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Russian Capitalism

 

By the end of the nineteenth century the system of Russian capitalism was in place and displayed certain distinctive as well as common features as compared with the leading capitalist nations of the West. What were its more salient characteristics?  

 
   
The opening of the 2,594 meter long Amur bridge near Khabarovsk  on the Trans-Siberian Railway (5 October 1916)
 
 
 
High Degree of Concentration of Production and Labour

Because Russia industrialized late and rapidly, advanced Western technology was borrowed wholesale, with the result that Russian factories were often more modern than their Western counterparts. Almost overnight Russia acquired huge plants and large-scale industries in few industrialized regions. The result was high concentration of workers in very large-scale industrial enterprises. In 1900 almost half the industrial labor force was located in factories which employed more than 1,000 workers - very high by contemporary European standards. 

Not impressive in quantity  in proportion to total population (about three million out of a population of about 170 million in 1914), the Russian proletariat was therefore more densely massed than in other countries, forming large and closely knit groups in industrial centers, which included St Petersburg and Moscow. This heavy concentration of labor in the few nerve centers of the empire would pose great danger to the imperial government after the workers had discovered, in 1905, the powerful weapon of a general strike to pressurize employers and the authorities.

Formation of Monopolies

The high concentration of production inevitably led to the formation of monopolies.  The owners of large-scale enterprises belonging to the same branch of industry began to co-operate with one another in regulating  output and setting prices for their goods.  This allowed the monopolists to establish control over the market, dictate their terms to the consumer and thus extract maximum profits. 

The monopolies first appeared in the form of syndicates in which individual companies maintained their autonomy in matters of production while co-operating in setting prices for their products. By the early twentieth century syndicates began to turn into trusts in which enterprises were incorporated into a single production system managed from one centre of command. Monopolies existed in all major branches of industry, such as oil extraction, sugar-production, railway rolling-stock production, coal-mining, metallurgic industry.

High Concentration of Financial Capital

The process of the formation of trusts led to radical changes in the organization of production and required huge financial resources.  Industry was beginning more and more to depend financially on banks. The concentration of industrial production went hand in hand with the concentration of financial capital. In the early twentieth century the five biggest banks controlled most of the finances.  They eagerly invested in industry and to a considerable degree subordinated it to their control. 

As a result, the confluence of financial with industrial capital took place. Major financial tycoons sat on governing boards of industrial enterprises; while leading industrialists and entrepreneurs became closely linked with banking. The financial oligarchy emerged which had concentrated in its hands huge financial and industrial resources.  In the early twentieth century this new force would begin to vie with the government for the right to direct the countrys economic development.

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