Another one for the pile

by Kieran Healy on May 24, 2004

My pile of Books to Read grew considerably over the past two months (though not as much as my pile of books to “not read”:https://www.crookedtimber.org/archives/001011.html). Robert C. Allen’s “Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution”:http://www.amazon.com/exec/obidos/ASIN/0691006962/kieranhealysw-20/ref=nosim/ sounds interesting, though I’m not likely to get to it. It makes the argument that, comparatively, the Russian economy was very successful from the late 1920s to the early 1970s. The gray world of ’70s Communism wasn’t exactly “Big Rock Candy Mountain”:http://ingeb.org/songs/onasumme.html, but economically it was in the same league as second-tier capitalist countries like those on the European semi-periphery. Considering that Russia was barely post-feudal when the Soviets arrived, this is (to coin a phrase) a big leap forward — at least comparable to the growth-rates of many of the advanced capitalist democracies, and much better than almost all other “developing” countries over the same period.

The book seems like a strong effort to separate the question of economic growth from the political dimensions of Soviet failure. Allen argues that Stalin’s brutal collectivization schemes didn’t do much for growth rates and that most of the benefits of mid-century growth were squandered by bad decisions from the Kremlin gerontocracy. I’ll wait for a full book report from “Brad DeLong”:http://www.j-bradford-delong.net/movable_type/.

{ 14 comments }

1

Sebastian Holsclaw 05.24.04 at 8:25 am

“The book seems like a strong effort to separate the question of economic growth from the political dimensions of Soviet failure.”

I had some really cutting comments but I’ll try to calm down.

Why would you want to separate the two? Let us say that you were in fact able to prove that the Soviet Union was able to grow at a somewhat larger pace during the years of murdering millions of its own citizens… when would be a good time to apply that lesson?

2

Carlos 05.24.04 at 10:43 am

… barely post-feudal?

Anyway. The Soviet Union was once hailed (by the left) and feared (by the right) as the very model of an economic powerhouse, due to its extremely high rates of growth in the NEP period, and later its high rates of industrial production during World War Two. But the NEP period was merely a return to the pre-World War One, Tsarist economic trend, and we now know that productivity in wartime Soviet factories was unbelievably low. Of course, even a value-subtracted tank is better than no tank at all, if the Wehrmacht is camping on your front lawn.

Post-WWII Soviet economic growth attracted much less international attention. The Soviets, rather cunningly, switched to technological showpieces that could be done on the cheap. The postwar looting of eastern Europe seems to have been a net loss, though the Soviets became rather proficient at more formal methods of exploiting their client states. There was also an enormous amount of human capital that the Soviets just plain kept, taking their own sweet time about allowing repatriation. Later on, the Soviets did some cute tricks manipulating exchange rates and commodity prices with their client states, even burning the US badly with the Great Grain Robbery.

But all things must come to an end.

Oh, wait. I didn’t mention the megadeaths. I will now suffer the cutting remarks of Sebastian “Imminent” Holsclaw. Oh, the humanity!

C.

3

Conrad Barwa 05.24.04 at 10:46 am

It makes the argument that, comparatively, the Russian economy was very successful from the late 1920s to the early 1970s.

My understanding was that the period of relatively rapid growth ended by the 1950s; after which TFP was either negligible or negative for the economy as a whole. Clearly, this was not a good or sustainable growth path for any economy as a whole.

It makes the argument that, comparatively, the Russian economy was very successful from the late 1920s to the early 1970s.

But wasn’t it suffering from several internal systemic crisis at periodic intervals, I assume this was the reason behind all the various (unsuccessful) reform efforts to resolve problems in the planning allocations and agricultural sector.

Considering that Russia was barely post-feudal when the Soviets arrived, this is (to coin a phrase) a big leap forward — at least comparable to the growth-rates of many of the advanced capitalist democracies, and much better than almost all other “developing” countries over the same period.

Not all that surprising, given that the real attraction of socialist economic planning engineered from above, for most de-colonised countries was the possibility of accomplishing industrialisation in a single generation, what would (thought to, at least) have taken several under more laissez-faire systems.

4

Kieran Healy 05.24.04 at 10:49 am

Let us say that you were in fact able to prove that the Soviet Union was able to grow at a somewhat larger pace during the years of murdering millions of its own citizens… when would be a good time to apply that lesson?

You’d take it into consideration if you were asking questions like “What are the causes of economic growth?” or “What makes capitalism different from communism?” or “Can an economy survive even if there’s a genocidal maniac running the country?” or “Is it true to say that stagnant communism failed because it wasn’t able to keep up with the dynamic growth rate of capitalism?” or any number of other questions.

5

Doug Muir 05.24.04 at 11:25 am

Allen argues that Stalin’s brutal collectivization schemes didn’t do much for growth rates

…but this is by no means a new argument. A lot of economists have been arguing for a while now that the collectivization and the famines ended up being surprisingly irrelevant to growth, particularly industrial growth.

It’s natural to assume that since Stalin was killing and brutalizing millions of peasants at the same time that the USSR was undergoing forced-growth high-speed hothouse industrialization, especially in “smokestack” manufacturing industries, that the two were connected — viz., that he was moving some of those inputs from one sector to another. In fact, it seems not.

But, again, this is not a new idea.

Doug M.

6

Doug Muir 05.24.04 at 11:55 am

The gray world of ‘70s Communism wasn’t exactly Big Rock Candy Mountain, but economically it was in the same league as second-tier capitalist countries like those on the European semi-periphery.

Um. Per capita GDP numbers for the pre-collapse USSR are as skiffy as, well, any other numbers for the pre-collapse USSR. Still, a quick stroll through unstats.un.org (which is based on official statistics) gives us the following:

Year 1970 1980

USSR 1659 3498
Ireland 1428 6134
Greece 1283 5063
Spain 1153 5893

So, it would probably be more accurate to say that “Soviet Communism spent the 1970s falling behind second-tier capitalist countries like those on the European semi-periphery.”

As a fourth data point, there’s the Former Yugoslavia: 668 in 1970, 2902 in 1980. Lower base, but a growth rate much more like Greece or Ireland.

Doug M.

7

Doug Muir 05.24.04 at 12:11 pm

at least comparable to the growth-rates of many of the advanced capitalist democracies, and much better than almost all other “developing” countries over the same period.

In Maddison’s “Monitoring the World Economy, 1820-1992”, there’s a lovely graph showing growth rates in the OECD countries from 1928 to 1970. It plots growth against 1928 per capita GDP, and then draws a line through the data points.

The line slopes downwards; there’s a clear negative correlation between 1928 GDP and subsequent growth. It’s “convergence” writ clear — poorer countries grew faster than richer ones.

Alas, the waters get muddy when non-OECD countries are included… with a couple of exceptions (Turkey), they spent the middle of the 20th century huddled pathetically in the lower left-hand corner of the graph, with low income /and/ low growth.

But let that bide. Point here is, the USSR sat squarely on the line. Over on the left end, sure — low ’28 income, high growth — but almost exactly on it.

IMS the weird outlier was Japan, which was a wee bit to the right of the USSR (slightly higher 1928 income) but waaaaay above it (much better growth rates).

(This from memory — if someone can find a copy of that graph online, it’d be swell. Maybe over at the OECD? It was an OECD publication IIRC.)

Anyhow, point is: you can argue with a straight face that Soviet growth, 1928-1970, was pretty much exactly where you’d expect it to have been. It’s right on the curve. It only looks weird if you compare it to those non-OECD countries… but in this period, that means, like, Guatemala and Ethopia.

Doug M.

8

also 05.24.04 at 5:11 pm

agree with much of what doug m has said, and also…

1) there are plenty of countries that leapt ahead of the ussr during this time frame. japan is the most obvious, but also singapore/taiwan/south korea and hong kong (which is no longer a “country”, but does have 6-8 million people and is bigger than several of the smaller european countries).

2) russia today has slightly more than 1/4 the gdp-per-capita of the usa (something like $9500 vs $37000). So their growth rate wasn’t just slowed down, it was totally killed by communism.

3) the same is true for china. till they implemented deng’s reforms, their growth rates were in the toilet.

4) bottom line proof that low growth and economic disaster are endemic to communism is the comparison of north & south korea, east & west germany, and hong kong/taiwan/singapore vs. the PRC.

All of these examples have the same ethnic population and vastly different outcomes, due to the difference between communism & capitalism.

5) as doug muir observes, the reports of the ussr’s economic success are largely potemkin village fabrications. technology successes were present, but only at the cost of throwing *everything* into guns. And we don’t really know how good their military *was*…the AK-47 was a good weapon, but dollars to doughnuts says that those rusty tanks would have been paper tigers in a (non-nuclear) Fulda Gap scenario.

9

Matt 05.24.04 at 6:32 pm

I don’t see how this adds up. ‘Russian economy was very successful from the late ’20’s to the early ’70’s’. However, this doesn’t count the 30’s, ‘brutal collectivization didn’t do much for growth’, there was, as I recall, a war during the ’40’s, and I don’t think anyone claims that the GULAG economy of the late ’40s and early ’50s was efficient or productive. So what’s left? Late ’20s and ’60s?

10

Giles 05.24.04 at 7:09 pm

Here’s the actual GDP per capita growth rates for those of you interested.

USSR USA
1900-1930 17.1% 51.9%
1930-40 48.0% 12.8%
1940-50 32.6% 36.4%
1950-60 38.8% 18.5%
1960-70 41.3% 32.7%
1970-80 15.3% 23.6%
1980-90 7.0% 24.9%
1990-2000 -36.7% 21.2%

11

Conrad Barwa 05.24.04 at 11:43 pm

there are plenty of countries that leapt ahead of the ussr during this time frame. japan is the most obvious, but also singapore/taiwan/south korea and hong kong (which is no longer a “country”, but does have 6-8 million people and is bigger than several of the smaller european countries).

I don’t think that is the argument; but in anycase almost all the examples cited come from one particular region of the global economy – ie Eastern Asia which had a number of benefits not accessible to the rest of the world; so it is unlikely that their growth path could be easily replicated.

the same is true for china. till they implemented deng’s reforms, their growth rates were in the toilet.

Don’t know where this comes from, China’s pre-reform growth rate was between 4.4%-5.5% which isn’t great but isn’t in the ‘toilet’ as it were. Much better than that other Asian giant India, stuck at the ‘Hindu rate’ of growth for this period of 3.5%.

And we don’t really know how good their military was…the AK-47 was a good weapon, but dollars to doughnuts says that those rusty tanks would have been paper tigers in a (non-nuclear) Fulda Gap scenario.

It was pretty good at least for a lot of the hardware; and quite cost-effective. I don’t see how the armour is meant to have somehow been crap, along with the fighter aircraft and other naval equipment; this was one of the few areas where the Soviets actually did well. One of the reasons why their weapons are still in such high demand even now.

12

Doug Muir 05.25.04 at 7:53 am

there are plenty of countries that leapt ahead of the ussr during this time frame. japan is the most obvious, but also singapore/taiwan/south korea and hong kong

On the other hand — devil’s advocate here — I must point out that the USSR was /on/ the curve, not below it. In other words, its growth over the period 1928-1970 was nothing special, but it wasn’t particularly bad either.

Paul Krugman has a much-googled article talking about how Soviet growth involved spectacular increases in inputs rather than productivity improvements. Perhaps. Still, there was real growth, and plenty of it.

russia today has slightly more than 1/4 the gdp-per-capita of the usa (something like $9500 vs $37000). So their growth rate wasn’t just slowed down, it was totally killed by communism.

…Russia in 1914 had /less/ than 1/4 the pcGDP of the 1914 US.

4) bottom line proof that low growth and economic disaster are endemic to communism is the comparison of north & south korea, east & west germany, and hong kong/taiwan/singapore vs. the PRC.

…I note that the jury’s not in on that last one; for the last decade or so, China has been growing faster than either Taiwan or Hong Kong.

as doug muir observes, the reports of the ussr’s economic success are largely potemkin village fabrications.

I didn’t say that.

Doug M.

13

Doug Muir 05.25.04 at 8:19 am

Kieran, if you want to save about 300 pages of reading (and you might not; sometimes this stuff can be quite interesting), this looks like an interesting review.

1000 words of description, followed by 500 of critique, with which I mostly agree:

“Allen’s analysis conveys no sense of the real price Russia is paying today for six decades of Stalinist planning, which temporarily boosted production and employment but did terrible damage to economic and civic institutions. Allen suggests that if Russia had made it through the twentieth century as a food-exporting market economy it would have remained relatively poor. But having emerged from communism Russia is poor anyway: according to Angus Maddison average real incomes across the former Soviet Union were only two thirds of the Latin American average in 1998, compared with rough parity in 1914.

“This fascinating book contributes to the long tradition of seeking a transferable “development model” for poor countries in Soviet historical experience (page 4). The problem is that this model is historically inseparable from dictatorship.”

Doug M.

14

Tom T. 05.26.04 at 3:08 am

The Soviet economy also left behind a legacy of staggering environmental destruction, well beyond any of the harm that the US has managed to do to itelf.

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