Soviet Union (China) fact of the day

by on May 8, 2016 at 3:38 pm in Books, Economics, History | Permalink

In its first three decades, the Soviet Union urbanized at about the same rate as China since 1978.

That is from Arthur Kroeber, China’s Economy: What Everyone Needs to Know, a new and useful introductory guide to what the title suggests.  This parallel of course is one reason why the early years of Soviet communism went as well economically as they did.

1 Ray Lopez May 8, 2016 at 3:46 pm

Is there a Straussian reading of this? That China will also collapse?

2 Heorogar May 8, 2016 at 3:59 pm

In its first three decades, the Soviet Union mass murdered at a hugely higher rate than China since 1978.

3 CW May 8, 2016 at 8:21 pm

Or just that China pulled that off prior to the cirrent 30-year period. Mao’s policy-induced great famine, the Cultural Revolution.

4 Quite Likely May 9, 2016 at 10:08 am

Heh, right, the real difference is that the Soviet Union had its murdery period and its explosive economic growth period at the same time, while China had them one after the other.

5 Jan May 8, 2016 at 5:52 pm

So, do you think the murder helped or hurt growth? I think it makes Soviet economic performance under Stalin that much more impressive.

6 Tom T. May 8, 2016 at 10:58 pm

Positive effect on GDP per capita by reducing the denominator.

7 Jan May 9, 2016 at 8:52 am

The appropriate metric is overall GDP.

8 AIG May 8, 2016 at 7:10 pm

Tyler Cowen’s silliest post?

I’d say, yes.

1) How’s this for a completely unrelated and equally pointless Vox/MR style BS comparisons: China’s urbanization rate is far slower than the US urbanization rate from 1840-1940. What does this tell us? Absolutely nothing.

2) China’s urbanization rate didn’t start taking off until 1995.

3) USSR’s urbanization rate, similarly, didn’t start taking off until the mid-late 30s. (i’e’ only in the last decade of those 3 decades).

4) In those 3 decades, about 10-12 million peasants were murdered in the USSR. Another 10-20 million peasants were forcibly deported to “urban” centers in Siberia and elsewhere. And another 20-30 million, mostly peasants, were killed in WW2. Gee, ya think the rate of urbanization in USSR had something to do with the mass starvation and forced relocation of peasants? 😉

5) So well economically in the first 3 decades? In the first 3 decades of the USSR there were at least 2 major famines which killed 10-12 million total. What a great success.

Is MR turning into Vox, with these totally stupid comparisons?

9 Jan May 8, 2016 at 7:30 pm

3) the 30s were not the third decade of the Sovetsky Sayus. It appears you generally have no idea what you’re talking about on this topic. Next you’ll tell Stalin was a bad person!

Do you know what economically means?

10 AIG May 8, 2016 at 7:48 pm

????? 3 decades = 30 years

1917 + 30 = 1947

Stalin took over in 1922.

Vox reader I assume?

11 Jan May 9, 2016 at 5:39 am

Uh USSR – 1922.

Mid-late 30 =/= third decade of USSR.

12 AIG May 9, 2016 at 10:19 am

If that’s the metric, its even worst then. Almost all of that period is then mass murder and mass deportations.

Dope!

13 Jan May 9, 2016 at 10:56 am

The Soviet economy was kicking ass during that period, and it started way earlier than you said. Undeniable.

Yes, Stalin murdered a bunch of people. That’s well-established and tragedy. Not the point.

This time you should respond by calling me a doo-doo head. I think that is befitting of a 21 year old grad student who thinks he knows everything. Heh.

14 AIG May 9, 2016 at 11:20 am

LOL. Kicking ass, while starving to death and relying on American handouts of food to survive.

A glimpse into the mind of Jan.

15 Ja May 9, 2016 at 11:37 am

That’s what was remarkable. The USSR sacrificed, literally people, to achieve superb levels of growth during that period. The progressed at any cost. That is partially why Hitler invaded–he made some poor assumptions about Russia’s ability to fight back based on an outdated understanding their capabilities–much had changed in 20 years. The USSR had been industrializing and growing at a rapid clip and were much more prepared to defend themselves than the Germans expected.

16 JWatts May 10, 2016 at 7:14 pm

“The Soviet economy was kicking ass during that period, and it started way earlier than you said. Undeniable. ”

“Therefore our answer to the ‘Was Stalin Necessary?’ question is a definite ‘no’. Even though we do not consider the human tragedy of famine, repression and terror, and focus on economic outcomes alone, and even when we make assumptions that are biased in Stalin’s favour, his economic policies underperform the counterfactual. We believe Stalin’s industrialisation should not be used as a success story in development economics, and should instead be studied as an example where brutal reallocation resulted in lower productivity and lower social welfare.

http://voxeu.org/article/stalin-and-soviet-industrialisation

17 AIG May 8, 2016 at 7:49 pm

Do I know what economically means?

I assume economics has some, tenuous as it may be, connection with the ability of people to procure food to survive.

18 Jan May 9, 2016 at 5:39 am

No.

19 FYI May 9, 2016 at 10:53 am

Jan, you are an idiot. Just wanted to get this out there in case you are too stupid to notice it.

20 Jan May 9, 2016 at 10:59 am

I mean, please, do some more name calling. I think it helps your case.

21 JWatts May 10, 2016 at 7:08 pm

Jan, sometimes replies are substantive and should be replied with substantive counter arguments. But your reply of “No” to a post that is basically correct is pretty much a dumb answer.

22 Dylan D. May 8, 2016 at 8:08 pm

I think Tyler is insinuating that China’s prosperity is as faulty as the USSR’s perceived prosperity was in its first three decades. Here’s what he said last month about China:

“Due to the prevalence of SOEs and state influence in the economy, the country can in fact (for now) achieve almost any gdp target it wishes, at least within reason. But it trades off the quantity of gdp for the quality of gdp, and this time — again — the Party opted for the relatively high growth figure. That is bad news, not good news.”

That doesn’t sound like a guy who really believes that China is as doing as well as it seems.

23 AIG May 8, 2016 at 8:14 pm

Ok, Tyler is being sarcastic in that last sentence then. My apologies Tyler.

24 Todd Kreider May 8, 2016 at 7:54 pm

I read the first chapter at Amazon and while the book may be good, there are problems: 1) the ratio of GDP/capita (ppp) of China to the US was not 18% as Kroeber’s table shows but a higher 23%. (Austria is at 86% not 99% as written, etc. 2) Japan did not have three decades of 8 to 10% growth but closer to two decades. 3) Kroeber uses a brief developmental explanation of Japan by Robert Wade ( who he calls an economist despite his PhD in social anthropology) explain rapid growth due to controls of currency, interests rates and export promotion. Economists (the PhD kind) have shown that the political scientists (Chalmers Johnson), anthropologists (Robert Wade) and sociologists (Ezra Vogel – Japan as Number One) were wrong and that the government effects were essentially zero.

So, this book may be very good but problems early in the book.

25 AIG May 8, 2016 at 8:23 pm

“Robert Wade ( who he calls an economist despite his PhD in social anthropology)”

Alas, when Robert Reich can go on CNN and call himself an economist, James Pethokoukis can go on Fox Business and call himself an economist, and Matt Yglesias can go on MSNBC and claim himself an economist…

…why can’t I call myself an astronaut? I have flown as high as 30,000 feet!, so I have been much closer to space, then any of these people have to economics.

26 Troll me May 9, 2016 at 1:36 am

For most purposes outside of academics and banking, the label “economist” doesn’t have much to do with education or expertise, it mostly has to do with some organization likes to interview you about economics-related things.

Canada’s last PM was “an economist”, yet he has never published anything on the subject, never taught the subject, and has never been asked for economics advice by any organization other than ones which are explicitly political or ideological. And, more importantly, even rather neoliberal pro-market economists are generally critical of most of his tax and fiscal policy, with the exception of a couple think tanks with obvious and persistent political bias.

27 AIG May 9, 2016 at 3:34 am

Just like when you (Nathan) claim to have taken econ classes, when you really mean sociology classes.

28 Troll me May 9, 2016 at 7:20 am

Tell me about these sociology classes which masquerade as economics.

I’m not sure why you’re so dedicated to knocking me in that sense. I’m not going to beat my chest. Are you feeling inadequate today?

29 So Much For Subtlety May 8, 2016 at 11:02 pm

It is not particularly credible that government effects were essentially zero. The Japanese state may or may not have been able to speed up industrialization – and it is certain that a lack of a welfare state and an insistence on savings did work to that end – but they did influence the economy in other ways.

For instance, without the state’s backing does anyone really think that the Japanese economy would be so dominated by the big zaibatsu? They cannot be smart all the time. Without the state giving them preferential treatment, the playing field would be more equal and you would see more upstart innovators like Google and Facebook.

30 Troll me May 9, 2016 at 1:54 am

The Japanese government subsidized people to go abroad and learn foreign technologies. And then were highly guided in public-supported research which was basically handed over to industry. It was very incestuous, in what appears to have been a good way – no matter that most of the wealth got concentrated in a variety of highly connected families, it did accomplish industrialization. It was very state-led, with most of the profits being privatized.

31 Todd Kreider May 9, 2016 at 4:50 pm

I was referring to the post-war recovery period. See economist David Flath’s “text Japanese Economy.” The Meiji period was not state led by much butinstead mostly laissez-faire. (Flath points out the first industrial sector, cotton-spinning, received almost no support from the government. In the post war era, Flath states on p.7 that government policies “didn’t amount to much” and goes into detail in chapter 4 ( preview available for the 2014 edition on Amazon) with respect to the Solow growth model accounting for the rapid growth of the recovery period.

32 Troll me May 10, 2016 at 1:24 am

Todd – a lot of the expansion was fairly laissez faire. But the initial advances in those technologies and applications were absolutely directed by state-sponsored research missions, namely to learn about foreign technologies. Also, a variety of preferences in domestic markets and efforts to informally achieve preferential access to many markets which hugely relevant.

The SIZE of the support in $$ was not large compared to the eventual size of these industries. But the effects almost certainly were critical. This is addressed in “The Economic Development of Japan” by Kenichi Ohno: http://www.grips.ac.jp/forum/pdf06/EDJ.pdf

33 Sean Kelleher May 8, 2016 at 8:07 pm

Does anyone have good reading recommendations on the Soviet economy? Outside of the popular ideas that socialism encourages laziness and dependence on the state, I don’t know why it lost the economic competition with the West. I’m aware of the oil price issue, but was that enough to explain the collapse? Thanks in advance, Sean

34 chuck martel May 8, 2016 at 10:09 pm

“The Coming Soviet Crash, Gorbachev’s Desperate Pursuit of Credit in Western Financial Markets”. By Judy Shelton. 246 pp. New York: The Free Press, 1989. http://www.nytimes.com/1989/02/05/books/russia-in-the-red.html?pagewanted=all

35 Troll me May 9, 2016 at 2:12 am

Starting 100 years behind might not have helped. Having half the population might not have helped either.

36 JWatts May 10, 2016 at 7:21 pm

“Starting 100 years behind might not have helped. Having half the population might not have helped either.”

I don’t understand this comment at all. 100 years behind what other country? Half the population of what other country? And how does that really matter?

Plenty of countries went to relatively poor and backwards to advanced over a 30 year time frame. Indeed, look at Taiwan or South Korea.

Whereas, no country has prospered under Communism.

37 maros. May 9, 2016 at 5:42 am

I second this. I believe there is a kind of a cognitive dissonance regarding this subject – Soviet Union used to be a US enemy = by definition immoral, inefficient and corrupt. Studying their history might reveal some positive traits, which by definition they can’t have. So the topic is not studied.
.
There is a link to 2 pretty solid papers in an older MR post:
http://marginalrevolution.com/marginalrevolution/2012/12/soviet-power-plus-electrification-what-is-the-long-run-legacy-of-communism.html

38 AIG May 9, 2016 at 10:22 am

The topic is studied to death, you’re simply unaware of the research.

There’s a thing called Google.

Google it.

Not much positive to be found, however. Or nothing that we don’t already know or expect. You think “electrification” is something impressive? Same experience in virtually every third world country growing exponentially.

39 Caleb May 9, 2016 at 1:55 pm

Wow, how helpful you are. Get up on the wrong side of the bed today?

40 Moreno Klaus May 9, 2016 at 7:16 am

Dictatorships are slower to adapt to new circumstances…I say corruption corruption corruption and commodities, commodities, commmodities.

41 Matt May 9, 2016 at 11:14 am

If you’re serious about this (I assume you are) and want to learn something and not read propaganda, I’d strongly recommend works by Alec Nove. You can learn a lot by reading his _The Economics of Feasible Socialism_ (it has useful comparisons between the Soviet system and other socialist ones such as Hungary and Yugoslavia). The revised edition has a lot of useful information on the reforms under Gorbachev. If you want more than that, I found his book _An Economic History of the USSR_ to be interesting and insightful. His fullest work on the topic is probably his book, _The Soviet Economic System_, though it’s more ponderous than the other two, and probably more than is worth putting time into for most people.

42 Chris May 9, 2016 at 1:34 pm

If you want an overview on why the Soviet economy didn’t work, I recommend The Russians by Hedrick Smith and Armageddon Averted by Stephen Kotkin. Neither are economics works, but they reveal a lot about the Soviet economy. The Russians were published in 1975 and is about life in the Soviet Union. So work and economy is only one aspect of it. Armageddon Averted covers “the Soviet collapse” of 1970-1990. It is more of a political book, but covers the economic failings and various failed reforms.

43 Chuck May 8, 2016 at 9:08 pm

“the early years of Soviet communism went as well economically as they did”

Does Tyler seriously believe that? Is this post just mood affiliation? Signaling?

44 Neal May 8, 2016 at 10:32 pm

It’s hard for a central planner to mess up a very small economy and low levels of capital. Mistakes don’t cost a lot.

45 So Much For Subtlety May 8, 2016 at 10:53 pm

The early experiments with Communism produce famine and a complete collapse of the Soviet economy. It is not hard for people who think that the state is so simple to run that a tram driver can do it to screw up.

By August 1921 the Soviets were forced to let Herbert Hoover save millions of peasant lives. So only 5 million died.

46 prior_disapproval May 8, 2016 at 10:05 pm

By killing off the peasant population?

47 Jan May 9, 2016 at 9:25 am

Good article in the Post today reminding us not to forget that the Soviet Union saved the world from Hitler. The importance of that accomplishment and the sacrifice of those people should not be forgotten.

https://www.washingtonpost.com/news/worldviews/wp/2015/05/08/dont-forget-how-the-soviet-union-saved-the-world-from-hitler/

48 AIG May 9, 2016 at 10:24 am

You mean America saved the Soviet Union from Hitler.

We provided somewhere between 50-70% of the war materials they needed to fight: fuel, food, chemicals, metals etc.

Without America, they would have all starved to death…as they had been doing prior to WW2.

Muzhiks gonna muzhik.

49 Jan May 9, 2016 at 10:58 am

Not sure you know what muzhik means, because you just used it incorrectly.

The fact of the matter is that with the USSR sacrificing dozens of people for every single American who died, the war would have been lost. You think Hitler would have stopped at Europe and Asia? Think again.

50 AIG May 9, 2016 at 11:22 am

Muzhiks gonna muzhik, as I said.

“more of us died than of you, so we won!” 🙂

Muzhiks…gonna…muzhik…lol

51 Ja May 9, 2016 at 11:39 am

It seems you think you’re winning by being ignorant of the facts.

Molodts, patsan!

52 Bob from Ohio May 9, 2016 at 11:41 am

“The fact of the matter is that with the USSR sacrificing dozens of people for every single American who died, the war would have been lost.”

You are awfully impressed with the squandering of lives. Stalin after attacking Poland, sat on his hands and let the Germans achieve absolute surprise. Millions of lives were needlessly lost and massive industrial capacity overrun.

Soviet tactics consisted of throwing waves of tanks and men until the enemy was overrun. Casualties were ignored, always more half trained soldiers to come.

US tactics bypassed enemy strongholds when possible and used air power to degrade the enemy. These US tactics saved US lives.

53 AIG May 9, 2016 at 11:44 am

It’s muzhik logic at work. Don’t be surprised.

54 Jan May 9, 2016 at 11:48 am

If the USSR surrenders, thereby saving most of those lives, the US loses and Hitler triumphs.

55 MS May 9, 2016 at 2:37 pm

US had the luxury of waiting safely behind an ocean until everything was ready. If NYC, Washington DC and other cities were on brink of being overrun in 1941/42, pretty sure they would have used whatever was at their disposal, including half-trained men, to stop the enemy from advancing.

> sat on his hands and let the Germans achieve absolute surprise
Actually the Red Army basically quadrupled in size in that time frame. Universal conscription was put into place. New armaments were put into production. And half the point attacking Poland (from the Soviet perspective) was to push the border westward. Yes, Germans were able to achieve surprise but it is really much more complicated than that. There is only so much you can do to prepare for war without being provocative and making that war a self-fulfilling prophecy.

56 JWatts May 10, 2016 at 7:33 pm

If you’ve read any history from the period at all, it’s absolutely clear that the USSR was militarily incompetent at the start of the war. This is almost assuredly due to the purge of the Russian officer corp by Stalin and the appointment of Soviet political Commissars throughout the military command structure.

Furthermore, Stalin has a nervous breakdown when the Nazi’s attacked because he was convinced that Hitler was trustworthy. The military wouldn’t respond without orders from higher up and no one would risk making any orders to retreat. Literally, thousands of planes were destroyed on the ground because the Soviet Air Corp didn’t get any responses to it’s requests to move it’s air planes back to safer positions.

The Soviet military took so most of those casualties specifically because of Stalin’s poor leadership.

“When Nazi Germany attacked the Soviet Union in June1941, it quickly became apparent that the Soviet Air Force was not prepared for war.[25] Poor planning and lack of organization left planes sitting on the tarmac at airbases, allowing the Luftwaffe to destroy 4,000 Soviet planes within the first week.The disorganized Soviet defenses and technologically deficient aircraft were no match for the Luftwaffe.”

https://en.wikipedia.org/wiki/Soviet_Air_Forces

57 FYI May 9, 2016 at 11:03 am

Isn’t it amazing that in 2016 we still have people like Jan? I mean, 20 years ago you had people who were invested emotionally in the whole thing so you kind of gave them a break. Now a days you have to be a delusional idiot to try to defend that murderous dictatorship in any way.

58 Jan May 9, 2016 at 11:13 am

You’re delusional if you don’t think the war was won because of the USSR. This does not mean the solely won the war. Yeah, it clearly took the USSR and the US to deliver the knockout, but these are basic facts. The common US perception is that we single handedly won the war. Just not true.

This does not mean that someone who recognizes the USSR’s contribution is a communist or thinks that we would be under a socialist system. Just calm down, grow up and put your big boy pants on, so you can have a mature conversation informed by facts. Alternatively, you could respond to me with a two-word insult and confirm what everyone is thinking about you.

59 AIG May 9, 2016 at 11:28 am

LOL. Jan. 50-70% of the material needs of the USSR during WW2 came from the West. The US supplied about 70% of the aluminum, about 80% of the chemicals, about 90% of the food for the army, about 100% of the transport equipment, about 50% of critical metals, about 80% of aviation fuel…etc….used by the USSR during WW2. Not to mention the majority of ammunition, and about 20% of total tanks and planes used by the Soviets (the rest of what the Soviets build was mainly by using raw materials supplied by the US). Not to mention things like…tools for production…which almost all came from the West.

Not to mention the Western allies destroyed 99% of German war industry in the process.

Think about this for a second: the reason Germany lost was because it ran out of manufacturing capacity to sustain the war effort. The West did that (US mainly). The reason the USSR won was because it had the capacity to sustain a war. The West did that too (US mainly).

Wars are won in the factory floor, not by muzhiks throwing themselves into hails of bullets.

60 Bob from Ohio May 9, 2016 at 11:43 am

If the US was not in the war, Russia would have lost.

If Russia was not in the war, the US would have still won, it just would have taken longer and been more costly.

If nothing else, the atomic bomb attack on Berlin would have won it.

61 Jan May 9, 2016 at 11:47 am

The USSR provided the military and lives that stopped the German machine. There is literally no way the US is victorious without the USSR. The US could have shipped all the metal and bombs in the world and not won the war if the Soviets had surrendered, like the French did, or even just retreated into Siberia.

The Eastern Front consumed the vast majority of German resources and manpower. That was the difference. Wars are won with determination and endurance. Letting Germany grind itself down in the East ended any chance of Hitler’s success in the West.

62 Bob from Ohio May 9, 2016 at 2:19 pm

“There is literally no way the US is victorious without the USSR.”

Ridiculous. The US defeated Japan by itself. It would have beaten Germany, though it would have cost many more US lives and taken more time.

We were immune from German attacks on the homeland due to our naval and air superiority. With the UK as base, we would have rolled back the Germans eventually.

You also ignore the atomic bomb. One on Berlin and one on the Ruhr, end of the war.

63 MS May 9, 2016 at 2:54 pm

AIG: you’re exaggerating. Most of those goods the Soviets received weren’t delivered until 1943 or later. They had no impact on the outcome of the Battle of Moscow (when Operation Barbarossa crashed and burned) and very little impact on Stalingrad.

Secondly, those statistics are misleading (as any statistics can be). For example, the USSR received nearly 400,000 trucks which completely dwarfed its own domestic production. However what isn’t mentioned is that the USSR had more than 700,000 trucks at the beginning of the war. Of course a sizable portion was lost in the attrition, but it isn’t like the USSR would have been entirely without transport.

> Not to mention the Western allies destroyed 99% of German war industry in the process.

Funnily enough, German war production increased every single year of the war until 1945.

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