Дарон Аджемоглу - Why Nations Fail

Austria-Hungary was not alone in fearing industry. Farther east, Russia had an equally absolutist set of political institutions, forged by Peter the Great, as we saw earlier in this chapter. Like Austria-Hungary, Russia’s economic institutions were highly extractive, based on serfdom, keeping at least half of the population tied to the land. Serfs had to work for nothing three days a week on the lands of their lords. They could not move, they lacked freedom of occupation, and they could be sold at will by their lord to another lord. The radical philosopher Peter Kropotkin, one of the founders of modern anarchism, left a vivid depiction of the way serfdom worked during the reign of Tsar Nicholas I, who ruled Russia from 1825 until 1855. He recalled from his childhood

stories of men and women torn from their families and their villages and sold, lost in gambling, or exchanged for a couple of hunting dogs, and transported to some remote part of Russia … of children taken from their parents and sold to cruel or dissolute masters; of flogging “in the stables,” which occurred every day with unheard of cruelty; of a girl who found her only salvation in drowning herself; of an old man who had grown grey-haired in his master’s service and at last hanged himself under his master’s window; and of revolts of serfs, which were suppressed by Nicholas I’s generals by flogging to death each tenth or fifth man taken out of the ranks, and by laying waste the village … As to the poverty which I saw during our journeys in certain villages, especially in those which belonged to the imperial family, no words would be adequate to describe the misery to readers who have not seen it.

Exactly as in Austria-Hungary, absolutism didn’t just create a set of economic institutions that impeded the prosperity of the society. There was a similar fear of creative destruction and a fear of industry and the railways. At the heart of this during the reign of Nicholas I was Count Egor Kankrin, who served as finance minister between 1823 and 1844 and played a key role in opposing the changes in society necessary for promoting economic prosperity.

Kankrin’s policies were aimed at strengthening the traditional political pillars of the regime, particularly the landed aristocracy, and keeping the society rural and agrarian. Upon becoming minister of finance, Kankrin quickly opposed and reversed a proposal by the previous finance minister, Gurev, to develop a government-owned Commercial Bank to lend to industry. Instead, Kankrin reopened the State Loan Bank, which had been closed during the Napoleonic Wars. This bank was originally created to lend to large landowners at subsidized rates, a policy Kankrin approved of. The loans required the applicants to put up serfs as “security,” or collateral, so that only feudal landowners could get such loans. To finance the State Loan Bank, Kankrin transferred assets from the Commercial Bank, killing two birds with one stone: there would now be little money left for industry.

Kankrin’s attitudes were presciently shaped by the fear that economic change would bring political change, and so were those of Tsar Nicholas. Nicholas’s assumption of power in December 1825 had been almost aborted by an attempted coup by military officers, the so-called Decembrists, who had a radical program of social change. Nicholas wrote to Grand Duke Mikhail: “Revolution is on Russia’s doorstep, but I swear that it will not penetrate the country while there is breath in my body.”

Nicholas feared the social changes that creating a modern economy would bring. As he put it in a speech he made to a meeting of manufacturers at an industrial exhibit in Moscow:

both the state and manufacturers must turn their attention to a subject, without which the very factories would become an evil rather than a blessing; this is the care of the workers who increase in number annually. They need energetic and paternal supervision of their morals; without it this mass of people will gradually be corrupted and eventually turn into a class as miserable as they are dangerous for their masters.

Just as with Francis I, Nicholas feared that the creative destruction unleashed by a modern industrial economy would undermine the political status quo in Russia. Urged on by Nicholas, Kankrin took specific steps to slow the potential for industry. He banned several industrial exhibitions, which had previously been held periodically to showcase new technology and facilitate technology adoption.

In 1848 Europe was rocked by a series of revolutionary outbursts. In response, A. A. Zakrevskii, the military governor of Moscow, who was in charge of maintaining public order, wrote to Nicholas: “For the preservation of calm and prosperity, which at present time only Russia enjoys, the government must not permit the gathering of homeless and dissolute people, who will easily join every movement, destroying social or private peace.” His advice was brought before Nicholas’s ministers, and in 1849 a new law was enacted that put severe limits on the number of factories that could be opened in any part of Moscow. It specifically forbade the opening of any new cotton or woolen spinning mills and iron foundries. Other industries, such as weaving and dyeing, had to petition the military governor if they wanted to open new factories. Eventually cotton spinning was explicitly banned. The law was intended to stop any further concentration of potentially rebellious workers in the city.

Opposition to railways accompanied opposition to industry, exactly as in Austria-Hungary. Before 1842 there was only one railway in Russia. This was the Tsarskoe Selo Railway, which ran seventeen miles from Saint Petersburg to the imperial residencies of Tsarskoe Selo and Pavlovsk. Just as Kankrin opposed industry, he saw no reason to promote railways, which he argued would bring a socially dangerous mobility, noting that “railways do not always result from natural necessity, but are more an object of artificial need or luxury. They encourage unnecessary travel from place to place, which is entirely typical of our time.”

Kankrin turned down numerous bids to build railways, and it was only in 1851 that a line was built linking Moscow and Saint Petersburg. Kankrin’s policy was continued by Count Kleinmichel, who was made head of the main administration of Transport and Public Buildings. This institution became the main arbiter of railway construction, and Kleinmichel used it as a platform to discourage their construction. After 1849 he even used his power to censor discussion in the newspapers of railway development.

Map 13 (opposite) shows the consequences of this logic. While Britain and most of northwest Europe was crisscrossed with railways in 1870, very few penetrated the vast territory of Russia. The policy against railways was only reversed after Russia’s conclusive defeat by British, French, and Ottoman forces in the Crimean War, 1853–1856, when the backwardness of its transportation network was understood to be a serious liability for Russian security. There was also little railway development in Austria-Hungary outside of Austria and the western parts of the empire, though the 1848 Revolutions had brought change to these territories, particularly the abolition of serfdom.

NO SHIPPING ALLOWED

Absolutism reigned not just in much of Europe but also in Asia, and similarly prevented industrialization during the critical juncture created by the Industrial Revolution. The Ming and Qing dynasties of China and the absolutism of the Ottoman Empire illustrate this pattern. Under the Song dynasty, between 960 and 1279, China led the world in many technological innovations. The Chinese invented clocks, the compass, gunpowder, paper and paper money, porcelain, and blast furnaces to make cast iron before Europe did. They independently developed spinning wheels and waterpower at more or less the same time that these emerged at the other end of Eurasia. In consequence, in 1500 standards of living were probably at least as high in China as they were in Europe. For centuries China also had a centralized state with a meritocratically recruited civil service.