Revolutions - 10.18- The Witte System

Episode Date: October 14, 2019

If your nascent bourgeoisie isn't big enough or rich enough to industrialize your Empire, just call Sergei Witte. He'll know what to do.   

Hello and welcome to revolutions. Episode 10.18, the VIT system. First of all, sound education was great. It was super fun to see everyone. I did some interviews, and there may be some other sound bites and recordings or things that pop up out there. And when they do, I will be sure to share them with you all. Thanks to everyone who put it on, showed up and participated.

Now did sound education contribute a little bit to this episode? coming out late. Yes, yes, it did, but who cares? We're here now. You can also probably tell that I did get a new microphone. That's why this episode sounds a little bit different than the last one, hopefully a little bit better, though I am recording it inside an old apartment in Ithaca, New York, not the usual space in Paris, so it'll probably sound different again when I go home in a few weeks. Cé la Vie. Now, what I want to do today is return to Russia from our spell among the radical emigrate exiles in Switzerland and discuss why the new Emancipation of Labor Group is about to find their Marxist message resonating instead of falling on deaf ears.

Today's episode is going to take us right up to the early 1890s, right up to the ascension of Zarr Nicholas II, in fact, who is going to combine the worst parts of King Charles I and King Louis XVI to form the truly platonic ideal of a terrible monarch. We'll introduce Nicholas Foley next week. then I'm going to take one scheduled week off, and after that we will more fully develop the political and economic situation of the Russian Empire as it plunges first towards 1905 and then 1917. As I have said, this is not just going to be the story of the Bolsheviks rise to power. This ain't going to be Lenin versus the Tsar, because the Russian revolutions of 1905 and 1917

were about so much more than that. We've got liberals who wanted a democratic constitution and civil rights, anarchists who wanted to blow up the whole empire root and branch, nationalists who wanted self-determination and freedom from the Russian Empire, as well as a resurgent brand of neurotism, still saying, hey, you know, the empire is 90% peasant, you can't just ignore that. We're going to talk about all of it.

Now, as we discussed at the beginning of last week's episode, Alexander III came to power upon the death of his father in March of 1881, and he did not waste any time repudiating everything, that the now late lamented Tsar Liberator had done. The movement towards further constitutional reform, like actually having a constitution, was reversed. The new policy of Alexander III would be a return to the old policy of his grandfather Nicholas I, Orthodoxy, autocracy, and nationality. One czar, one church, one language, faith, Tsar, and the fatherland. The goal now was to suppress anything that challenged that triad. The semi-democratic Zemstvah were an affront to the principle of autocracy,

so they would find their activities and authority severely curtailed. Religious alternatives to Russian Orthodox Christianity, Protestants, Catholics, Jews, and Muslims all face new hurdles of intolerance. And as we'll talk about more in future episodes, the return to an official policy of Russification would land hard on minority nationalities. Jews again, Poles, Germans, Central Asians, Ukrainians, all of them would be facing an imperial policy steamrolling over their ethnic and cultural identities, and none of them would be happy about it. But this return to the political and cultural policies of his grandfather still left Tsar Alexander III with a problem, the problem that had in fact been the impetus for his father's great reforms in the early 1860s, Russia's backward economy.

In terms of economic and technological process, there was kind of an objective forward and backward, advanced and primitive, and Russia was on the wrong side of all those lines. To compete in the big new world of modern industrialization, they were going to have to modernize and industrialize, and the great reforms on their own had not done the work they were supposed to have done. Russia still did not have the financial resources, the material capital, or the labor force necessary to compete with the likes of Britain and Germany and France. Now, the 1860s and 1870s had seen annual output increases in iron and steel and coal and oil. In 1861, there were thousands of miles of railroad track. By the 1880s, there were tens of

thousands of miles of railroad track. In 1861, the quote-unquote industrial labor force was only about 750,000 people, and by the time Alexander III was ascending, it was on its way to being a million and a half or so. You started seeing financial institutions and joint stock companies forming to pool resources and fund projects. Large factories started sprouting up in Moscow and St. Petersburg and Kiev, mining operations in the Ural Mountains and the exploration and exploitation of the Baku oil fields expanded. But this happened slowly, and not without encountering the inertia of tradition. Capital investment was greater than it had ever been, but it was still low compared to Western Europe. And though freed, most peasants still lived in their villages.

Now for some of the ascendant conservatives in the Ministry of Alexander III, this was all for the good, because no less than Marx, they suspected that major changes in the basic economic relations of the Russian Empire would cause social upheavals that would increase the threat of political revolution. But others have their eye on different threats to the existing political order. Yes, changes to the underlying forces of production can lead to revolution, but what happens if the state goes bankrupt? Or worse yet, what happens if we lose another war in humiliating fashion? I mean, let's just take as a purely hypothetical, I'm not saying this would actually happen, just purely hypothetically. I mean, what if we got in a war with, and again, I'm just picking a random name out of a hat here, let's say we got in a

war with like Japan and lost. With so much of our political legitimacy resting on our military might, losing a war like that might topple the government quite a bit faster than changes in the substructures mode of production. So some voices inside the government said, look, we can modernize the economy inside a system of orthodoxy, autocracy, and nationality. We just have to be careful. And besides, even if you're scared of what might happen, we have to do it. We have to take the risk. We have to navigate the consequences because if we do nothing, we are done for, for sure. The man who became synonymous with this latter position is Sergei Witt. Sergei Witt was born in June 1849, just as the Russians were snuffing out the last embers of the Revolution of 1848.

Born into a noble family of Baltic Germans. Sergei's father converted from Lutheran to orthodoxy to advance his political career. Little Sergei was raised on the estates of his noble grandparents and originally went off to university to study theoretical mathematics with an eye on becoming a professor. But this career path did not sit well with his family, who prodded him instead to enter the civil service in the growing railroad sector. So after graduating at the top of his class in 1870, that's what Sergei Vitt did. He started out doing internship-type work to learn all aspects of the business and then got himself. appointed head of the traffic office for the Odessa Railroad. This was a fine, cushy job, but then in 1875 there was a bad wreck on one of the lines under his jurisdiction, and Vitt himself

was arrested and charged with official negligence. But while his case was being contested, Russia got involved in another brief war with the Turks, which lasted from 1877 to 1878 down in the Balkans. Vitt had devised a novel double shift program to increase efficiency of the critical Odess are railroads that serve the front lines. The dramatic increase in efficient productivity in a sector critical to the war effort was recognized by an influential Grand Duke who interceded in Vitt's case, got his sentence reduced to two weeks, and then set him free to play a bigger role in Imperial Railroad policy. Now working under the auspices of some pretty powerful patrons, Vitt moved to St. Petersburg for a while before moving on again to Kiev, where in 1883,

he published an influential paper outlining ways to improve the freight system of Russia. This included not just technical and organizational recommendations, but he also said that the Tsar needed to take some official interest in the conditions of the growing group of industrial workers, if not out of humanitarian benevolence, then at least out of economic and political self-interest. Well-treated workers are more productive and less revolutionary. After more than a decade working diligently for the state, Vitt then moved to the private sector, accepting a job as manager of the Southwestern Railway, a privately held operation based in Kiev.

When he showed up, he did what he always did wherever he showed up. He quickly increased the efficiency and profitability of the Southwestern Railway and now had a well-earned reputation as something of a wonder boy. That reputation brought him to the attention of Tsar Alexander III himself. This attention earned Vitt the enmity of a few of the Tsarer. other ministers. You see, the Imperial family had a private locomotive, which had been outfitted with this super fast double engine that allowed it to travel at super high speeds, which everyone agreed was totally awesome. Vitt looked at the specs and said, this is crazy. This is a disaster

waiting to happen. Neither the cars these engines are pulling, nor the tracks these engines are riding on, are designed to handle the kind of vibration and stress you're putting on them. Everyone else was like, dude, you're no fun at all. Look how fast it goes. It's awesome. In October of 1888, the Imperial train was traveling at its usual, completely unsafe high speed near Borky, a town 250 miles south of Kersk, when, as Vitt predicted, it derailed in spectacular fashion. 21 people were killed in the wreck. Zar Alexander and his family were in the dining car and managed to escape with only injuries. And the story goes that the czar personally the weight of the collapsed roof of the dining car while his family escaped the wreckage.

Now, this isn't totally implausible. I mean, Google up a picture of Tsar Alexander III. He's a big dude. But this feat of heroic strength immediately went into the propaganda machine of orthodoxy, autocracy, and nationality, and became a standard part of Tsar Alexander's story. Not only the feat of strength, but the fact that the imperial family survived the crash at all was clearly a sign that his policies were favored by God. A subsequent investigation found plenty of blame to go around,

and one voice who had predicted to a T what might happen. The Tsar may have been protected by God, but he would have been even smarter to trust the word of Sergei Vitt. So in 1889, Vitt was appointed head of the State Railway Department inside the Ministry of Finance. This put him in charge of the railroads of Russia. Vitt accepted the job on the condition that he would have high, and firing power, specifically so that he could hire people who were talented, experienced,

and had expertise, and fired duffices with good political connections or fancy pedigrees. You know, the kinds of men who might say things like, ain't it neat, how fast we can make the train go. The arrival of VIT as the head of the railroads in 1889 marks the beginning of his push towards what becomes known as the VIT system. As he took up his new office, Vitt published another paper called National Savings and Friedrich Lest, which outlined a new plan partly influenced by the German economist Friedrich Lest. Now, Liszt had died back in 1846, but Vitt quite liked his philosophy. List had advocated his own stages of economic progress and recommended a plan for how underdeveloped nations could become developed nations.

First, you should embrace free trade to swap raw resources for advanced foreign manufacturers and capital. Then, once you had some wealth built up, you should erect trade barriers to encourage and protect your domestic industries and make a little tax revenue on the side. Then, once your domestic economy was robust, powerful, and productive, you drop the tariffs again and go out and compete on an equal basis in the global economy. List was a great believer in the national system, no internal barriers to trade, and a major emphasis on economic connectivity and integration, and he was thus a great promoter of domestic railroads to knit together the national economy. Witt took large portions of this theory and believed that he could apply them profitably, literally profitably, to Russia. Zitt also believed, not unlike Marx, that the kind of modernizing economic development Russia needed was not going to be driven by the relatively small and weak Russian bourgeoisie. There hardly even was a Russian bourgeoisie.

So he argued that the state itself was going to have to be a major locomotive of development as both producer and customer of industry. And his ultimate goal was to amass financial and material capital that would make Russia a strong industrial economy in its own right. And Sergei Vitt, being Sergei Vitt, he believed that the best place to launch this locomotive of development was in the locomotives. So the state would organize direct and finance railroad development that would create major demand for labor, mining, coal, and petroleum. To finance these projects, Vitt energetically looked for foreign investors. He sold Russian projects to British and French and Belgian investors, and they were enticed.

by the opportunities they saw, high interest rates on their loans, low labor costs for the projects, and a powerful repressive autocracy that wouldn't let the workers make any trouble. But foreign investment was not the only thing. VIT also raised taxes across the board, most of which wound up being borne principally by the lower classes, especially by the peasants. VIT also followed lists recommendations and protected Russian industrial development by throwing up tariff barriers, that, yes, shielded that development and made the state some revenue, but it also made many consumer goods much more expensive. So the VIT system in general was about fostering and protecting a growing industrial economy,

raising revenue for the state with new tariffs and taxes, and integrating the empire with a dramatic expansion of railroads, which, once finished, would make further progress in other sectors possible. The most important of these new rail projects was unquestionably the Trans-Ciberian Railway, which would forge a direct link all the way to the Pacific Ocean in the Far East. The Trans-Siberian Railway would take a decade to complete and have all the beneficial impacts that desired, prodding major demand for metals, coal, oil, and labor. Though, come 1901 when the project was finished, let's just say that the resulting disappearance of demand and jobs was of some benefit to the activities of the next generation of our Russian revolutionaries. Another thing that would be of some benefit to our future Russian

revolutionaries would be the Russian famine of 1891, 1892. Terrible harvest in the fall of 1891, combined with terrible government policy that continued to export grain abroad and only belatedly and ineffectually attempted to deal with the problem. The famine led to upwards of 500,000 deaths, and despite official censorship, which tried to pretend like, you know, times are bad, but not that bad, plenty of Russians walked away from the famine with their faith in the Tsar supremely tested, which again was something that later Marxists and anarchists and resurgent neurotists were going to be able to play on. The mishandling of the famine by the Minister of Finance helped lead to his ouster in the summer of 1892, and who better to install in this all-important post

than the one guy who seemed like he knew what he was actually doing, Sergei Vitt. Appointed in August 1892, Vitt would serve in the post for the next 11 years. And from this perch, with the full blessing and protection of the Tsars he served, he was able to go even further with his plans. He pushed hard for the Trans-Siberian Railway,

which would soon have him playing a major diplomatic role in Russia's relations with China and China, Japan, both of whom were going to be directly impacted by the project. He further expanded and raised tariffs and taxes and cultivated foreign investment. And he was already getting ready to have Russia adopt the gold standard, which would ingratiate Russia with the European banking establishment. A move that would precede the same move, Jose Leman Tour would make in Mexico just a few years later. Now, development we talked about in the early episodes on the Mexican Revolution. And really as I sit here writing about the VIT system, I am very much reminded of the Scientifico program

for the middle and latter years of the Porfirio. And in fact, while I'm sitting here, I should say that a lot of the things I've been writing about Russia have been very similar to things I wrote about Mexico, and I may have to do a dedicated compare and contrast session on the Mexican and Russian revolutions. And for the record, Pancho Villa and Emiliano Zapata were never confused about whether or not the peasants had revolutionary potential. No promises on that. It's just, it's been on my mind a lot lately. The impact of the VIT system was undeniable, and it is sometimes described as sparking the VIT boom. Now, this takes us a little bit ahead of the temporal framework of today's episode,

but between 1890 and 1900, the amount of railroad track doubled from 30,000 kilometers to 60,000 kilometers. Annual output of coal, iron, and petroleum all more or less tripled. and the value of annual textile production doubled. By 1900, Russia had gone from having 1.5 million industrial workers to 3 million, though they were still a minuscule 2.5% of the total population, a population that was pegged in a census taken in 1897 at 125 million people. But the impact of this was not really an empire-wide affair. It was mostly concentrated in major cities or areas

where the necessary raw resources were found. So like Moscow, St. Petersburg, Kiev, mining operations in the Ural Mountains, petroleum operations in the Baku oil fields. Those specific areas underwent significant economic and social transformation, even if Russia as a whole still remained predominantly rural and peasant. So what we're seeing here is the rapid doubling of the industrial labor population, not spread out over the vast acreage of the empire, but jammed into very specific areas, they were all living right on top of each other. So the hallmark of Russia's rapid industrialization was that it was much larger and more concentrated in the factories and mines and construction projects than similar operations in the West, and conditions were infamously deplorable.

In an environment where all power was held by management, management backed by orthodoxy, autocracy, and nationality, working standards and living conditions were bad, very, very bad. Long hours, low pay, no safety standards, poor sanitation, terrible food, and even worse shelter. It was all dehumanizing and degrading and dangerous. Workers often lived in barracks like buildings, just living and sleeping next to each other in large open halls that maybe had beds and maybe didn't. Certainly most of these barracks did not have dedicated laundry services or built-in kitchens. everyone was just kind of filthy, ate at communal canteens, and had zero privacy.

Other areas might have cheap tenement buildings thrown up that would be subdivided and subdivided again to maximize the number of quote-unquote rooms available. Now, some of these deplorable conditions were explained away by one of the other hallmarks of this phase of Russian industrialization, which is the somewhat temporary and quasi-seasonal nature of the workforce. drawing primarily from villages near the big cities and factories and work sites, the workers still identified mentally as residents and members of their home villages. They were just here to work and make as much money as they could, sending most of that money back home. And they themselves would go home whenever duties there like the harvest required it, which would always cause work slowdowns during those times. So Russian industry was still subject to the rhythms of agriculture.

The younger generation of workers, though, were very one foot in and one foot out of the village. They were very interested in getting both feet out of the village entirely. Sure, they had come to make money for their families, but also to escape the dull, ignorant drudgery of village life. Women especially were eager to take on jobs as housekeepers and maids and anything else that was on offer, as that gave them a degree of financial independence and got them out from under the plotting tyranny of the village patriarchy. These young women would be especially receptive to the ideas about breaking down the tyranny of the patriarchal family, which was being pitched by socialists and anarchists, and make them critical mainstays and leaders in the revolutions to come. But for the moment, they were not yet mentally the permanent urban proletariat population that revolutionary theorists like Brehannoff was

counting on. For that, they would need additional years together living in squalid conditions and working terrible jobs, which would instill in them an instinctive fighting spirit. That, if given a name and a direction, could be very revolutionary indeed. But next week, we will get back to the Romanoffs, because on October the 20th, 1894, Zahar Alexander III would die at the age of just 49. This left the empire to his 26-year-old son, Nicholas II. On his deathbed, Alexander told his son that the only minister he should listen to was Sergei Vitt. Vitt is the only one who knows what he's doing. This is advice that Nicholas would at first take and then later disregard, as his mind wandered off to listen to other more eccentric voices.

A true believer in orthodoxy, autocracy, and nationality, Nicholas never doubted that he was God's chosen father of the Russian people. And next week, we will spend time with young Nicholas, an attempt to puzzle out, if it's true what Nicholas believed, just what on earth God might have been thinking.