What Are You Currently Reading? 2014

[Firn]

I finished now the paper summing up the book Farm to Factory by Robert C. Allen to understand more about the pre-war Soviet economy. It is interesting to compare the early Soviet experience with the later (early) Chinese one of which I got a decent understanding thanks to The Chinese Economy by Barry J.Naughton.

Soviet economic performance is usually dismissed as a failure. In contrast, I argue,the Soviet economy performed well. Japan was certainly the most successful developing economy of the twentieth century, but the USSR ranked just behind it. This success would not have occurred without the 1917 revolution or the planned development of state owned industry. Planning led to high rates of capital accumulation, rapid GDP growth, and rising per capita consumption even in the 1930s. The collectivization of agriculture was not necessary for rapid growth--I argue that industrial development would have been almost as fast had the five year plans been carried out within the frame work of the NEP–but it none-the-less nudged up the growth rate.

Daron Acemoglu and James Robinson, authors of Why Nations Fail have a blog entry based partly on his graphs.

The important leap in Allen’s conclusion, and the reason why his thesis is ultimately unconvincing is that as Gerschenkron noted long ago in Economic Backwardness in Historical Perspective, partly in the Russian context also, backward economies can grow rapidly and may do so using a variety of arrangements. This is made feasible because they are benefiting from catch-up and technological convergence. The fact that Soviet Russia took advantage of catch-up opportunities and transferred resources from its massively inefficient agriculture to industry implies neither that central planning was efficient in the short run nor that it could be a steppingstone for more growth-enhancing institutional structure in the long run.

Without entering into the debate itself, in which many questions are still open it is certainly interesting to note the effect of big shift from the surplus labour in agriculture into the producing sector and mostly heavy industry. Female labour was also moblized to a far greater degree. This was enabled by the steady increase in capital investment coupled with ruthless policies and more (technical) education for a far greater part of the population.

The many modern factories built in that period were heavily influenced by the American way of mass-production and given the policies of the regime and the many basic needs of the population and economy aimed at producing decent-enough quantiy then quality. Military production received very considerable attention quite early and the factories seem to have been easy to switch to war production. Basic ressources were rather readily accessible with capital being the bottleneck, although food production suffered initially very severly under a bundle of radical Soviet policies, resulting in widespread famines, especially in the Ukrainian SSR.

A very nasty surprise in industrial production was in store for the invader, which could only deploy part of his industrial power. (Obviously there is a great deal of propaganda and illusions in it, but the surprise was certainly there. Notice the very lenghty discussion of the oil problem and it's strategic implications for Mr. Hitler. Fits perfectly with what Tooze worked out).