Comparative Economic Development

Unit 1: Introduction and Overview of the Countries Selected for Case Study
Topic: Chapter 1 - Britain in 1750

Introduction

Britain was a pioneer in the industrial revolution. The process began in Britain in the late 18th century.
But, the seeds for industrialization were already sown from the beginning of 18th century. By 1750,
Britain was a major colonial power in the world. It was a rich and powerful country mainly because of
its trade and commerce. This reading describes the state of Britain in early and mid-18th century as
explained by numerous foreign visitors and the flourishing trade and commerce in early 1700s that
encouraged the development of a larger, stronger and more flexible industrial base.

Overseas trade was the lifeblood of Britain.

• The main aim of the British was to set up colonies in the Americas and Asia in order to provide
goods such as tobacco and sugar and at the same time, these colonies served as an import
market for British goods.
• Tobacco, sugar, tea, pepper and calico cloth were imported into Britain at cheaper rates and
then re-exported to European countries in which there was a mass market for these goods. This
brought income to the British merchants.
• There were complex and multilateral trade patterns like the ‘Triangular Trade’.

• Major ports were developed with new harbor installations like Bristol, Liverpool and Glasgow.
Navy was the most powerful weapon of Britain. In 1750s, there were about 6000 mercantile
ships, which were several times that of French mercantile marine. They formed one-tenth of all

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 capital fixed investment. 100,000 seamen were employed in Navy, forming the largest group
of non-agricultural workers.

London

London was the biggest city in Europe. By the middle of 18th century, it contained 15% of the English
population. No other towns had such a huge number of inhabitants. At the end of the 17th century, 3/4th
of English trade still went through London. Half the merchants’ fleets were based in the city. It was a
dominant center for shipbuilding and repairing, sugar refining and tobacco industry. In the mid-18th
century, London remained at the top but there were some regional centers growing slowly like Bristol
and Liverpool.

Presence of Local Economies/ Distinctive Occupational Regions

Different regions in Britain specialized in the production of different commodities. For example,
Birmingham specialized in the production of nails, tools, weaponry, buttons, pans, kettles, steel jewelry,
etc.; Sheffield in metal goods; Staffordshire in potteries; East Anglia, west country and Yorkshire in
woolen industry; Lancashire in cotton industry. Textiles continued as a major industry. Newcastle
specialized in coal production. Coal industry bred other innovations. Steam engines were invented at
the end of 17th century originally to drain coalmines. Wooden wagon ways and railways for
transportation of coal were commonplace in the coal mining areas by early 18th century.

Political System of Britain

In Britain, kings were subordinate to the parliament. Parliament was controlled by an oligarchy of
landowning aristocrats. British politics was dominated by the ‘landed interest’. Landownership was the
key to enter into high politics. Landowners occupied the top positions in both economic and political
domain. Government favored the middle class. Trade and commerce enhanced freedom and liberty.
Institutions were stable despite the weak apparatus for maintaining public order and administering the
country’s economic affairs.

Population of Britain remained stable during 1641-1701. Then it started increasing from the beginning
of 18th century. Reasons for stable population were: low fertility rates, low life expectancy at birth, high
mortality rates due to poor living conditions and spread of communicable diseases and overseas
migration to the Americas and West Indies.

Expansion of Rural Manufacturing Industries

By 1750, England was already a monetary and market economy on a national scale. It was a nation of
shopkeepers (producer). There was proliferation of little shops in villages. The shopkeepers linked the

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market town and the local community to a network of markets stretched beyond the nation’s boundaries
and overseas. The increase in demand for food and fuel in London because of its huge population
transformed agriculture all over the south and east. Efforts were made to improve river navigation, road
qualities and regular carrier services. This led to the integration and transition of local economies from
self-sufficiency to market economies linking together the farmers, craftsmen, merchants, seamen,
hunters and plantation slaves.

Most of the industries and manufacturing of Britain were rural. Production of goods was done at small
shops or at homes. Craftsmen used hand tools and simple basic machines. No big factories or machines
were present then. Rural workers specialized in manufacture of mainly cloth, hosiery and a variety of
metal goods. Villages turned into industrial villages of full-time weavers, knitters or miner and
eventually developed into industrial towns. Development of a ‘domestic or putting out system’ in which
merchants provided raw materials to the workers in the villages, workers produced the goods, which
were then taken by the merchants and sold in the markets. This led to a wide spread of industries
throughout the countryside resulting in commercialization of rural life.

This spread of industries had two important consequences:

• The politically decisive class of landlords became interested in investing in mines and
manufactures in villages that were under their control.
• Government policies were mainly determined by the interests of the manufacturers.
Though trade was more lucrative and prestigious than manufactures, which is evident by the fact that
merchants and tradesmen earned much more income than the manufacturers, but when it came to
choosing between the interests of commerce and those of industry the political class and the government
favored the domestic producers or manufacturers. For example, the British government prohibited the
imports of foreign calicoes to protect the domestic textile industry from foreign competition.

Conclusion

In 1750, no one could have predicted that Britain would pioneer industrial revolution. Definitely, we
could have imagined a powerful and prosperous future for the country but not the transformation that it
underwent. It is also a fact that no other country was as well prepared as Britain for the Industrial
Revolution.

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Chapter 2: Growth and Structural Change
Introduction to Japan

➢ In last quarter of 20th century, Japan was world’s 3rd largest industrial power.
➢ Post WW2, growth accelerated, GNP per head of total population was nearly 11%
➢ Market transition from monarchial absolutism to republicanism with symbolic emperor
➢ Now, modern industry is concentrated in Tokaido belt
o Produces 75% of total manufactured output
o Employ 80% of factory workers
o Suffers land scarcity, excess density, traffic jam & pollution
➢ 1959 per capita income
o In Tokyo was 63% above national average
o In Kagoshima-ken was 40% below
➢ 1960, Kyushu- 54% employment in primary sector generates 60% of total average income
➢ WW2 resulted real GNP in 1946 was below 1918 level and half of 1937 level
➢ In 1952 they reached 1937 level
➢ Growth in export transformed BoP deficit (1903) in surplus, mainly silk export
➢ Long swings to private and total capital formation
o Upswing: investment spurts
o Downswing: slower investment growth
o 1880s to 1960s: four downswing and three upswings
o Each upswing has faster rate of growth than predecessor
➢ Behavior and attitude of Japanese and national ethos’ supported economic growth
➢ Japan have mixed Ainu, Malay & Mongol origins but isolation and remoteness developed
uniformity and homogeneity of language& culture
➢ Capitalism was idiosyncratic
➢ Before WW2: government encouraged through education system and state Shinto (belief in
emperor)
o These are treated as distortions with western industrial society
o Evident of Japan’s lagged development
o Inhibitors of modernization
➢ Females in factories
o 1930: over half of factory workers with 5 or more employees were women
o Cotton textile: women were 80% of workforce
o Were more transient but earn less than male
➢ Growing literature among women and disadvantaged minorities (Ainu, Buraku, Koreans,
Okinawans)

Growth and Structural change

➢ Japan started modern economic growth at much lower level of per capita income than other
developed countries
➢ 1974: UN International Comparison Project- GDP per capita was 63% of USA and below
than in most industrialized societies except UK and Italy
➢ Without structural change and diversification, country can’t develop
▪ Japan has transition from agriculture to manufacturing

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 ▪ Pre-modern to modern industry
▪ Remarkable persistence of traditional and small-scale sector
➢ Faster growth in manufacturing, followed by services and agriculture
1887-1938 Average growth per annum
Agriculture 1.36%
Industry 6.34%
Services 2.60%

Annual average growth of 1901-38 1955-70

TFP
Agriculture 0.6% 2.6%
Non-agriculture 1.1% 5.7%

Share in NDP at current 1887 1938

prices
Agriculture 42.5% 18.5%
Service 37.5% 30%
Industry 20% 52%
Share of industry grew but agriculture and services declined

➢ Part time farmers as percentage of total farmers increased:

1938 1965
55% 78.5%

Total occupied population 1878 1940

Primary industry 83.5% 44%
Secondary industry 5% 23.5%
Tertiary 11.5% 32%
There is marked contrast with Britain where agriculture employment fall from 36% (1801) to 8%
(1911)

➢ Earlier major exports were agriculture and processed goods later on textile and manufactures
1874-83 Primary products Manufactures
Share of export at current 42.5% 57.5%
prices
42%were textiles, mainly silk

➢ Raw silk dominated early total merchandise export from 60% at restoration to 46% in early
1920s
➢ 1931-40:
o fall in share of primary product to 6.9%
o Increase in manufactures to 93%
1874-83 1931-40 1966-70
Heavy manufactures as 8.2% 29% 68%
percentage of export
➢ Ministry of International Trade and Industry made structural change in export
o Labor intensive textile ˃ capital intensive ship ˃ consumer durables ˃ knowledge
intensive machinery and information electronics

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 ➢ Until 1930s manufacturing output was dominated by food, heavy industry had smaller but
growing share
1885 1940
Manufacturing output (heavy 16.7% 59%
industry)
Food products 42.5% 12%
Textiles 29% 17%

➢ A researcher opined that normal order of transition from light to heavy industry was reversed
in Japan.
➢ Japan was late starter:
• short of suitably skilled labor & industrial entrepreneur
• Reliant on state capitalism, especially for infrastructure investment
th
➢ At end of 19 century, percentage of manufacturing output at current prices:
• Machinery: 2.8% Iron and steel: 0.54%
➢ Japan’s early modern industrial structure was biased, not to capital but to light consumer
goods
➢ Most discussed features of Japanese industrialization
o Co-existence of large, capital-intensive, high wage and productivity firms and
small medium enterprises, relatively labor-intensive with lower wages and
productivity
Plant employing 1-9 Employing 10-49 Employing 55-99
workers workers worker
Japan (1960) 15% 28% 11%
USA (1958) 4% 14% 10%
UK (1951) 4% 11% 10%
➢ Overseas demand was significant for:
o Silk and toys (among western boys)
o German toys imitated in 1880s, domestic market dominated till 1914
o export expanded to peak in 1937
➢ Small manufacturing firms:
o 1935- 65% of manufactured export 1956- 60% export
o Lack standardized quality, cut throat competition and low labor cost
Consumption expenditure 1920 1930s
dominated by food decrease
with time
Food as output of small scale 60%-65% 50%
sector

Clothing as share of 1880 1940

expenditure increased
8% 13%

➢ Two features of Japanese personal expenditure: Low MPC and high saving rate and
traditional consumption patter post WW2, because of low income by western standards and
inherited social attitudes to wants
➢ Supply side small industries

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 o High supply price of external finance
o Still profitable, high propensity to re-plough profits
o 1957- plants with ≤10 workers had wages 60% of national average & capital labor ratio of
24%
➢ Prince of Satsuma purchased second-hand ship from Britain, Holland & Germany
➢ Proportion of second hand machinery to total fixed investment in 1957: 41% (factories with
4-9 employees and 3.3% (1000+ group)
➢ 18th century Britain, technical progress was partly result of small-scale industry.
➢ Water wheels → steam engines → thermal and hydroelectric power
➢ By 1905 horsepower was generated by electric motors (were cheap), exceeded by water
wheels and by 1917 that by steam engines
Percentage of prime 1909 1930 1940
movers in
establishment
Employing 5-9 17% 92% 95%
workers

➢ Motive power is classical case of Japanese technological innovation:

o In early stages reliant on electrical borrowing from Britain, France, Germany & US
o Demonstrating factor endowment, resulting large domestic supplying industries,
independent of exports
➢ Japanese research relates to ‘chusho kigyo mondai’ small and medium enterprises as social
problem
o Small firms exploit cheap labor and in turn exploited by monopoly capital which
grew as risk-free parasites
➢ 1973: over 83% of Japanese manufacturers employing 1000+ workers used subcontractors
o Average number of sub-contractors per enterprise were 160
o System was most common in electric goods, transportation equipment’s, textile mill
products and machinery
o Least common in petroleum, ceramics & food processing
➢ Large firms had permanently employed workforce and seniority payment wage system, they
faced fixed labor cost, even in slumps
➢ Burden of unemployment and underemployment was faced by dependent companies
➢ Some small-scale firms grew to medium size and, less commonly to large
o One researcher said it was based on mutual trust and loyalty Japanese business
o In Japan many survived because they were complimentary rather than competitive
o Took advantage of low labor cost and entrepreneurs
o Inequality and social cost made positive contribution to manufacturing growth
➢ Major role in modern industrialization
o Large enterprises grouping, such as zaibatsu
o Old zaibatsu controlled by state and dominated by Mitsui, Mitsubishi, Sumitomo &
Yasuda
o Reached heights at end of WW2
➢ Dual structure: co-existence of giant oligopolies and small units in agriculture and
manufacturing
o Central to many economic and political interpretations
o Provided opportunity for exploiting technology and cheap factor

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Topic: Chapter 3: The Tokugawa Background (c. 1600-1860)

Introduction to The Social Construct

➢ The Japanese economy in the 20th century witnessed:
o Greater flexibility
o Greater individualism
o Greater rationality
o Good Meiji landlords became parasite of 1920s.
➢ Low ranked merchants of Tokugawa became powerful group long before 1868.
➢ The society was enriched with the presence of well-educated and people of high attributes of
loyalty, discipline, acceptance of authority during the Tokugawa regime.
➢ Agriculture was the centerpiece of the economy. There was a continuous process of growing
agricultural production between late Tokugawa and the Meiji restoration.
➢ The Tokugawa economy had large surpluses, much of which was wasted in unproductive
outlays since the economy was closed.
➢ The social hierarchy in Japan:

Land Distribution During Tokugawa Shogunate

➢ Shogunate’s share was one- fourth. Remaining was shared by daimyos. This showed the
relationship between the shogunates and feudal lords.

➢ The rigid fourfold hierarchy was:

o Samurai
o Peasants but was flexible in practice.
o Artisans
o Merchants

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It was seen that the merchants were growing in power and attempts were made to feudalize the
merchants by giving them official honors and status to maintain the hegemony of the shogunates.
Thus pre-1868, Japan was described as the classic case of rising feudalism even in the low rank.

Cultural Influence in Japan

➢ Japan was long subjected to Chinese cultural, social and religious influences.
➢ 16th century saw the arrival of the Portuguese, with them came the Roman Catholic religion.
➢ However, Christianity and Portuguese were regarded undesirable foreign influences.
➢ Christianity ceased in 1638 with the massacre of “rebel” Christians at shimabara.
➢ Xenophobia in 1603, prohibited oversea travel of Japanese and restricted foreign entry to
handful of Chinese and Dutch merchants.
➢ Japanese imports were mainly sugar, spices, looking glasses, textiles and raw silk from china.

Impact of Sakoku (closed economy)

The Third Tokugawa Shogunate, lemitsu (1630) adopted the policy of sakoku or closing the economy.
➢ Japan was cut off when west was entering industrial revolution. Japanese markets were mostly
limited to domestic demands.
➢ In the Marxist view, “a closed country meant a necessary condition of relative backwardness.”
Isolationism constrained capital accumulation by bourgeois merchants and allowed feudalism
to extend beyond natural limits and exclusion of post Newtonian science.
➢ Frank argued that “Japan avoided the development of underdevelopment.” Because it escaped
the political and economic colonization of the west.
➢ Sakoku protected native manufacturers. Japanese-style Confucianism (social and religious
philosophy) was promoted which also trained a large body of samurai in the bureaucratic skills
and the discipline which guided to run the Meiji government and the modern army and factories.

Agriculture During Tokugawa Regime

➢ Agriculture was the backbone of the Japanese economy. The key to agriculture was irrigation,
improved seeds, and better methods of planting, weeding and applying insecticides as well as
natural and commercial fertilizers.
➢ They had highly organized village communities, well-versed in communal infrastructure
projects.

Non-Agricultural Activities During Tokugawa Regime

➢ In the 17th century, manufacturing and commerce advanced and the products made by the
artisans were not only sent all over Japan but also exported through the Chinese merchants.
➢ In the later Tokugawa period, non-agricultural operations, de urbanization and ‘rural centered
pre modern growth’ laid the foundation of the industrial revolution.
➢ The proto- industrialization under the shoguns was the prerequisite of the post 1868
development.
➢ The Tokugawa period provided a backlog of industrial and organizational experience which
were later translated into skills for industrial labor force and modern economic growth.

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Education During the Tokugawa Regime
The exceptional growth of the Japanese economy in the last hundred years was due to the
mobilization of labor and managerial skill development of the rural human capital along with the
emphasis on entrepreneurial and innovative abilities.
➢ At the time of the Meiji restoration, 40 to 50% of all Japanese boys and 15% of girls were
getting formal school education.

Meiji Restoration (Revolution)

➢ In 1853, commodore Matthew Perry arrived in Japan to open its economy.
➢ In 1868, the Tokugawa shogun who ruled Japan in the feudal period lost his power and the
emperor was restrained as sovereign.
➢ The emperor took the name of Meiji (enlightened rule).
➢ The Meiji inherited a society which had highly developed agriculture, an extensive marketing
system, and well-educated people with attributes of loyalty, discipline and responsiveness to
economic incentives.
➢ The 1868 Meiji restoration accelerated the economic development by providing the
fundamental political and institutional changes along with the opportunities to the already
potential growing economy of Japan.
➢ The peasant’s revolt during the revolution resulted in the implementation of the land reform act
of 1873. Also, the destruction of ‘feudalism’ led by the samurai.

Conclusion
The last Tokugawa regime isolated Japan from the outside world. Trade was prohibited except for the
two Dutch ships a year and Chinese traders at Nagasaki. Opening of Japan and treaties weakened the
Shogunate’s rule and gradually ended it. With the Meiji restoration, the Japanese economy opened itself
to opportunities in social, political and economic fields. It also abolished feudalism in Japan. The
peasant’s movement was revolutionary as it abolished the aristocratic privileges.

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Topic: The Tsarist Economy

Introduction

Russia was under the Tsarist regime during the 19th century. All power and wealth was controlled by
the Tsar. This reading focuses on the state of the Russian economy during Tsarism. It talks about the
policies implemented by the Tsars, people’s reactions to those policies, developments in different
spheres of the economy, the reforms and their implications, revolutions and finally the reasons for the
fall of the tsarist rule in 1917.

Overview of Social Hierarchy In Russia During the Tsarist Regime

Russia was ruled by the Tsars (king/monarch/autocrats). The Tsars had the divine rights to rule Russia
i.e. their position and power had been given by God. No political party was allowed. No freedom of
speech and expression. Army was headed by the Tsar and was used to put down any rebellion against
the ruler. Bureaucracy belonged to noble class and was inefficient and corrupt. Tsar was the head of
the church and the church taught that ‘God commands us to obey the Tsar’. Serfdom1 was rampant.
More than 80% of the populations were serfs.

Russia was largely an agrarian country, socially and economically underdeveloped. Successive Tsars
tried to strengthen economic and military condition of the country. One of them was Peter the Great
(1694-1725). He used serf labor to construct a western style capital at St. Petersburg and build up a
charcoal-based iron industry in the Urals.

Russia in the 19th Century

➢ Early 19th century- Russian markets widened considerably, cotton-based textile industry
developed rapidly largely using imported machinery from Britain.
➢ Emancipation Act of 1861-
• Issued by Tsar Alexander II
• It abolished serfdom

1
SERFDOM- state of being a serf or a feudal labor that was tied to work on his lord’s estate.

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 •Peasants or serfs were set free from personal dependence on their landlords,
acquired civil rights, and were granted participation in social and economic
activities as free citizens.
• Main aim of the Act was to free labor for employment in industries as
industrial labor was scarce because peasants were tied to land
➢ In 1870s, Alexander II government initiated several large infrastructure projects particularly
the construction of railways with the state support. The state guaranteed foreign loans for
railway construction and provided substantial sums from the budget.
➢ The reforms of Sergei Witte-
• Construction of Trans-Siberian railway
• Introduced gold standard
• Supported high import tariffs
• Arranged state finance and support for the railway network
• Encouraged foreign investment in Russia’s industrial and manufacturing
sectors

Outcome of the reforms-

• Industrial boom in 1890s

• Industrial production increased by 8-9% per year
• Large amount of foreign capital chiefly from France and Britain had funded
new plants and factories in major cities.
• By 1900, around half of Russia’s heavy industries were foreign owned

Revolution of 1905: Causes;

1. Industrial depression in 1899-1902

2. Growing political and social instability
3. Population in cities increased rapidly but cities were not equipped with facilities
4. Poor living and working conditions of workers and peasants
5. Strikes and protests were suppressed
6. Food shortage and rampant famines
7. BLOODY SUNDAY: on Jan 22, 1905; the Tsar’s imperial guards open fired on a crowd of
thousands of peaceful protestors
8. Humiliating defeat in Russo-Japanese war in 1904-05. Many Russians lost faith in the Tsar.
9. Rise of proletariat (the industrial working class) and bourgeoisie (the commercial and
intellectual middle class who wanted more say in the government)

Reforms after 1905 Revolution- concerned that his rule might be toppled, Nicholas II (1894-1917, the
last Tsar) adopted following reforms:

Political Reforms

• Duma (elected national parliament) was established. But it had limited powers.
• October Manifesto- granted civil liberties like freedom of assembly, association, press and
speech.

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Stolypin’s Agrarian reforms

Peter Stolypin was the Prime Minister during 1906-14. He brought a series of reforms aimed at
modernizing agriculture and make it more competitive with other European powers. Peasants were
encouraged to leave village commune and acquire own private land holdings. He gave land to millions
of landless peasants. He believed that individual land holdings would provide greater economic
incentive to peasants and ultimately create a class of prosperous, conservative and small farmers that
would support the government. He abolished the fee that peasants were forced to give to the landlords
to move out of serfdom. Factories were also inspected.

Performance of economy after Stolypin’s reforms:

• Agriculture production increased in 1900-14

• Rapid industrial growth which continued till WWI
• Production of large-scale industry and small-scale industry increased by almost 8% a year.
• National income grew by 5% a year. Population growth was 2.4% a year. So, production per
head increased substantially.
• Employment: large scale manufacturing and mining employed 2.5 million workers in 1913.
Market led sector of industry (mainly cotton and textiles) employed 20% of all workers in large
scale industry mostly women.
• Capital goods industry (especially fuel, iron, steel and machine building) expanded more
rapidly than consumer goods industries. They were largely foreign owned (British, French and
German) and financed from abroad. They were under state influence and had marked
oligopolistic tendencies. Syndicates (cartels) were formed post 1899-1902 depression.

Despite industrial development, Russia on the eve of WWI was still primarily an agrarian peasant
country. Agriculture contributed to 50% of the GDP and 3/4th of all employment.

Features of the tsarist economy on the eve of WWI: - market economy strongly influenced by the
state, foreign owned oligopolies in capital goods industry, landowners’ estates, small scale artisan
units and an immense number of individual peasant micro economies.

Two schools of thought over the role of state in Russian economic development

One school of thought held that;

1. Industrial development no longer depended on the state post 1905 revolution. Boom of 1908-
13 was primarily due to increase in consumer spending. Role of state was declining.
2. Some historians disagreed on the effectiveness of the state economic policy. They argued that
the burden of taxation and other state intervention restricted the scale of the market and of
domestic investment and the cost of adoption of gold standard was more than its benefits.
3. State policies played a minor role in industrialization it was mainly due to growth of Russian
market economy and its integration in the world market.

Other school of thought held that;

1. Despite the rapid expansion of consumer goods industries (1908-13), state orders increased
equally rapidly.

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 2. Some historians argued that state tariff policy i.e. the tariff levied on imports of food
products, industrial material and manufactures was needed for budgetary revenue and for
developing infant industries.

Interpretations of historians for capital in Russian industry development and the state of
Russian economy

1. Foreign capital vs. domestic capital: some historians claimed that Russian industry was
dominated by foreign capital while others argued that capital structure of Russian industry was
a mix of both Russian and foreign capital in different proportions in different industries. Share
of Russian capital was more in well-established industries while foreign capital was dominant
in new industries such as electrical engineering.
2. Some claimed that a modern capitalist economy was successfully emerging in the Tsarist
Russia. They also argued that the Stolypin reforms led to even more rapid agriculture growth.
3. Others historians stressed on the continued backwardness and instability of the economy.
• There was high regional concentration of large-scale industry in St. Petersburg, Mexico
and the Ural regions only.
• Industry lacked the most advanced forms of machinery and capital equipment’s.
• Lack of research and technology.
• While agricultural grain production increased but the livestock declined. Countryside
suffered from overpopulation and economic distress.

Reasons for Collapse of Tsarism:

Internal factors

1. Miserable condition of the workers- very low wages, long working hours, poor working
conditions, large number of workers were unemployed. Workers demanded higher wages and
decline in working hours but their demands were not met.
2. Miserable condition of peasants- most of the peasants were landless and very poor. They had
to do free labor work for the landlords. They were politically, socially and economically
deprived. Small farmers having land had to pay high land revenues leavings very less for them
to survive on. Landless farmers demanded that land of the nobles should be given to them and
reduction of land revenue. But their demands were not fulfilled.
3. The Tsarist regime failed to adapt to the needs of a modernizing society. There was still absolute
monarchy and centralized administration.
4. Spread of socialism and communism. Ideologues and philosophers like Marx and Gorky
influenced people. Flow of liberal ideas from Western Europe.

External factors

1. Russia’s defeat in WWI

• Russians armies suffered defeat and a large number of soldiers were killed in the war.
• Russian people wanted to withdraw from the war but the Tsar was not willing to do so.
This turned the people against him and encouraged them to revolt.

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 • Russia was half developed and it failed to stand in front of the economically more
advanced nations like Germany which had huge quantity and high quality of weapons
and educated soldiers and army.
• There was economic crisis. Manpower was required in the war which led to shortage
of industrial labor. Food was required to feed army leading to shortage and starvations
across the country.

There were two revolutions in 1917:

Phase I- February Revolution: fall of the tsarist regime and a social democratic provisional government
was formed by the Mensheviks faction. 2

Phase II - October Revolution: fall of the Mensheviks government and establishment of a Communist
government by the Bolsheviks faction.

What was Russian Revolution?

Two revolutions led to the demise of Tsarist regime of Russia and eventual establishment of USSR.
The period of this Russian Revolution was from February to October 1917

Background and Causes

Russia at the turn of 20th century

• Largely an Agrarian country with impoverished and highly taxed peasants

• Dominance of Aristocrats and Clergy in the government

• Industrial development was minimal

• Workers in cities lived in overcrowded apartments and poor conditions

Ideas of enlightenment like democracy, rights of individual and accountable government came from
Western Europe and spread to Russia in the 19th century.

"Romonovs" were absolute monarchs since 17th century. They were also called 'Tsars'.

The Seed of Russian Revolution

In 1894, new king was ascended the throne, his name was Tsar/Czar Nicholas, his policies led to the
revolutions of 1917, he was influenced by "Rasputin", who was a mystic and it is said that he heavily
influenced the Tsar as well as the Czarina. Vladimir Lenin and Karl Marx were the two people whose
ideas led to the Russian Revolutions. Karl Marx gave the philosophy of Communism, he said that the
workers / proletariat are the people who are in majority, and they should rule, all the resources should
be in their hands. Vladimir Lenin changed his philosophy and said that if the workers have to take power
in their own hand then it will take a lot of time, so there must be some form of government in which

The Social Democratic Labor Party of Russia was divided into two wings in 1903: Mensheviks and
Bolsheviks.
Mensheviks were democratic liberals while Bolsheviks were revolutionaries who followed Lenin.
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there is a direct dictatorship of the workers. This is Leninist philosophy, he modified the Karl Marx's
communism theory, and that is why the philosophy is known as the Marxist Leninist.

#Russian Social Democratic Party:

• Formed in 1898

• Philosophy of Marx added to, by Lenin( Marxist- Leninist)

• Looked after the interest of Workers (Proletariat)

• Split into Bolsheviks and Mensheviks factions in 1903

#Russo Japanese War (1904-05)

• Dominance over Manchuria and Korea

• Warm water port in Pacific

• Russia defeated

• Humiliation in the war was one of the reasons for revolution of 1905

#Revolution of 1905

• Workers strike, demanding better conditions and rights

• Strikes and protests all over, suppressed military by Tsar (he opened fire to the protesting
people, many people were killed, that day was called "Bloody Sunday")

• Concessions by Tsar - October Manifesto

• DUMA established (It was the parliament, which was very weak, the Tsar did not
give powers and also there was no true representation, only aristocrats, noble people and
clergy become member of it, not common workers)

• 1906 - 11 - Peter Stolypin - Prime minister appointed. He did land reforms.

• 1911 - PM assassinated

#World War I

• Russia had a huge loss. 20 lakh soldiers and 80 lakh civilians lost their lives, huge economic
crisis, food shortages by 1917

#Events of the Revolution:

There were two revolutions not one.

Phase 1 - February (O.S) March (N.S)

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First one is called February revolution but it actually happened in March. The reason for the difference
in dates is, at that time Russia followed Julian calendar that was the old calendar that was followed
everywhere but slowly all countries adopted Gregorian calendar and Russia was one of the last countries
who adopted this. It was 1918 when Russia adopted Gregorian calendar.

Phase 2 - October (O.S) November (N.S)

Events in Detail

Phase 1

50,000 workers strike in Petrograd (a city of St. Petersburg), public protests erupt too. Tsar Nicholas
abdicates (leaving voluntarily) in favour of his brother Michael. Michael was not interested in becoming
the Tsar because he saw that protests were going everywhere and they had already put Nicholas under
house arrest. Thus, Tsar Ship fell and instead of that, DUMA takes power and a social democrat
provisional government is formed.

Alexander Kerensky was chosen as the prime minister of the provisional government and majority of
these provisional government members were from the Menshevik faction of the RS DB party.
Menshevik and Bolshevik were the two factions and they did not get along because of their ideological
differences.

Two mistakes that this government committed:

1. They didn't hold elections

2. Didn't withdraw from WW 1(World War 1).

#Phase 2/ October Revolution/ second Revolution

• Bolshevik under LEON TROTSKY demand immediate reforms and withdrawal from WW1.
But the government bans the Bolsheviks and arrests leaders. The army tries a coup in August
and Kerensky asks Bolsheviks and its RED GUARDS to defend the government.

• After this, the Red guards stay on in Petrograd (St. Petersburg) after the failed coup. Lenin
returns and gives his famous speeches. SOVIETS (workers councils) all over the country are
under Bolshevik control and help in change of government.

• This was also called blood less revolution because there was not much killing in this.

• On October 24/25 - All government buildings in Petrograd are captured by Bolsheviks

overnight

• Bolshevik capture all major cities

#Russian civil war started

The reason for this civil war was that there were two factions and they both wanted power. It was also
called the REDS v/s WHITES, Reds are Red guards. Around 20-30 lakh people died and it was fought
for around four to five years. It started in November of 1917 and it went on until November of 1922

The whites were:

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First, they were the supporters of Monarchy that means they were the supporters of Tsar. They were
the landlords, Aristocrats, Church/clergy and Mensheviks. They all are called whites.

The Reds were:

Reds were the Red guards which now was called the Red Army. They defeated the whites and the
Tsar and his family were executed brutally. So, now these Bolsheviks were known as Communists.
This Bolshevik Party was now named as the communist party.

USSR was established as one party socialist state with Lenin as the 1st premier and he always said
that "Dictatorship of the proletariat" it means he called himself the dictator but he said that I am the
dictator on behalf of the workers of industries so the USSR was established in December 1922
officially and it lasted up till December 1991, almost 70 years.

#Impacts

• End of Monarchy in one of the largest empires.

• Communism found its practical shape.

• Nationalism of all resources

• Abolition of private property

• Command economy

• 5-year plans

• It is the first revolution to establish "True Equality.” It means it gives equal rights to all
citizens despite having different social status and different economic status. French and
American Revolution did not do this.

War Communism

War Communism, which is name of the economic policies brought in by Lenin and the Bolsheviks,
between 1918 and 1921. It's called War Communism because this is also the period of the Russian
Civil War. It was an attempt to deal with the situation and partial response to the economic, industrial
conditions that Russia was facing, during the civil war. Also, attempt to put in place communist
economic theory in Russia.

By the middle of 1918, the Bolsheviks believed that the time was right to start introducing more
communist-based economic policies.

Policies

• 28th June 1918 - Decree on Nationalisation - the state was to take full ownership of all metal,
textiles, electrical, mining, cement, and tanning industries.

• This was followed up on the 29th November 1918, with an announcement that all factories
employing 10+ people or 5+ people, if the factory used machines would be nationalised and
placed under direct government control.

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 • Decree of 21st November 1918, declared all private trade illegal and the food commissariat
was put in charge of supplying consumer goods.

• The collapse of the rouble and the ban on private trade saw a black market and bartering
system flourish and became a daily reality for all citizens in order to fulfil their basic needs.

• Paradoxically the ban on private trade created a system where there was more private trade
(even though it was an illegal black-market economy) than ever before.

• It is estimated that between 1918 and 1919, illegal traders were responsible for supplying city
dwellers with up to 60% of their bread, with this percentage even higher in smaller towns.

• Ranges of free services were introduced by the state to replace wages - postal services, public
transport, medical treatment, and food rations.

• Tax system had collapsed because money had been abolished; the Bolsheviks resorted to
printing more money to pay for the services they were providing, which increased inflation.

• May 1919 the people's Bank was authorised to print as much money as they wanted - by the
end of 1919, the amount of money in circulation rose from 61.3 billion to 225 billion roubles.

• By 1921, the amount was 1.2 trillion and 2.3 trillion by mid-1923.

• Money was worthless and had fallen to 1/20th of its value - hence why bartering was such a
big deal and the illegal black market flourished.

• By July 1918, a class-based system of rationing was introduced. Workers, soldiers, and
members of the communist party were entitled to food rations, people from other social
classes were not.

• In order to ensure that the amount of grain/food needed reached the workers in the cities, Red
Army requisitioning was reintroduced to Russia.

• Lenin was convinced that food shortage was caused by the "Kulaks" (wealthy peasants) who
were hoarding grains, hoping to force the prices up so that they made more money when they
sold it.

• His proposed solution was to turn the poorer peasants against the richer ones - 'only if we are
able to split the villages into two camps, to arouse there, the same class war as in the cities.
However, the system failed because the Bolsheviks didn't understand the nature of Russian
society in the country side. Strong ties between families in the village due to years of inter
marriage combined with a sense of anger and hatred towards the outsiders. Denounce each
other meant the peasants supported each other.

• Later, it backfires because skilled farmers were removed and unskilled farmers were working.
Therefore, output produced was really less. Yield was less.

Effect of the War

• Communist and western Marxist historians have seen these changes as necessary and part of
true communist ideology whereas liberal western historians saw it as Bolshevik ideological
fanaticism rather than a response to actual economic circumstances.

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• War communism was literally communism in response to war - many decrees were
improvised in the face of the crisis facing the Bolshevik during the civil war.

• However, chronic food and fuel shortage prevailed. By 1920, most wages bought less than
1/50 of what they had bought in 1914.

• By 1920, Petrograd's population had fallen by 70% and Moscow's by 50% as workers fled to
the countryside in search of work, food etc.

• There were 3.024 million industrial workers in 1917 but only 1.48 million in 1921 - critics
noted that if the Bolsheviks continued along those lines they would be ruling in the name of a
non-existent class.

• Large-scale industries output fell to 13% of its pre - WWI level. Steel output was 4% of 1913
levels, iron ore at 1.5% and copper production ceased entirely.

• Coal production fell to 30% of its maximum possible output and electrical energy fell to 25%

Economic Output in 1921

Industry Per cent of the 1913 Output

Total Industrial Output 20
Finished Goods 16
Un-finished Goods 12
Mining 29
Oil 36
Metal Industries 10
Cotton 7
Wool 34
Transport (mainly rail and river) 20

• The biggest impact was probably the "famine", we saw grain requisitioning, sometimes
farmers took away seed crops, as a farmer they keep a certain amount of seed, the grain from
the crop, from the current year to plan next year, to have some seed to grow new crops.

• The peasants also stopped farming as, Checkers used to come and take that food away. We
see a massive man-made famine. The estimates were, 5 million people died during the
famine, 10 million people died during the Civil war, half of them died of starvation, and
malnutrition was common.

• In the province of samara grain requisitioning between 1919 and 1920, exceeded the harvest
surplus by 30% - the average peasant household was forced to give up 118 kg of food, fodder,
and seed.

• Villagers of some regions ate "famine bread" made of clay and grass. Horsemeat was referred
to as 'Civil war sausage' - Graffiti in Petrograd read "Down with Lenin and horse meat! Give
us the Tsar and Pork!

• Thousands of cases of cannibalism were reported. Russia was forced to accept aid from the
American Relief administration- its soup kitchens were feeding 10 million Russians a day.

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 • Even Pravda admitted in 1921 that there was a famine with 1 in 5 starving. Bolsheviks were
even desperate enough to accept foreign aid to feed the people - whilst blaming the whites
and kulaks for this situation not themselves.

• The outstanding contribution was from the American Relief Administration, which provided
food for 10 million Russians by the time the ARA were removed from Russia in 1923; they
had provided $60 million dollars in relief work.

Conclusion

War communism simply did not work. The Economic Policies between 1918 and1921, didn't work.
Nationalisation of industry, Grain requisitioning, strict central management, foreign trade in control of
state, rationing of food commodities, banning of private enterprise, military control and
"Prodrazvyorstka" – collecting surplus agriculture from peasants and distributing it to the remaining
population. All these measures made the economy worse than under the Tsarist regime (with industry
dropping massively and currency dropping). The result was man-made famine, which became the
reason of deaths of millions of people. People question what the revolution was for, when we see the
situation getting worse off.

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