But shortly before the February Revolution Tsarist reforms led by people like Witte and Stolypin led to drastic industrialisation. Metallurgy and mining increased 84%. metalworking 79%, textiles 46%, electrical power 83% and woollens 56%. Light industries like sugar, cotton, low-growth tobacco etc. also showed growth. The railroad boom in the 1890s also helped bolster the process of industrialisation and began to recover before the War... x.com/ProletarioP_/s…
Output-wise Russia began at half the level of the US, 80% the UK and Germany, and only slightly below France. By 1913 output was well above France and comparable to Germany and the UK, and only really lagged behind the US. Overall growth levels were similar to the UK, Germany, Italy, etc. but slower than that of the US, Canada, Scandinavia etc. Per-capita product was comparable to Germany, the United States and Canada whom were mostly in the "late" stages of industrialisation.
Although Russian income inequality is often stated as extremely drastic, it turns out that it was not terrible for the time or even the present-day. The Gini Coefficient of 0,362 was lower than Victorian England at the time and is comparable to nations like Latvia and the UK today, and the income share of the top 1 & 5% was lower than comparable European/Scandinavian nations at the time.
The idea of a despondent peasant class, wherein the peasantry lived primarily in subsistence, also does not seem to be universally accurate. For instance, in the Voschchazhnikovo area there are no references to increased mortality, and foreigners remarked that grain prices were cheaper and more available. In the Volga region there are evidence of local markets which had more than 140 items for sale. In Voschchazkhniovo markets offered needles, linen, tobacco, paper and other consumer goods. In addition, only about the bottom 25% actually lived in wooden huts-the majority in these rural areas had two-story stone houses.
The idea of limited labour mobility and low land productivity due to the mir commune system (commonly referred to as the agrarian crises) is also reductionist. The Stolypin reforms, which allowed exits from the mir commune and the enclosure/privatisation of previous communes. This drove increases in land productivity as communes and farmers adjusted for economic changes. There were also examples of entrepreneurship within the Black Earth South and Baltic regions and examples of significant immigration from rural to urban region evidenced via. passports. Nominal rural wages also increased during this time in both Moscow and St.Petersburg.
I want to conclude my revisionism by arguing that Soviet industrialisation was also imbalanced and to an extent illusory. Soviet industrialisation favoured heavy industry disproportionately at the extent of light industry, which lowered the growth rate of non-agricultural consumption.
Total factor productivity in Soviet Russia was also continuously lower than that of the Tsarists, particularly in the agricultural sector. As Davies argues, this was because of re-collectivisation, by disrupting crop rotation, and by the fall of draught animals and loss of entrepreneurship caused by dekulakisation. Also, in the industrial sector, extremely ambitious production targets caused expansion of industrial output and labour allocation, but this lowered labour productivity overall.
I do not want to argue that the Tsarist economy was perfect. It had extreme structural flaws and barriers-of-entry that prevented it from fully flourishing; for instance, the massive channeling of money towards rail networks, the protectionism on foodstuffs, the export-oriented industrial policy, state-supported cartelisation on oil, steel, iron and coal that allowed them to set price controls, and low levels of human capital.
But the standard narrative that Tsarist Russia was stagnant and pre-industrial, that agrarianism prevented industrialisation, that labour markets were inflexible, that land communes failed to develop, that rural citizens were extensively impoverished etc. is at best overly simplistic.
Sources:
Industrial Expansion in Tsarist Russia, 1908-14 by Peter Gatrell
The Industrialisation of Russia, 1700-1914 by M.E. Falkus
Before command : an economic history of Russia by Paul R. Gregory
The rural/urban wage gap in the industrialisation of Russia, 1884–1910 by Leonid Borodkin, Brigitte Granville And Carol Scott Leonard
Tracy Dennison and Steven Nafziger, Living Standards in Nineteenth-Century Russia
The Stolypin Reform and Agricultural Productivity in Late Imperial Russia Paul Castañeda, Dower University of Wisconsin-Madison
Russian Inequality on the Eve of Revolution, Peter H. Lindert, Steven Nafziger
WAS STALIN NECESSARY FOR RUSSIA'S ECONOMIC DEVELOPMENT? Anton Cheremukhin
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The notion of reform is not new to Cuba. In the mid 1990s, when Cuba was reeling from the loss of the USSR and Comecon, Castro decided to become a pragmatist and allowed citizens to hold bank accounts, open small businesses, and (de facto) employ others, before allowing farmers to sell their surplus at market prices (like Deng), hold private farmland and give more land-use rights. He then allowed people to sell—individually sell—handicrafts, light manufacturing and consumer goods in public markets; and even allowed foreign direct investment.
Companies like Sheritt International of Canada committed billions of dollars for oil exploration, sugarcane, nickel mining, tourism, etc. This was despite the Helms-Burton Act which was designed to keep other foreign companies from investing in Cuba. The overall effects of the reforms were highly positive, with a growth in output, a fall in the price of the dollar, and greater abundance of foodstuffs and electricity. However…
These reforms were not all too comprehensive and were met with limiting conditions in nearly all aspects. This is because in Castro’s cabinet during this time there were a mixture of technocrats who had studied abroad, hardliners, military officials and loyal officials; Castro sided with the hardliners so it keep them in power and to reform with them more cautiously than needed.
Examples: I mentioned the establishment of coöperatives earlier, but the cooperatives still had a monopsony with regards to the state (the state was the sole distributor), and the state also limited the farmers that could join or form a coöperative. Production plans and prices were also determined by the state. I also mentioned foreign investment, but most (all but one) ended up being joint ventures with state investment, and had to pay the wages to the state in dollars who would then redistribute the wealth to the workers in pesos. The state also prohibited at-will employment during this time.
Today I will summarise multiple theories of capital, mostly the classicals and the beginning of the Neoclassical Movement, including also thinkers like Proudhon and Marx. The treatment of capital in its varying homogeneity and heterogeneity, as well as the role of the entrepreneur is worth noting as well. (This is pt. 1 of a 2 part thread)
Instead of starting with Smith, who was not the founder but rather the systemizer of economic thought, let's start with Ibn Khaldoun (ابن خلدون) who wrote the مقدّمة (Prolegomena) and lived in the 14th Century. In it, Capital is taken to mean accrued assets, attained through fluctuations within the market of agriculture and commerce and undertaken for the purpose of profit. 1 People who manage to accrue an abundance of capital live luxuriously but must be protected by communities in order to prevent envious individuals (rulers) from expropriating it. 2 Capital is always, in Khaldoun's view, represented value-wise in gold and silver, 3 both intrinsically considered as treasures, and reliant on labour as it is labour that transforms useless goods to useful ones. 4
Khaldoun is interesting because he anticipates both thinkers like Smith, the Liberals (wealth creation should be done by merchants/entrepreneurs and the State should not take an active role) and Marx centuries before they were born. But enough about that, let's go to Richard Cantillon. Richard Cantillon is considered a predecessor to the Physiocrat school because he says plainly: "Land is the source or the matter from which wealth is derived; labor is the form that produces it." 1
It is land in Cantillon's view that possesses intrinsically valuable goods (hemp, cotton, cereals) which is why it is ideal to be a landowner and accrue consistent income. However Cantillon does recognise the entrepreneur, who trades and sells commerce in uncertain terms (lack of knowledge about demand/price) and buys capital from other entrepreneurs. 2 If a "substantial" entrepreneur has saved enough capital (gold, silver, wheat, wool) with "intrinsic value" he may become independent and prosperous, but only temporarily, because even these goods are subject to constant "accidents" and "losses". 3
Cantillon's theory, although ruinous in some aspects (as it inspired Smith's enemies, the Physiocrats) is not entirely without merit, for it taught that 1.) "Capital goods" are subject to oscillating laws of supply and demand, 2.) the entrepreneur necessarily makes decisions in uncertain and unknown market conditions, and 3.) preexisting plans of capital may fail. This in my opinion seems not too dissimilar to what Mises, Lachmann &c. said.
Cit. 1- Essay on the Nature of Trade in General, R.Cantillon, Sec.1 (Of Wealth), 2- idem., Sec. 13, 3- ibid.
There are certain misconceptions about the Kowloon Walled City, the so-called anarchic and festering slum of British Hong Kong. Some include that housing quality and space was almost non-existent or that they were at least far inferior to less spontaneous public housing programmes; that poverty was significantly higher, that quality of life was far worse and that the area lacked governance (not to be equated with a state in this case). These are for the most part, misleading.
Please note: although I'm pretty decent in Cantonese as it is one of my primary languages (我嘅廣東話一般般啦) I am mostly using Colonial-era Romanisation of certain location names. So don't take offence if you are one of the few people to be offended by that.
Despite the fact that government interests favouring the demolition of the walled City were at play, a report found no structurally defective or unsafe buildings 17 years after the Walled City's construction. This was after considering potential factors such as collapse, a lack of structural integrity, fire, disease outbreak, or a plane mis-approximating its approach to Kai Tak Airport (one of the most challenging approaches in the world, mind you). It seems as if the buildings being packed together actually contributed to their structural integrity.
However, many public rental buildings were found to be structurally unsound, such that 27 housing blocks were demolished and 411 required heavy costs and maintenance to survive. This was due to the shoddiness of public housing projects, which I shall cover in due course.
There are several problematic propositions employed when studying and understanding the role, expansion, and nature of Government, as first detailed by Robert Higgs (1991). These fallacies are employed by economists, political scientists, public choice theorists, and laymen.
The first is the idea that we can universalise all actions of government into a single "size". We can say that from government doing "X" and "Y" that it is a "big" government or "small" government. This is problematic for the following reasons; suppose that government increases defence funding whilst eliminating subsidies for certain manufacturing industries for the exact same amount. Suppose that government decreases zoning regulations (in the real estate sector) but increases excise duties at the same time.
One action is associated with increased interventionism, the other one decreased interventionism; now also consider that government officials often work at odds ("churning") with each other; for instance, the USDA doing research on developing new and more efficient crop varieties may increase the supply and decrease the price of said crop; but land regulations may decrease the supply and increase the price of said crop. These two actions are countervailing but done by the same government. Now imagine that these contradictory and offsetting actions are multiplied thousandfold, as the regulatory code is hundreds of thousandsfold; it is clear that an objective unit of account is generally not possible.
The next is the idea that statistics can provide us with a more legible definition of the size of government; namely, the ratio of total spending to GNP (gross national product). Or the ratio of tax revenues to GDP, or the ratio of government employees to labour force. These are proposed alternatives.
There are some simple complications in this. When one says "government spending" should one mean all government spending or the government's spending for newly purchased finished goods & services? Both measures are used, but the all-spending ratio can rise whilst the exhaustive one is level. Also there are more practical examples. Say a company produces more products ceteris paribus. The implication is that government has "shrunk" because the ratio is smaller. But has it? Suppose a government department agrees to pay more for the exact same supply of goods, so the ratio is ipso-facto higher. Has government grown? Suppose government goes from closing local meat inspection factories, instead forcing businesses to operate off a strict bureaucratic code. Has government gotten smaller?
The same is true for tax revenues, which is more complicated by taxes switching regularly from on to off budget, and by the appearance of multiple taxes. And the issue with government employees as a ratio to labour force is that government contracts many private companies to build so-called public services (roads, bridges, etc.) These workers may not be employed by government, but can we classify them as "private"? Issues abound.
Many people claim that the end of the Glided Age was a peak example of positive interventionism: big business doing whatever they wanted with little respite, which only stopped when government regulated and broke them up, freeing consumers from the yoke of unregulated capitalism. But is this true? The answer is... no. What if, instead... the regulations were done in the name of big businesses and special interests? This might seem difficult to fathom in the here-and-now, but read on.
The following sections are mostly theoretical and provide for the reader a reason to believe the idea that regulation can be done for special interests, before actual empirical examples are given to bolster such an idea; if you are already well-versed in public choice theory, feel free to skip posts 3-8..)
The underlying ratiocination behind my thesis that regulations can be a tool to consolidate is this truism and its logical conclusions; large companies (and by extension, all companies, but large companies have more resources and knowledge to fulfill it) want their competitors to lose.
After all, competition is something that is done for personal gain, and by extension personal victory. This is in essence a doxastic "truth". Now in a free market the optimal way to do so is to pursue strategy that sells products that are highly demanded, at the right supply, with the correct price set. This process is very intertemporal, that is to say transient, because having the correct strategy in year X does not ensure you will have the correct strategy in year X+1.
There might be competitors who discover new methods and flood the market, or there might be new, similar goods that are in higher demand, or there might be internal tension between your own business, which causes poor execution. Or, even simpler, consumers might want different goods. So even if companies want the market entirely to themselves, it is difficult for them to hold such a position for an extremely long time without a great deal of luck.
People denounce the starvation and impoverishment in present-day society. And they have a right to do so, but one must remember how starvation and famine were often the norm for many societies pre-industrialism, even amongst "colonial powers" like Europe. The examples abound.
(Disclaimer: I am not trying to say life was universally poor or that certain aspects like spirituality did not factor in quality of life. I am merely trying to show how much famine and overall suffering ruined even affluent and privileged imperial societies, and not just in mass disasters like the Black Death or the Potato Famine)...
Let us start in the Mediterranean, specifically in the Venetian islands of the Levant: Crete, Corfu and Cyprus in the 16th-18th century. In the late 16th c. the Rev. Father Stefano described the various natural flora and fauna of Cyprus; the white apium, a relative of celery-leaf that could be eaten when crystallised in sugar; Oldanum was a plant used for liquor; black cypress was used to provide orange dye; and herbs, cattles, donkeys and bears. Animal and plant life was teeming, so one would think human life was too.