Academic journal article Independent Review

The Soviet Economy, 1917–1991: Its Life and Afterlife

Academic journal article Independent Review

The Soviet Economy, 1917–1991: Its Life and Afterlife

Article excerpt

We think of Russia before the Bolshevik Revolution as a poor country, and this was so by the standards of other great powers. In 1913, as figure 1 shows, Russia was far behind the global frontier marked by the United States. But by another standard, that of economic development around the world, Russia was just an average economy, with real output per capita at the global mean. Over the century from 1913, the eve of World War I, to 2008, the edge of the recent world financial crisis, Russia's real output per capita multiplied more than five times-but so did that of the world. So in 2008 Russia was again an average economy.

If the twentieth century saw Russia develop at the same pace as the global economy, neither faster nor slower, one might wonder why the years between 1913 and 2008 deserve much attention.

In fact, these years were extraordinary. The Bolshevik Revolution began with an economic disaster as output plunged. It did not recover to the prewar level until the end of the 1920s. During the 1930s, Soviet production regained the global mean and rose above it. The margin of Soviet advantage over the world average was 10 percent by the outbreak of World War II and 40 to 50 percent for much of the Cold War. For half a century, Russia's output was forced by the relentless pressure of state-led modernization and mobilization. The level of output was pushed up, but there was no sustainable path to the global frontier. With the collapse of the Soviet Union, the pushing stopped, and everyone breathed out. Output fell back to the world average and then below it, before reverting once more to the mean.

Before and after the Soviet era, therefore, Russia had an average economy- exceptional only in size. And size mattered.

Size and Mobilization

Size was reflected in Russia's large population and abundant natural resources. These things mattered not for consumer welfare but for power and security. In the world as the Bolsheviks saw it, the survival of states was decided by their relative economic and military capabilities. Vladimir Lenin wrote that Russia had moved forward politically because of the revolution, but it still lagged economically: "The war is inexorable; it puts the alternative with ruthless severity: either perish or overtake and outstrip the advanced countries economically as well" ([1917] 1974, 369). Greater powers, Joseph Stalin observed, had continually beaten Russia "for falling behind, for her backwardness. . . . That is why we must no longer lag behind. We are fifty or a hundred years behind the advanced countries. We must make good this distance in ten years. Either we do it, or they crush us" ([1931] 1949, 40-41).

Power and security were often neglected when Western economists turned their attention to the Soviet economy during the Cold War. Many of them followed a shared outlook, explaining Soviet economic policies as a strategy for growth or a model of development (e.g., Nove 1961; Spulber 1964). They acknowledged that for the sake of modernization the Soviet state relied on methods that were authoritarian or paternalistic. The secret police and thermonuclear weapons entered the story, if at all, as undesirable and costly by-products of the quest for growth.

The Soviet archives have shown what this perspective left out.1 Considerations of national security were decisive at every turning point. As the Bolsheviks understood the world, they faced a double threat. The external enemy was continuously in collusion with the enemy within, and these enemies encouraged and reinforced each other, so that threats from abroad incited internal resistance and vice versa. In this vision, internal and external security were inseparably linked.

The economy was reorganized, therefore, to mobilize against the foreign enemy and suppress the enemy within. Forced industrialization allowed the economy to be diversified into mass production of the guns, planes, tanks, and shells that would hold off the external enemy in the "future war. …

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