From sickle to hammer: the decline of production frictions and the industrialization of Russia

Abstract

Cheremukhin et al. (2017) suggest that a reduction in frictions in the production process accounted for most of the structural change experienced by the Russian economy in 1885– 1940. Yet, what was responsible for this reduction? In this paper, we first reconstruct an annual time series of production frictions in 1885–1940, complementing the data provided by Cheremukhin et al. (2017). Then, we verify whether the trends in such frictions are consistent with the set of policies implemented by the different governments (Tsarism, War communism, The New Economic Policy, and Stalin’s policies) by using a decomposition and regression analysis. Our findings, though speculative, indicate that the reduction in production frictions correlates with the implementation of Stalin’s industrial policies, i.e., high level of investments, lax provision of bank credit to the heavy industry state-owned enterprises, and high production objectives.