Great War, Civil War, and Recovery: Russia’s National Income,

1913 to 1928Andrei Markevich(New Economic School)

Mark Harrison(Warwick and Hoover)

The last gap: 1913 to 1928

Russian and Soviet GDP per head, 1885 to 2006

1885 1905 1925 1945 1965 1985 200525%

250%

2500%

Gregory (1982)

Maddison (2010)

Harrison (1996)

The last gap: 1913 to 1928

Russian and Soviet GDP per head, 1885 to 2006

1885 1905 1925 1945 1965 1985 200510%

100%

1000%

Gregory (1982)

M&H

Maddison (2010)

Harrison (1996)

Motivation• We need to fill the gap!• Without this, we cannot answer important questions from

Russian economic history– How effectively did alternative economic systems and government

policies mobilize the economy in times of Great War and Civil War? – At the end of two wars, just how bad was it?– Given this, what was pace of postwar recovery under the New

Economic Policy? – When did the Soviet economy recover fully?

• Implications beyond Russia: economics of wars, WWI in particular, and Civil wars in the past

• Difficult to analyze Russian/Soviet economic growth in the long –run without the GDP series

Plan• Estimation issues• Findings

– Implications for Russian Economic History– Russian 1913-1928 Experience in Comparison

• Cross-country– Economics of WWI– Civil wars of the past– Post-war Recover

• Over-time: Russian/Soviet crises in the 20th C.

Estimation issues

• Borders– We have Soviet Union within interwar borders of 1925 to 1939 as

primary territory for GDP and population in all years.– Russian Empire excluding Poland and Finland, within borders of 1913, as

secondary territory for GDP and population, 1913 to 1917 only.

• Population – Reconstructed for the from censuses and vital statistics.– Corrected on lines suggested by Vainshtein; Sifman; Andreev, Darskii,

and Khar’kova and Adametz

Estimation issues• GDP by sector of origin

– Sectors: agriculture, large + small industry, construction, transport, civilian + military services.

– Physical production from official sources, mainly published in 1920s.– Corrected as advised by Gukhman, Vainshtein, Wheatcroft, and others.– Service sector output based on employment.

• Prices– We use constant prices of 1913.– Why not 1928, too?– By 1928 Soviet markets were isolated from world trade.– Relative prices were affected by government controls and subsidies; markets

were in disequilibrium– Branch shares in the Soviet economy in 1928 were nearly identical to those of the

Russian economy in 1913.

Findings

Russian/Soviet GDP, new and old estimates

19131915191719191921192319251927192910%

100%

1000%

M&H

Gukhman (1928)

Gregory (1990)

Gatrell (2005)

Maddison (2010)Per c

ent o

f 191

3

Implications for Russian Economic History

• Implications for Russian economic development during First World War– Russian economy operated reasonably well;

by 1916 decline still less than 10 percent– fuller credit for the military mobilization of

1914 through 1916 than previous estimates– Two-thirds of decline came after the

Revolution

GDP/head % of 1913 % change1914 96% -4.5%1915 98% 3.4%1916 87% -9.8%1917 77% -11.2%1918 47% -38.8%1919 41% -13.7%1920 41% 0.3%1921 37% -8.6%

• Reflections on the War Communism and Civil War- output fell most precipitously before 1919 when the Red and White armies clashed most fiercely, i.e. should blame the policy of grain requisitions started in 1918- by 1920, with a command economy in place, the Bolsheviks were able to stabilize the economy, but not at first to recover- 1921-1922 famine occurred after a series of very bad harvests, i.e. caused not by the weather shock only

Implications for Russian Economic History

• Reflections on NEP– Soviet GDP/head in 1928 fell short of 1913

by around 4 percent (agrees with Gregory, roughly )

– Rate of recovery was dropping as 1928 approached – despite the shortfall.

– Against Allen’s view that that the best development strategy for the Soviet economy would be the policy of the late NEP

GDP/head % of 1913 % change1922/23 50% 15.1%1923/24 63% 26.5%1924/25 79% 24.9%1925/26 89% 12.3%1926/27 92% 4.1%1927/28 97% 5.2%

• Implications for five-year-plan era:– Soviet GDP/head remained below 1913 level until 1930 that imply a more

pessimistic view on the achievements of the first five-year plan policy

Russian 1913-1928 Experience in Cross-Country comparison: WWI

40%

50%

60%

70%

80%

90%

100%

110%

120%

0 1000 2000 3000 4000 5000 6000

Tota

l GD

P in

191

7, p

erce

nt o

f 191

3

GDP per head in 1913, international dollars and 1990 prices

Russia

Turkey HungaryFinland

Austria

FranceGermany

Belgium

UK

Greece

Russian 1913-1928 Experience in Cross-Country comparison: Civil War• The consequences of Russia’s civil war were very severe in international

comparison– Short run: Russia fared worse than either Spain or USA and equally

worse to China.– Long run: “Most of the costs of civil war ... accrue after the war is over”

(Collier 2008).

• Causes of Civil wars according to cross-country studies of Civil wars (Collier and Hoeffler 2007; Blattmann and Miguel 2010): a political constitution that restricted competition and participation, and several years of declining output – Limited help to explain the start of the Civil War in Russia in that time

Russian 1913-1928 Experience in Cross-Country comparison: Recovery

60%

80%

100%

120%

140%

160%

180%

0 1000 2000 3000 4000 5000 6000

Tota

l GD

P in

192

8, p

erce

nt o

f 191

3

GDP per head in 1913, international dollars and 1990 prices

USSR

Bulgaria

Romania

Yugoslavia

Turkey

Austria

Hungary

Germany

Greece

CzechoslovakiaFinland

France Belgium

UK

Economically, the deepest trauma

Russian and Soviet GDP per head, 1885 to 2006

25%

50%

100%

200%

400%

800%

1880 1900 1920 1940 1960 1980 2000

Per c

ent o

f 191

3

Gregory

M&H

Maddison

Harrison

Russian/Soviet Crises in the 20th C. in comparisons

Sources: Various.

* Figure is for decline in national income.

Change in personal

consumption per head, per

cent

Premature deaths, Million

Great War-Civil War -56% (1913-21) 13,0 (1914-23)

Great Breakthrough-Great Terror -14% (1930-32) 6,0 (1932-34)

Great Patriotic War -44% (1937-42) 28,6 (1937-47)

Post-Soviet transition -38% (1990-94) 0.1-3.8 (1991-98)

Conclusion and perspective for further research

• Reconstruction of the GDP series shed new lights on the Russian economic development during the first transition

• Further research: the analysis of Russian/Soviet growth in the long-run is now possible– Did it follow a common trend? – Were there any breaks?– Were negative shocks of the WWs and the Great

Breakthrough permanent or transitory?