Russian Economy Money, money, money, must be funny, in a Capitalist’s world. I thank you! Aims 1. Explain industrial and agricultural changes. 2. Identify turning points. 3. Begin to assess social and economic impact. Alexander II • Fear of industrialisation, would create proletariat and revolts. • New work discipline – rules and regulations for employees in factories. • Did develop state involvement, particularly in railways, coal and iron production. • Managed, with Mikhail Reuturn as Finance Minister, to attract foreign investment (J.J. Hughes – steel in Ekaterinoslav). • New industries open up, including oil industry in Baku and Caucasus. Railways – Al II next to a train, ALRIGHT!!!! • Used foreign expertise. • Stimulated by British railways. • Reutern helped increase railway 7x from 3532km to 22,498km by 1878. • Boosted industry and cushioned from 1873-1882 depression. • Did cause some corruption, i.e. government bonds, tax exemptions and monopoly concessions. • By 1880 94% of railways in private hands. Al III • 1881 Bunge takes over as FM. • Abolished Salt Tax in 1881 and Poll Tax in 1886. • Created Peasant Land Bank 1883, started to allow railways to go into state hands. • Bunge replaced by Vyshnegradski, hardliner and balanced books, but responsible for 1891 famine. Great Spurt - Witte You looking at me? Ain’t no one else around, so you must be looking at me… • Encouraged foreign investment. • Sacrificed agriculture, some anger. • Raised taxes, interest rates and foreign loans. • Focussed on railways, iron and coal. • 1897 rouble placed on the gold standard. Results: Coal doubled and iron and steel increased 7x. 52,612 km railways by 1901. Industrial income increased from 42m Roubles 1893 to 161R 1897. WWI and Nic II • Witte dismissed 1903, ignored agriculture and railways costly and poorly built. • Became PM in 1905, Stolypin FM. • 1909-1913 GNP increased by 3.5%p.a. • BUT – population boomed, small scale producers still around and productivity not improved. • Starvation still a real possibility. • WWI killed economy. • Inflation rampant, loans called in, food and fuel prices rocketed. • Killed off Romanovs. Lenin • Russia faced WWI hangover and Civil War. • Introduced State Capitalism, reaction to situation – nationalised economy until it could “safely” be passed back. • Nov. 1918 – Land Decree, Nov.1918 Decree on Workers Control (power to run factories). • Dec. 1917 Supreme Economic Council, helped to nationalise over 30,000 entities. This was subservient to Council of Labour and Defence, chaired by Lenin. Civil War • • • • Nullified all gains from State Capitalism. Industrial output fell. Inflation rocketed. By Oct 1920 the rouble was worth 1/10th of value from 1917. • 90% of all wages were paid “in kind” due to worthless nature of money. War Communism and NEP War Communism • State capitalism saw Bol. take over economy. • 1917 Decree on Land. • 1917 Supreme Economic Council (SEC) nationalised all enterprises, 1918 Decree on Workers Control = “extra powers”,. • 1920 30,000+ enterprises, SEC struggled to control. • Labour militarised, nationalisation meant workers lost control of production and distribution and grain was forcibly requisitioned. • By 1921 Party and people wanted change. NEP • Denationalisation of small scale enterprise and private ownership allowed, small workshops flourished. • State control of heavy industry continued. • Trade increased with less state restrictions, i.e. food sales. • Rouble re-valued and introduced. • Grain requisitioning ended and peasants able to sell surplus. Impact of NEP Economic Impact • Initial results were strong. • Market goods improved. • Nepman were created, entrepreneurs who by 1920 were responsible for 60% of trade. • Scissors crisis kicked in, food increased and outstripped demand, prices fell. • Peasants reluctant to sell surpluses, but industrialists needed them to. Political Impact • “Temporary deviation, a tactical retreat”. • Papered over by call for greater party unity, instigated by 1921 Kronstadt uprising. • Lenin’s death in 1924 exacerbated divisions. • Stalin remained ambivalent between rightists and leftists, pulled NEP in 1929. Stalin and 5 Year Plans • Two aims: – Economic autarky for war footing. – Improved value of workers. • Based on strict control and centralised planning. • Plans were set on often flimsy evidence and targets were often unrealistic. • Gosplan set targets, passed on to regional commissariats then industrialists. Only guidelines on what was required, not instructions on how to do it! 5 Year Plans • First set in 1929, but did not run full course, often exaggerated. • Stalin even upgraded targets towards the end of each plan. • Statistics are impressive, but unreliable. • Khrushchev also centralised, but saw eventual slowdown in growth. Read pp.112-113 and assess statistics and success. Russian Agriculture Agriculture in Russia • Both Tsars and Commissars experienced similar problems. • Most of the population was working on the land. • Industry was always seen as more important to agriculture and peasants were always seen as second class citizens. • Land was always problematic and no leaders managed to deal with it adequately. Peasant anger was always fuelled by resentment that they could not own land outright. Emancipation (we know this, but…) • • • • Impact Peasants freed, able to marry whoever and own land. Nobles compensated, payments over 49 years at 6% interest. Nobles allocated land to peasants. All redemption payments dealt with by the mir. • • • • Unrest Peasants given poorer quality land and less than before Emancipation. Many couldn’t afford payments or earn enough from the land. Mir still in charge of what was grown. Subsistence farming kept so no motivation to farm more. Al III 1891 Famine • Blamed on peasant attitudes and out-dated techniques. • Land captains introduced to maintain control. • Consumer taxes raised to encourage more grain to be sold, grain also continued to be exported. • 500,000 died. Stolypin’s Reforms • Appointed PM in 1906 following peasant unrest that lasted 190507. • Hoped to improve land distribution and create stronger peasant class as role models (wager on the strong). • Peasant land bank had unused land made available. • Consolidation of strip farms encouraged. Rich peasant class expanded, but remained angry over available land. 2m peasants left land and created labour shortages, exacerbated by WWI. Lenin War Communism • Showed lack of care for peasants. • Grain requisitioning. • 3 types of peasant, poor, middling and the kulak. • Denounced by village poor = Cheka class war. • Peasants still looked down on by Bolsheviks. NEP • Wealthier peasants increased [kulaks]. • In 1925 they were defined as owning 3 cows, 1928 it was 6. • Suffered from higher taxes, disenfranchised and children barred from secondary school. • Were able to criticise Bolsheviks = Bol. attacks. Collectivisation • Small farm units into bigger collectives. • Lenin wanted gradual approach, only 3% by 1929. • Shortages believed to be part of hoarders during NEP. • 1927-8 saw push for collectivisation – “socialism in the countryside”. • Matched by de-kulakisation. Process of Collectivisation • Meant to be voluntary. • Explained to peasants, komosols and poor peasants denounced kulaks ad created fear. • Kolkhozy (pure) or Sovkhozy (state) collectives. • 1930 58% claimed collectives, exaggerated. • Opposition saw Bransk-oblast reject Komosols, migrationin Kazakhstan saw 75% migrate. • Opposition led to “Dizzy with Success” paper and peasant allowed to leave collectives. Renewed Collectivisation • 1937 = 98% of peasants re-collectivised. • Now allowed to keep small plots of land (more productive than collectives). • MTS stations set up, meant to distribute seed, collect grain and decide levels of payment. • Disrupted by 1932-34 famine. • Payments of kolkhozy farmers improved. • 1941 98% collectivised, still disliked. • Hated 1930 end of the mir, wanted to make extra independence, realised famine not prevented by collectives. Khrushchev and Agriculture • G. Hosking “[Khrushchev] never fully got to grips with the authoritarian and bureaucratic structure of agricultural administration”. • Khrushchev believed himself to be an expert. • Removed MTS stations and merged smaller collective farms, believed this would improve production. • Tried to provide more incentives by reducing taxes, increasing electricity provision to rural areas and raised prices on state procurements. • Changes angered urban workers over price rises. • 1962-63 saw bad weather and harvests = riots, worst at Budyenni Locomotive Works, 23 protesters shot by KGB. Virgin Land Scheme VLS • Designed to increase cereal production. • Meant to be achieved through increase in cultivated land. • 1950 96m acres allocated for wheat production, 1964 = 165m acres. • Sense adequate food was being produced. • Failures: – Land overused and crops not rotated. – Soil fertility fell and soil erosion made many areas too arid for cultivation. – Largely cut corners due to speed of implementation. – Productivity and production fell. – Main reason Khrushchev fell?