3 Russia as an Emerging Market

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3) Russia as an Emerging Market

• General History XII,
• 1756-1914

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1859
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Questions
Was the Tsarist regime incompatible with the
economic modernization? A topical question
China
Was revolution in Russia inevitable before the
First World War? The determinism implicit in
recent periodisation (Figes 1891 Pipes 1899)
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From the Tsar Liberator to the Tsar Liquidated
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How Russia grew

• Average annual NNP growth 3.3 pa 1885-1913
  (Gregory)
• Investment up from 8 to 10 of NNP
• Industrial output 4.55 pa
• Agricultural output grew at 2 per annum
  18601914
• BUT
• Population growth 1.5
• From an economy with abundant land to and scare
  labour to one with abundant labour

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Output of pig iron (in thousands of metric tons)
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Length of Railway Line Open
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Raw Cotton Consumption (in thousands of metric
tons)
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Net National Income, 1898-1913
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Population and Per Capita Income

• Population rose from 135 million to 171 million,
  up 26
• Per capita income rose from 70.2 rubles to 109.6,
  an increase of 56
• Death rate fell from 35.7 per 000 to 29.5
  (1876-80 c/w 1906-10)
• Infant (under 1) mortality fell from 275 per 000
  live births to 247
• Literacy rose from 21 of population to 40
  between 1897 and 1914

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The Debate

• Gerschenkron
• state-led industrialization financed by high
  levels of borrowing from abroad
• investment attracted by decision to join gold
  standard (1896)
• interest on debt paid by
• grain exports
• high levels of indirect taxation
• leads to declining peasant consumption
• Kahan
• emphasis on heavy industry for arms and railways
  leads to
• crowding out of private sector investment
• diversion of resources from social into military
  functions

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In fact

• The Russian debt burden tended to fall
• No evidence of crowding out of the internal
  market
• Percentage of total Russian capital market
  accounted for by govt. bonds actually fell from
  88 in 1893 to 78 in 1914.
• The cost of borrowing was falling
• A large proportion of Russian debt was external,
  especially held by French bond-holders
• 27.5 of all French overseas investment in
  Russia, 90 in state bonds

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The Cost of the Steamroller
Russian military burden was c. 38 of total
central government spending
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Taxing the Peasants

• Government was financed overwhelmingly from taxes
  on consumption.
• Net revenue from the vodka monopoly was c. 2.5
  times higher than that from the state railways!
• Gross revenue (900 m. rubles in 1913) accounted
  for more than a quarter of state revenue
• The other key articles taxed were kerosene,
  matches and sugar
• Direct tax just 6.8 per cent of total revenue.
• Per capita tax burden rose from
• 12.4 of national income (1860) to 16.9 (1913)

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Social Polarization as Key?

• In 1850, less than 2 of population lived in
  towns of more than 100,000. In 1900, 80 of
  population still classed as peasants
• After emancipation, nobles continue to sell land
  total area they owned fell from 33 per cent of
  arable land to 22 (1870 c/w 1905)

• 7 of households have no land, 20 had a plot of
  less than 2.7 acres (1 desyatina) average
  peasant allotment 2.6 desyatina
• 50 of marketable surplus from a few large
  estates (hence 1891 famine)

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Peasants are the key
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Essential Reading
Gogol, Turgenev, Dostoevsky, Tolstoy, Chekhov
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The Oblomov Factor
Ivan Goncharov, Oblomov (1859) - the bone-idle
provincial noble. He was a man ... of pleasant
appearance ... with a total absence of any
definite idea, any concentration in his features.
Thoughts promenaded freely all over his face,
fluttered about in his eyes, reposed in his
half-parted lips, concealed themselves in the
furrows of his brow, and then vanished
completely. ... Lying down was not for Oblomov a
necessity, as it is for a sick man or a man who
is sleepy or a matter of chance, as it is for a
man who is tired or a pleasure, as it is for a
lazy man it was his normal condition.
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The Bazarov Factor
Ivan Turgenev, Fathers and Sons (1861) Bazarov,
a nihilist student of peasant family Aristocra
tism, liberalism, progress, principles - think of
it, what a lot of foreign ... and useless words!
To a Russian theyre not worth a straw. ... In
these days, the most useful thing we can do is to
repudiate - and so we repudiate. Everything?
Everything. ... even the emancipation of the
serfs is not likely to be to our advantage, since
those peasants of ours are only too glad to rob
even themselves to drink themselves silly at the
gin-shop.
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Paradox Foreign Perceptions
Bethmann Hollweg to his secretary Kurt Riezler,
as recorded by the latter, in 1914 The future
belongs to Russia. It grows and grows and hangs
upon us ever more heavily like a
nightmare Russias growing claims and enormous
power to advance in a few years will simply
impossible to fend off, especially if the present
European constellation persists (July 20,
1914)
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Essential Reading

• H. Rogger, Russia in the Age of Modernisation and
  Revolution, 1881-1917
• Richard Pipes, Russia under the Old Regime
• P. Gatrell, The Tsarist Economy, 1850-1917

• M.E. Falkus, The Industrialisation of Russia,
  1700-1914
• A. Kahan, Russian Economic History the
  Nineteenth Century
• G.L. Yaney, The Urge to Mobilise Agrarian Reform
  in Russia, 1861-1930

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1896
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Next week

• The Origins of the First World War