Economics of Russia and Eurasia

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Economics of Russia and Eurasia
Dr. Victoria Vernon Ph.D.(Economics), University
of TX, Austin M.A., Indiana University,
Bloomington B.A., Kharkov State University,
Ukraine
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Russia Ukraine Belarus Moldova Kazakhstan
Armenia Georgia Azerbaijan Uzbekistan
Kyrgyzstan Turkmenistan Tajikistan Estonia Lithua
nia Latvia
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Germany Hungary Poland Czech Republic Slovakia
Slovenia Croatia Macedonia Bosnia and
Herzegovina Serbia and Montenegro Bulgaria
Romania Albania
Central and Eastern Europe
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GDP 2008 - per capita, purchasing power
parityhttps//www.cia.gov/library/publications/th
e-world-factbook/index.html
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USSR History Timeline
1861 End of Feudalism, end of serfdom 1905 Const
itutional monarchy, Duma 1914-18 World War
I 1917 February and October Revolutions
1918-21 Civil war, War Communism, famine
1921-28 Lenins New Economic Policy (NEP) 1922
Soviet Union formed 1924 Lenin's death 1928
Stalin's First Five Year Plan 1930-33
Collectivization of Agriculture 1930's Purge
Trials 1939-45 World War II, beginning of cold
war 1953 Stalin's death 1955-64 Khrushchev's
regime 1964-82 Brezhnev's regime 1985-91
Gorbachev's regime 1980's Perestroika 1991
Collapse of the Soviet Union
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Global expansion of Communist states
Dark red 1920s-1930s Bright red
1940s-1950s Salmon 1960s-1980s

• 1980s 1/3 of the world's population in 25
  nations ruled by Communist governments
• US http//www.cpusa.org/

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Founding Fathers
Stalin
Karl Marx (1818-1883)
Vladimir Lenin (1870-1924)
Mao
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Marx History before Capitalism

• History represents class-struggles over surplus
  value
• Old inefficient economic order replaced with
  superior (qualitative leap)
• Primitive communism" of prehistoric times
• no exploitation, equalitarian, free, very poor,
  no individual could survive for long without the
  group
• Slavery
• exploitation of defeated group by triumphant
  group
• Classes slave-owners, slaves
• Feudalism
• exploitation based on ownership of land
• Classes land-lords, serfs
• Capitalism
• internal contradictions bourgeoisie
  (capitalists) ?? proletariat
• Socialism
• Transition between capitalism and communism
• Revolutionary dictatorship of the proletariat
• Communism
• Das Kapital the capitalist disappears as
  superfluous from the production process.

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Communist Manifesto, 1848
The Communists disdain to conceal their views
and aims. They openly declare that their ends can
be attained only by the forcible overthrow of all
existing social conditions. But not only has the
bourgeoisie forged the weapons that bring death
to itself it has also called into existence the
men who are to wield those weapons the modern
working class the proletarians. Let the ruling
classes tremble at a communist revolution. The
proletarians have nothing to lose but their
chains. They have a world to win .
A spectre is haunting Europe the spectre of
communism.
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Theory of Dialectical Materialism
Materialism world is material Dialectics laws
of development of nature, society 1. Universe is
an integral whole, all things are mutually
interdependent 2. Nature is in a state of
constant motion 3. Development process
insignificant quantitative changes lead to
fundamental, qualitative leaps from one state to
another 4. All things contain within themselves
internal contradictions, - primary cause of
motion, change, and development Basis economic
relations in society Super-structure
institutions laws, church, culture, etc
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Marx Labor Theory of Value

• Value of any commodity measured in units of
  labor VCS
• V Value of labor, subsistence wage to worker
• C Labor embodied in used up machinery
• S Surplus-value, profit of capitalist
• Increase S through exploitation of workers!
• Collective rate of profit falls as capital
  replaces labor
• Capitalist firms in cut-throat competition for
  business
• Introduce technological innovations
• Innovators quickly lose advantage as innovations
  diffuses
• Capitalists keep up profit by exploiting labor
  more
• "immiserization" of the working class
• More firms fall behind and fail, bankrupt
  capitalists join proletariat
• Final stages of capitalism Instability,
  overproduction, agrarian crises, depressions,
  political unrest
• Inevitable socialist revolution
• proletariat swelling, becoming increasingly
  exploited
• bourgeoisie shrinking, becoming increasingly
  cut-throat
• proletariat rises up in revolt, replacing
  bourgeoisie as the dominant class and creating
  the new socialist order
• Revolutions occur where capitalism is the most
  advanced!

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What is Communism?

• From 1962 CPSU Congress
• Communism is a classless social system with one
  form of public ownership of the means of
  production and with full social equality of all
  members of society.
• Under communism, the all-round development of
  people will be accomplished by the growth of
  productive forces on the basis of continuous
  progress in science and technology, all the
  springs of social wealth will flow abundantly,
  and the great principle, from each according to
  his ability, to each according to his needs,
  will be implemented.
• Communism is a highly organized society of free,
  socially conscious working people, a society in
  which labor for the good of society will become
  the prime vital requirement of everyone, a
  clearly recognized necessity, and the ability of
  each person will be employed to the greatest
  benefit of the people.

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Russia before 1917 Hereditary Monarchy
Kievan Rus, Duchy of Moscovy, Mongol invasion
(1237-1452) Ivan the Terrible (1547-84), first
Tsar of all Russia The Romanov dynasty
(1613-1917) 19 Tsars
Peter I (the Great), (1682-1725) Catherine I,
(1725-1727) Peter II, (1727-1730) Anna,
(1730-1740) Ivan VI, (1740-1741) Elizabeth,
(1741-1762) Peter III, (1762) Catherine II (the
Great), (1762-1796) Paul I, (1796-1801)
Alexander I, (1801-1825) Nicholas I,
(1825-1855) Alexander II, (1855-1881) Alexander
III, (1881-1894) Nicholas II, (1894-1917,
abdicated)
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1917 Revolutions

• Feb-Oct 1917, Provisional government a
  coalition of Social Democratic parties
• Bolshevik party is small, influential only among
  Petrograd workers
• Councils (Soviets) of workers, soldiers, peasants
  at every factory, military unit, village
• Congress of Workers, Peasant and Soldiers
  Deputies

• Provisional govt unpopular war policies
• Fight WWI till victory
• Half of working age men drafted, huge human
  losses
• Finland and Ukraine declare independence,
  Caucasus and Central Asia on the verge
• Peasants desert army
• Summer 1917 Menshevik-headed govt outlaws
  Bolshevik party for calls to overthrow
  provisional govt
• Oct 1917 Bolshevik conspire with Petrograd
  Soviet, central committee votes for armed
  uprising
• Oct 25 Petrograd workers and soldiers headed by
  Trotsky took control of Winter Palace
• Second Congress of Soviets presented with
  Bolshevik majority in Central Committee of
  Soviets

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• Stalin Should kulaks be permitted to join
  collective farms? Of course not, for they are
  sworn enemies of the collective farm movement
• 3.5 million peasants arrested as enemies of the
  state, collected into Gulag camps
• 3.5 million were resettled
• 3.5 million died
• Young boy Pavlik Morozov reported his own father
• 1932-33 Famine in Ukraine
• 7 million deaths, 25 of population,
  policy-induced
• USSR exported agricultural goods, imported
  industrial machines, manufactured goods,
  technology

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Phenomenon Young Communists Organizations

• Little Octobrists 7 - 9 year olds
• Young Pioneers 10-14 year olds
• Komsomol (Communist Union of Youth)
• 14-28 year olds
• teaching values of CPSU, political activism

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WW2 1941-1945

• Nazis broke Molotov-Ribbontroff Pact and invaded
  Soviet territory
• Britain and United States join forces with Soviet
  Union

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• USSR in 1960-70s
• Economy grew more complex planning complicated
• Oversized, inefficient bureaucratic apparatus
• USSR GDP 40-70 of US economy
• world's largest producer of oil and steel
• parity with US on strategic nuclear weapons
• 6.4 times ahead of US in manufacture of tractors
• 16 times ahead of US in manufacture of grain
  harvesters
• agriculture used 3 times more capital per unit of
  output, but had 6 of US labor productivity

Growth Rates of Output
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Labor Force Participation Rates for Women
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Who gets national income? In the USSR -
Workers. In capitalist countries-
Exploitators.National income increased 60 in
1950 compared to 1940
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Declining Standards of Living
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Adult literacy rate, 2005
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http//www.cia.gov/cia/publications/factbook
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Global Gas Resource BaseProved Reserves
Current Net Gas Exporters
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Generation by Fuel in Western Europe
avg. GW
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More State Control

• Increasing state interference in the economy
• expand state ownership of strategic sectors (oil,
  gas) Gazprom acquired Sibneft
• curb media freedom
• 2001 Bargain with oligarchs President will
  overlook the dubious ways business empires were
  built in murky privatizations of 1990s. In
  return, stay out of politics, stop bribing
  officials and pay taxes
• Mikhail Khodorkovsky - Yukos oil company
• convicted on tax and fraud charges
• Serving 8 years in a Siberian jail
• Government renationalized part of Yukos
• Energy used as a foreign policy tool
• Gazprom wants control over pipelines in Ukraine
  and Belarus
• Russia briefly cuts supply of gas for Ukraine,
  reduces supply to Europe