Nikolai Rostov Profile picture
Feb 20 8 tweets 7 min read Read on X
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…Image
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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.Image
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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.Image
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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.Image
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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.Image
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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.Image
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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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More from @austrosillyism

Jul 18
Managers are strange people. My grandfather was one and smoked two packs of cigarettes everyday, which is also why I never got to meet him. But anyways, they act in ways that seem unbecoming of pure profit maximization; for instance, they seek to increase asset size, or buy machinery that cuts beyond the profit maximising point. Why? Armen Alchian explains.Image
More specifically, managers are observed to emphasize growth in total assets and sales, instead of purely targeting profit. Also they try to reduce cost and increase efficiency in response to demand falling; under wealth maximization this would be default. They also do things such as, say, buy more expensive computers that are not very conducive to profit maximization.Image
Baumol says that sales maximisation is an objective feature of managerial work, and Penrose says asset growth is one. But this does not explain all managerial actions and to hold these objectives as subject to a wealth constraint means that the firm will never trade off pecuniary profit for sales. So they are weak defences.
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Jul 12
In Economics, as with many other fields, there are many good papers, if you know where to look. A lot of stuff recently published in the American Economic Review, or NBER, or Econometrica is world-class. But, there are very few masterful papers. That is, papers that can change or shape an entire worldview. Papers that propose conclusions that seem trivial but are reasoned beautifully. This is one of these papers that transcend common criteria for quality. This is one of the greatest papers of all time.Image
We want to create a system of rational economic planning. Or, put more simply, we want to create institutions that can, when given certain information, preferences and knowledge of technological means, use these parameters to produce and allocate scarce goods. If all the information, all relevant preferences and all knowledge of the best means are given, then of course everything becomes easy. Then planning just becomes an optimisation problem.Image
All we have to do then is make sure the marginal rate of substitution between commodity X and commodity Y are the same in each of their different uses. So if the MRS between apples and oranges in juice is 2, the MRS between apples and oranges in fruit salad should also be 2. This is so that there is no capital reshuffling; this is Pareto efficient. Wow, that was very easy. This paper sucks. Which idiot said it was one of the greatest papers of all time?
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Jun 29
The sharp Armen Alchian read, as a junior professor at UCLA, the bitter marginalism debate between Lester and Machlup (with Stigler helping the latter), and was confused about why the debate was so long and acrimonious. In his view, the solution was simple and intuitive: behold one of Prof. Alchian’s best papers.Image
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Present-day economics (in Alchian’s time) says rational actors seek completely optimal solutions, and the most appropriate types of action yield an optimal result, but it is said that this doesn’t happen in real life because of uncertainty about what the “optimal” period is. Nevertheless it is asserted that people act according to these principles if unknowingly.Image
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Jun 19
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…Image
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May 15
I talked about the Coasian theory of the firm here: [x.com/austrosillyism…] and to be sure, it is a very good paper. Perhaps one of the best of all time. However, Coase's paper was only the beginning of a long and firm-standing tradition. Oliver Williamson, another oft-overlooked economist, argues for the firm in an altered manner that I plan to discuss here.Image
Organisation is scarcely talked about in economics. This is because in WIlliamson's view, it is much easier to say "organisation matters for economic transactions" than to detail why. Therefore, Williamson's ultimate goal is to apply the conclusions of organisation theory, but from the perspective of contract, and tie it back into the theory of the firm.Image
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Read 18 tweets
Apr 6
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

Cit 1 - THE MUQADDIMAH, trans. Rosenthal., 360. 2- idem., 426. 3- idem., 446, 4- ibid.
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.
Read 24 tweets

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