The Economic Reformations of Russia: Efforts of Tsar Nicholas II and Vladimir Lenin

Contemporary World History- Research Paper

Dr. Caroline Attie

Dar Al-Hekma University

December 10, 2015

Prepared by:

Reem Alwazir- 1220082

Nemah Alsayed- 12200042

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Russia has come a long way to have reached where it stands in the world today as a super-

power. The country endured three main revolutions which have marked the course of its history. In

order to properly explain the different efforts Russia has undergone in the time of Tsar Nicholas II

and Vladimir Lenin, it is crucial to overview the progression of events from Tsarism to Commu-

nism.

The first was the 1905 revolution when the masses uprose against the autocracy of the Russ-

ian Empire’s Tsar Nicholas II in attempt to establish a constitutional monarchy. The efforts of this

revolution resulted in the formation of the State Duma of the Russian Empire. The second revolu-

tion was the February Revolution which ended the Romanov dynasty by overthrowing the Tsar and

replacing him with a Russian Provisional Government. The third revolution, also known as the Oc-

tober Revolution, was when Vladimir Lenin led his Bolshevik party into a civil war toppling the

Russian Provisional Government for a Soviet regime.

In the midst of these changing rulers and the radical changes that followed them, different

economic policies and strategies were implemented according to these leaders’ ideologies and vi-

sions. Thus, this paper will focus on explaining how Tsar Nicholas II and Vladimir Lenin went

about in economically reforming as well as what both leaders have focused on to industrialize this

peasant nation. Both of these leaders worked to modernize and improve Russia’s economic state

through implementing new taxation and tariff policies, foreign investments, War Communism, or

the NEP.

Tsar Nicholas II came to rule the Russian empire unprepared and naive in 1894. The Tsar

was an autocratic ruler as he clearly stated that he “will preserve the principles of autocracy as firm-

ly… as my late father…” . Yet he failed to rule with the strength and power his father possessed, 1

leading the Romanov dynasty and Tsarist Russia to their end. Russia was considered to be economi-

Prominent Russians: Nicholas II. Retrieved from http://russiapedia.rt.com/prominent-russians/the-1

romanov-dynasty/nicholas-ii/ ! of !2 6

cally and industrially backwards as it was mostly rural with majority of the society working in agri-

culture. The extremely unbalanced distribution of the classes was the main reason for imperial Rus-

sia’s underdeveloped economy. In 1897, factory workers and owners, industrialists, and small

traders made up only 4% of Russian society while peasants made up 82% . Due to this, moderniza2 -

tion using the middle working class as a driving force was nearly impossible as Russia barely had

one. Yet, Russia was at a time of great need for economic reformation. In doing so, Tsar Nicholas II

mainly put his trust in his Financial Ministers, just as his father had. One of them was Sergei Witte

who sought to modernize Russia through industrialization and production. This meant that huge

capital had to be acquired. Witte has collected investments in industry through foreign investments,

loans, and increasing taxes and interest rates2. The import of foreign goods were also limited by

placing tariffs in order to protect Russia’s “young” domestic industries2. Another method of encour-

aging international investment and trade with Russia was by placing the Russian ruble on the gold

standard . From 1890 to 1900, this has proven to be successful as international investment by west3 -

ern countries such as France, Britain, and Belgium has increased from 200 million rubles to 900

million3. However, this has caused great strife for locals as the increased value of the ruble led to

inflation within Russia on already limited goods due to the tariff restrictions2. Another means of

economic expansion Witte has focused on the construction of railways. He believed that communi-

cation lines were crucial for a more modernized Russia. From 1891 to 1902, the Trans-Siberian rail-

road project was constructed with a cost amounting to 275 million rubles annually. Its construction

formed contributed to industrializing Russia as it included 25 factories . This helped increase em4 -

From Autocracy to Communism : Russia 1894-1941. Lynch, Michael J., Woodward, Geoffrey. 2

Pages 1-17

Economic change under Alexander III and Nicholas II. 3

Retrieved from https://historyrevision.files.wordpress.com/2012/04/economic-developments-under-the-tsars.pdf

The End of Imperial Russia, 1855-1917. Field and Factory: The Russian Economy. 4

Peter Waldron (1997). (pp. 38-68). ! of !3 6

ployment among the people. The project aimed to encourage the migration of workers to the indus-

trializing west2. The railroad system also linked towns and cities together, such as the oil city of

Baku to the port of Batum on the Black Sea3. However, this project was not as ideal when applied

as it did not really increase the migration of workers. In addition, connecting Russia with the Pacific

Coast increasingly threatened Japan and thus contributed to the Russo-Japanese war. All the efforts

of Tsar Nicholas II and his financial minister in the late nineteenth century boosted Russia’s indus-

trial sector. This increase was so rapid that the period was then regarded as the “great spurt”2. Yet,

these efforts were not enough as the economy remained mainly dependent on agriculture4. More-

over, these efforts of economic reform were done primarily for military purposes rather than eco-

nomic. Industries producing guns, equipment, and ships were mainly promoted as the Tsar and his

Financial Ministers aimed to strengthen the Russian military rather than benefit the country’s fi-

nanciers and industrialists2. As a conclusion, although Russia demonstrated rapid economic growth

during the “great spurt”, it still remained predominantly backwards as these efforts were not enough

to catch up with the other more developed European countries2.

The collapse of Imperial Russia brought about the rise of one of history’s most influential

leaders, Vladimir Lenin. He triumphed in the 1917 Bolshevik revolution and took down the Provi-

sional Government for a Soviet regime which promised power to soldiers, peasants, and workers.

Succeeding as the USSR’s first leader, Vladimir Lenin proved his power and ruthlessness by annihi-

lating all who oppose him . From 1981 to 1921, the Red Army supported the military with supplies 5

during the civil war using War Communism- an economic system which aimed to quickly national-

ize and centralize the economy. The market was made illegal by ending private trade, private prop-

erty, the leasing of lands, and the hiring of labor . Factories and businesses were nationalized by 6

Vladimir Lenin Biography. 5

Retrieved from http://www.biography.com/people/vladimir-lenin-9379007#russian-leader

War Communism to NEP: The Road from Serfdom. 6

Retrieved from http://png.cdn.mises.org.468elmp01.blackmesh.com/sites/default/files/5_1_5_0.pdf ! of !4 6

forcefully confiscating property. Those who disobeyed would be punished by the state. Consumer

goods were first fixed at low prices and then at no price at all6. Factory workers were organized like

military units where labor was compulsory. As for the rich Kulaks, surplus had to be given up as

“support” for the Bolshevik fighters and workers. As a result, the Kulaks had no gain from produc-

ing more and were therefore discouraged and uncooperative. This made the government turn to con-

fiscation and punishment, which negatively affected agricultural production. Between 1909 and

1913, gross agricultural output fell from more than 69 million tons to 31 million tons6. In the Li-

brary of Congress Archives Internal Workings of the Soviet Union , a 1918 handwritten document 7

by Lenin to his comrades ordered the hanging of 100 of the prosperous peasants. Lenin also states

in the document that “The interest of the entire revolution demands this, …We need to set an exam-

ple.”. He also demanded for this to be done publicly in order to plant fear in the hearts of the peo-

ple. This bloody civil war has only brought famine and poverty. This meant that Lenin had to again

deal with the uprise of peasants5. He and his government were threatened by the outbreak of strikes

in cities and rural areas. As a result, Vladimir Lenin had decided to save Russia’s economy from

complete disaster by introducing the New Economic Policy (NEP)5. Instead of confiscating the Ku-

lak’s surpluses, taxes on grains were imposed. Although, the state remained in control of large in-

dustries, transportation, and foreign trade6 some private ownership was allowed. The Kulaks were

now allowed to sell their surplus on the open market, rent more land, and hire labor. However, the

effectiveness of Lenin’s new policies were questioned by his comrades. In 1921, he explained in a

meeting the importance of imposing the tax policies of the NEP rather than the original policies of

confiscation by saying “A tax is something the state takes from the population without compensa-

tion.”. He concluded his speech by saying: “If we have control of the factories, transport and for-

eign trade… I believe it to be incontrovertible that we need have no fear of this capitalism.”. This

Revelations from the Russian Archives. 7

Retrieved from http://www.loc.gov/exhibits/archives/trans-ad2kulak.html ! of !5 6

clarified that although this policy promoted an open market, it still acted in accordance with com-

munist aims. Vladimir Lenin reinforces his point by adding: “Growing capitalism will be under

control and supervision, while political power will remain in the hands of the working class and of

the workers’ state.”. This means that the greater goal is to resolve peasantry, provide capital to the

state, and help boost the economy. Lenin adds, “We shall be able to do this more quickly with the

help of a rested and recuperated peasant economy than with the absolutely poverty-stricken peasant

farming we have had up to now.” . 8

Although both Tsar Nicholas II and Vladimir Lenin had different ideologies, they shared

aims of industrializing Russia through economic reform. Due to this, both leaders have implement-

ed policies and strategies in attempts of doing so. Tsar Nicholas II mostly focused economic re-

forms on ‘guns’ rather than ‘butter’. He had failed to realize that what truly builds and strengthens a

nation is not its military base, but rather, its working class. On the other hand, although Vladimir

Lenin’s initial efforts of War Communism were not effective, he had rectified them by allowing

some type of an open market through the NEP. Thus, it can be concluded that the most effective

means of industrializing underdeveloped Russia was through its working class.

Report on the Tax in Kind 8

Retrieved from https://www.marxists.org/archive/lenin/works/1921/apr/09.htm ! of !6 6