The USSR and beyond
The revolutions of 1917 gave various new directions to economic thought in Russia and Ukraine. There was no initial rupture, and much continuity can be observed. The people suffered from World War One, and the policies of War Communism (1918—20) — shock therapy in the vanguard — did not help to recover the situation.
Lenin announced NEP (1921—9), bringing back temporarily the market in the developing USSR.The 1920s were a period of intense theoretical stimulation for economic thought. Communism was to be built. Research was mainly organised around institutes and administrative bodies. N.D. Kondratiev’s Conjuncture Institute — where E.E. Slutsky, N.S. Chetverikov, T.I. Rainov and Shaposhnikov worked, among others — was a place where business cycles, price movements and monetary circulation were studied in a pioneering manner.
Slutsky (1880—1948) was an economist and statistician, established in Kiev until 1926, when he had to leave Ukraine, due to him not mastering the Ukrainian language. He then joined Kondratiev’s Conjuncture Institute in Moscow. Slutsky is famously known in economics for two contributions. The first, ‘On the Theory of the Budget of the Consumer’ (1915), was originally published in Italian and went unnoticed for several years. It was rediscovered as a path-breaking mathematical development of Paretian ordinal utility theory, in particular of his distinction, similar to J.R. Hicks’s later one, of the budget and substitution effects of the consumer’s demand subsequent to a variation of price. This contribution is the only one, out of this history, to be included in all contemporary mainstream economic textbooks. The second, ‘The Summation of Random Causes as the Source of Cyclic Processes’, first published in Russian in 1927, then in 1937 in English in Econometrica, is concomitant with similar efforts in the West to formalise business cycle theory.
He was the first to show that stochastic errors may by itself cause a cyclical process (see Barnett, 2011).Kondratiev’s Conjuncture Institute also worked on the development of emerging econometric techniques, and on methodological issues related to economic equilibrium and to planning. Agriculture was the speciality of the Institute of Agriculture Economy, directed by A.V. Chayanov. The Central Statistical Directorate, headed by P.I. Popov, provided innovative methods for the establishment of a balance of the national economy. The People’s Commissariat for Finance, among others things, worked hard in stabilising the ruble, with Yurovsky. The Marx-Engels Institute published, under the editorship of D.B. Riazanov and I.I. Rubin, the works of Marx and F. Engels and high-quality Marx studies. Closer to the centre of the political power, economists like N.I. Bukharin, Ye.A. Preobrazhensky, A.A. Bogdanov and V.A. Bazarov were directly involved in the debates on the direction to take, while Gosplan (State Committee for Planning), where V.G. Groman and S.G. Strumilin worked, became the heart of Soviet economic policies from the first five-year plan (1929—33).
Stalinism had disastrous consequences on the fate of Soviet economic thought. The 1920s developed under the banner of economic pluralism. The 1930s, inaugurated by a series of trials involving many of the mentioned economists, established a single-minded world of ossified Marxism-Leninist dogma. Many economists (Bukharin, Kondratiev, Yurovsky, Chayanov, Riazanov, to name only a few) were executed during the Stalinist purges of 1937—8. But besides physical liquidations, Soviet economic thought lost even more. Many economists worked only for themselves, since they were not allowed to publish their work (this was the case of L.V. Kantorovich, the future and only Soviet Nobel Prize in economics, whose works could be published only after J. Stalin’s death). Others would simply substitute economics for another discipline (geophysics for Slutsky).
Eventually, many chose (or suffered) exile, like W. Leontief, S.N. Prokopovich and Brutzkus. This represented an enormous loss of human capital. In the meanwhile, a massive collectivisation in agriculture (far away from the old obshchina) and an accelerated industrialisation were occurring, while Soviet economic thought was at half-mast. For instance, Stalin commissioned in 1936 what was to become the first Soviet manual of political economy, but its conception implied difficult debates, in which Stalin himself intervened. The first and only manual was eventually published in 1954.The death of Stalin in 1953 released some of the pressure, and Soviet political economy began to revive. But the blow to Soviet science remained visible: for instance, teaching (at universities) was separated from research (at the Soviet Academy of Sciences). Moreover, the ideological framework provided by the Soviet manual of political economy prevented any theoretical research at the core of socialist political economy. Research was therefore confined to applied issues, or engaged in comparing the Soviet economy with other countries. However, Kantorovich, V.S. Nemchinov and V.V. Novozhilov made an achievement in the field of linear programming, recognised abroad, with mathematical techniques of optimisation for economic planning. As in Tsarist times, the importation of ideas from abroad had a huge impact. In this context of intellectual stagnation, the arrival in the 1980s of copies of the work ofJanos Kornai (The Economics of Shortage) had a decisive influence on a new generation of economists (an example among others): those involved, like A.N. Yakovlev, in the internal reforms under M.S. Gorbachev’s perestroika, and those involved, like Ye.T. Gaidar, in the transition to a market economy.
The post-Soviet transition to a market economy in the independent Russia and Ukraine was anew the battleground for different camps, representatives of several currents of economic thought. Today the old Marxists, supporters of the former regime, still resist. The young liberals, seduced by the Western neoclassical market model, brought the first liberal reforms. But a third group challenges their dominance. This heterogeneous third way consists of economists with (either) neo-institutionalist, evolutionary, nationalist (or Eurasian) ideas, seeking the optimal path of economic development for their respective countries. These economists returned to the debates that inflamed economic thought in the late-nineteenth century on the same issue. Thus, at the beginning of the twenty-first century, contemporary Russian/Ukrainian economic thought is also fed by the history of economic thought, perhaps more so than in the West.