Economic_History_anim.gif (3797 bytes)    

 


THE POST-WWII ECONOMY IN RUSSIA

by Alexandra Ginieres
 

 

For the years after World War II, many of the countries involved in the war had to rebuild their landscape and national spirit. For Russia, the economy had to be rebuilt and restructured as well. While most of the countries had gone through industrialization before the war, Russia was still in the process as the war broke out in 1941. Stalin's industrialization drive, begun in the 1930s,would move at full speed in the post-World War II years. While war-torn countries were slowly recovering from the war, Soviet industry thrived and reached new levels. This growth, however, would only be brief. By the time of Stalin's death, Russia's economy was being drained by major investment in heavy industry, a massive military build-up, and low amounts of agricultural output. As was the case with most other Soviet republics, Russia was not able to achieve a balance between industry and agriculture. For this, the economy and people would suffer.

While destruction was widespread throughout Russia on account of the war, it does not compare to the complete devastation found in the Western republics, in countries such as Belarus. It was in these republics that the land became battlefields for four years. While some western and northern portions of Russia were destroyed in the war, nevertheless the war helped to build up industry and industrial centers in eastern and southern locations that were less affected. The German invasion forced Soviet industry to be converted and relocated. Heavy industries were converted to the production of munitions, armaments, and military machinery. As the Germans advanced, entire sections of industries were dismantled and transported to the Asian interior. Railroad freight cars transported equipment and workers to the Urals, Western Siberia, and Central Asia. By the end of the war, the Urals had surpassed the Ukraine in iron, steel, and armaments production. The eastern industrial centers in Russia assisted in the development of Russian industry while other parts of the country were being destroyed by the invasion. Russia itself was able to maintain production in its new locations, and these new types of industry would continue after the war. (Blackwell, 147)

After World War II, however, Russia needed a massive reconstruction that would allow the economy throughout the republic to recover. Soviet planners continued to implement the series of economic plans which had been started in 1928. The Fourth Five-Year Plan, which span from 1946-1950, was aimed at reconstructing the economy. This plan, however, was focused primarily on heavy industry. Of total investment funds used during this period, 88% was allocated to heavy industry. The effect was that by 1948, output had reached the level which it had been in prewar time in most capital goods sectors. (Cohn, 41) By 1950, industrial production had exceeded the level reached in 1940 by 40%. (Blackwell, 149) The Russian economy recovered at a rapid pace and industrialization was continuing successfully.

The type of industry that Russia became involved with tells not only about the structure of the economy, but about Russia's political ideals as well. Russia's industry after 1945 was based heavily on armaments and the production of war equipment. One reason for this was that these industries were born out of World War II, and they continued in the post-war years because they became key components of industrial growth. A second reason is that in order to uphold its position as a powerful nation, the USSR needed be strong militarily. Since Russia was a vast country with a large population, it became a major producer of the weapons and equipment that needed to be stockpiled as a means of projecting Soviet strength and power to the world, especially the West. The third reason explains why the military build-up in Russia became so defined in the early 1950s. The Korean War forced Russia to step up military production In 1950, "11% of GNP for the USSR was allocated to defense expenditures." (Cohn, 42) This defense effort also included nuclear weapons research, development, and production. This military build-up proved to be a drain on Russia's economy, and it is the "main reason for the sluggishness of the late Stalinist economy." (Blackwell, 149) Because Russia was involved so heavily in this defense effort, its economy started to deteriorate in the 1950s, and this trend would continue throughout the Cold War.

Many other factors plagued the Russian economy by the end of Stalin's rule. Problems with agriculture added to Russia's economic problems. The high industrial growth rates for the republic are deceiving when considering the economy of Russia on the whole. The losses in agriculture due to the war caused decreases in manpower, equipment, and land. Other components included "the continuing lack of necessary investment in agriculture, the heavy taxation of the peasantry and the continuing attack on their private economy." (Blackwell, 149) All of these forces contributed to the economic slowdown which characterized the beginning of the 1950s. The agricultural sector in particular was a main culprit for lackluster economic results.

As it was throughout the USSR, agriculture in Russia was sacrificed because of the industrialization drive. Losses were immense, roughly one-third, because planners ordered farmers to "increase sown area under conditions in which labor and equipment were desperately lacking both for sowing and harvesting." (Nove, 100) Production constantly remained depressed because of low investment in agriculture. As a result, conditions were severe throughout the countryside and shortages and hardships filled the villages. The Russian peasant population definitely felt the effects of the government's neglect: Khruschev himself stated in his 1956 speech that after the war, "They (Stalin and Molotov) sold grain abroad while in some regions people were swollen with hunger and even dying for lack of bread." (Cohn, 42) The little amount of production that did exist did not go to the Russian people, it went into the hands of the government.

It is clear that Russia went through an amazing period of rapid recovery in the industrial sector immediately following World War II. Industrial outputs increased steadily and the industrialization drive was progressing. Within a few years, however, the problems in agriculture and defense spending began to show its effects on the Russian economy. By the end of Stalin's years, the economy had become sluggish and drained by heavy investment in industry and defense. The countryside was suffering and those Russians living in the city were not benefiting from Russia's surge for international power. Consumption remained low, for it was "strangled in a net of high prices and low wages." (Blackwell, 149) Innovations and investment in social services were sacrificed as the economy grew more wasteful. The inability to strike a balance between industry and agriculture would be a trend that would be passed on through the generations of leaders. Preferential treatment towards industry would do just the opposite of what planners had intended: instead of strengthening the economy, it would cause it to lag behind Russia's Western enemies, namely the capitalist United States.

Bibliography:

  • Blackwell, William L. The Industrialization of Russia. Thomas Y. Crowell Co. New York, 1970.

  • Cohn, Stanley H. Economic Development in the Soviet Union. Heath Lexington Books. Lexington, MA, 1970.

  • Nove, Alec. Studies in economics and Russia. St. Martin's Press, New York, 1990.

 

 

 

 

OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:

http://econc10.bu.edu/GENEC/Default.htm

Economic Systems:  

http://econc10.bu.edu/economic_systems/economics_system_frame.htm

Money and Banking:

http://econc10.bu.edu/Ec341_money/ec341_frame.htm

Past students:

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

Czech Republic

http://econc10.bu.edu/Czech_rep/czech_rep.htm

Kyn’s Publications

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

 American education

http://econc10.bu.edu/DECAMEDU/Decline/decline.htm

free hit counters
Nutrisystem Diet Coupons