From Agriculture to Industry: The Soviet Union Between 1929 and 1940

Name: Tim Goudsmid

Course: SSC 112

Date: 11-11-2005

Words: 2794

From Agriculture to Industry: The Soviet Union between 1929 and 1940

"We are fifty or a hundred years behind the advanced countries. We must make good this distance in ten years. Either we do it, or they crush us." Ð'- Josef Stalin, 1931

Introduction

For a large part of the Russian population, the Communist Revolution did not start until 1929. This was the year in which the collectivization of agriculture began and the year in which the Soviet industrialization process started to accelerate rapidly. The ensuing period led to a lot of death and social suffering, but also to extensive industrial growth. It transformed the Soviet Union from backward agricultural society into a superpower.

During the 1920's the Soviet leaders began to fear that another World War might break out. They knew that the Soviet Union could not compete with western countries, if the industrialization would fail. The future existence of the Soviet Union depended solely on its ability to industrialize. This is why in 1928 Stalin announced what is perhaps the most ambitious and costly plan for industrialization ever created by man.

The outcome of the Second World War and the position the Soviet Union had afterwards show that the Soviet Union had become a competing and industrialized nation. This stands in sharp contrast with the achievements of Russia under Tsarist rule and the industrialization during the New Economic Policy. While both of these periods generated substantial economic growth, a real industrial revolution did not take of until the introduction of Stalinist policy in 1928. This leads to the question why Stalinist policies were an economical success. In order to study why Stalinist policies were successful, it is necessary to first take the previous failure to industrialize into account. The most radical and effective changes made by the Stalinist government were in the agricultural and industrial sector, which will be discussed subsequently. The huge social costs of Stalinism are only assessed on points that are relevant to the industrialization process.

Imperial Russia and the Soviet Union before 1928

When comparing the pre industrial situation in Tsarist Russia and Western Europe, one immediately sees how backward Russia was. While proto industrial societies began to emerge in Western Europe, Russia remained a feudal society. Russia lacked industrial prerequisites, like large sums of money owned by private investors and entrepreneurs and a surplus of labor force, available for industries . Because of this lack of prerequisites, no industrial revolution took place in 19th century Russia. Drawbacks of this situation became painfully apparent when the Russian Empire started to lose wars against industrialized nations .

The Russian Tsars wanted to modernize their empire, in order to make it more competitive and to improve Russia's military power. This led to a number of innovations in the agricultural sector (e.g. abolishment of serfdom). However, the prerequisites for an industrial revolution were severely lacking. Most of the wealth was in the hands of the aristocratic elite and was used for the consumption of luxury goods. These elite had little to gain from industrializing, as investments in agriculture were more profitable. For the aristocrats, investing in industries also meant the risk of losing their position, due to the rise of entrepreneurs and the Egel effect. The unwillingness of the elite to embrace industry meant that money to invest and industrial entrepreneurship had to be found abroad. As Gerschenkron explains, when a country lacks industrial prerequisites, the government has to substitute for them.

Imperial Russia also lacked a large consumer market, as most of the inhabitants were uneducated peasants, living on the edge of subsistence. Education, science and knowledge in general were on a lower level than in Western Europe. So not only capital and entrepreneurship, but also knowledge had to be imported from industrial countries. This was of course far more costly and less efficient than domestic development would have been. Nonetheless, the benefits of industrializing had become so great that it was deemed necessary by the Tsars to substitute for the lacking industrial prerequisites.

In the period from 1850 to 1910 Russia managed to create substantial economic growth. This growth came mostly from agricultural reforms and rising grain prices. The state subsidized and protected light industry and was not competitive contributed little to the rise in GDP . Large scale industrialization did not take place under the rule of the Tsars.

In the revolution of 1917 the Bolsheviks took over control of the country. The first years of their rule were chaotic, because of civil war and internal conflicts in the communist party. The new leaders were confused and divided, because Marx theory contained little information about the workings of a post-revolutionary communist state. This first period of Ð''War Communism' was replaced by the New Economic Policy in 1922. The NEP was a cross between a communist and a capitalist system. All large scale factories were loosely controlled by the state, while peasants were allowed their own land and access to markets . Government also invested more in both primary and secondary education and in infrastructural projects. The NEP was criticized from the start by Communist Party ideologists, because the system was not purely communist. It also proved to be most beneficial to large landowners, which were traditionally seen as class-enemies .

Under NEP, peasants had an incentive to work harder, because they could profit from the surpluses, which led to a great increase in agricultural production. The surpluses were partially consumed and partially extracted by the government, which used them to invest in heavy industry. Despite these investments, the industry was still largely outdated and inefficient, and could not keep up with the fast growth of agriculture. This difference in growth destabilized the economy. The countryside became overpopulated while no migration to the cities took place. Under the NEP, the Soviet Union attained substantial economic growth . However, like during the Imperial period this growth came mainly from agriculture. Large scale industrialization did not take place. If the Soviet Union wanted to industrialize, radical changes were needed to substitute for the lacking industrial prerequisites.