"Gorbachev Factor"

Russia’s 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.

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.