A History of Russian Economic Thought

Vincent Barnett

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781134261901
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The collapse of the Union of Soviet Socialist Republic at the end of the 1980's was conceived as a victory for capitalist democracy. Here, Vincent Barnett provides the first comprehensive account of the historical development of Russian and Soviet economic thought across the nineteenth and twentieth centuries, and considers its future in the twenty-first century.

Utilizing an extensive range of historical sources, Barnett examines the different strands of thought, including classical, neoclassical, historical, socialist, liberal and Marxian schools. He traces their influence, and the impact their ideas had on shaping policies. An excellent addition to the Routledge History of Economic Thought series, this book covers pre-1870, Tsarist economics, the late Tsarist period, the impact of the war, Bolshevik economics, Stalinist economics, Russian economics after 1940.

Incorporating a detailed timeline of the most significant Russian economists work and analyzing the effects of historical discontinuities on the institutional structure of Russian economics as a discipline, Barnett delivers an essential text for postgraduates and professionals interested in economic history and the evolution of Russian economic thought.

1 Introduction – analysing the Russian economic mind

The Union of Soviet Socialist Republics – the USSR – was the first ever nation-wide experiment conducted in purposely creating a completely new economic system apparently based on non-capitalist principles of operational control. This was a system that a significant number of Russian economists played an important role in first actively campaigning for (or against), and then actually designing (or criticising). The dramatic collapse of the system thus generated at the very end of the 1980s, and the various attempts at capitalist restoration in the 1990s, has set the political backdrop for the beginning of the twenty-first century in a unique and spectacular fashion. Many politicians have triumphantly pronounced the end of history and the final victory of liberal representative democracy, and it appears that the upstart competitor to capitalistic individualism has been vanquished by its more powerful Western neighbour. An era of bi-polar international authority and a high-temperature Cold War has been replaced by an era of multi-polarity and ongoing low-level regional and politico-religious conflicts.

However, amongst all the triumphant celebrations, it is easy to forget that the Soviet economic system was not created on a completely blank canvas, but was actually fashioned in a particular and very unique country – or combination of countries – and these countries had long histories and intellectual traditions that went back many centuries before 1917. Moreover, the people who created the economic system of the USSR were themselves the products of specific cultures in particular times and places, and the actual components of the Soviet economy were sometimes more the result of these particular national and cultural features, rather than of the abstract socialistic principles that the revolutionaries claimed to be implementing. Consequently this book attempts to explain some elements of these national features by focusing on documenting the history of economic thinking in Russia and in some closely proximate states both before and after 1917.

The general approach adopted

Ideologically, the book attempts to be politically neutral, i.e. to be neither pro- nor anti-socialist and neither pro- nor anti-capitalist, but rather simply to present the history of the particular topic as it happened to be found. Of course, in selecting the particular economists and topics that are discussed, some choices have inevitably been made. But the criterion for such selection was always to try to include the best quality, the most original and the most influential economic thought that was encountered, rather than the ideas that supported any single philosophical or political point of view. Moreover all the various different perspectives on economics should be presented with equal force, no single point of view dominating the narrative. Hopefully, if this defiant deadpan neutrality has been successfully maintained throughout the book, then both fervent socialists and rabid anti-socialists should be dissatisfied with the outcome, as their particular predispositions will not have been confirmed. Reality in all its multi-layered richness rarely conforms to any particular one-sided political philosophy; neither should the history that claims to document such reality.

Methodological questions

Various different methodological approaches to studying the history of economics have been articulated in the past, such as the Whig approach – how today's finally correct views were developed and all past errors were exposed – or the Marxist view – how economics (as part of the ideological superstructure of society) simply reflected the economic base at any given time. Both these approaches tend to result in biased history, biased either from the point of view of the eventual victor, or in terms of reducing all ideas simply to expressions of materialistic interest.

In contrast to both of these extremes, the approach adopted in the book will be to combine the history of ideas, the history of economic thought, the analysis of economic/financial policy and economic/financial history, and also the role of specific individuals (‘great thinkers’), to fashion a historical reconstruction of some of the beliefs, behaviour and legacy of economists and policy-makers of the period under review. Maintaining a sceptical attitude to the question of whether any particular theory is true in an ultimate sense, relativism is generally preferred, but with due sensitivity to the absolute consequences of the paradox of relativism. If adopting a bias cannot be avoided, then the bias of approach of those people being studied and of the period under review is generally best adopted, in order to better recreate the ‘feel’ of the period in question.¹

Moreover, the book analyses the work of ‘economic theorists’ rather than ‘economists’, or what can be called ‘economic thinking’ in a general sense rather than what today is often narrowly defined as ‘economics’. This is because in much of the period under review, ‘economic thought’ in Russia was a much broader activity than what it is perceived as ‘mainstream economics’ today. It was something closer to what was called ‘political economy’ in the West, but wider than this even, including elements of other disciplines such as philosophy, law, statistics and sociology. Put another way, these disciplines had not yet fully separated from each other, or multiple discipline demarcation was an essential part of the story. This notion will be explored further later on in the introduction.

Regarding the absolute/relative methodological distinction in writing the history of economics, Mark Blaug wrote that:

No assumptions about economic behavior are absolutely true and no theoretical conclusions are valid for all times and places, but would anyone seriously deny that in the matter of techniques and analytical constructs there has been progress in economics?²

This apparently sensible middle path is however open to further dispute, as it all depends on exactly what is meant by ‘progress’. If by this word is meant only change, development, greater sophistication and uncovering of more obvious errors, then ‘progress’ (in a weaker sense) is indeed made in economics. If however by ‘progress’ is meant an inevitable progression towards an ultimate and permanent truth that explains everything about the economy (a stronger sense of the word), then this is less clearly the case. In a thousand years time, will scholars be able to say for certain that Milton Friedman came closer to ‘the truth’ than Irving Fisher? Or that Kondratiev was a definite improvement over Tugan-Baranovsky?

In the case of the Russian national history examined in this book, progress will be documented only in the weaker sense of the word, i.e. in terms of documenting change and development. The progression from Tsarist to Soviet economics is not nowadays usually seen as ‘progress’ in an analytical sense, in fact it could easily be seen as a regressive development for the health of economics both in Russia and also in the West. On the other hand, if oppositional currents within early Soviet economics are considered, then some impressive socialist-inspired developments could certainly be documented. Moreover, the benefits of the progression from Soviet to post-Soviet economics in the 1990s, while discussed only briefly in this book, are also questioned by some, whilst being praised by many others. Hence, it all depends on what perspective is being adopted as to whether progress in the stronger sense is seen as being made between two specific points in time, and this book will deliberately refrain from making an ultimate choice of one ‘true’ perspective from which to judge all past developments. The discovery of such an Archimedean point will be left to others more qualified for this difficult and as-of-yet unaccomplished task.

Russia and its economists

To begin with, a key question: is there a nation-specific and clearly identifiable ‘Russian tradition’ in the history of economic thought? The answer is very likely no, there is not only one single Russian tradition but many, just as there are many American or French traditions in the history of economic thought; and the various Russian traditions have periodically intertwined with those of other nations, most notably Germany and the UK in the nineteenth century and the USA after 1989. This book is in part the rich life story of some of these cross-fertilisations in the period 1870 to 1940, with particular emphasis on the individual economists involved and the connections to related areas such as policy-making initiatives and important political events. Eschewing the idea that a purely national current in economics could ever be completely isolated (wasn't the founder of English classical economics Scottish, and a key member of the English historical school Irish?) reoccurring themes and ideas in Russian economics will be discussed in their institutional and historical context, and in comparison with the economic ideas that were developed in other nations.

Russia has usually been seen as being a separate and ring-fenced national case for study by many historians, with unique features and special dispensations that make it unsuitable to compare directly with other countries in either Western Europe or North America. While this is true in many respects for empirical or events history, it will be suggested that this is less accurate when intellectual history is considered, or at least that it might fruitfully be considered as being so. Hence in this book a concerted effort will be made to ‘bring Russia in from the cold’; that is, to reintegrate the history of Russian ideas with other European and even some international currents of economic thinking, in order that Russia's true contributions might better be gauged, and Russia's significant place in the world culture of ideas be forcefully reaffirmed.

In qualitative terms, Russian economists – even the best of them – have sometimes been considered as only playing for the second eleven, i.e. as not being of first rank status, lacking in the magnitude of policy influence effected by someone like J.M. Keynes, or the conceptual originality of an Irving Fisher. Measuring the impact of Russian economists in the period 1940 to the present day, this evaluation is undoubtedly true, but the situation was less clear-cut when the period before 1940 is considered. In fact it will be suggested here that between 1870 and 1940, Russian economic theorists did occasionally reach the level of the first eleven, albeit inconsistently so, and for only relatively short periods of time. Frequently substituted and spending long periods on the reserves bench, when in play they did sometimes score spectacular goals.

It was not inevitable that their influence and originality would have to decline after 1940; rather this was due to a number of contextual factors that could have been different, if the actual historical path that was chosen after 1940 had been modified. The responsibility for the decline in Russian economics after 1940 cannot really be laid at the feet of the economists themselves, either in an intellectual or an organisational sense. Much more powerful forces outside the control of small groups of intellectual specialists were in operation, social and political forces that swept purely theoretical expressions aside like so many peacock feathers in a violent tornado. This maelstrom was not a purely Soviet creation, but was also conditioned by the Western response to the challenge of the appearance of an apparently new economic system, a response that was at least in part fuelled by fear and lack of understanding.

Special features of Russian economics

One unusual feature of the history of Russian economic thought, at least in its Soviet manifestation in much of the twentieth century, was what might be called the extremity of doctrinal orthodoxy, extreme at least in relation to the dominant political currents that existed in the West at this time. Perhaps more than any other nation state in living memory, Russia between 1929 and 1985 promoted a highly politicised doctrine that was government-sponsored and glaringly fanatical about its own validity. Defining all non-Soviet economics as an intellectual excrescence fashioned by the ideologues of capitalism, Russia after 1917 developed a coldly imprisoning variety of Marxist economics that served as doctrinal justification for the Soviet variety of planned economy. The story of the progress of some of the early stages of the tragicomically named ‘Marxist-Leninist-Stalinist’ economics is documented here, at least up until the outbreak of the Second World War, with an epilogue bringing the story up to date.

J.K. Galbraith called the Cold War a ‘grim and angry cleavage’, and it set the iron tone and overall framework for global international relations in the second half of the twentieth century.³ However, before 1945 the ideological chasm between East and West was certainly less pronounced than it was after this date, making for a more fluid bi-directional movement of economic ideas between Russia and the rest of the world. This applied both to the period before 1913 and to a lesser extent in the inter-war period.

Less overtly dramatic than the onset of the Cold War, but equally worthy of study, was the story of Russian economics in the second half of the nineteenth century, where English, German, French and even American influences can readily be detected, together with the development of indigenous Russian concepts and links to domestic policy-related questions. Another feature of nineteenth century Russian economics was the emergence of various important and enduring thematic currents, such as the progress of business cycles, the role of foreign capital and the creation of indigenous economic formations, many of which were connected to the problem of the relation of Russia to the West and to the particular type of capitalism that was developing in Russia. It will be seen from what follows that many such enduring themes survived across the political discontinuities of Russian history, notably those that occurred in 1861, 1917, 1929 (and even 1991), or at least went into a period of hibernation, to re-emerge only sometime later in a modified form.

The few well known Russian economists easily remembered today – people such as Tugan-Baranovsky and Dmitriev at the end of the nineteenth century and Kondratiev and Slutsky at the start of the twentieth – were really only the tip of an iceberg of quality in terms of the contributions made by Russian thinkers to economic issues broadly conceived. Whilst not always original and sometimes plainly derivative, exactly how the work of foreign economists was employed by theorists within Russian boundaries is frequently an enlivening topic in itself, and the many lesser Russian figures were often skilled in adapting Western ideas to the native context.

Given the nominally red turn that history took in Russia after 1917, the importance of considering the reception of Marxist ideas in nineteenth-century Russia is unquestionable, although Marxist economics itself was certainly not the dominant current in Russia before 1917. In fact, a number of separate currents flourished – historical political economy, classical notions of free trade, socialist teachings and so on – and these currents even intermingled with each other to some extent. In terms of influence on governmental policy-making, some currents were undoubtedly more successful than others, although different social groups often supported particular economic doctrines against the overarching will of the state.

It is certainly true that the species of Marxism that came into existence in the USSR after 1929 bore no striking resemblance to that which had existed in Russia prior to 1917. Pre-revolutionary Marxian economics was sometimes quite a sensitive animal, with due attention being paid to historical context and the contributions of various non-Marxist thinkers; after 1929 a hideously distorted and caricatured doctrine was created, the style of which was sometimes as ominous as the content. This reversal did not take place overnight, but rather in a stage-by-stage transformation that was the result of various social, political and other factors that warrant detailed examination.

The changing borders of ‘Russia’

Over a very long period of time, spatial entities such as Muscovite Russia, the Russian Empire, Soviet Russia, the USSR and the Commonwealth of Independent States (CIS) encompassed a number of significant geographical modifications and transformations that had important consequences for defining the nature of what...

Table of contents

• Front Cover
• A History of Russian Economic Thought
• Title Page
• Copyright
• Contents
• Preface
• Acknowledgements
• Timeline – key developments in Russian economics and statistics
• 1 Introduction – analysing the Russian economic mind
• 2 Prelude – the Russian economic mind before 1870
• 3 The Russian economic mind under Tsarism, 1870–1890
• 4 Socialism and development in late Tsarism, 1890–1913
• 5 Economic theory in late Tsarism, 1890–1913
• 6 Interregnum – the Russian economic mind at war, 1914–1917
• 7 The Russian economic mind under Bolshevism, 1917–1929
• 8 The Russian economic mind under Stalinism, 1929–1940
• 9 Conclusion – evaluating the Russian economic mind
• 10 Epilogue – the Russian economic mind after 1940
• Appendix I – the first Russian translations of the works of Western economists
• Appendix II – dramatis personae
• Notes
• Select bibliography
• Author index
• Subject index