Reviewed work(s): Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution . By Robert C. Allen.

The Princeton Economic History of the Western World. Edited by Joel Mokyr. Princeton, NJ: Princeton University Press, 2003. Pp. xv+302. $45.00. James R. Millar George Washington University This is a very difficult book to review. Robert C. Allen has made a prodigious effort to counter what he sees as a series of incorrect analyses and conclusions regarding Soviet economic history and the success of the Soviet economic growth strategy. He takes issue with almost every prior study and student of the Soviet economy. The works and conclusions of Paul Gregory, Boris Mironov, Abram Bergson, Robert Tucker, Alec Nove, Sheila Fitzpatrick, Joseph Berliner, Marshall Goldman, and Jnos Kornai are among those challenged. He disputes the conclusion that Soviet economic growth was not high when compared globally; that the Russian economy might have achieved a comparable rate of growth without command planning; that personal consumption declined in the 1930s as planning focused on iron, steel, coal, and heavy industry generally; that collectivization had a positive side despite the devastation of the sector; that Soviet socialism was irrational and caused significant misallocation of resources; and that the decline in growth after 1970 reflected fundamental and inherent weaknesses in the Soviet economic system. Allen challenges these and other conventional views directly. First, he recalculates and reconstr ucts quantitative measures of Soviet economic performance. Second, he revisits the question of international comparison in considerable detail. And, third, he uses rather sophisticated economic and computer simulation models to examine the usual counterfactual analyses in the field (e.g., Alec Nove's Was Stalin Really Necessary?). These procedures are developed in the first part of the book (chaps. 14), in what is essentially a rather detailed and chronological economic history of the Soviet Union. Part 2 is entitled Stalin's Industrial Revolution; its chapters are essentially functional in character (e.g., chapters on planning, collectivization and growth; on the standard of living; on population history; and so forth). Part 3 contains only one chapter: The Soviet Climacteric. This is followed by four detailed appendixes on, respectively, Soviet national income, the simulation model of the Soviet economy, data sources, and the demographic databases and simulation model used in the chapter on population. What is striking in Allen's careful review of the work of the scholars who have pieced together the standard story of Soviet economic development, decline, and fall is how so many of them got so many different stories wrong. Allen claims to have found the fatal flaw in all their arguments. Many decades' worth of research and discussion among Soviet specialists, who have not agreed on many points and even disagree sharply on others, is brushed aside and replaced with new calculations, new simulations, new insights, and new international comparisons. It would take much more careful and detailed examination of Allen's arguments and reconstructions than is possible in this review to assess their validity and meaningfulness. Farm to Factory is not a book for a nonspecialist: the reader needs to have a good grasp of the general line and main features of Soviet economic history in order to obtain even a sense of what Allen is challenging, not to mention what he proposes to put in its place. According to Allen, the Soviet economic development strategy was relatively successful. Most countries that began at the level of the New Economic Policy economy have not succeeded in creating a modern industrial economy or in closing the gap with the more developed economies. The Soviet Union did. The decline of the Soviet economy after 1970 or so was not, as alleged by others, caused by systematic and fundamental weaknesses in the nature of the system. Once again, Allen has found an alternative interpretation. He claims that there were two main reasons for the eventual failure of the system. The first was external: military competition in the cold war drained resources and innovation from civilian production and undercut productivity increases. The second was internal: the end of the labor surplus economy. Soviet leaders and economists failed to develop a new strategy for continued development. The problem was not, as Allen asserts that mainstream Soviet specialists argue, ineffective incentives and failure to adhere to plans; rather, the problem was that they [the plans] did not make sense and that by the 1970s, the ratio of good decisions to bad was falling. In short, Allen contends, the economy stopped growing because of the failure of imagination at the top (211). Although it would take much more space to do justice to Allen's arguments, recalculations, and simulations than has been allotted here, my general reaction is a skeptical one. Viewing Soviet growth in the context of the labor surplus model is neither new nor definitive. Besides, twosector economic models leave a lot to be desired if the goal is to understand actual historical events, and simulation models are generally

quite sensitive to small changes in assumptions and parameters. Moreover, we cannot all have been so far off base, nor did we as a field underestimate what successes the Soviet economy achieved. The conclusions alluded to earlier in this review are not as radical as Allen seems to believe. At the very least, we all agree that different decisions at the top levels of the political and economic bureaucracies might have produced different and more viable results. Were not many of the wrong decisions of the 1970s and 1980s a result of adherence to a policy of autarky, of faulty price relatives, and of obsolete theoretical foundations of economic policy? In the end, despite Allen's argumentation, many specialists will continue to believe that the Soviet economic experiment was a failure, partly for reasons that Allen repudiates and partly for reasons that he propounds. Perhaps Allen's contribution will be a general reappraisal of Soviet economic history. Unfortunately, it is field much depleted of manpower in recent years.

Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution, Robert C. Allen. (Princeton University Press, Princeton, 2003), pp. xv + 302 In his stimulating study of the Soviet industrial revolution, Robert Alien challenges the view that the Soviet development model was a failure, argues the model produced high growth rates between 1928 and 1940, and tries to explain the post-1970 slowdown. He attempts to achieve these aims through international comparisons of performance, through quantitative analysis of economic and demographic data, and through the testing of counterfactuals by means of a computable general equilibrium model. Among his most important conclusions are the following: high levels of investment in heavy industry plus soft budget constraints on production units powered Soviet economic growth and stimulated higher levels of both consumption and living standards; forced agricultural collectivisation contributed only marginally to economic growth; the Soviet development strategy achieved higher growth rates by 1940 than would have been achieved through a continuation of the pre-1917 model, a continuation of NEP, the Soviet strategy with voluntary collectivisation, or with a hard budget constraint on production units; and the post-1970 slowdown was due mainly to flawed investment decisions, including the channelling of too many resources into defence expenditure. At the outset, it must be said that the general interpretation Allen gives is not especially new. Despite the widespread criticism of the Soviet model that has accompanied the fall of the USSR, the general interpretation shared by most scholars for a long time has been that the Soviet development model produced rapid growth in the prewar period. Certainly, there have been disagreements about the sort of contribution made to this by forced agricultural collectivisation and many have argued that other models of economic development would have created a similar level of economic development by 1940 without the cost of that employed by the Soviet rulers, but the general point has been widely accepted. Similarly, the view that flawed investment decisions were responsible for the post-1970 slow-down has been a feature of most explanations of that phenomenon, although this has usually been accompanied by the argument that the traditional Soviet model had become exhausted by this time and so necessitated new directions of investment. There are, however, two parts of Allen's argument that are novel: (i) his treatment of collectivisation; and (ii) his argument about increased consumption flowing from the Soviet model. Allen argues that collectivisation made only a minor contribution to Soviet growth, and that this took the form not of the pumping of agricultural resources into industrial development as the standard story had maintained, but of the increased rural-urban migration that collectivisation stimulated; it was the mobilisation of underemployed agricultural workers into the new urban industries that was a chief driver of economic growth. In this sense, it was the 'terrorist' element of collectivisation driving this migration rather than the economic aspects of collectivisation that were crucial for growth. Scholars have long recognised the importance of this migration and the role of coercion in bringing it about, but no one has argued for its primacy in the way that Alien has. However, the question here is the downplaying of the importance of the economic aspect of collectivisation, the consolidation of individual farms into collective farms that were part of a larger agricultural extractive mechanism. This is a big and complex question, and all I can do here is

point to part of Allen's own work that may question his conclusion about the small contribution the economic aspect of collectivisation made. Allen has argued, based on North American comparisons, that there was little likelihood of increased agricultural production under the old, precollectivisation system. However, he has also cited figures for the marketing of agricultural output that show a considerable increase in 1937 compared with both 1913 and 1928; in terms of the total value of agricultural products, 1937 represents a 91.7 per cent increase on 1928 and 47.5 per cent on 1913. This increase must be due to collectivisation, much of it would have gone to fuel industrial investment and must, therefore, have had a positive effect on growth levels. This is not to deny the importance of migration, but to suggest that, even on the basis of his own data, the argument about collectivisation's contribution may not be as simple as Allen suggests. Allen also makes much of the claim that higher levels of consumption were the flow on from higher levels of investment in producer goods and that this was a conscious strategy of the Soviet authorities. He then argues that the claim that Soviet development was pursued at the expense of living standards is therefore incorrect. This argument needs some qualification. For a start, the improved living standards he talks about occurred in the urban areas and yet, by 1939, only 33 per cent of the Soviet population lived in the cities and it is clear that for many in the countryside collectivisation was an economic, as well as a personal, disaster. However, leaving aside the qualification that improved living standards were enjoyed by a minority of the population, is it fair to say that 'The frequent criticism of Soviet investment-that it sacrificed living standards for ever more steel and military ordnance-is off the mark' (p. 165)? It is obvious that heightened investment in producer goods can only be sustained over the long-term if it is accompanied by investment that produces increased consumption because people must get some reward for the sacrifices they are making. However, in the Soviet economic model, decisions about where investment was to be directed were in the hands of central planners, who could vary the location and level of investment at will. Given that the weight of investment in every Soviet 5 year plan favoured heavy industry over consumer goods, unless it is the case that higher levels of investment in consumer goods would have led to lower levels of consumption, then the argument that heavy industry was pursued in preference to (and, therefore, at the expense of) increased living standards appears self evident. In other words, unless there were no circumstances under which the planners could have raised consumption by varying plan targets, then living standards were sacrificed for more steel and military ordnance. Indeed, acceptance of this principle seems to underpin Allen's explanation for the downturn after 1970. There is also a problem with Allen's explanation of the post-1970 slowdown. He seems to argue that this was not a problem with the basic model, but with the decisions made by those who ran it. However, as he has made clear, fundamental to that model up until 1940 was the continuing growth of labour inputs as a result of agricultural collectivisation. By 1970, because of demographic factors, the possibility of continuing high levels of labour input had disappeared. This means that the basic Soviet model had run out of steam. Despite these qualifications, this is an immensely stimulating book. It raises many new questions and presents old ones in a new light, it offers challenging arguments and conclusions, is methodologically sophisticated and clearly written. It is a must read for anyone interested in the debates about the Soviet economic model, its achievements and ultimate failure. AuthorAffiliation GRAEME GILL The University of Sydney