Globalist Analysis

1913-2013: How Russia Botched an Entire Century

Could Russia have been as successful as the United States?

Russian Tsar Nicholas II (r. 1894-1917)

Takeaways


  • A century ago, before the Bolshevik Revolution in 1917, Russia was on the verge of becoming the China of the day.
  • Pre-revolutionary Russia was developing into a major global economic power naturally and consistently.
  • Russia had abolished serfdom in 1861, 2 years before President Lincoln's Emancipation Proclamation in the US.
  • Russia still suffers from Soviet legacies. It is among the poorest & technologically backward European states.
  • In a serf-like state, Russia's raw material riches benefit small, kleptocratic elites, who shift assets abroad.
  • Russia has wasted its resources, especially human ones. It literally killed off many talented people.
  • Russia has been driven into the ground, but even now it has much unrealized potential and may yet rise up.
  • To meet its potential, Russia will need to change its Soviet-inherited kleptocratic political system.

One hundred years ago, shortly before the Bolsheviks seized power in 1917, Russia was on the verge of becoming the China of the day. It had embarked on the path to industrial capitalism two or three decades after the United States and Germany.

By the start of World War I, it was developing dynamically enough to get on track to catch up with the leading industrial powers of the day.

The Russia of that era was an enormous country, even larger than the Soviet Union at its peak, because it included both Poland and Finland within its borders. It also boasted tremendous natural resources and a vast, diversified population.

Russia featured remarkably modern elements. For example, it abolished serfdom in 1861, two years before President Lincoln’s Emancipation Proclamation in the United States.

In the countryside, a class of prosperous peasants was emerging. And in Russia’s southern provinces and in Ukraine, there were large, productive farms — similar to those later found in the American Midwest.

These farms made Russia the breadbasket of the world, accounting for around one-third of the global wheat trade before World War I. In fact, Russia’s early 20th century wheat traders were so sophisticated that they initiated hedging prices and used financial markets in London and New York for their crops.

In the Donetsk region in eastern Ukraine, coal and steel production was expanding, also using British investment and knowhow.

The construction of the Trans-Siberian railway, inaugurated in 1890, linked European Russia with the Pacific Coast. This made the economic development and exploration of Siberia possible, a move from which even today’s Russia benefits most handsomely.

Lagging literacy

At the same time, Russia’s educational system was poor. Around 70% of the population was still illiterate at the start of the 20th century. However, the illiterate were mainly peasants. In cities, primary and secondary schools were being established, benefiting even the urban poor.

Russia also had very modern universities and a substantial scientific research establishment. Mathematician Nikolai Lobachevsky pioneered hyperbolic geometry and chemist Dmitri Mendeleev is credited with creating the first periodic table of elements, both in the 19th century.

Russian physiologist Ivan Pavlov was the fourth winner of the Nobel Prize for Medicine in 1904, followed by immunologist Ilya Mechnikov in 1908. No Russian has won the prize since.

Professional and technical education, too, was increasingly open to children of lower-ranking officials, workers and even peasants. The ranks of the Russian intelligentsia, the educated class, were swelling. By the start of World War I, the literacy rate rose to 40%.

Despite lagging behind in terms of literacy, Russia managed to develop world-class culture and arts. Tolstoy and Dostoyevsky were probably the most internationally famous and influential fiction writers of their time.

Chekhov’s plays shaped the development of theater throughout the 20th century and Gorky’s plays were performed all over Europe in the years before World War I.

Stanislavsky developed an acting method that is still widely used in Hollywood. The Actors’ Studio and Lee Strasberg, who trained some of the brightest stars of American theater and cinema in the middle of the 20th century, adapted it.

Meanwhile, Stravinsky, Prokofiev and Shostakovich were at the origins of modern classical music, and Diaghilev’s Ballet Russe created modern dance.

In 1913, the Armory Show became a major sensation in New York City. It brought the French post-impressionist art of Van Gogh, Gauguin and others to America for the first time. While Americans were just catching on to these trends, Russian artists had already moved beyond post-impressionism.

Just two years later, in 1915, Kazimir Malevich created his Black Square, the first abstract painting.

An economic boom

While it is hard to assess economic growth in the early 1900s — few institutions collected data back then, any available figures were notoriously unreliable and modern statistical tools had not yet been developed — there is evidence that Russia stormed into the modern era after 1905.

There was rapid urbanization, with men increasingly moving to towns in search of employment. The share of the agricultural sector fell from 58% of the economy in 1885 to 51% before World War I.

Meanwhile, industry, construction and transportation accounted for 32% of the Russian economy, up from 23% in 1885. The rail network increased from 2,000 km to 70,000 km.

Like all rapidly developing nations, including the United States shortly before, Russia was a huge user of foreign capital. In the final decades of the czars’ rule, foreign investment accounted for 40% of all industrial investment, and a substantial portion of agricultural investment as well.

Western Europe, notably England, France and Belgium, provided most of that capital. By the start of World War I, Russia accounted for 15% of all international debt.

Even though Russia was still an underdeveloped country by prevailing Western European standards, it was not as backward as it is commonly portrayed. Just look at Russia’s performance in World War I, when it confronted Europe’s leading industrial power, Germany.

At the start of the conflict, Russia was not only able to mobilize quickly. It also managed to deliver troops and supplies to the front fast enough to start an invasion of Galicia in September 1914.

In fact, Russia was able to help its Western allies by forcing Germany to divert forces out of France in order to use them to assist Austria-Hungary, which was reeling from Russia’s assault.

In World War I, Russians certainly were outmatched by German efficiency and military technology. But the czar’s troops held up a lot better than Stalin’s Red Army did in the summer of 1941.

Soviet failures

After the Bolshevik revolution, the introduction of the command economy did manage to mobilize the Soviet Union. Later on, by channeling much of the country’s immense resources into the military-industrial complex, the communists were able to defeat Nazi Germany. Thereafter, they were able to come close to matching American military prowess for around half a century.

But such a gigantic effort could not be sustained. To get close, the Soviet government wasted and destroyed much of the resources on which Russia’s economic success relied.

First and foremost, it squandered Russia’s human resources. Russia’s population is currently around 140 million. Some demographers believe that natural growth since 1913 should have put its population to almost 200 million or even 225 million.

Two World Wars, fought by Russian commanders without regard for losses, two famines in the early 1920s and the 1930s, purges and social ills brought about by communist mismanagement have resulted in as many as 85 million in today’s Russia “going missing” — not being born at all.

The communists did create a good educational system and achieved nearly 100% literacy, but they managed to waste human capital in other ways. Peasants were herded into collective farms, effectively reintroducing serfdom.

Life expectancy for men in Russia now is an extremely low 64.3 years — on a par with or less than in many countries in Sub-Saharan Africa. Chronic illnesses and alcoholism that often precede an early death rob society of the most productive years of its males.

Moreover, the economic system that prohibited private enterprise kept several generations of Russians from fulfilling their potential and benefiting society as a whole.

While pre-revolutionary Russia was developing into a major global economic power naturally and consistently, the USSR was a colossus with feet of clay.

Today’s Russia still suffers from the disastrous legacy of the Soviet era. Instead of co-leading the world, as its potential suggested at the start of the 20th century, it is, on average, one of the poorest and technologically backward countries in Europe.

In a 19th century kind of way, Russia produces little and survives by selling its vast array of raw materials to the world’s leading industrial nations.

With that as economic strategy, the country itself exists in a serf-like state. The raw material riches benefit small, kleptocratic elites, who shift their assets abroad. Considerable parts of the country’s infrastructure are as if they dated back to the medieval era. Social services are rudimentary and the quality of life is extremely poor.

The United States has spent much of the past 100 years relentlessly developing, perfecting its industrial base and its technological infrastructure and investing into human capital. It has focused on creating optimal conditions for individuals to achieve their potential.

Despite various mistakes and setbacks, the United States still sets the direction of technological innovation and its culture dominates the world.

Russia, in contrast, has wasted its resources, especially human ones. It literally killed off many talented people. Others were able to escape in time and achieved fame in Europe and, especially, in the United States, thus contributing notably to America’s economy and culture.

Choreographer George Balanchine, writer Vladimir Nabokov and, most recently, Google founder Sergei Brin are just a few examples among many.

Russia’s political economy has not moved forward much over the past 100 years. Despite mind-boggling mistakes, mismanagement and crimes of its leaders, Russia even now has much unrealized potential.

Russians may yet rise up and fulfill their human potential. But for that to happen, they will need to change the country’s kleptocratic political system and end their own serf-like mentality. Both are, in so many ways, the direct descendants of the Soviet era.

Alexei Bayer is a contributing editor of The Globalist. His debut novel, Murder at the Dacha, which is set in 1960s Moscow, was published in May.

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About Alexei Bayer

Alexei Bayer is the Eastern Europe Editor of The Globalist. [United States]

Responses to “1913-2013: How Russia Botched an Entire Century”

Archived Comments.

  1. On September 6, 2013 at 8:14 am TheBlogFodder responded with... #

    An excellent article. Sad in so many ways. Russia is a wonderful country and the Russians are great people. So many mistakes all along the line. When moderates are continuously ignored or worse, extreme radicals are the only choice left. This has been repeated so often in history but people never seem to learn.

  2. On September 6, 2013 at 9:40 am umbrarchist responded with... #

    The United States botched the planet with planned obsolescence. Our economists can’t specify the depreciation of all of the cars in any country.

  3. On September 6, 2013 at 10:29 pm Conroy Shields responded with... #

    Bayer has brought up a much needed topic but needs to bring in more issues. An earlier starting point would be the answer.The nineteenth century saw Russia as an ally of USA and the idea of a developng republic, aiding USA against British attack in the civil war posting nit’s navy in New York And San Francisco to prevent poised British troops to move in and take over USA.USA owes its survival to Russia. An 1824 trade act with USA paved the way, until Britain succeeded in rescinding it, leading to the setback, along with the 1848 revolutions designed to stop the spread in Europe of developing republics, which had failed in USA.Sending in the Bolsheviks, while interpreting it as a Russian revolt against the Tzar, finished the job and Russia has never been the same.These and many more support facts which would take much longer are the real reasons.Russia was not allowed to become the USA of Europe

  4. On September 7, 2013 at 4:40 am mladenm responded with... #

    Indeed was on the path to become China of the day. And China of the day was toy of Western imperialism. Lets remember how Bolsheviks seized power – on public anger over futile war with huge number of victims and seizing Socialist – Revolutionary (Eser) program of agrarian reform. Despite fact that Civil war ended 10 years after WWI and that WWII ravaged Soviet Union far more then West, economic development was rapid and remarkable until about 1980. Then economic model changed from tons of steel to models of shoes, something that centralized economy could not deliver. As for problems since 1990, blame people who ruled then. China and most East European countries were far more successful.

  5. On September 7, 2013 at 5:06 am Robin Anthony responded with... #

    Surely the same could be said about Austria – Hungary? Its economy was growing well before the first world war and its capital Vienna was second to none in terms of public health and services.

    And of course Germany is the textbook case of a nation shooting itself in the foot. It had experienced rapid population growth (despite loosing millions of emigrants) and economic growth. Unlike Russia, the US or Austria-Hungary it was largely monoethnic and need not have had any internecine rivalries. If German population and economic growth had continued at the pace it maintained throughout the 19th century it would now be a superpower. Indeed one could argue that had it not been for the thirty years war which set Germany back drastically demographically and economically it would be the most powerful country in the world. It may have had such a population overspill to the US that the US would have become German speaking – rather in the way that much of it is now becoming Spanish speaking.

    Let’s not forget China in these ‘what if’ scenarios. What they have achieved since the late seventies is unparalleled in human history. But what if the process had begun centuries earlier – as it was doing before an emperor stopped it? Would the entire African continent, the Indian subcontinent, Australasia now be Chinese colonies?

    The ‘Anglo Saxons’ take their world dominance for granted. But one could honestly say that it is the result of a fluke. The cards just fell in their favour – or rather, the rivals all just blew it.

  6. On September 7, 2013 at 6:54 am Mr. B responded with... #

    A good follow-up question might be, “How did authoritarianism and totalitarianism retard growth in Russia?” I think a lot of Russia’s potential has been lost because of its absolutist political tendencies.

  7. On September 7, 2013 at 7:56 am Ryan Bohl responded with... #

    I think you can argue that Britain got lucky, but America is a huge country with easy command of two major oceans. Russia always had difficulty connecting Atlantic to Pacific and China doesn’t even have an Atlantic option. I think that counts for a lot when your merchants’ costs are lower because they have to go less distance.

  8. On September 11, 2013 at 6:44 pm Dean Jackson responded with... #

    The article reads, “Today’s Russia still suffers from the disastrous legacy of the Soviet era. Instead of co-leading the world, as its potential suggested at the start of the 20th century, it is, on average, one of the poorest and technologically backward countries in Europe.

    In a 19th century kind of way, Russia produces little and survives by selling its vast array of raw materials to the world’s leading industrial nations.”

    The reason Russia sells little other than its natural resources, and is “on average, one of the poorest and technologically backward countries in Europe”, is because China needs foreign investments to build up her military. Russia does all she can do to deter foreign investment so that foreign investment may go to China instead. Russia can live on the foreign proceeds she obtains by selling oil (Russia is #2 behind Saudi Arabia in oil exports) and other natural resources. Not so China, which is beholden on foreign investments to procure her natural resources.

    I can’t help but wonder how Alexei Bayer doesn’t know this?

  9. On September 15, 2013 at 11:59 pm Frank Tang responded with... #

    China sells more than Russia in the world market is not because it needs foreign investment to build up its military, but because it has a vast network of overseas Chinese, including those live in Hong Kong, Taiwan and the US, which helps it to push its products to every corner of the earth since the 1970’s, while Russia doesn’t have that kind of advantage at all.