Proposal preview

Historical Economic Development Through Russian and Soviet Lenses

Recent years have seen a relative surge in interest in and research into myriad topics in Russian and Soviet economic history. Much of this has been closely tied to the exploration and digitization of new and exciting data from archival and obscure published sources from both the Imperial and Soviet periods. This empirical revolution has allowed scholars to examine long-standing questions in original ways and to address new questions that previously were not accessible. As a result, our understanding of the institutional and market development of Imperial Russia, the population and economic crises of the first half of the 20th century, the workings of the Soviet system, and the interaction of Russia with the global economy over the last 200 years has been fundamentally revised by this new wave of research projects.

This proposed two-block session will allow leading scholars of Russian and Soviet economic history a chance to take stock of these recent developments and to highlight new avenues of research going forward. The emphasis will be on work by less senior scholars in dialogue with the long-standing concerns of more experienced researchers in the field. In addition, the session will provide a forum for scholars trained and based in different disciplines – history, economics, finance, etc. – to explore issues of common concern in doing research in in Russian and Soviet economic history. Given the significant and growing interest in the economic history of the region, we are proposing the longer (two-block) session to allow for as many presentations and as much fruitful discussion as possible. Please see the attached preliminary schedule for further details.

Organizer(s)

  • Steven Nafziger Williams College snafzige@williams.edu USA

Session members

  • Gani Aldashev, Université libre de Bruxelles
  • Catherine Guirkinger, University of Namur
  • Elena Korchmina, NYU-Abu Dhabi
  • Marvin Suesse, Trinity College Dublin
  • Theocharis Grigoriadis, Free University of Berlin
  • Paul Castañeda Dower, University of Wisconsin - Madison
  • Natalya Naumenko, Northwestern University
  • Mark Harrison, University of Warwick
  • Kristy Ironside, McGill University
  • Ilya Voskoboynikov, Higher School of Economics

Discussant(s)

  • Yakov Feygin Harvard yakov_feygin@hks.harvard.edu
  • Amanda Gregg Middlebury College agregg@middlebury.edu
  • Steven Nafziger Williams College snafzige@williams.edu
  • Andrei Markevich New Economic School ammarkevich@gmail.com

Papers

Panel abstract

Recent years have seen a surge in interest in, and research into, myriad topics in Russian and Soviet economic history. Much of this has been closely tied to the exploration and digitization of new and exciting data from archival and obscure published sources from both the Imperial and Soviet periods. This empirical revolution has allowed scholars to examine long-standing questions in original ways and to address new questions that previously were not accessible. As a result, our understanding of the institutional and market development of Imperial Russia, the population and economic crises of the first half of the 20th century, the workings of the Soviet system, and the interaction of Russia with the global economy over the last 200 years is and will be under revision. The papers of this session provide a glimpse at the depth and breadth of this new wave of exciting research into Russian/Soviet economic history.

1st half

The Puzzle of Tax Compliance in Early Nineteenth-Century Russia

Elena Korchmina

The aim of this paper is to assess the level of tax compliance of the elites in relation to income tax in a relatively backward country with low administrative capacity as Russia was in 1812. My research is conducted on a unique dataset which was made of archival hand-writing sources: individual tax returns of about 4,000 Russian nobles, who lived and had different kinds of property in Moscow and Moscow province in 1812. The dataset allows to assess the level of tax compliance/evasion on a taxpayer’s level, it is a very difficult task “even for contemporary cases.” I argue that Russian nobles complied with fiscal demands of the Russian state and were ready to pay a new tax. The Russian government, via State Secretary Mikhail Speranskii, managed to organize quite an innovative system of income tax collection based on elected local bodies, instead of well-trained state bureaucracy. The introduced mechanism...

The aim of this paper is to assess the level of tax compliance of the elites in relation to income tax in a relatively backward country with low administrative capacity as Russia was in 1812. My research is conducted on a unique dataset which was made of archival hand-writing sources: individual tax returns of about 4,000 Russian nobles, who lived and had different kinds of property in Moscow and Moscow province in 1812. The dataset allows to assess the level of tax compliance/evasion on a taxpayer’s level, it is a very difficult task “even for contemporary cases.” I argue that Russian nobles complied with fiscal demands of the Russian state and were ready to pay a new tax. The Russian government, via State Secretary Mikhail Speranskii, managed to organize quite an innovative system of income tax collection based on elected local bodies, instead of well-trained state bureaucracy. The introduced mechanism of tax collection relied on group identity perception of Russian nobility, which was supported by national patriotism under the threat of imminent hostilities with Napoleon.

The Long-Run Effects of Clan Institutions - Evidence from Central Asia

Gani Aldashev, Catherine Guikinger, Alisher Aldashev, Mate Fodor

Traditional institutions are prominent in developing countries. They co-exist along with formal institutions of the State and interact with them in various ways. Although a large body of research highlights the positive role these institutions play (by filling the gap of missing markets and weak state institutions), scholars also pointed out certain negative aspects, such as, for instance, discouraging risk- taking by entrepreneurs because of redistributive pressures within traditional family networks. One key traditional institution is the clan, i.e. blood-based (usually patrilineal) lineage that extends beyond families and comprises a relatively large group of people. Numerous developing countries in Central and Eastern Asia, Middle East, and North Africa are clan-based societies. Anthropologists underline that in clan-based societies, individuals have well-defined rights and obligations towards people belonging to the same clan, beyond their immediate or even extended family. Economists still have an imperfect understanding of the economic and social role played...

Traditional institutions are prominent in developing countries. They co-exist along with formal institutions of the State and interact with them in various ways. Although a large body of research highlights the positive role these institutions play (by filling the gap of missing markets and weak state institutions), scholars also pointed out certain negative aspects, such as, for instance, discouraging risk- taking by entrepreneurs because of redistributive pressures within traditional family networks. One key traditional institution is the clan, i.e. blood-based (usually patrilineal) lineage that extends beyond families and comprises a relatively large group of people. Numerous developing countries in Central and Eastern Asia, Middle East, and North Africa are clan-based societies. Anthropologists underline that in clan-based societies, individuals have well-defined rights and obligations towards people belonging to the same clan, beyond their immediate or even extended family. Economists still have an imperfect understanding of the economic and social role played by these clan- based structures. In particular, we don’t know whether such roles persist when the State implements policies hostile to the traditional social structure. In this paper, we study the persistence and change in the economic and social role of clan institutions in Central Asia throughout the 20th century. During most of this period, Soviet regime implemented policies aimed at undermining traditional clan-based structure. We rely on high-quality micro-level datasets, the first collected in the early 1900s and the second in 2010s which allows us to match the clan identities in the past to the present-day ones.

Financing Late Industrialisation - Evidence from the Imperial Russian State Bank

Theocharis Grigoriadis, Marvin Suesse

To what extent does the location of banks affect industrial development? Prior to the outbreak of World War I, the Russian Empire occupied 15% of the world’s land mass. Capital was scarce, and banks were largely restricted to a few urban centres. Our hypothesis is that this constellation helps to explain Russia’s late industrialisation: 1) The geographical distance between banks and firms decreased the volume of credit extended by banks, due to a. Increased costs to banks of screening loan applicants and monitoring existing loans b. Increased costs to firms of applying for loans 2) The low volume of credit extended empirically explains the poor performance of Russian manufacturing firms, in terms of their low use of machinery, small size, and low profitability. The classic hypothesis that banks are a vital engine of industrialisation is due to Alexander Gerschenkron (1962). Gerschenkron hypothesised that in the presence of weak markets, large...

To what extent does the location of banks affect industrial development? Prior to the outbreak of World War I, the Russian Empire occupied 15% of the world’s land mass. Capital was scarce, and banks were largely restricted to a few urban centres. Our hypothesis is that this constellation helps to explain Russia’s late industrialisation: 1) The geographical distance between banks and firms decreased the volume of credit extended by banks, due to a. Increased costs to banks of screening loan applicants and monitoring existing loans b. Increased costs to firms of applying for loans 2) The low volume of credit extended empirically explains the poor performance of Russian manufacturing firms, in terms of their low use of machinery, small size, and low profitability. The classic hypothesis that banks are a vital engine of industrialisation is due to Alexander Gerschenkron (1962). Gerschenkron hypothesised that in the presence of weak markets, large banks could act as coordinating agents fostering growth in manufacturing industries. In those cases where private banks were too small due to a lack of capital, the state could step in and direct investment where it was needed. In Gerschenkron’s view, Russia’s state-run banking system was a prime example of this. Our data allows for an empirical test of Gerschenkron’s core prediction.

Democratic Support for the Bolshevik Revolution - An Empirical Investigation of 1917 Constitutent Assembly Elections

Paul Castañeda Dower, Andrei Markevich

Scholars have long-debated the causes of popular support for the Russian Revolution and how this support translated into successful regime change. We systematically investigate cross-district and cross-city variation in popular support for the Bolsheviks using voting outcomes of the All Russian 1917 Constituent Assembly elections, occurring right after the Bolsheviks seized power. We find that the Bolsheviks managed to mobilize more popular support in districts with more of a presence of industrial workers, Russian-speaking peasants and soldiers. However, we show that politics rather than fundamentals explain the variation in pro-Bolshevik voting and the policies that supported this coalition was hardly stable, forewarning the command economy to come.

Scholars have long-debated the causes of popular support for the Russian Revolution and how this support translated into successful regime change. We systematically investigate cross-district and cross-city variation in popular support for the Bolsheviks using voting outcomes of the All Russian 1917 Constituent Assembly elections, occurring right after the Bolsheviks seized power. We find that the Bolsheviks managed to mobilize more popular support in districts with more of a presence of industrial workers, Russian-speaking peasants and soldiers. However, we show that politics rather than fundamentals explain the variation in pro-Bolshevik voting and the policies that supported this coalition was hardly stable, forewarning the command economy to come.

2nd half

The Soviet Economy - the Late 1930s in Historical Perspective

R.W. Davies, Mark Harrison, Oleg Khlevniuk, Stephen G. Wheatcroft

This paper is a draft of the concluding chapter of The industrialization of Soviet Russia, vol.7: The Soviet economy and the approach of war, 1937– 1939, in preparation for publication by Palgrave Macmilan. We consider the development of the Soviet economy over the period of the series, that is, from the launching of the first five-year plan and the collectivisation of agriculture to the outbreak of the Second World War. We review, in turn, the pattern of forced industrialisation, the measurement and mismeasurement of economic progress, the extraordinary militarisation of a mobilised society and economy, the emergence of the Soviet Union as a global military power, and the scope for reforms within the economic system that Stalin created and ruled over. Concluding, we ask what kind of economic development this was.

This paper is a draft of the concluding chapter of The industrialization of Soviet Russia, vol.7: The Soviet economy and the approach of war, 1937– 1939, in preparation for publication by Palgrave Macmilan. We consider the development of the Soviet economy over the period of the series, that is, from the launching of the first five-year plan and the collectivisation of agriculture to the outbreak of the Second World War. We review, in turn, the pattern of forced industrialisation, the measurement and mismeasurement of economic progress, the extraordinary militarisation of a mobilised society and economy, the emergence of the Soviet Union as a global military power, and the scope for reforms within the economic system that Stalin created and ruled over. Concluding, we ask what kind of economic development this was.

The Political Economy of Famine - the Ukrainian Famine of 1933

Natalya Naumenko

The famine of 1932–1933 in Ukraine killed as many as 2.6 million people out of a population of approximately 30 million. Three main explanations have been offered: negative weather shock, poor economic policies, and genocide. This paper uses variation in exposure to poor government policies and in ethnic composition within Ukraine to study the impact of policies on mortality, and the relationship between ethnic composition and mortality. It documents that (1) the data do not support the negative weather shock explanation: 1931 and 1932 weather predicts harvest roughly equal to the 1925 – 1929 average; (2) bad government poli- cies (collectivization and the lack of favored industries) significantly increased mortality; (3) collectivization increased mortality due to drop in production on collective farms and not due to overextraction from collectives (although the evidence is indirect); (4) back-of-the- envelope calculations show that collectivization explains at least 31% of excess deaths; (5) ethnic...

The famine of 1932–1933 in Ukraine killed as many as 2.6 million people out of a population of approximately 30 million. Three main explanations have been offered: negative weather shock, poor economic policies, and genocide. This paper uses variation in exposure to poor government policies and in ethnic composition within Ukraine to study the impact of policies on mortality, and the relationship between ethnic composition and mortality. It documents that (1) the data do not support the negative weather shock explanation: 1931 and 1932 weather predicts harvest roughly equal to the 1925 – 1929 average; (2) bad government poli- cies (collectivization and the lack of favored industries) significantly increased mortality; (3) collectivization increased mortality due to drop in production on collective farms and not due to overextraction from collectives (although the evidence is indirect); (4) back-of-the- envelope calculations show that collectivization explains at least 31% of excess deaths; (5) ethnic Ukrainians seem more likely to die, even after controlling for exposure to poor Soviet economic policies; (6) Ukrainians were more exposed to policies that later led to mortality (collectivization and the lack of favored industries); (7) enforcement of government policies did not vary with ethnic composition (e.g., there is no evidence that collectivization was enforced more harshly on Ukrainians). These results provide several important takeaways. Most importantly, the evidence is consistent with both sides of the debate (economic policies vs genocide). (1) backs those arguing that the famine was man-made. (2) – (4) support those who argue that mortality was due to bad policy. (5) is consistent with those who argue that ethnic Ukrainians were targeted. For (6) and (7) to support genocide, it has to be the case that Stalin had the foresight that his policies would fail and lead to famine mortality years after they were introduced (and therefore disproportionately exposed Ukrainians to them). Keywords: Famines, Central planning, Collectivization, Genocide

Real Returns – An excerpt from Money and the Pursuit of Communist Prosperity in the Postwar Soviet Union, 1945-1964

Kristy Ironside

This paper looks at the impact of savings accounts, lotteries, and 'ʹmarket'ʹ bonds upon the real value of the ruble in the postwar years. The population’s steadily increasing income, especially after Khrushchev’s post-­‐‑1956 wage, pension, and tax reforms, was touted as clear proof of rising living standards; yet, as this paper reveals, these reforms also released ever more ‘uncovered’ money into the planned economy—money that could not be balanced with consumer supply. The government had to find incentives for Soviet citizens to give their spare money back to the state to invest in social programs and, more importantly, remove it from circulation. It found them in the ‘rational’ consumerism of the late 1950s and early 1960s: workers were encouraged to invest their spare money in bonds and savings accounts to gradually acquire the necessary financial resources to buy big-­‐‑ticket items like refrigerators, cars, and summer holidays, or buy cheap lottery...

This paper looks at the impact of savings accounts, lotteries, and 'ʹmarket'ʹ bonds upon the real value of the ruble in the postwar years. The population’s steadily increasing income, especially after Khrushchev’s post-­‐‑1956 wage, pension, and tax reforms, was touted as clear proof of rising living standards; yet, as this paper reveals, these reforms also released ever more ‘uncovered’ money into the planned economy—money that could not be balanced with consumer supply. The government had to find incentives for Soviet citizens to give their spare money back to the state to invest in social programs and, more importantly, remove it from circulation. It found them in the ‘rational’ consumerism of the late 1950s and early 1960s: workers were encouraged to invest their spare money in bonds and savings accounts to gradually acquire the necessary financial resources to buy big-­‐‑ticket items like refrigerators, cars, and summer holidays, or buy cheap lottery tickets that gave the chance to win the goods themselves. Unlike its earlier more extractive fundraising efforts, which had continually asked citizens to focus on public considerations over personal interest and which had delayed returns on their investments, the Soviet government promised citizens tangible and more immediate returns on spare money voluntarily entrusted to the state. At the same time, as Soviet financial authorities were all too aware, the rising amount of money put into these instruments reflected the growing glut of money in the Soviet economy that simply could not be spent.

Inter-industry labour reallocation and Soviet growth slowdown in 1966-1990

Ilya Voskoboynikov, Maria V. Taktasheva, Anton Tolokonnikov

The present study deals with the impact of structural change on labour productivity growth (structural bonus) in the Union republics of the Soviet Union. For this it introduces the new dataset of output and employment at the level of 18 industries in 15 republics from official input-output tables of the Union republics. Using the conventional shift-share analysis approach, the paper shows that the structural bonus in most republics was close to zero, which can be explained by low labour mobility and the lack of incentive of state enterprises to release excessive labour force. In general, the absence of structural bonus can be considered as one of origins of Soviet economic stagnation in 1960-1980-s, along with extensive growth and low elasticity substitution between labour and capital.

The present study deals with the impact of structural change on labour productivity growth (structural bonus) in the Union republics of the Soviet Union. For this it introduces the new dataset of output and employment at the level of 18 industries in 15 republics from official input-output tables of the Union republics. Using the conventional shift-share analysis approach, the paper shows that the structural bonus in most republics was close to zero, which can be explained by low labour mobility and the lack of incentive of state enterprises to release excessive labour force. In general, the absence of structural bonus can be considered as one of origins of Soviet economic stagnation in 1960-1980-s, along with extensive growth and low elasticity substitution between labour and capital.