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The Princeton Economic History of the Western World #29
Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution
To say that history's greatest economic experiment--Soviet communism--was also its greatest economic failure is to say what many consider obvious. Here, in a startling reinterpretation, Robert Allen argues that the USSR was one of the most successful developing economies of the twentieth century. He reaches this provocative conclusion by recalculating national consumption and using economic, demographic, and computer simulation models to address the "what if" questions central to Soviet history. Moreover, by comparing Soviet performance not only with advanced but with less developed countries, he provides a meaningful context for its evaluation.
Although the Russian economy began to develop in the late nineteenth century based on wheat exports, modern economic growth proved elusive. But growth was rapid from 1928 to the 1970s--due to successful Five Year Plans. Notwithstanding the horrors of Stalinism, the building of heavy industry accelerated growth during the 1930s and raised living standards, especially for the many peasants who moved to cities. A sudden drop in fertility due to the education of women and their employment outside the home also facilitated growth.
While highlighting the previously underemphasized achievements of Soviet planning, Farm to Factory also shows, through methodical analysis set in fluid prose, that Stalin's worst excesses--such as the bloody collectivization of agriculture--did little to spur growth. Economic development stagnated after 1970, as vital resources were diverted to the military and as a Soviet leadership lacking in original thought pursued wasteful investments.
Although the Russian economy began to develop in the late nineteenth century based on wheat exports, modern economic growth proved elusive. But growth was rapid from 1928 to the 1970s--due to successful Five Year Plans. Notwithstanding the horrors of Stalinism, the building of heavy industry accelerated growth during the 1930s and raised living standards, especially for the many peasants who moved to cities. A sudden drop in fertility due to the education of women and their employment outside the home also facilitated growth.
While highlighting the previously underemphasized achievements of Soviet planning, Farm to Factory also shows, through methodical analysis set in fluid prose, that Stalin's worst excesses--such as the bloody collectivization of agriculture--did little to spur growth. Economic development stagnated after 1970, as vital resources were diverted to the military and as a Soviet leadership lacking in original thought pursued wasteful investments.
312 pages, Hardcover
First published September 29, 2003
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Displaying 1 - 21 of 21 reviews
March 28, 2021
Dry as a bone, but an interesting counterweight to received wisdom.
December 1, 2018
Allen's book is a fascinating and important first step in revising the ideological underpinnings of Cold War historiography. Throughout his book, he rethinks and reinterprets old assumptions about the Soviet economy, its performance, its structure, its biopolitics (though not his own words), etc. and provides new models, often speculative, to rethink how we approach the Soviet economic model, its components, and its results. His arguments that the Five Year Plans were successful is convincing, but I believe the major problem of the book is that its audience seems to be too narrow.
Allen's numerous speculative charts and models tells the reader that this is intended for economists and economic historians, many of whom will not be necessarily interested in the evidence nor conclusions, largely for ideological reasons. This book could have used more help from the methods of social history, and Sheila Fitzpatrick is a major case in point, in this sense. Oftentimes throughout the book, Allen's numerous numbers and charts fail to adequately describe the movement of people, the logistics, and the social underpinnings which allowed for the economy to function in the first place. This should come as no surprise as the book itself does not take a critique of political economy as the starting point, and, in this sense, does not take the powerful tools Marx and Marxist economic historians provide in trying to unravel the large conceptual web of economics that largely hides rather than explains the functioning of the capitalist world system. The book's ignorance of the international political situation, as another example, makes Allen assert that NEP growth (which he admits would have been lower) would have been preferable and possible in the Soviet Union during the 30s, without ever discussing what repercussions this would have had in relation to the country's readiness for World War II (which took place, and therefore to a certain extent justifies the Soviet paranoia of the late 20s and throughout the 30s), one of the main factors at the time which even led to the idea of rapid industrialization in the first place.
One cannot entirely blame Allen for his methodological choices, however. The field of history, as many other academic "disciplines," are plagued by popular methodological trends which offer little to the actual question at hand and instead only reinforce old conclusions. It is only particularly disappointing in this case because the ideas presented in the book are an important starting point for asserting the truth the book only hints at; namely, that the Soviet Union was not only efficient, powerful, and innovative, but that it also should be the starting point for any socialist today in imagining any possible future. In my opinion, then, the book overall succeeds as a starting point for further investigation and research, primarily through its (latent) attack on ideology's obfuscation in academia.
Allen's numerous speculative charts and models tells the reader that this is intended for economists and economic historians, many of whom will not be necessarily interested in the evidence nor conclusions, largely for ideological reasons. This book could have used more help from the methods of social history, and Sheila Fitzpatrick is a major case in point, in this sense. Oftentimes throughout the book, Allen's numerous numbers and charts fail to adequately describe the movement of people, the logistics, and the social underpinnings which allowed for the economy to function in the first place. This should come as no surprise as the book itself does not take a critique of political economy as the starting point, and, in this sense, does not take the powerful tools Marx and Marxist economic historians provide in trying to unravel the large conceptual web of economics that largely hides rather than explains the functioning of the capitalist world system. The book's ignorance of the international political situation, as another example, makes Allen assert that NEP growth (which he admits would have been lower) would have been preferable and possible in the Soviet Union during the 30s, without ever discussing what repercussions this would have had in relation to the country's readiness for World War II (which took place, and therefore to a certain extent justifies the Soviet paranoia of the late 20s and throughout the 30s), one of the main factors at the time which even led to the idea of rapid industrialization in the first place.
One cannot entirely blame Allen for his methodological choices, however. The field of history, as many other academic "disciplines," are plagued by popular methodological trends which offer little to the actual question at hand and instead only reinforce old conclusions. It is only particularly disappointing in this case because the ideas presented in the book are an important starting point for asserting the truth the book only hints at; namely, that the Soviet Union was not only efficient, powerful, and innovative, but that it also should be the starting point for any socialist today in imagining any possible future. In my opinion, then, the book overall succeeds as a starting point for further investigation and research, primarily through its (latent) attack on ideology's obfuscation in academia.
July 12, 2020
Para quem não gosta de maniqueísmo e convive bem tendo mais dúvidas que certezas, o livro do Allen é uma leitura muito aprazível. O leitor pouco afeito ao tema ficará surpreso ao descobrir que:
1) A URSS foi um dos países que mais cresceram no mundo no século XX
2) Países com nível de renda similar no início do século XX (como alguns países latino-americanos) que optaram pelo desenvolvimento capitalista tiveram performance bem pior do que os soviéticos.
3) Os planos quinquenais stalinistas, que combinaram foco em indústria pesada com maximização de produção, foram um retumbante sucesso (e teriam sido mesmo sem coletivização na agricultura)
4) A URSS convergiu rapidamente para os padrões demográficos de países desenvolvidos devido ao rápido aumento dos níveis educacionais da mulher russa e das taxas de urbanização
O objetivo do livro não é dizer que "o comunismo deu certo". Avalia-se apenas a dimensão econômica do experimento comunista na Rússia sem deixar de criticar suas falhas (mais notáveis a partir da década de 1970).
Allen, assim, explica a industrialização soviética usando ampla base empírica e técnicas modernas de teoria econômica. O resultado é uma leitura intelectualmente estimulante, mas um pouco árdua sobretudo para não-economistas. Recomendo o livro para todos que tem interesse em economia russa e para os interessados em desenvolvimento econômico de economias atrasadas em geral.
1) A URSS foi um dos países que mais cresceram no mundo no século XX
2) Países com nível de renda similar no início do século XX (como alguns países latino-americanos) que optaram pelo desenvolvimento capitalista tiveram performance bem pior do que os soviéticos.
3) Os planos quinquenais stalinistas, que combinaram foco em indústria pesada com maximização de produção, foram um retumbante sucesso (e teriam sido mesmo sem coletivização na agricultura)
4) A URSS convergiu rapidamente para os padrões demográficos de países desenvolvidos devido ao rápido aumento dos níveis educacionais da mulher russa e das taxas de urbanização
O objetivo do livro não é dizer que "o comunismo deu certo". Avalia-se apenas a dimensão econômica do experimento comunista na Rússia sem deixar de criticar suas falhas (mais notáveis a partir da década de 1970).
Allen, assim, explica a industrialização soviética usando ampla base empírica e técnicas modernas de teoria econômica. O resultado é uma leitura intelectualmente estimulante, mas um pouco árdua sobretudo para não-economistas. Recomendo o livro para todos que tem interesse em economia russa e para os interessados em desenvolvimento econômico de economias atrasadas em geral.
November 16, 2017
Allen talks about how Soviet industrialization was anchored on a rapid transfer of labour from farm to factory, and collectivization sped up that process and how it is possible to identify five interlaced characteristics of the Five-Year Plans: central planning, capital accumulation, growth of human capital, collectivization of agriculture, industrial revolution, and urbanization.
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These days I'm reading nothing but books for the Economic History class, I can't believe it is worth only 6 credits.
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These days I'm reading nothing but books for the Economic History class, I can't believe it is worth only 6 credits.
August 24, 2024
Robert C. Allen sets the record straight on Soviet industrialization; its rapidity is nothing short of remarkable, that is when you set the right benchmark. He begins with a critique of the tendency to consider the Soviet economy based on how well it measures up to the West's, and particularly America's (perhaps unavoidable considering the Cold War). He instead convincingly makes the case that Russia in the 1920s was in every way demographically and economically closer to the countries of the Third-World, which any fair comparison would take into account rather than engage in Procrustean judgements where the USSR will always come up short.
Allen's most scathing criticism (read: polite scholarly takedown) is reserved for the 'optimist' school of historians of Russia who, citing increasing agricultural productivity and national income, believe the Empire was poised for a economic miracle until Bolshevik revolution derailed things. This childish outlook is exploded as Allen demonstrates the imperial economies two sources of growth, grain and railway construction to ship said grain, would both dry up during the post-WW1 price slump and later Great Depression. By using the counterexample of the North American great plains, he shows conclusively that there was no foreign panacea to increase the yield; output per hectare would stagnate until the introduction of chemical fertilizers in the 1950s.
He moves on, with the help of ample graphs and tables, to examining counterfactuals regarding economic development. Using a simulation model he developed, he shows that collectivization performs the best, then a continued NEP, and finally a capitalist model of development. The difference between the former two is considerably smaller than the gulf which divides the latter from them, something he attributes to firms success being measured by output targets rather than profit as well as possessing soft budget constraints (meaning they can hire additional workers even when it is not individually profitable). He further asserts that contrary to the mainstream view, consumption actually increased during the First Five-Year Plan (famine notwithstanding), and that there is no contradiction between increasing investments in producer goods/capital and consumption, as the former being developed allows greater production of consumer goods.
However, here is where Allen's analysis begins to fall short, as he downplays the gap between the NEP and the collectivized economy. He states that the collectivization resulted in 'only' a 22% higher non-agricultural value added, a non-agricultural capital stock 8% higher, and a GDP 5% higher by 1939. He also demonstrates that the industrial working class would be roughly 10 million less populous if the NEP had been continued, and that the policy had failed in increasing farm marketing as it was 24% lower in 1928 than in 1913 (collectivization increasing this by 92% by 1937). One is left wondering if the USSR would have managed as well as it did during WW2 without these substantial developments, but despite this Allen is completely silent on the issue and he proceeds to chastise 'Stalinism' as being "barbaric" and "corrupt[ing] socialism". The eminent late R. W. Davies in his review of the work questions how with an urban population in the late 1930s more than double that of 1928, the NEP patterns of farm marketing could at all be sufficient, and concludes that any viable alternative economic model "would certainly have to include some form of state control of agricultural production." (Read here: https://eh.net/book_reviews/farm-to-f...).
One interesting point I did want to mention was his discussion of how in the period from 1933 to 1939, the fraction of producer goods investment went from 93 to 58%, and production of military equipment increased from 3 to 41% of producer goods output. He estimates that had the threat of Germany not been present, the capital stock, GDP and per capita consumption would have been ~one fifth greater. This helps break down the widespread myth of Stalin's 'unpreparedness' for the coming war.
There are other discussions regarding Soviet demography including a lengthy section exploring why the USSR did not experience a Third-World style population explosion (in short: economic modernization and women's education) and exploring counterfactuals on the population if famine or WW2 never occurred, as well as devoting a chapter to the economic stagnation in the 1970s (which he blames on the lack of easily absorbable surplus-labor from the countryside, investment in brownfield rather than greenfield projects and the drying up of accessible natural resources among other things) which are interesting in their own right, but really beyond the scope of this review.
This is also not mentioning the technical discussions of how his model works and the data he used in the Appendix, which makes up a solid fifth of the book if you consider it alongside the smaller mathematical parts interspersed within the main chapters. All things considered, in view of the scope, Allen is to be commended for his brevity considering this dense work is only ~300 pages.
There is a particularly odious paragraph in which he derides the late Soviet Union's commitment to maintaining employment at existing industrial enterprises, rather than building more economical brand new ones, by comparing it unfavorably with the U.S governments response to deindustrialization. "It was as if the United States had decided to maintain the steel and auto industries of the Midwest by retooling the old plants and supplying them with ore and fuel from northern Canada instead of shutting down the Rust Belt and importing cars and steel from brand-new, state-of-the-art plants in Japan supplied with cheap raw materials from the Third World. What the country needed was a policy to close down old factories and shift their employees to new, high-productivity jobs (read: PMC desk jobs, 'Learn to code!'), reductions in the use of energy and industrial materials, and increased involvement in world trade."
Allen's most scathing criticism (read: polite scholarly takedown) is reserved for the 'optimist' school of historians of Russia who, citing increasing agricultural productivity and national income, believe the Empire was poised for a economic miracle until Bolshevik revolution derailed things. This childish outlook is exploded as Allen demonstrates the imperial economies two sources of growth, grain and railway construction to ship said grain, would both dry up during the post-WW1 price slump and later Great Depression. By using the counterexample of the North American great plains, he shows conclusively that there was no foreign panacea to increase the yield; output per hectare would stagnate until the introduction of chemical fertilizers in the 1950s.
He moves on, with the help of ample graphs and tables, to examining counterfactuals regarding economic development. Using a simulation model he developed, he shows that collectivization performs the best, then a continued NEP, and finally a capitalist model of development. The difference between the former two is considerably smaller than the gulf which divides the latter from them, something he attributes to firms success being measured by output targets rather than profit as well as possessing soft budget constraints (meaning they can hire additional workers even when it is not individually profitable). He further asserts that contrary to the mainstream view, consumption actually increased during the First Five-Year Plan (famine notwithstanding), and that there is no contradiction between increasing investments in producer goods/capital and consumption, as the former being developed allows greater production of consumer goods.
However, here is where Allen's analysis begins to fall short, as he downplays the gap between the NEP and the collectivized economy. He states that the collectivization resulted in 'only' a 22% higher non-agricultural value added, a non-agricultural capital stock 8% higher, and a GDP 5% higher by 1939. He also demonstrates that the industrial working class would be roughly 10 million less populous if the NEP had been continued, and that the policy had failed in increasing farm marketing as it was 24% lower in 1928 than in 1913 (collectivization increasing this by 92% by 1937). One is left wondering if the USSR would have managed as well as it did during WW2 without these substantial developments, but despite this Allen is completely silent on the issue and he proceeds to chastise 'Stalinism' as being "barbaric" and "corrupt[ing] socialism". The eminent late R. W. Davies in his review of the work questions how with an urban population in the late 1930s more than double that of 1928, the NEP patterns of farm marketing could at all be sufficient, and concludes that any viable alternative economic model "would certainly have to include some form of state control of agricultural production." (Read here: https://eh.net/book_reviews/farm-to-f...).
One interesting point I did want to mention was his discussion of how in the period from 1933 to 1939, the fraction of producer goods investment went from 93 to 58%, and production of military equipment increased from 3 to 41% of producer goods output. He estimates that had the threat of Germany not been present, the capital stock, GDP and per capita consumption would have been ~one fifth greater. This helps break down the widespread myth of Stalin's 'unpreparedness' for the coming war.
There are other discussions regarding Soviet demography including a lengthy section exploring why the USSR did not experience a Third-World style population explosion (in short: economic modernization and women's education) and exploring counterfactuals on the population if famine or WW2 never occurred, as well as devoting a chapter to the economic stagnation in the 1970s (which he blames on the lack of easily absorbable surplus-labor from the countryside, investment in brownfield rather than greenfield projects and the drying up of accessible natural resources among other things) which are interesting in their own right, but really beyond the scope of this review.
This is also not mentioning the technical discussions of how his model works and the data he used in the Appendix, which makes up a solid fifth of the book if you consider it alongside the smaller mathematical parts interspersed within the main chapters. All things considered, in view of the scope, Allen is to be commended for his brevity considering this dense work is only ~300 pages.
There is a particularly odious paragraph in which he derides the late Soviet Union's commitment to maintaining employment at existing industrial enterprises, rather than building more economical brand new ones, by comparing it unfavorably with the U.S governments response to deindustrialization. "It was as if the United States had decided to maintain the steel and auto industries of the Midwest by retooling the old plants and supplying them with ore and fuel from northern Canada instead of shutting down the Rust Belt and importing cars and steel from brand-new, state-of-the-art plants in Japan supplied with cheap raw materials from the Third World. What the country needed was a policy to close down old factories and shift their employees to new, high-productivity jobs (read: PMC desk jobs, 'Learn to code!'), reductions in the use of energy and industrial materials, and increased involvement in world trade."
May 23, 2020
Fascinating economic history of the early Soviet Union. Sometimes a little bit too concerned with demonstrating its rigorous use of data and modelling for the non-economist to read without going cross eyed, but overall draws out many useful insights into this controversial topic. It engages heavily with a wide selection of past academic work, which it contrasts and compares with the conclusions of its own research. The final chapter on why the Planned Economy failed so suddenly and so drastically is also valuable reading, going well beyond the usual lazy assumptions about disincentived workers and corrupt managers. Farm to Factory fits into an emerging canon of work on the Soviet Union that treats the subject soberly and in good faith, something sorely lacking while the memory of fighting the "evil empire" was still fresh in the mind of many western academics.
What this is *not* is a history of Gosplan and the *politics* of planning. Its an analysis of the economic outcomes of planning using statistical analysis. Although the book may have benefitted from some extra contextual material of this nature, its equally benefits from its focused and disciplined structure.
What this is *not* is a history of Gosplan and the *politics* of planning. Its an analysis of the economic outcomes of planning using statistical analysis. Although the book may have benefitted from some extra contextual material of this nature, its equally benefits from its focused and disciplined structure.
January 16, 2021
An essential text to anyone endeavoring to interact with the Soviet Industrial Revolution.
November 13, 2018
Наконец-то стало понятно почему СССР развалился.
February 23, 2025
Libro sobre como se desarrolló la economía sovietica. Creo que deja interesantes reflecciones sobre las cosas que hemos creído desde chicos y saca a la luz datos que pueden ayudarnos a entender mejor como desarrollar nuestras economías hoy en día.
Lo principal es que generalmente vemos a la unión sovieta como un estado fallido, sin embargo, esta comparación siempre la hacemos en fin de justificar que el comunismo no sirve, sin considerar que la Rusia de inicios del sigo XX se parecía más a los países más pobres de asia o latinoamerica que a Estados Unidos, en especial de la primera guerra mundial (y luego habiendo perdido 10 años por la segunda guerra mundial). Considerando que los sovieticos presenciaron un crecimiento del 7% anual en promedio hasta los 70s, hito solo replicado por el milagro japonés, creo que es mercedor darle crédito a la unión por el rapido desarrollo que tuvo.
Esto se debió principalmente por la movilización stalinista de las granjas a las fábricas y la rápida urbanización provocada por la centralización. La cual dirigió a los campesinos hacia las ciudades donde trabajarían en aumentar el capital y las maquinas. Esto viene de la idea de que en las granjas habían demasiadas personas debido a la estructura familiar bajo la que se regían, desperdiciando demasiadas personas en el uso agrario en vez del de la industria pesada. Sin embargo, esta movilización en parte se debió a las duras medidas de Stalin con el proceso de colectivización, que forzó a los granjeros a redirigirse a las fábricas. Pensandolo del punto de vista matemático, este incremento de personas en industria pesada aumentó el capital disponible durante decadas, aumentando así la producción.
Sin embargo, desde la decada de los 70 la nación se estancó parando su crecimiento mientras que países como Japón seguían con el suyo. Esto a pesar del crecimiento constante del capital. En términos simples, se llegó a un punto en el que había más capital que trabajadores, por lo que había maquinaria que no se utilizaba. Pensando en el modelo de Solow, al alcanzar el estado estacionario, lo que quedaría sería aumentar el desarrollo e investigación para mejorar la tencología. Sin embargo, todos los esfuerzos de desarrollo se fueron a la industria armamentistica para igualarse con los gringos, a pesar de todavía estar por detrás de ellos en la economía civil.
Esto sumado a la corrupción de los lideres, las vuelta al sistema capitalista que daban espacio a oligarcas, que en general es menos eficiente para movilizar la economía completa y la dificultad para entender las demandas de consumo de la gente llevó a los malos rendimientos y las baja de productividad en la unión sovietica.
Lo principal es que generalmente vemos a la unión sovieta como un estado fallido, sin embargo, esta comparación siempre la hacemos en fin de justificar que el comunismo no sirve, sin considerar que la Rusia de inicios del sigo XX se parecía más a los países más pobres de asia o latinoamerica que a Estados Unidos, en especial de la primera guerra mundial (y luego habiendo perdido 10 años por la segunda guerra mundial). Considerando que los sovieticos presenciaron un crecimiento del 7% anual en promedio hasta los 70s, hito solo replicado por el milagro japonés, creo que es mercedor darle crédito a la unión por el rapido desarrollo que tuvo.
Esto se debió principalmente por la movilización stalinista de las granjas a las fábricas y la rápida urbanización provocada por la centralización. La cual dirigió a los campesinos hacia las ciudades donde trabajarían en aumentar el capital y las maquinas. Esto viene de la idea de que en las granjas habían demasiadas personas debido a la estructura familiar bajo la que se regían, desperdiciando demasiadas personas en el uso agrario en vez del de la industria pesada. Sin embargo, esta movilización en parte se debió a las duras medidas de Stalin con el proceso de colectivización, que forzó a los granjeros a redirigirse a las fábricas. Pensandolo del punto de vista matemático, este incremento de personas en industria pesada aumentó el capital disponible durante decadas, aumentando así la producción.
Sin embargo, desde la decada de los 70 la nación se estancó parando su crecimiento mientras que países como Japón seguían con el suyo. Esto a pesar del crecimiento constante del capital. En términos simples, se llegó a un punto en el que había más capital que trabajadores, por lo que había maquinaria que no se utilizaba. Pensando en el modelo de Solow, al alcanzar el estado estacionario, lo que quedaría sería aumentar el desarrollo e investigación para mejorar la tencología. Sin embargo, todos los esfuerzos de desarrollo se fueron a la industria armamentistica para igualarse con los gringos, a pesar de todavía estar por detrás de ellos en la economía civil.
Esto sumado a la corrupción de los lideres, las vuelta al sistema capitalista que daban espacio a oligarcas, que en general es menos eficiente para movilizar la economía completa y la dificultad para entender las demandas de consumo de la gente llevó a los malos rendimientos y las baja de productividad en la unión sovietica.
September 13, 2015
A good account of Soviet economic growth. Allen presents a strong case for Soviet planning.
Allen argues that collectivization and state terror were unnecessary, and did little for industry; the Soviet economy under the New Economic Plan would have seen comparable rates of growth. By delivering labor from unproductive agricultural work into productive industrial work, both collectivization and the NEP would have delivered sustained growth. But a market economy would have left hard budget constraints: employers unwilling to employ labor at prevailing wage rates, and persistent underemployment in the countryside.
By commanding the complete allocation of labor (and compensating that labor through the soft budget constraints of bank credit), and by manipulating the terms of exchange between industrial and agricultural employment, both collectivization and the NEP would have delivered high output growth. Collectivization delivers somewhat more growth than the NEP.
Allen also revises the statistics for living standards over the controversial period 1928–40, the Stalinist high-tide. He contends that previous calculations, such as that of Bergson (1961), relied on bad specifications of consumption baskets (which computed consumption according to a constant 1927 allocation of goods), rather than the modern method, which is to compute a geometric mean between a first-term basket and a final-term basket – between a 1927 basket and a 1937 basket. Under this minor revision, which permits the introduction of new goods (bicycles, radios) and the changing pattern of consumption allocation among old goods, we can see that real per capita consumption rose from a 1928 base of 100 to 125 (140, table 7.2). Allen admits that consumption per head was depressed during the period of rapid collectivization 1929–33 (see 138, figure 7.2), but contends that this was an aberration, or perhaps an example of Feld'man-style sacrifice: forced savings and capital investment in the short run, and consumer goods in the long (see 54–57).
G. A. Fel'dman and E. Preobrazhensky are Allen's touchstones. Fel'dman is responsible for the above discussion of investment in producer and consumer goods, and is read through discussions of the model in Domar (1957) and Kaser (1964). Preobrazhensky (1926) is responsible for the other side of Allen's model of industrialization: that the countryside was full of "huge disguised unemployment", and that development should absorb that "surplus population" into industry. The state should extract surplus from peasant agriculture to finance industrial development. This should be done, Preobrazhensky contended, not by direct taxation (as under the NEP), but by effecting "unequal exchange" through the planning mechanism: the state would raise the price of consumer goods and lower the price paid for grain requisitions (57f). These two theories underpin the discussion in the rest of the book; the penultimate chapter is called "Preobrazhensky in Action" (172–86), and the index is full of listings for the "Fel'dman model" (296) and the "Preobrazhensky theory in action" (299).
Allen concludes the book with "The Soviet Climacteric" (189–211), a discussion of the decline in growth from the 1960s to the 1980s in the face of an investment share in GDP rising from 22% in 1950 to 39% in 1980 (189). He outlines and dismisses rival arguments. The first is the "end of labor surplus" argument, by Weitzman (1970) and Easterly and Fischer (1995), where a low elasticity of substitution between labor and capital (0.4) produces a growth dynamic where increasing inputs of either factor do not yield much additional output except where both factor inputs are raised in tandem. As the Soviet economy moved from one end to the other of the isoquant (from high labor–low capital to low labor–high capital), the constraint on output moved from deficient capital to deficient labor (191–97). Allen argues that it is not clear why the Soviet Union should have had such a low elasticity of substitution, since other nations managed the transition from labor-intensive to capital-intensive growth. Evidence from Japan and other developed capitalist nations suggests an elasticity of substitution closer to 1.0 or even larger (198). Allen thus contends that the 0.4 value is an artifact of a bad investment strategy rather than an essential constraint on growth.
The key problem in later Soviet development for Allen is the choice to invest in the redevelopment of existing plants rather than building new greenfield sites and in expanding domestic extraction rather than importing cheaper inputs or increasing throughput efficiency. A failure of initiative at the top resulted in chronic short-term planning. Allen's key example here is the choice to purchase 1420mm pipeline and new compressors from the West during the 1970s rather than building new production lines or adapting extraction techniques to use existing Soviet technology (210).
Allen dismisses the "incentives" arguments related by Joe Berliner (1976a, 1976b), contending that the institutions Berliner condemns were long-standing, and could not have been responsible for the country's poor growth record in the 1970s and after, and that there was still a good deal of enterprise-level innovation despite general constraints on innovation (207–11).
Allen contrasts the success of socialist economies under effective planning with the failure of socialist economies under poor planning. Market economies, he writes, do not have the same problems. His final words (211):
Allen argues that collectivization and state terror were unnecessary, and did little for industry; the Soviet economy under the New Economic Plan would have seen comparable rates of growth. By delivering labor from unproductive agricultural work into productive industrial work, both collectivization and the NEP would have delivered sustained growth. But a market economy would have left hard budget constraints: employers unwilling to employ labor at prevailing wage rates, and persistent underemployment in the countryside.
By commanding the complete allocation of labor (and compensating that labor through the soft budget constraints of bank credit), and by manipulating the terms of exchange between industrial and agricultural employment, both collectivization and the NEP would have delivered high output growth. Collectivization delivers somewhat more growth than the NEP.
Allen also revises the statistics for living standards over the controversial period 1928–40, the Stalinist high-tide. He contends that previous calculations, such as that of Bergson (1961), relied on bad specifications of consumption baskets (which computed consumption according to a constant 1927 allocation of goods), rather than the modern method, which is to compute a geometric mean between a first-term basket and a final-term basket – between a 1927 basket and a 1937 basket. Under this minor revision, which permits the introduction of new goods (bicycles, radios) and the changing pattern of consumption allocation among old goods, we can see that real per capita consumption rose from a 1928 base of 100 to 125 (140, table 7.2). Allen admits that consumption per head was depressed during the period of rapid collectivization 1929–33 (see 138, figure 7.2), but contends that this was an aberration, or perhaps an example of Feld'man-style sacrifice: forced savings and capital investment in the short run, and consumer goods in the long (see 54–57).
G. A. Fel'dman and E. Preobrazhensky are Allen's touchstones. Fel'dman is responsible for the above discussion of investment in producer and consumer goods, and is read through discussions of the model in Domar (1957) and Kaser (1964). Preobrazhensky (1926) is responsible for the other side of Allen's model of industrialization: that the countryside was full of "huge disguised unemployment", and that development should absorb that "surplus population" into industry. The state should extract surplus from peasant agriculture to finance industrial development. This should be done, Preobrazhensky contended, not by direct taxation (as under the NEP), but by effecting "unequal exchange" through the planning mechanism: the state would raise the price of consumer goods and lower the price paid for grain requisitions (57f). These two theories underpin the discussion in the rest of the book; the penultimate chapter is called "Preobrazhensky in Action" (172–86), and the index is full of listings for the "Fel'dman model" (296) and the "Preobrazhensky theory in action" (299).
Allen concludes the book with "The Soviet Climacteric" (189–211), a discussion of the decline in growth from the 1960s to the 1980s in the face of an investment share in GDP rising from 22% in 1950 to 39% in 1980 (189). He outlines and dismisses rival arguments. The first is the "end of labor surplus" argument, by Weitzman (1970) and Easterly and Fischer (1995), where a low elasticity of substitution between labor and capital (0.4) produces a growth dynamic where increasing inputs of either factor do not yield much additional output except where both factor inputs are raised in tandem. As the Soviet economy moved from one end to the other of the isoquant (from high labor–low capital to low labor–high capital), the constraint on output moved from deficient capital to deficient labor (191–97). Allen argues that it is not clear why the Soviet Union should have had such a low elasticity of substitution, since other nations managed the transition from labor-intensive to capital-intensive growth. Evidence from Japan and other developed capitalist nations suggests an elasticity of substitution closer to 1.0 or even larger (198). Allen thus contends that the 0.4 value is an artifact of a bad investment strategy rather than an essential constraint on growth.
The key problem in later Soviet development for Allen is the choice to invest in the redevelopment of existing plants rather than building new greenfield sites and in expanding domestic extraction rather than importing cheaper inputs or increasing throughput efficiency. A failure of initiative at the top resulted in chronic short-term planning. Allen's key example here is the choice to purchase 1420mm pipeline and new compressors from the West during the 1970s rather than building new production lines or adapting extraction techniques to use existing Soviet technology (210).
Allen dismisses the "incentives" arguments related by Joe Berliner (1976a, 1976b), contending that the institutions Berliner condemns were long-standing, and could not have been responsible for the country's poor growth record in the 1970s and after, and that there was still a good deal of enterprise-level innovation despite general constraints on innovation (207–11).
Allen contrasts the success of socialist economies under effective planning with the failure of socialist economies under poor planning. Market economies, he writes, do not have the same problems. His final words (211):
Perhaps the greatest virtue of the market economy is that no single individual is in charge of the economy, so no one has to contrive solutions to the challenges that continually arise. The early strength of the Soviet system became its great weakness as the economy stopped growing because of the failure of imagination at the top.
April 5, 2025
Allen at his best. Learns russian, reads the literature, writes something, and puts the field upside down. Single handedly responsible for revising the ideological conclusions of Cold War historiography. Since publication, most arguments in the book have been vindicated. Key points are:
- Economic growth under tsarism was moderate but unsustainable. While there were some signs of acceleration, this was mostly due to the agrarian boom of rising wheat prices. Growth in agriculture was due to this, and growth in consumer goods industry was fueled by domestic demand created by the wheat boom. Unfortunately for Russia, what followed internationally was the collapse of wheat prices during the Great Depression. Heavy industry was dependent on railroad construction, which was very advanced and did not have much future. (Also, industrial growth was not that fast, especially given the rapid rise in urban population). Given the tariffs (which prevented the shift to consumer good exporting a la Japan), the institutional picture (a stupid Tsar, massive monopolies, political rentseeking everywhere, etc.), and the unfavorable international scenario (WW1 and collapse in wheat prices incoming), Russia was likely to follow the LATAM path if it wasnt for the October revolution.
- The trend of living standards during Tsarism was negative. Allen only cites figures on earnings, which show stanganting living standards in cities and a mixed picture in the villages. Real wages were flat for industrial workers despite productivity and national income doubling. The fruits of industrial growth did not trickle down. Further work by Allen himself has only strengthened this position. In the villages, rising incomes do not apply to day laborers, and coexisted with skyrocketting rents and land prices, as well as with the dismantling of the commune. This, along with the monetization of the economy, probably led to a worsening of living standards. Anthropometric evidence, despite what some say, clearly shows declining living standards, supporting Allen's pessimist interpretation.
- NEP would not have worked beyond rebounding the economy back to its prewar levels. It could not lead to rapid industrialization and generalized increases in living standards. It had five main structural issues:
1. Even though many important industries were state-controlled, they operated under capitalist
constraints; they would only make profitable investments. Investments that were unprofitable but socially useful (in that they further industrialization) would not happen, at least not to the extent necessary.
2. The same is true when it comes to employment. Unemployment remains in capitalist economies because of profitability constraints. Under the NEP structural unemployment was a massive pool of wasted potential for increased output.
3. The increasing returns to scale in farming would have resulted in progressive concentration of agricultural output. These emerging agricultural capitalists often held onto their output and did not sell it to the cities, waiting for better prices/opportunities. Taking control of the grain supply was crucial if industrialization was to succeed, since a rapidly increasing urban labor force was incompatibelw ith an increasingly unwilling peasantry to sell grain to the cities. The 1927 crisis reflected this fact, and led Soviet leaders to advocate for collectivization (see Tauger).
4. Capitalist control of land and industry, even if constrained by the NEP, was an obstacle in equalizing the the income and wealth distributions; there was no guarantee that any economic gains would not be sucessfully monopolized by the re-emerging capitalist class.
5. If a large part of the surplus was to remain outside of the control of the state, the investment rate would be lower than desired, both because of elite consumption and because of constraint number 1 above.
- Stalinist industrialization was focused on two objectives: relocating surplus labor from the farms to the factory, where their 'marginal product' was much higher, and concentrating investment in capital goods. Contrary to the standard account, the latter was not a zero-sum choice between investment and consumption in favor of the former: higher levels of investment in capital goods led to greater output in consumer goods down the line as argued by Feldman, that is why consumption actually rose in the prewar years. The former required a massive increase in grain marketings which was the main driver of collectivization. (Therefore, neither of these could have been achieved by the NEP. Also because of what is argued in the previous point). (Export-led industrialization, where capital imports are funded by exports of grain or light manufactures was not possible because of foreign protectionism in the 30s).
- The existence of surplus labor in the countryside is obvious from the comparison of labor productivity between the North American midlands and European Russia. Another insight from this comparison is that there was very little margin to increase output without increasing acreage. So marketings could not be increased significantly by mechanizing (you could only free up labor).
- Chapter four empirically assesses whether limitation number three (grain marketings) was real or imaginary, and which factors were responsible. Allen demonstrates that marketing of grain diminished very radically compared to 1913, though it was increasing during the late 1920s. Why was that? He finds that one fourth of it was because of the decline in the need for cash due to the decline in taxes and rents, and the rest is due to a decline in the terms of trade. The latter was due to high prices for manufactures, not due to low prices for grain. While it seems like grain marketing could have been increased substantially by lowering the prices of manufactured goods, this does not quite solve the problem. As Allen notes, for every new industrial worker coming from the countryside, food marketing would have to increase by enough to feed him. To me, this seems to show that the radical increase in marketings without a concurrent massive decline in available surplus was only possible due to collectivization.
- The arguments by revisionists, i.e., that the first year plan saw improvements in the terms of trade of the countryside is misguided because the extraction was not so much through prices but through the turnover tax, which taxed consumer goods sold to peasants. Still, terms of trade did not worsen as rapidly as one would imagine because collective markets allowed for very high prices for non-procured agricultural goods.
- The concentration of investment on capital goods was certainly achieved (p. 96-8 are fascinating), and key to explain the inferiority of the NEP, that never could have supported something like this. Also, this makes it clear that the Stalin economy was targetting output growth, not productivity. This was explicit; they were accumulating physical capital until you run out of workers or their marginal product turns negative. The war slowed growth because accumulation declined because industries whose output used to be employed in capital goods was now being employed in military. 79% growth in consumer goods from 1928 to 1937, Feldman is right.
- Investment included human capital, i.e., education. Massive investments in the 5 year plans for education, 30 percentage points increase in literacy in ~10 years.
- Collectives had quotas for output, any excess could be sold freely. Any private production (small private plots, one cow, some swines) could also. Very unpopular system, peasants slaughtered their livestock in protest. There was rapid mechanization of agriculture, excess labor was freed. From 20 days per acre of grain to 10 in 10 years, allowing migration to the cities. However, total days in work did not go down because collectives were employers of last resort, a system of welfare in the countryside. Despite the brutality with which the state gained control of agriculture, one gets the impression that they could have been much more extractive once they achieved it. Total agricultural production did not increase much despite mechanization (and likely would not have increased absent collectivization either) because in terms of yields they were already close to the frontier (measured by equivalent US land). Collectivization successfully increased marketings, 89% above 1928, and also through various mechanisms, some of which terroristic, it also increased rural-urban migration, increasing output.
- Living standards increased pretty rapidly during industrialization. Even though real wages fell, consumption increased because agricultural incomes were much lower than any urban wage and there was a rapid movement towards the cities. The increase in living standards is also apparent in life expectancy figures (3-5 years increase), and in caloric intake trends. Something that was left out of was anthropometric data which would have also supported these conclusions.
- And we go on the simulations. The model is elegant and overall good. The main conclusions are that a capitalist Russia would have performed much worse off because of hard budget constraints that lead to underemployment, while in a planned economy soft budget constraints allow for hiring even when the marginal product of labor is below the wage. This obviously raises output extremely fast. The second reason is the ambitious production targets that stimulated production. He then compares what he calls a NEP economy and a collectivized economy. The names are deceiving because the NEP economy that he models is not the actual NEP model, it is a centrally planned economy minus collectivization. The real NEP economy had unemployment and hard budget constraints, so the NEP model overstates the performance of the actual NEP economy by a lot.
- Still, the collectivized model (which closely matches the actual trends of the Soviet economy) outperformed the "NEP" model, though only slightly. He attributes most of this advantage to the terroristic measures in the countryside boosting migration, but I think his model underestimates the role of collectivization in boosting migration in non-terroristic ways. First, collectives mechanized more quickly than NEP farms would have because of economics of scale and soft budget constraints, which freed up labor for migration (his model of migration does not include a variable for mechanization/amount of surplus labor). Second, I am skeptical of the results of the model regarding marketings. According to the model, food prices would be much higher because under the "NEP" model they are free. However, the state would successfully make up for the deficit with a flat tax (i.e., also affecting urban workers) without bringing down total consumption and without diminishing migration (by increasing the rural to urban consumption rati0). I do not how the hole is covered: are workers paying for it? Then we get much lower rural migration, less urban employment, less growth. Is the state paying for it? Then we get lower urban consumption because the state balances its budget with tax, which again leads to less migration and growth. The only way this works is if the price increase is not significant and overridden by the increases in supply, but I feel like that is impossible because of the elasticity of 0.7 that Allen provides and because of the yield comparisons with the U.S. Also, the overestimation of marketings in the late 20s by the model makes me suspicious. Finally, the fact that the investment rate is exogenously determined compounds all these problems. Without collectivization he would either see less migration or less investment -- either way less growth -- because agricultural surplus is being left in the countryside, diminishing migration and/or investment.
- Allen argues the slowdown was due to the exhaustion of surplus labor, which was a problem because of a very low elasticity of substitution. Eventually, you would have needed a massive amount of capital to keep growing. But he argues that the low EoS was a result of poor investment decisions, like Siberian excursions, gigantism, etc. He also argues that systemic problems were probably not the cause (e.g., Berliner's innovation argument), and that the arms race probably played a role by taking away resources from the civilian economy. In general, he sees the growth decline as totally contingent. Personally, I find the evidence on which the entire debate is based kind of shaky, because I am quite certain that most figures of Soviet capital stock are overestimated due to hidden inflation. If we were to account for that, I am not sure that the declining TFP narrative would still hold. In fact, with different figures some recent studies suggest it still does not hold (https://onlinelibrary.wiley.com/doi/p...). However, if we take the underlying national income data at face value, new analyses have confirmed Allen's interpretation of bad investment as the cause of the growth slowdown, even showing that 1) the Soviet economy essentially reached the labor productivity frontier; 2) the problem was capital productivity, and specifically structures, pointing to bad investment decisions (https://onlinelibrary.wiley.com/doi/p...).
Overall, this book is brilliant, it goes to the heart of the economic development problem (capital accumulation) and the socialist vs. the capitalist approach to it. It is a historical study with massive implications for the present and the future, i.e., the absolute best type of economic history.e, i.e., the absolute best type of economic history.
- Economic growth under tsarism was moderate but unsustainable. While there were some signs of acceleration, this was mostly due to the agrarian boom of rising wheat prices. Growth in agriculture was due to this, and growth in consumer goods industry was fueled by domestic demand created by the wheat boom. Unfortunately for Russia, what followed internationally was the collapse of wheat prices during the Great Depression. Heavy industry was dependent on railroad construction, which was very advanced and did not have much future. (Also, industrial growth was not that fast, especially given the rapid rise in urban population). Given the tariffs (which prevented the shift to consumer good exporting a la Japan), the institutional picture (a stupid Tsar, massive monopolies, political rentseeking everywhere, etc.), and the unfavorable international scenario (WW1 and collapse in wheat prices incoming), Russia was likely to follow the LATAM path if it wasnt for the October revolution.
- The trend of living standards during Tsarism was negative. Allen only cites figures on earnings, which show stanganting living standards in cities and a mixed picture in the villages. Real wages were flat for industrial workers despite productivity and national income doubling. The fruits of industrial growth did not trickle down. Further work by Allen himself has only strengthened this position. In the villages, rising incomes do not apply to day laborers, and coexisted with skyrocketting rents and land prices, as well as with the dismantling of the commune. This, along with the monetization of the economy, probably led to a worsening of living standards. Anthropometric evidence, despite what some say, clearly shows declining living standards, supporting Allen's pessimist interpretation.
- NEP would not have worked beyond rebounding the economy back to its prewar levels. It could not lead to rapid industrialization and generalized increases in living standards. It had five main structural issues:
1. Even though many important industries were state-controlled, they operated under capitalist
constraints; they would only make profitable investments. Investments that were unprofitable but socially useful (in that they further industrialization) would not happen, at least not to the extent necessary.
2. The same is true when it comes to employment. Unemployment remains in capitalist economies because of profitability constraints. Under the NEP structural unemployment was a massive pool of wasted potential for increased output.
3. The increasing returns to scale in farming would have resulted in progressive concentration of agricultural output. These emerging agricultural capitalists often held onto their output and did not sell it to the cities, waiting for better prices/opportunities. Taking control of the grain supply was crucial if industrialization was to succeed, since a rapidly increasing urban labor force was incompatibelw ith an increasingly unwilling peasantry to sell grain to the cities. The 1927 crisis reflected this fact, and led Soviet leaders to advocate for collectivization (see Tauger).
4. Capitalist control of land and industry, even if constrained by the NEP, was an obstacle in equalizing the the income and wealth distributions; there was no guarantee that any economic gains would not be sucessfully monopolized by the re-emerging capitalist class.
5. If a large part of the surplus was to remain outside of the control of the state, the investment rate would be lower than desired, both because of elite consumption and because of constraint number 1 above.
- Stalinist industrialization was focused on two objectives: relocating surplus labor from the farms to the factory, where their 'marginal product' was much higher, and concentrating investment in capital goods. Contrary to the standard account, the latter was not a zero-sum choice between investment and consumption in favor of the former: higher levels of investment in capital goods led to greater output in consumer goods down the line as argued by Feldman, that is why consumption actually rose in the prewar years. The former required a massive increase in grain marketings which was the main driver of collectivization. (Therefore, neither of these could have been achieved by the NEP. Also because of what is argued in the previous point). (Export-led industrialization, where capital imports are funded by exports of grain or light manufactures was not possible because of foreign protectionism in the 30s).
- The existence of surplus labor in the countryside is obvious from the comparison of labor productivity between the North American midlands and European Russia. Another insight from this comparison is that there was very little margin to increase output without increasing acreage. So marketings could not be increased significantly by mechanizing (you could only free up labor).
- Chapter four empirically assesses whether limitation number three (grain marketings) was real or imaginary, and which factors were responsible. Allen demonstrates that marketing of grain diminished very radically compared to 1913, though it was increasing during the late 1920s. Why was that? He finds that one fourth of it was because of the decline in the need for cash due to the decline in taxes and rents, and the rest is due to a decline in the terms of trade. The latter was due to high prices for manufactures, not due to low prices for grain. While it seems like grain marketing could have been increased substantially by lowering the prices of manufactured goods, this does not quite solve the problem. As Allen notes, for every new industrial worker coming from the countryside, food marketing would have to increase by enough to feed him. To me, this seems to show that the radical increase in marketings without a concurrent massive decline in available surplus was only possible due to collectivization.
- The arguments by revisionists, i.e., that the first year plan saw improvements in the terms of trade of the countryside is misguided because the extraction was not so much through prices but through the turnover tax, which taxed consumer goods sold to peasants. Still, terms of trade did not worsen as rapidly as one would imagine because collective markets allowed for very high prices for non-procured agricultural goods.
- The concentration of investment on capital goods was certainly achieved (p. 96-8 are fascinating), and key to explain the inferiority of the NEP, that never could have supported something like this. Also, this makes it clear that the Stalin economy was targetting output growth, not productivity. This was explicit; they were accumulating physical capital until you run out of workers or their marginal product turns negative. The war slowed growth because accumulation declined because industries whose output used to be employed in capital goods was now being employed in military. 79% growth in consumer goods from 1928 to 1937, Feldman is right.
- Investment included human capital, i.e., education. Massive investments in the 5 year plans for education, 30 percentage points increase in literacy in ~10 years.
- Collectives had quotas for output, any excess could be sold freely. Any private production (small private plots, one cow, some swines) could also. Very unpopular system, peasants slaughtered their livestock in protest. There was rapid mechanization of agriculture, excess labor was freed. From 20 days per acre of grain to 10 in 10 years, allowing migration to the cities. However, total days in work did not go down because collectives were employers of last resort, a system of welfare in the countryside. Despite the brutality with which the state gained control of agriculture, one gets the impression that they could have been much more extractive once they achieved it. Total agricultural production did not increase much despite mechanization (and likely would not have increased absent collectivization either) because in terms of yields they were already close to the frontier (measured by equivalent US land). Collectivization successfully increased marketings, 89% above 1928, and also through various mechanisms, some of which terroristic, it also increased rural-urban migration, increasing output.
- Living standards increased pretty rapidly during industrialization. Even though real wages fell, consumption increased because agricultural incomes were much lower than any urban wage and there was a rapid movement towards the cities. The increase in living standards is also apparent in life expectancy figures (3-5 years increase), and in caloric intake trends. Something that was left out of was anthropometric data which would have also supported these conclusions.
- And we go on the simulations. The model is elegant and overall good. The main conclusions are that a capitalist Russia would have performed much worse off because of hard budget constraints that lead to underemployment, while in a planned economy soft budget constraints allow for hiring even when the marginal product of labor is below the wage. This obviously raises output extremely fast. The second reason is the ambitious production targets that stimulated production. He then compares what he calls a NEP economy and a collectivized economy. The names are deceiving because the NEP economy that he models is not the actual NEP model, it is a centrally planned economy minus collectivization. The real NEP economy had unemployment and hard budget constraints, so the NEP model overstates the performance of the actual NEP economy by a lot.
- Still, the collectivized model (which closely matches the actual trends of the Soviet economy) outperformed the "NEP" model, though only slightly. He attributes most of this advantage to the terroristic measures in the countryside boosting migration, but I think his model underestimates the role of collectivization in boosting migration in non-terroristic ways. First, collectives mechanized more quickly than NEP farms would have because of economics of scale and soft budget constraints, which freed up labor for migration (his model of migration does not include a variable for mechanization/amount of surplus labor). Second, I am skeptical of the results of the model regarding marketings. According to the model, food prices would be much higher because under the "NEP" model they are free. However, the state would successfully make up for the deficit with a flat tax (i.e., also affecting urban workers) without bringing down total consumption and without diminishing migration (by increasing the rural to urban consumption rati0). I do not how the hole is covered: are workers paying for it? Then we get much lower rural migration, less urban employment, less growth. Is the state paying for it? Then we get lower urban consumption because the state balances its budget with tax, which again leads to less migration and growth. The only way this works is if the price increase is not significant and overridden by the increases in supply, but I feel like that is impossible because of the elasticity of 0.7 that Allen provides and because of the yield comparisons with the U.S. Also, the overestimation of marketings in the late 20s by the model makes me suspicious. Finally, the fact that the investment rate is exogenously determined compounds all these problems. Without collectivization he would either see less migration or less investment -- either way less growth -- because agricultural surplus is being left in the countryside, diminishing migration and/or investment.
- Allen argues the slowdown was due to the exhaustion of surplus labor, which was a problem because of a very low elasticity of substitution. Eventually, you would have needed a massive amount of capital to keep growing. But he argues that the low EoS was a result of poor investment decisions, like Siberian excursions, gigantism, etc. He also argues that systemic problems were probably not the cause (e.g., Berliner's innovation argument), and that the arms race probably played a role by taking away resources from the civilian economy. In general, he sees the growth decline as totally contingent. Personally, I find the evidence on which the entire debate is based kind of shaky, because I am quite certain that most figures of Soviet capital stock are overestimated due to hidden inflation. If we were to account for that, I am not sure that the declining TFP narrative would still hold. In fact, with different figures some recent studies suggest it still does not hold (https://onlinelibrary.wiley.com/doi/p...). However, if we take the underlying national income data at face value, new analyses have confirmed Allen's interpretation of bad investment as the cause of the growth slowdown, even showing that 1) the Soviet economy essentially reached the labor productivity frontier; 2) the problem was capital productivity, and specifically structures, pointing to bad investment decisions (https://onlinelibrary.wiley.com/doi/p...).
Overall, this book is brilliant, it goes to the heart of the economic development problem (capital accumulation) and the socialist vs. the capitalist approach to it. It is a historical study with massive implications for the present and the future, i.e., the absolute best type of economic history.e, i.e., the absolute best type of economic history.
Read
August 2, 2021I found this a lot more interesting than Allen's more famous book on the British Industrial Revolution, maybe because Allen makes a good case that the Soviet Union was, despite its institutional quirks, a pretty typical developing country. This means it's possible to glean broader lessons about development -- how to get people from the titular farms to factories -- from the Soviet experience. (That, and reading about Stalin and the run-up to World War II is just inherently more interesting than reading about British wool farmers.)
The big framing device is that, at least from 1928-70, the Soviet Union's economic performance was pretty good. Not Japan good, and not enough to close the gap with the West, but better than Latin America, and enough to achieve pretty respectable human development outcomes by the 1980s. (At least, if you were not disappeared by Stalin in the 1930s or killed by the Nazis in the 1940s.) You can argue about the framing but I think this is broadly in line with historical consensus.
Allen then goes on to make several more controversial claims. The first is that, without the Soviet revolution and Stalin's Five Year Plan, Russia was bound to be yet another underdeveloped commodity exporter -- more like India than Western Europe. Since we're extrapolating a growth rate over decades to get a counterfactual, pretty minor shifts in estimated growth can produce wildly different outcomes. Allen thinks growth under the Tsar was more like 1.7%/yr, which would have undershot growth under Stalin; this replication using newer data thinks it was 2.1%/yr, which would have produced similar results. Given the sensitivity of this counterfactual, I don't think Allen's argument is a slam dunk. But I think we can all agree that the Tsarist regime didn't seem particularly promising economically, at least without reform or an industrial push of its own.
The second is that collectivization, despite causing farm output to collapse, actually helped the cause of industrialization by driving former farmers to urban factories. Allen argues that Soviet agriculture had a lot of surplus labor, which meant you could sustain this movement for quite a while and still push up industrial growth. (When the USSR started running out of bodies to push off farms, capital ran into diminishing returns and the Soviet model stalled.) The "soft budget constraints" of state-owned enterprises (i.e. firms could hire s.t. MPL < w) allowed the factories to absorb all these new workers without very much trouble. To prove all of this, Allen runs a big 50-equation model, and shows that running a counterfactual with no collectivization doesn't make much difference to GDP.
The model is something of a black box, and I haven't had the time to dive into the appendices to read it. But my sense is that Allen's collectivization-less counterfactual is too limited -- first, in that targeting GDP alone can be a pretty bad approximation for welfare, and that rural-urban migration can be incredibly dislocating; and second, in that the model's setup is simply wrong. We know that the end of collectivization in China precipitated large increases in agricultural output. It seems possible to imagine a counterfactual path of growth where agriculture kept pace with industry (perhaps even outpacing Allen's chosen counterfactual of North Dakota), farmers lived better lives, and rising commodity exports could have financed a different kind of industrial push.
Apologies for the incompleteness. This was largely a note-taking exercise to get my own preliminary thoughts in order.
The big framing device is that, at least from 1928-70, the Soviet Union's economic performance was pretty good. Not Japan good, and not enough to close the gap with the West, but better than Latin America, and enough to achieve pretty respectable human development outcomes by the 1980s. (At least, if you were not disappeared by Stalin in the 1930s or killed by the Nazis in the 1940s.) You can argue about the framing but I think this is broadly in line with historical consensus.
Allen then goes on to make several more controversial claims. The first is that, without the Soviet revolution and Stalin's Five Year Plan, Russia was bound to be yet another underdeveloped commodity exporter -- more like India than Western Europe. Since we're extrapolating a growth rate over decades to get a counterfactual, pretty minor shifts in estimated growth can produce wildly different outcomes. Allen thinks growth under the Tsar was more like 1.7%/yr, which would have undershot growth under Stalin; this replication using newer data thinks it was 2.1%/yr, which would have produced similar results. Given the sensitivity of this counterfactual, I don't think Allen's argument is a slam dunk. But I think we can all agree that the Tsarist regime didn't seem particularly promising economically, at least without reform or an industrial push of its own.
The second is that collectivization, despite causing farm output to collapse, actually helped the cause of industrialization by driving former farmers to urban factories. Allen argues that Soviet agriculture had a lot of surplus labor, which meant you could sustain this movement for quite a while and still push up industrial growth. (When the USSR started running out of bodies to push off farms, capital ran into diminishing returns and the Soviet model stalled.) The "soft budget constraints" of state-owned enterprises (i.e. firms could hire s.t. MPL < w) allowed the factories to absorb all these new workers without very much trouble. To prove all of this, Allen runs a big 50-equation model, and shows that running a counterfactual with no collectivization doesn't make much difference to GDP.
The model is something of a black box, and I haven't had the time to dive into the appendices to read it. But my sense is that Allen's collectivization-less counterfactual is too limited -- first, in that targeting GDP alone can be a pretty bad approximation for welfare, and that rural-urban migration can be incredibly dislocating; and second, in that the model's setup is simply wrong. We know that the end of collectivization in China precipitated large increases in agricultural output. It seems possible to imagine a counterfactual path of growth where agriculture kept pace with industry (perhaps even outpacing Allen's chosen counterfactual of North Dakota), farmers lived better lives, and rising commodity exports could have financed a different kind of industrial push.
Apologies for the incompleteness. This was largely a note-taking exercise to get my own preliminary thoughts in order.
April 6, 2015
Allen presents a fairly interesting take on the issues of Soviet industrial and economic policy. His stance on the success of the Soviet Union in increasing the standard of living and achieving sustained economic growth much better than that experienced under the Czarist regime is quite interesting. However, his counter-factual exploration used to illustrate his beliefs misses the mark in my book. To assume that Czarist growth rates would remain the same in the 20th Century as they had in the 19th is, to me, a bit of a stretch. Overall, it is an interesting look at the economy of the Soviet Union and its struggles.
April 11, 2016
do you like learning about grain yields and the industrialisation of the ussr? then have I got a book for you
December 2, 2021
A borgouise historian suffering from cognitive dissonance. 🙃
A bit tedious book, I do not recommend.
A bit tedious book, I do not recommend.
February 21, 2023
This book is a fascinating review of the soviet Industrial Revolution of the 1930s. A revision of sorts of the consensus that socialist development in the former USSR hampered the region’s potential, Allen convincingly argues that capitalist “development” would leave the economy peripheral to the core of Western Europe and North America, like other countries in Asia. Allen also provides a compelling breakdown of how different aspects of soviet policy, e.g. collectivization and central planning, affected economic growth. In particular, he finds the use of soft budget constraints and output targets instead of profit maximization within firms greatly increased the rate of growth of industrialization. On the other hand simulated models of capitalist development results in growth that is severely lacking.
This book is well-sourced and Allen’s methodology is meticulously detailed. However, even as a relative layman in economics, the central points are clearly articulated to the reader. Allen expertly balances not getting the reader bogged down in details while not papering over facts in a way that would reduce one’s confidence in his conclusions. The result is not only an important academic study, but an engaging read. Watching the science of economics, so often used to discredit socialist development, to instead prove the efficacy of it was a real treat. It shows that other underdeveloped countries do not have to rely on the parasitic west to advance themselves and how we can learn from the successes and failures of the soviet experiment.
This book is well-sourced and Allen’s methodology is meticulously detailed. However, even as a relative layman in economics, the central points are clearly articulated to the reader. Allen expertly balances not getting the reader bogged down in details while not papering over facts in a way that would reduce one’s confidence in his conclusions. The result is not only an important academic study, but an engaging read. Watching the science of economics, so often used to discredit socialist development, to instead prove the efficacy of it was a real treat. It shows that other underdeveloped countries do not have to rely on the parasitic west to advance themselves and how we can learn from the successes and failures of the soviet experiment.
February 5, 2020
Robert Allen hace un magnifico trabajo al analizar la economía soviética desde su estado pre revolucionario hasta su estado en la revolución, tras los planes quinquenales desde 1928 y su climaterio en los años 70 y 80.
Contrario a lo que se suele comentar para Allen fueron dos las principales causas de su desaceleración,una externa la guerra fría, de acuerdo a sus simulaciones sin el gasto militar de la guerra fría su tasa de crecimiento hubiera sido de 4% y la segunda e interna fue el agotamiento de sus reservas de trabajadores potenciales en el campo. A todo esto se suma una serie de malas decisiones de inversión en los años 70 y 80.
Allen encuentra que la colectivización de Stalin fue muy importante en lograr tasas de crecimiento muy elevadas al maximizar el ritmo de migración entre el campo y las ciudades y al financiar con agricultura el desarrollo de un sector industrial. No obstante, argumenta que una estrategia que no usara el terror y fuerza más pacifica hubiera logrado resultados ligeramente inferiores pero aun superiores al resto de alternativas.
Allen nos invita a pensar en la URSS sobre todo en el periodo stalinista no como un país rico sino como un país en desarrollo. Bajo esa óptica es uno de los casos de rápido desarrollo económico más exitoso del siglo XX, solo eclipsado por Japón, China y Corea del Sur.
Contrario a lo que se suele comentar para Allen fueron dos las principales causas de su desaceleración,una externa la guerra fría, de acuerdo a sus simulaciones sin el gasto militar de la guerra fría su tasa de crecimiento hubiera sido de 4% y la segunda e interna fue el agotamiento de sus reservas de trabajadores potenciales en el campo. A todo esto se suma una serie de malas decisiones de inversión en los años 70 y 80.
Allen encuentra que la colectivización de Stalin fue muy importante en lograr tasas de crecimiento muy elevadas al maximizar el ritmo de migración entre el campo y las ciudades y al financiar con agricultura el desarrollo de un sector industrial. No obstante, argumenta que una estrategia que no usara el terror y fuerza más pacifica hubiera logrado resultados ligeramente inferiores pero aun superiores al resto de alternativas.
Allen nos invita a pensar en la URSS sobre todo en el periodo stalinista no como un país rico sino como un país en desarrollo. Bajo esa óptica es uno de los casos de rápido desarrollo económico más exitoso del siglo XX, solo eclipsado por Japón, China y Corea del Sur.
July 12, 2025
What it says on the tin: Allen examines the causes and plans that led to Soviet Industrial Growth. Two major theories in the eyes of Soviet planners were "Farm Marketing" - or getting peasants out of subsistence farming and into the wider market, where they would sell their goods to the cities - and the Fel'dman model - which theorized that greater investment in heavy industry would lead to faster growth and ultimately more wealth down the line. These ideas led to many aspects of the Soviet system, such as collectivization and the starvation it wrought, as well as the Soviet focus on heavy industry at the expense of consumer goods.
I could not help thinking that this is must read for any Victoria 3 fan, given how closely the game's mechanics mirror the thesis of the book and how Soviet planners thought about industrialization. A non-Goodreads friend of mine remarked the same thing as he was reading the first few chapters.
I could not help thinking that this is must read for any Victoria 3 fan, given how closely the game's mechanics mirror the thesis of the book and how Soviet planners thought about industrialization. A non-Goodreads friend of mine remarked the same thing as he was reading the first few chapters.
April 17, 2018
Книга с множеством цифр и мнений, в одной главе много эконометрики (не для моего ума), но читается быстро и с интересом.
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October 7, 2019lost interest
December 21, 2022
"Do you see where that line meets that line? That's where my model determines that economic growth via Stalinist terror would outstrip growth under the continuation of NEP." Economics is so wack, man.
On the other hand, Allen validates my longstanding belief that Preobrazhensky was the most insightful contributor to the Soviet industrialization debates of the 1920s, so it's kind of a wash.
On the other hand, Allen validates my longstanding belief that Preobrazhensky was the most insightful contributor to the Soviet industrialization debates of the 1920s, so it's kind of a wash.
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