Building Russia, what communism couldnt accomplish

[Roman]

As much as I hate to admit this, Communism (Soviet style) can achieve high economic growth. Under Stalin's 5-year plans in the 1930s the economic growth averaged more than 20%!! That is rather remarkable even if one takes into account the low base Russia was starting out from.
The problem is that this growth concentrated almost excllusively on heavy industry rather than consumer goods. Crucially there was also a very powerful system of incentives to work hard - pure coercion (and later also differential rewards + national honor eg. Stakhanovites). If one did not work exhaustingly hard, he/she would be severely punished, possibly even killed - now that's a pretty powerful incentive if you ask me, but I would rather not have it. Another point to remember is that much of the finance for industrialization was acquired by completely milking the farms and using the profits from selling confiscated grain abroad even though the peasants from whom it was forcefully taken were starving.

[chequita guevara]

For the '30s overall, the USSR's growth rate was 35%. No other country even came close. It came at a horrible cost as both Garth and Roman point out.

I disagree with Garth on its necessity, however. If the bureaucracy and Stalin hadn't been primarily interested in their own power and had been real communists interested in spreading the revolution, Germany would not likely have fallen to the Nazis and there would have been no war to defend against. Stalin's criminality exists on so many levels.

[Bosh]

Um, Russia's growth is decent now for much the same reason that US GNP growth was well over 10% for a lot of the 30s. When half of your factories shut down its easy to get some growth by opening a few up again.

[Giancarlo]

Originally posted by chegitz guevara
For the '30s overall, the USSR's growth rate was 35%. No other country even came close. It came at a horrible cost as both Garth and Roman point out.

In the long run would this system work? The answer is no, communism doesn't work, it can't work because it is incorrect because it doesn't allow market flucucations. This growth was forced, and was not real growth. The growth was centered on the wealth of several fat party klepocratic politburo officials. This is what true communism is. It is evil, as Reagan said over and over again. It is dead.

35% growth rate in the 30s, yeah sure... proof for that claim? I am sure the 40,000,000 that perished, because of the purges and paranoia, would agree with you.

[Imran Siddiqui]

if chrustchev (sp?) would be smarter , the Soviet Union would be alive and well. ( not to mention the idiot brezhniyev )

I seriously doubt it. The only way to reverse the decline of the Soviet Union, in growth patterns, from 1950 onwards, would be to reintroduce markets (like the NEP period), but that would be political suicide after Stalin's changes in 1928. The fact is that that system could not live or live well. A system in which a common saying was "They pretend to pay us, we pretend to work" cannot sustain itself.

As was stated before, the main focus was on heavy industry and there were little consumer goods. And not like they could be traded for either. Firstly the ruble was non-convertible (resulting in somewhat barter-like trading) and the state controlled all trade, and they didn't care about consumer goods.

Also the Soviet economy didn't seem to improve in the efficiency of their economy. To feed growth, they relied on putting more and more inputs into the mix (extensive growth). On of the main problems with that, is that inputs were lacking. The Soviet economy was mostly underemployed throughout its history. Its labor force participation rate was from 85-90%. So, couldn't put more workers in the mix. We next look at capital. The Soviet Union's savings rate was one of the highest in the world (~35%), mostly through artificially increasing prices through the turnover tax. However, once you have such a high savings rate, it is hard to go even higher. And of course, there was little usable land left. So, there were no inputs to feed.

When this happens, you have to turn to intensive growth, which is growth by greater efficiency, but it seems the Soviet Union wasn't doing this at all. Their efficiency rates were horrid. Labor and Capital productivity were going DOWN. Capital productivity was in fact negative for 40 years. This was a system that never moved from extensive growth. HELL, total productivity in the economy went negative in the 80s. That simply cannot keep continuing. That means for every ruble you put in, you get less back! An economy like that is bound to implode.

Um, Russia's growth is decent now for much the same reason that US GNP growth was well over 10% for a lot of the 30s. When half of your factories shut down its easy to get some growth by opening a few up again.

It is more than that. Transition was a very hard time. Some nations like Poland, and Czech Republic dealt well, Russia did not. First off, you had to have a non-convertable currency shift to a convertible one. This is a VERY painful convertion. They attempted to sell their state assets, but there was no one in the country that could buy them. What resulted was an oligarchy, which make things even worse. Secondly, there was NO banking system. They had to create one from scratch. Also Russia was the nation that took over the USSR's debt load, which was crippling, seeing as how they really couldn't trade in rubles (who'd accept them?).

In short, EVERYTHING had to be changed. They had to squeeze in all of these things that the capitalist world gradually adopted, but they were neccessary, especially making the currency convertable and the banking system. THIS HURTS. It was a matter of time before they righted themselves, but for a while, everyone knew it wasn't going to be too pretty.

[Seneca]

A system in which a common saying was "They pretend to pay us, we pretend to work" cannot sustain itself.

At least half of that works at my company

[Natan]

I think people fail to realize how central militarism and repression were to the Soviet system. A Soviet spy and army officer who defected to the west wrote in the 1980s in his book "Inside the Soviet Army" that the USSR was like a snake which had disconnected its jaws and bit into the world - the world, he said, could not break free, and the snake cannot take out its jaws without causing its own death, but the world is too big for it to swallow. He also said that the three pillars of the Soviet system were the army, the KGB, and the Pulitburo. I don't think you can make anything good out of that sort of system.

[Roman]

Russia's current spurt of growth is certainly encouraging. However, long term optimism is not yet warranted. There is some suspicion that the two main engines fueling Russia's current growth are high oil prices and the previous devaluation. Oil prices are now falling even as I am writing this post. The competitive advantage of the devaluation is fast being eroded by Russia's rampant inflation. Some reform of the economy is being enacted but corruption is still very widespread and this seriously hampers recovery. Very soon situation in Russia might turn sour again. Russia's long term problems are exasperated by her rapidly dwindling population. She looses approximately 1 million people per year! In the long term this will be devastating to Russia's economy and demographics especially when one also considers the fact that the birth rate is unlikely to recover, while death rate is projected to rise even higher, due to rapid spread of AIDS and other diseases in Russia. AIDS is already spreading at an alarming rate and is largely ignored by the health authorities. It is conceivable that it will reach African proportions in the near future. Even if it doesn't though, Russia's population is projected to collapse by 2050. Estimates vary but some indicate a population as low as 70 million at this point and all predictions are consistently being revised for the worse. The demographic crisis will seriously hamper Russia's economic growth.

Now, maybe the current bout of growth will provide a spark for a turnaround, but unfortunately I am not convinced and predict a lot of further pain ahead for Russia. I wish I were wrong.

[Giancarlo]

Well, I think Putin is following the right steps to prevent any of that from happening Roman, but it is going to be a difficult road ahead for him. I believe he can make the growth stick.

[Imran Siddiqui]

Roman, I fear you may be right.

The negative population growth in a developing economy is not very good at all. After all, the Soviet Union was always underemployed, and Russia in the present day doesn't need to lose anymore people. Population should grow at the same rate of the warrented rate of growth, ideally, but I fear in Russia that just won't happen.

[Roman]

Gian, sure Putin is doing a decent job and trying to implement some reforms (albeit probably not fast enough). If he is sufficiently skillful and lucky he might manage to right the structural problems of the economy, even though I have some doubts here too, since proper reforms require a change in people's psyche and that happens far too slowly.

As to the issue of diseases especially AIDS:- Russian health authorities have been consistently underestimating the scale of the AIDS problem in Russia. Oftentimes they simply deny that the problem exists, as they find it embarassing. The sanguine approach with which they view the issue is not shared by various international bodies like the WHO though. These estimate that already more than 800,000 Russians have contracted the disease and that it is spreading at an incredible pace with the 1 million mark waiting to be passed sometime soon. Education on on the issue is grossly insufficient and most people in Russia are simply not aware of the scale of the AIDS epidemic. Major route of transition remains the repeated use of hypedermic neadless among Russia's massive heroine addict population - a problem in its own right. I also fail to see how Putin can influence Russia's birth rate to any significant degree. Hence, although I am an optimist for most of the world, unfortunately I see a lot of gloom for Russia in the future.

[Roman]

Originally posted by Imran Siddiqui
Roman, I fear you may be right.

The negative population growth in a developing economy is not very good at all. After all, the Soviet Union was always underemployed, and Russia in the present day doesn't need to lose anymore people. Population should grow at the same rate of the warrented rate of growth, ideally, but I fear in Russia that just won't happen.

You are completely correct. Russia's population density is low so population growth would not be environmentally harmful in the country whatsoever. The population decline Russia is experiencing, though; will leave it with a small (and probably unhealthy) productive population and a relatively large elderly population - a recipe for disaster in what is essentially a developing country. Furthermore the size of the Russian market will have shrunk making it more difficult to achieve domestic economies of scale, althought this can be countered somewhat by increased exports.

Currently, Russia has all the characteristics of a low-medium income developing country other than the population decline, which however makes the matter even worse, and relatively high education levels, which make the matter somewhat better.

[Roman]

Originally posted by Giancarlo
In the long run would this system work? The answer is no, communism doesn't work, it can't work because it is incorrect because it doesn't allow market flucucations. This growth was forced, and was not real growth. The growth was centered on the wealth of several fat party klepocratic politburo officials. This is what true communism is. It is evil, as Reagan said over and over again. It is dead.

No, in the long run the growth would not have been sustainable. As Imran correctly pointed out the growth was extensive rather than intensive. Moreover, while this worked for the development of heavy industry (which is of course neccessary and useful, but not everything a country needs), it did not work for the development of a service economy or even light manufacturing. It is difficult to coerce people to preform a service well.

35% growth rate in the 30s, yeah sure... proof for that claim? I am sure the 40,000,000 that perished, because of the purges and paranoia, would agree with you.

I think chegitz got his figures right, though, I do not remember precisely what the average figure was. I do remember, however, that at no point in the 1930s did Soviet Union's growth dip under 20% per year. Therefore, I believe the figure he presented is accurate.

Nobody is disputing the enormous human costs of Stalin's economic and other policies.

[Roman]

The following article might be of interest to people concerned about the Russian population decline:

Copyright 2001 The Christian Science Publishing Society
The Christian Science Monitor


February 22, 2001, Thursday

SECTION: FEATURES; IDEAS; Pg. 15

LENGTH: 2153 words

HEADLINE: The Incredible Shrinking Russia

BYLINE: John Dillin Staff writer of The Christian Science Monitor

DATELINE: WASHINGTON

HIGHLIGHT:
It is dawning on the world that among the tremendous changes in russia since the disintegration of the soviet union - population decline is perhaps the greatest.

BODY:
In the mid-1960s, William Odom was a young American officer assigned to keep tabs on Soviet troops in Communist East Germany. As he quickly discovered, the Russian Army looked healthy and tough.

"I saw thousands and thousands of soldiers," he recalls. "They were big, sandpaper-hard, rough, ready peasants. You could have hit 'em with a two-by-four and it wouldn't hurt 'em."

When General Odom, now retired, took a more recent first-hand look at Russian troops, he found something entirely different.

"They're sallow, thin, sick, poor," he says. "I physically observed that decline."

What has happened to the once-proud Russian Army has happened to Russia itself.

The former Communist giant and one-time superpower now faces an unparalleled 'people crisis.'

Russia's population is collapsing. Communicable diseases are spreading. Hospitals are overwhelmed. Birthrates are dropping. Alcohol poisoning is rampant. Sexually transmitted diseases have left millions of women infertile. Environmental problems like heavy-metal pollution have increased birth defects.

Joblessness, alcoholism, suicide, and divorce are putting intolerable strains on Russian families. A typical Russian man now drinks three half-liter bottles of vodka a week, according to a report in The Moscow Times. Abortions - the principal form of birth control in Russia - now outnumber live births by more than 2 to 1.

If that weren't enough, the officially reported economy shrank 45 percent from 1991 to 1999. Four out of every 10

Russians now lives below the poverty line, compared with only 1 out of 10 in neighboring China, according to the US Central Intelligence Agency.

Odom, who ran America's super-secret National Security Agency in the 1980s, is blunt about what is happening: "Russia is the newest member of the third world." He adds: "From a human point of view, it is just heart-rending."

Russian President Vladimir Putin has warned his countrymen: "If this continues, the survival of the nation will be in jeopardy."

Murray Feshbach, an authority on Russian demographics (editor in chief of the "Environmental and Health Atlas of Russia"), relates what he calls the "terrible detail" of the crisis. It includes: An epidemic of tuberculosis, including drug-resistant varieties; a spreading HIV/AIDS crisis; a soaring death rate among males, half of whom die before the age of 60; and a female population so devastated by disease that 30 percent of the women of child-bearing age are now infertile.

To illustrate the magnitude of Russia's health problems, Dr. Feshbach draws a comparison with the United States. Once American boys reach the age of 16, 88 to 90 percent of them go on to reach the age of 60. But in Russia, only 58 to 60 percent of 16-year-old boys reach the age of 60. In addition, Russian children's prospects are growing steadily worse.

Nicholas Eberstadt, a scholar at Harvard University and the American Enterprise Institute, says that based on the empirical data, Russia's overwhelming health problems are difficult to explain fully.

Excessive drinking, widespread use of cigarettes, sedentary lifestyles, and wretched prisons that serve as incubators for new strains of TB account for some problems - but not all of them. Dr. Eberstadt says there appears to be something else - "an 'R' factor, a Russian factor you could call it."

He describes the "R" factor as mental. It consists of Russians' harmful "outlook, viewpoints, and attitudes" - a kind of nationwide "mental-health problem," or "depression" that "cannot be measured very well." This mental crisis is having a devastating impact on the Russian people, he says.

From an American viewpoint, these developments are troubling, though the longer-range implications are not entirely clear.

Militarily, Russia's conventional forces have shriveled. But the nation of Tolstoy and Sputnik still brandishes an arsenal of nuclear, chemical, and biological weapons. Some American analysts worry that a weakened and fearful Russia, if threatened, could be quicker to pull the trigger, particularly against its neighbors.

Feshbach, for example, talks about the potential danger of a Russian "man on horseback," a would-be dictator with nothing to lose who says, "Apres moi, le deluge" - essentially, "I might as well kill everybody, and they'll kill me."

Around the Russian perimeter, the border with China seems the most sensitive. In Russian Siberia, the ethnic Russian population is shrinking, while China's billion-plus people are pressing hard against Siberia's thinly settled frontiers. It is a situation that could easily become inflamed.

Many Americans may not comprehend the tremendous changes that have swept Russia since the Berlin Wall fell in November 1989.

When it was still the Union of Soviet Socialist Republics, its population was 287 million: 40 million more than the United States at the time. It spread over 8.6 million square miles - 2-1/2 times the size of the US. It led the world in output of steel and oil and was a pacesetter in the design of tanks, submarines, missiles, and aircraft.

The Soviets proudly held numerous records for space flight, and were major players in a number of areas of research, such as nuclear fusion.

When the USSR broke up, it lost nearly one-half of its population and nearly one-quarter of its territory. With the end of Communist rule, and the arrival of greater press freedom, decades of hidden problems came to light. There is almost unimaginable environmental degradation. An estimated 36 percent of all babies in Russia are born ill. Suicides are escalating. Corruption is endemic.

Last summer, when newly elected President Putin spelled out his agenda, he put the population crisis with all its ramifications at the top of his list. He warned the country that it could lose another 22 million people by 2015.

A decade ago, Russians numbered 150 million. By July 2000, the CIA estimated that had dipped to 146 million.

Now the decline is accelerating - as predicted. Though thousands of ethnic Russians have returned to their homeland since the end of communism, Russia still shrank by 700,000 people in 1999. The loss quickened to perhaps 1 million in 2000 because Russians now are dying nearly twice as fast as they are being born.

Various analysts predict that Russia's population in 50 years will sink to 128 million (Population Reference Bureau estimate), or 121 million (United Nations estimate), or even go as low as 80 to 100 million (Feshbach). A leading Russian health authority, Nicolai Gerasimenko, has reportedly said if current trends continue, Russia could dip to 50 million to 60 million people by 2075.



No one sees Russia growing

Even if the UN's middle-of-the-road projections were correct, Russia's populace in 50 years would be smaller than Mexico (147 million), the Philippines (131 million), or even their current ally, Vietnam (127 million).

If Feshbach's gloomier projection of 80 million to 100 million were right, Russia would have fewer people in 2050 than either Turkey or Egypt.

There is growing agreement among Russia-watchers that Feshbach, and not the UN, has the better estimates. The UN will release newly revised population estimates for Russia and other countries on Feb. 28.

Meanwhile, in 50 years, neighboring China will have climbed to 1.48 billion - 12 to 18 times the size of Russia. To the south, the Islamic Republic of Iran at 115 million would be near population parity.

In the big-power game, Russia would have become a minor player.

Odom says: "There is this delusion on the part of Westerners that Russia is a strong state, or it's going to return to become one soon. I don't see the empirical evidence for it."

What amazes Russia analysts is that a tragedy this great could happen to a country that is so technically and educationally advanced.

Harvard's Eberstadt says the growing crisis in Russia is "unprecedented for any organized, literate society." He explains that at its root, Russia's population implosion is "primarily a health crisis" - one that extends "as far as the eye can see." He calls the UN's estimates of Russia's future population "too optimistic," and says that there is no visible way in which Russia could halt its population decline in the next 25 years.

From the Kremlin's perspective, the security implications for Russia are obvious, starting with Siberia. With more than 5 million square miles, Russian Siberia shares a 2,265-mile border with China. Approximately 31 million Russians live there, but only 7 million of them are in the Far East near the eastern border with China. The number of ethnic Russians in the Far East shrinks every year because the best educated people head toward better jobs and easier living in European Russia. Left behind are the pensioners and less-productive workers.

Meanwhile, an estimated 1 million to 1.5 million Chinese (some say the number could be as high as 5 million) have migrated across the Russian border as traders and settlers. No one in Russia has found a way to stop it.

Are there serious dangers here?

Certainly for Russia. Siberia is rich in natural resources, particularly oil, gas, timber, and precious metals. China has a growing appetite for those resources, particularly the oil, to keep its economy humming.



What will China do?

William Taylor, senior adviser in international security affairs at the Center for Strategic and International Studies in Washington, says that if China did have aggressive designs on Siberia and its oil, any military action by Beijing is probably still "decades" away.

Eberstadt also doubts that China will engage in provocative acts against Russia in the near future. He explains:

"It would be far more advantageous for Chinese interests to 'rent' the place - to purchase the resources. Taking over a territory [the size of Siberia] would be a lot more trouble than it is worth. And it would also set in motion all sorts of big repercussions which would cause trouble [that] China isn't even dreaming of right now."

It is important to note that since this article was published, Russia's prospects got even worse and its projected population has been further downgraded by the United Nations and other forecasters.

[faded glory]

Yes I believe Russia should begin importing Swedish hookers.....that would solve the problem


Dalgetti you have to be kidding me right? Sure Stalin built factories...Airports...roads etc etc...

At what price? millions of his own people. And Russia was hardly up to par with the west in terms of economic well being. Had Krushev and the leaders after Stalin wanted to keep the Soviet Union alive and modern they would have to employ the same brutal forced labor means that stalin did. Even in 1945 the Soviet Union industry was cranked up. The labor was still forced with 14 hour shifts and meager pay. I know...I know I can hear your pro-commie BS.....would you want to work 14 hours in a factory building tank after tank for nothing in the freezing siberia? Granted, this is a strength of most Communist systems. The ability to produce endless amounts of one product (usaully military)

The Fact is people like Solver and others on Apolyton will tell you that living in the Soviet Union or other communist governments was pure hell... You couldnt buy meat, you couldnt better yourself, and your herculian efforts were never enough for the state.

One Soviet Physic once lived in the Soviet Union. I think his name was Unizemf or somthing...

Anyway he lived like the rest of the downtrodden masses of citizens. He got paid nothing for what he did...in 1968 he came up with revolutionary ideas about Stealth technology. Even after publishing his work he asked for investments to get prove his ideas worked. the Soviets lauged at him and sent back to Siberia. In 1971 we picked this guy up and he is still working for Skunk works today.

You see my point? There were no promotions.....no oppurtunitys.....nothing. The Soviet System was no better then the Fuedal ones of the middle ages.

Capitalism has came to Russia and people are now opening there own stores. Making Profits and hiring workers...the economy is booming and in a few years Communism will be just a bad memory and the future will look very bright.