Would Russia have industrialized without Stalin?

The question, “Was Stalin necessary?,” posed in a  recent paper, by economists Anton Cheremukhin of the Dallas Fed, Mikhail Golosov of Princeton, Sergei Guriev of the New Economic School in Moscow, and Aleh Tsyvinski of Yale, seems a bit tasteless at first. Obviously, nothing could make the 20th century’s greatest mass murderer “necessary.”

But considering Russia’s growth from a largely agrarian economic backwater into an industrialized power that was competing with the United States and putting humans into space in just a little over four decades, it’s worth considering whether the same result could have occurred had he never come along. The authors attempt to do this by developing a counterfactual model of how the Russian economy might have developed if it had continued on the same path it was on prior to 1918.

The authors point out that the Russian economy was not exactly stagnant in the late Tsarist period. Efforts to industrialize the country had begun with the abolition of serfdom in 1861 and accerated in the early 20th century with the reforms undertaken by Prime Minister Pyotr Stolypin, which included the adoption of a gold standard, investments in railroads, and the encouragement of exports. GDP per capita grew at around 1.91 percent between 1885 and 1913.

Economic productivity was decimated by World War I and the revolution, and only returned to pre-revolutionary levels by around 1928, following the limited market reforms of Lenin’s New Economic Policy. GDP and levels of industrialization then skyrocketed under Stalin:

But did this happen because of, or in spite of, Stalin’s policies? The authors argue that while the economy certainly benefited from improvements in technology and investments in industry under Stalin, these gains were counteracted by losses in productivity due to his burtal collectivization of agriculture: 

First, the state exaction of grain from peasants on its own created dramatic disruption in agricultural production. There was virtually no incentives to work on the collectivized land. The system of crop rotation was severely disrupted and not restored even by 1935 when crop rotation was used only on 50 percent of the sown area. The grain requisition lead to drastic fall in livestock because of lack of feed. This fall in quantity, exacerbated by the careless application of the available manure, in turn lead to a significant reduction of manure to fertilize the land and again lowered its productivity.

Second, the dekulakization campaign of 1929-1931 affected five to six million peasants, one million out of 25 million peasant households (Wheatcroft and Davies, p. 68 in Davies et al 1994). These most successful and knowledgeable peasants were in the best case exiled, and in the worst case executed. Third, there was a significant decline in skills and technical training. A part of this can be attributed to dekulakization itself. Another part was due to the lack of experience on the side of the urban workers who were sent to run the collectivized farms. Additionally, the purges of the “bourgeois” elements bled the agricultural (as well as non-agricultural) sector of the trained specialists. Fourth, the system of centralized control and planning lead to a variety of erroneous decisions made.

Neither Stalin and the top brass of the Soviet elite, nor the regional party secretaries had experience in agriculture. Wheatcroft and Davies (p. 124 in Davies et al 1994) argue that the positive elements of the centralized planning (economy of scale, some new advanced farming methods, increase in mechanization, etc.) were outweighed by the “great disadvantages … from the ignorance of politicians”.

The authors run a counterfactual simulation of economic growth under “Tsarist” conditions, as well as comparing Russian performance to that of Japan — which had similar economic conditions prior to 1918:

The Tsarist economy, even in our conservative version assuming that it would not experience any decline in frictions, would have achieved a rather similar structure of the economy and the levels of production as Stalin’s economy. However, this structural transformation would be achieved at a significant cost in terms of economic welfare measured in consumption equivalents. The short-run (1928-1940) costs of Stalin’s policies are very significant for an economy in a peaceful period. Our comparison with Japan leads to astonishingly larger welfare costs of Stalin’s policies.

However, after 1940, things start to diverge:

Stalin’s policies led to the short run costs (1928-1940) amounting to astonishing 24.1 percent of consumption. However, in the long run the generation born in 1940 reaps the benefits of the reduction of frictions and yields a 16.5 percent lifetime gain.

The paper is a good reminder that just because terror coincided with industrialization in Stalin’s Soviet Union, one was not a precondition for the other. Obviously, even had the Bolsheviks never come onto the scene, it’s hard to imagine that the Tsarist status quo would have continued indefinitely without disruption. The paper doesn’t get into how some sort of non-Tsarist, non-Stalinist system might have fared.

And of course, taking a step back from the economics, the obvious answer to the question of whether a 16.5 lifetime gain in consumption levels makes 20 million deaths “necessary” is ‘no.’

Via Chris Blattman