Farm to Factory : A Reinterpretation of the Soviet Industrial Revolution

by Robert C. Allen

Release Date: 29 September, 2003

Edition: Hardcover

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3.5 stars, interesting, but not easy to read

The Soviet Union was the perfect failure, so said no shortage of people during and especially after its lifespan. So to argue the opposite, as Robert Allen's new book does, certainly presents a provocative hypothesis. Allen's argument is that from 1928 to 1970, the Soviet Union was one of the world's fastest growing economies, with few rivals in the world. By contrast, the high rate of growth under the last tsars was not sustainable. Collectivization seems to have encouraged industrial growth, though not enough to cancel out the horrible loss of lives from the 1932-33 famine. Unfortunately, unwise investment decisions in the seventies and eighties lead to rapidly falling growth rates and the collapse of the system.

Allen's argument does not start off well, as he seems to separate Russian development from Europe altogether. This coincides with Marshall Poe's argument that Russia shouldn't be considered European at all. This is misleading. It is true that in terms of poverty, rural population and demographic structure, Russia was behind the rest of Europe. But this does not mean that it was radically different from it. Russia is Christian, not Muslim. Russian is a Slavic language, and Slavic languages are European ones. Serfdom and feudalism are European institutions distinct from Ottoman and Moghul ones. However Allen soon gets back on track. The essential fact of comparative economic performance is that the high-income core generally stays the same, while those outside it fall further behind (relatively). Occasionally a country is able to enter the high-core club, like Japan, and occasionally another country is expelled, like Argentina. Given this stability, the Soviet Union's success from 1928 to 1970, where it outperformed all other developing countries except Japan, looks more impressive.

But wasn't economic growth high under the tsars? Surely would it not have reached the heights held by Western Europe? Clearly not, says Allen, since that would require an average 3.3 % growth rate from 1913 to 1989, a rate only held by one country, Japan. More to the point the Tsarist economic strategy faced severe problems. Russia's literacy rates were well below Japan's. Much of the growth in agriculture was the result of the wheat boom. Had Russia continued to be a wheat exporter it would have faced the disaster of the collapse of wheat prices in the Depression. Indeed, it would have made it worse. Argentina's own wheat boom did not last, and even wealthy Australia faced relative decline. Meanwhile the bulk of the railroad boom was over by 1913, while attempts to encourage a cotton industry were muddled by misguided protectionism.

Allen then discusses the crisis of the NEP. Given the limits of Soviet soil, agricultural output could not be easily raised until the fifties, when fertilizers became readily available. On the other hand agricultural productivity could be increased by mechanization and the now surplus agricultural labour could be diverted into industry. Potentially there is no conflict by increasing the investment needed for mass industrialization and increasing consumption. Both can increase at the same time. For Allen a key element to the 1928-1939 period was the use of "soft budget" constraints. Instead of basing the number of workers on simple budgetary constraints, constantly raising targets and increasing the demand for workers could increase growth enough that it would compensate for the deviations from strict accounting. Collectivization's contribution to this process was not the increasing of agricultural production; indeed, it dropped dramatically. Instead it encouraged, or more accurately forced, rural-urban migration and the growth of industry. Rather ironically the mass slaughter of horses to protest collectivization was not an unmitigated disaster, since it diverted grain from a rather "inefficient" animal. At the same time the Soviet Union benefiting from slower population growth. Much of this, of course, was the result of Stalinist terror, though nearly three times more important was the result of the Second World War. But even more important was the relatively quick fertility transition. Had it more resembled India the former Soviet Union would have had a 1989 population of 825 million. Allen then goes on to discuss standards of living from 1928 to 1939. They did seem to increase during this period. Previous studies suggested that they fell or stagnated, but Allen makes the reasonable argument that the index numbers they used miscalculated inflation and the effect of rural-urban migration.

So far, so good. But there are some problems. Allen's book is based on secondary literature and all Soviet statistics have a provisional nature. Allen then goes on to argue that Stalin's industrial strategy was more effective than a possible continuation of the NEP, but not so more effective to justify the loss of lives in the famine. This is not an unreasonable or inhumane argument. On the other hand, it would have been far more effective than a simple capitalist standard. This argument is based on complex computer simulations, which are difficult to read, and even more difficult to verify. Given that the Soviet Union would have been radically different if it had not followed Stalin's strategy in 1929, Allen's simulation models seem too simple. The last chapter deals with the decline of the Soviet economy after 1970. Allen delineates several crucial flaws: attempts to upgrade old factories when it would have been more productive to create new ones; increasing energy production with illusory success at prohibitive cost, when it would have been wiser to increase conservation; the harmfulness of soft budget constraints in a period of labour scarcity, and finally diversion of research and development into the military. These are interesting suggestions; we will have to see how they play out.