In regards to the route dependence of poor (economic) policies, consider the following: The traditions of the Tsarist Empire and the Soviet Union are obvious in Putin's Russia, as they were in the former Soviet Union. The prospect of changes has dimmed as a result.
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| Moscow, Russia |
"Empires continue to have significance long after they have passed away. As a result of the post-imperial syndrome of nostalgic illusions about the possibilities of reclaiming lost glory, popular ideologies based on inward concentration, xenophobia, and antagonism against the outside world are often developed." Ekaterina Zhuravskaya, Sergei Guriev, and Andrei Markevich are economists who wrote a piece that will be published in the prestigious "Journal of Economic Literature." These phrases, which feel oppressively current, are taken from their work.
As she points out, imperial history continues to have an influence on Russian society, which is particularly significant considering that the country's history comprises two collapsed empires – the Tsarist Empire and the Soviet Union. Further study has not altered the long-held conclusion that Russia is economically behind in the era of industrialization, despite more recent findings to the contrary. A quarter of the per capita income in the Tsarist Empire (excluding Finland, which was then part of the empire) compared well with the per capita income in England and the United States in 1860, the year of the abolition of slavery.
Workers moved from less productive agriculture to more productive industry beginning in 1890, resulting in a period of stronger economic growth for the tsarist empire. However, the empire did not advance very far because property rights were not reliably defined and labor market regulation remained oppressive. The bulk of the population was illiterate, as was the case in much of the world. "At the outset of World War I, agriculture accounted for more than half of total economic production," the authors wrote. The vast empire fell more and further behind in terms of economic development when compared to the industrialized countries of the West.
For a long period after the revolution of 1917 and the conclusion of the First World War, there was little change in the situation. The opposite is true: "In the first year after the revolution, production dropped by 40%." This economic downturn was concentrated mostly in the nationalized sectors of the economy." After it, there was civil strife and starvation. Despite a minor rebound brought about by Lenin's "New Economic Policy," the economy remained much below its late-tsarist level for a long time.
For decades, economic historians have questioned whether the Soviet Union's industrialization could have been achieved without the assistance of a cruel dictator such as Stalin. For many other nations, the most essential objective was to transfer labor from less productive agricultural to more productive industry - and doing so without resorting to terror against their own populations was a non-issue. In 1928, agriculture accounted for 87 percent of the working force, despite the fact that it produced just 48 percent of total economic production. As a result of recent research, it has been concluded that the natural productivity potential of industry has not been fully realized in many sectors of the economy — which should not come as much of a surprise given the nature of the command economy where scarcities are not reflected in pricing.
A significant portion of the book is devoted to the growth of the Soviet Union after World War II, which claimed the lives of over 27 million people, or almost a sixth of the world's population. In many circles, the first twenty years after World War II were seen as an economic success story propelled by a wave of tremendous industrialisation. As a result, when the Soviet Union launched the first satellite into orbit, Sputnik 1, in 1957, famous economists such as Paul Samuelson started to speculate on if and when the Soviet Union would catch up with the United States in terms of economic development.
That, however, was out of the question. In the 1950s, the average annual economic growth in the Soviet Union was a respectable 3.4 percent. Although it has made strides forward in comparison to Finland and Japan, the three writers assert that it has not yet caught up with industrialized nations. After then, it didn't get much farther. In the 1980s, the economy grew at a rate of barely 0.7 percent annually. Since the late 1960s, male life expectancy has been decreasing, partly as a result of rampant alcoholism in the population. The economy's limited flexibility had a role in the low rate of productivity growth.
In the West, it has often been debated whether the strategy of "change via reconciliation," as symbolized by Willy Brandt, or the weapons race, as personified by Ronald Reagan, was responsible for the Soviet Union's economic decline. Finally, but certainly not least, the three writers discuss the decline in the price of oil throughout the 1980s, which resulted in a decrease in the Soviet Union's foreign currency revenues. It was after Stalin that Soviet administrations shifted their strategy away from oppressing the public and toward purchasing allegiance via economic incentives, according to the authors. The fall in foreign currency profits diminished the likelihood of achieving the following: As a result of the collapse of the Soviet Union, Soviet governments were forced to depend more on imports to supply rising household demand for consumer goods. After Stalin's reign of terror came to an end, the Soviet Union was bound to fail because the government was unable to meet its promises of social welfare to the populace. According to the Soviet Union, "It worked as long as oil prices were high; when it crashed in the 1980s, the Soviet Union was bankrupt." Certainly, the present talks about an oil embargo may be addressed in the context of the lessons learned at the time.
In their large-scale business history since the dispersal of humans from their original East African birthplace, the three writers demonstrate, using Russian history, what Oded Galor was accomplishing in his large-scale business history: Previous impressions create lengthy shadows on the present. In particular, the authors write, "this is true for historical events that influenced cultural features, institutions, and human capital after the impacts of World War II had worn off after 25 years." "A notably significant number of economic shocks occurred during the Soviet period, when choices were often taken beyond the realm of supply and demand. These shocks continue to have an impact on economic behavior and institutional framework in contemporary Russia and other early Soviet countries." Slavery, despite the fact that it was abolished half a century before the Soviet period, continues to be a fundamental impediment to economic progress 150 years later."