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Early Capitalism

"Gorbachev Factor"

Russias prerevolutionary capitalist experience was brief and short-lived. In the thirteenth century the Mongol occupation cut Russia off from the West for over two hundred years and wrecked nascent roots of mercantile capitalism. Since the early fifteenth century Western Europe was developing a vigorous capitalism and strong bourgeoisie. 


By contrast, tsarist Russia lagged far behind with a bourgeoisie small and unimportant. Western notions of law, private property, and personal freedom were, to a large extent, unfamiliar to tsarist Russia. From the fifteenth to the seventeenth century the despotic tsars claimed absolute political power and were the chief owners of industry, mines, and the land. They held back the growth of capitalist tendencies by imposing royal monopolies on all lucrative enterprises.

Early industrialization from the seventeenth century on brought no introduction of capitalism. Russian traditional industrialization, as conducted under Peter the Great in the early eighteenth century, was alien to Western capitalist patterns. The state owned the means of production, appointed the management, set the price, and absorbed nearly all the output. The working force was not wage labor but the serfs tied in bondage to their factory. The state-licensed enterprises were assured of bonded labor and a market and had no incentive to rationalize production. In short, although a great surge took place in many branches of industry under Peter, his reforms did little to encourage private industrial capital.

At the beginning of the nineteenth century, while capitalism was only slowly beginning to affect Russia, it was revolutionizing Great Britain, Belgium, and France. It was transforming agrarian societies of the leading European states, rapidly expanding their industrial bases, and increasing urban populations. Yet the great industrial revolution spreading across the continent of Europe stopped short of the Russian borders. The government controlled the main forces of production, preventing the emergence of an urban bourgeoisie or commercial landed aristocracy. Private wealth was a function of government favor, when members of the nobility were rewarded with gifts of land and peasants by the government for their civil or military service. The gentry lived in the conviction that the government would provide them with an appointment and guarantee their livelihood. Few of them were familiar with or interested in commercial agriculture. At a time when the rest of Europe was undergoing rapid transformation under the influence of the developing capitalism, Russia lacked some of the basic institutional prerequisites for capitalism.

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The Economic Structure


Soviet Russia

Understanding the Soviet Period
Russian Political Culture
Soviet Ideology
The Soviet System
Soviet Nationalities
The Economic Structure
The Socialist Experiment
"Great Leap" to Socialism
The USSR in World War II
Stalin's Legacy
Brezhnev's Stagnation
The Economy in Crisis
Political Reform
The USSR's Collapse

Models of Soviet Power

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