoviev Joseph Stalin Lev Kamenev Leon Trotsky

Against

Joseph Stalin Grigory Zinoviev Lev KamenevNikolai Bukharin Alekseii Rykov

Against

Nikolai Bukharin Alekseii RykovJoseph Stalin

• 1922: USSR formed– Russian federation– Ukraine– Belorussia– Trancaucasia (Armenia, Azerbaijan, Georgia)– Independent republics have the right to leave USSR

• 1924: Lenin died– Trotsky, Kamenev, Zinoviev, Stalin –successor?– Stalin: General Secretary of Communist Party since 1922

• 1924: First Constitution of USSR• 1924: Central planning agency created• 1927: 15th party Congress condemns opposition

• Kamenev, Zinoviev expelled from party• Trotsky emigrates, supporters sent to Siberia• Stalin’s personality cult begins

• 1928: Industrialization – first 5 year plan• 1929: Collectivization of agriculture, “liquidation of

the kulaks as a class”• Kulaks <5% of all peasants, owned 10 ha land, 3 cows

USSR, 1922-29

Institutions of the First Five Year Plan

Central Politburo

Gosplan

Industrial Sector Agricultural Sector Other Sectors

Collectivization of Agriculture• 1929-35: Peasants forced to pool land, livestock and

tools into collective farms• Formally: to raise yields, mechanize agriculture • In fact: to facilitate transfer of agricultural surplus

to state for industrialization• State farm – Government budget financed– Workers state employees, director appointed– Inputs-outputs planned and distributed

• Collective farm– Peasants’ cooperative, head elected (party

member) – Peasants work for “labor-day” count

•Not clear how much each day is worth•No passports – no labor mobility •Switched to wage system in 1960s

• Grain exports were used to fund imports of industrial equipment– continued despite the famine of 1932-33 – note sharp jump in exports associated with the onset

of industrialization in 1930

Impact of Collectivization• Income of a farmer in 1935 was half of 1928 level • Large scale destruction of buildings and livestock• Low productivity thru Soviet period• Weak infrastructure, coordination, transportation:

• processing, storing, distributing• half of potato harvest rotted in fields and on trains

• Russia, grain exporter, turned into largest grain importer• Central planning poorly suited for agriculture• Lack of motivation, low state prices

Agriculture

Labor Force Materials for the study of unemployment in the soviet union, Warren W. Eason, Princeton U, http://www.nber.org/chapters/c2648.pdf

Agricultural Production(Million Tons)

0

20

40

60

80

100

120

Gro

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l

Gra

in

Cot

ton

Sug

ar

Pot

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Mea

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Milk

Egg

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Live

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1913

1928

1932

National Income by Sector (Millions of 1928 Rubles)

024

68

101214

161820

1928 1929 1930 1931 1932

Industry

Construction

Agriculture

Trade

Transportation

Forestry

Other