Economics

CHASE HODGES AND MIKE ALMACK

Economics in Romanov Dynasty

The Russian economy under the Romanovs has always been primarily driven by a strong dependence on
agriculture at least until 1890's when Russia kicked off its industrialisation. Until 1865, the Russian economy was
driven by forced labour - serfdom, where peasants were tied to land and forced to work. The income brought in
by these estates were paid in taxes to the government. An act of 1649 made the status of serfdom hereditary. In
Russia and most of eastern Europe, it was possible for landlords to sell whole villages of serfs as manufacturing
laborers. Serfs were not quite slaves. They remained free to manage their village governments, but they were
subject to taxation, owed labor services to lords and the government, and were subject to landlords' jurisdiction

International trade was handled through Western merchant companies located in the capital city. The Russian
economy was put emphasis on military conquest and population growth. Both agricultural and industrial
production lagged behind Western standards. Russia did become increasingly dependent on exports of raw
materials to the West. Russia's political dominance in central Asia set it apart from other dependent regions but
the Russian government still lacked economic planning or budget.

With the removal of Serfdom in 1861, Russia still was devastated economically until the reforms of Finance
Minister Count Sergei Witte, who recognized the dangers of the economic gap. With this in mind, Witte
accelerated industrialization of the Russian Empire. Under Witte, Large government investments expanded the
transportation network from 2,000 kilometers in 1861 to more than 70,000 kilometers in 1913. This development
opened up the iron and coal industries in Russia and began the marketing of wheat.

Russia underwent an overnight industrialization resulting in problems such as peasants leaving the land to go to
find work in the cities, especially between harvests or during famine / poor harvests.

Economics under Stalin

The second Stalin stepped into office, he got to work with his five year
plan. The first thing Stalin did was take possession of all farmlands. He took
all farming crops into his own hand to distribute food evenly and
effectively. Secondly, Stalin called for the start of major industrial
development, especially in the areas of heavy industry. He set impossibly
high standards for Russians to jumpstart development. He emphasized the
need for massive industrialization when he spoke to his industrial managers
in 1932, "We are 100 years behind the advanced countries. We must make
good this lag in ten years. Either we do it, or they crush us!"

Stalins Farming plan

When Stalin became the new leader of Russia, the first thing he did was
took over the farming industry. The purpose of his program, GOSPLAN's
primary, was to set the annual quotas for the upcoming harvests and the
production goals for the various industries. This data was then reported to
Stalin who would in turn propose new policies and goals for the new year.

Economics under Stalin

Soon enough, Stalin put Russia in the position they needed to be as the
economy skyrocketed. Although his standards were not reached, they
were almost tripled compared to the time before Stalin. Since communism
was Stalins technique, he developed a command economy which
means everything sold on the market was government regulated.

Economics under Yeltsin

Following the collapse of the USSR, Yeltsin came to power with the
intensions of implementing a democracy. They realized in order to remove
communism for good, they would have to do a great deal of damage to
everything communism had sustained in the country. This included Russia's
economy and political structure. The democrats did not expected to
come into power as fast as they did, and this resulted in President Yeltsin
having no clear plans regarding the government system transition. When
little was done in the first month of Yeltsin's rule, the Russian people began
to panic as they realized how severe an effect the removal of communism
would have on both the economy and their everyday life.

Yeltsin gets to Work

When everyone thought they were in trouble, Yeltsin bounced back. He

introduced a plan known as "shock therapy." Possession went to individual
purchasers. This means of almost everything that had once been controlled by
the state, including land, retail stores, and factories now went to the people
who actually owned them instead of the government. The "shock therapy"
plan also opened Russia to foreign investments. The Russian people were not
ready for this sudden economic freedom, and a number of problems came
up. Inflation caused prices to go up three hundred percent in the first month,
and 2,591 percent by the end of 1992. This resulted in the devalue of savings,
salaries and pensions, and left the economy in a terrible condition. While the
prices of most products were made independent of the government, the costs
of energy and transportation were still set, and both were made about four
times as expensive.

Success Before Putin Takes Office

Some people say Putin just happened to be in the right place at the right
time. Putin's luck was that he was appointed president by President Boris
Yeltsin in 2000, soon after Russia's transformation to a market economy had
been completed so the country had reached high economic growth of
6.4 percent in 1999. The 1990s was a good decade for Russia because
Yeltsin announced his market reforms in October 1991. Then Chief reformer
Yegor Gaidar liberalized prices and trade, labeling Russia a normal market
economy by 1994.

Putin Takes Control

By the time Putin took office, the economy was already getting better and
better. Putin is often given credit for these achievements, but the financial
stabilization took place in 199899 before he became prime minister, and
Russia was already growing fast. When Putin became president in 2000, he
continued the "second generation" market reforms that had been
formulated in 199697. From 2000-2002, Russia was putting together
progressive economic reforms. With the most impressive being the radical
tax reform. The progressive personal income tax, peaking at 30 percent,
was replaced with a income tax of 13 percent. The corporate profit tax
was reduced from 35 to 24 percent. Social security contributions were cut
from a flat rate of 39.5 percent of the payroll to an average rate of 26
percent. Also, small tax violations were decriminalized.

Works Cited:

"Can Someone Explain How the Romanov Dynasty Economic System Worked (automatic 10 Points)?"
Yahoo! Answers. Yahoo!, n.d. Web. 02 Dec. 2014.

"First Five Year Plan and Stalin's Economic Policies." First Five Year Plan and Stalin's Economic Policies.
N.p., n.d. Web. 02 Dec. 2014.

"Russian Economy in the Aftermath of the Collapse of the Soviet Union."Russian Economy in the
Aftermath of the Collapse of the Soviet Union. N.p., n.d. Web. 01 Dec. 2014.

"Subscribe." Article: An Assessment of Putin's Economic Policy. N.p., n.d. Web. 02 Dec. 2014.