Leon Trotsky: 1905

Leon Trotsky: 1905: CHAPTER 2-- Russian Capitalism
Russia into the domain of the stock exchange.
While economic contacts with Europe were still limited to the importation of craftsmen and machines or
even to loans borrowed for productive purposes, this was, in the last analysis, a question of making the
Russian national economy assimilate certain elements of European production. But when free foreign
capital, in its race for a high level of profits, flung itself upon Russia's territory, protected by customs
duties which were like the Great Wall of China, it became a matter of making the capitalist industrial
organism of Europe assimilate the national economy of Russia. That is the program which has filled the
last decades of Russia's economic history.
Only 15 per cent of the total number of existing Russian industrial enterprises were created before 1861.
Between 1861 and 1880, 23.5 per cent were created, and more than 6i per cent between 1881 and 1900,
40 per cent of all existing enterprises having been created during the last decade of the nineteenth century
alone.
In 1767, 10 million pouds of pig iron were smelted in Russia. In 1866 (a hundred years later!) smelting
still barely reached 19 million ponds. By 1896 it had already reached 98 million pouds, and in 1904, 180
million; moreover, while in 1890 the south accounted for only one-fifth of the total amount smelted, ten
years later it accounted for one-half. The development of the oil industry in the Caucasus proceeded at a
similar rate. In the 1860s, less than a million pouds of oil were produced; in 1870 the figure was 21.5
million pouds. Foreign capital entered upon the scene in the mid-eighties, taking possession of
Trans-caucasia from Baku to Batum and launching operations intended for the world market. By 1890 oil
production had risen to 242.9 million ponds, and by 1896 to 429.9 million pouds.
Thus we see that the railway, coal-mining and oil industries of the southern part of the country, to which
the economic center of gravity has been shifting with extreme rapidity, are only twenty or thirty years
old. In this part of Russia, the development assumed from the very start a purely American character,
and, within a very few years, Franco-Belgian capital has radically changed the appearance of the steppe
provinces, covering them with giant enterprises of a size almost unknown in Western Europe.
Two conditions were necessary for this: European/American technology and the Russian state budget.
All the metallurgical plants of the south -- many of which were bought from America, down to the last
bolt and screw, and transported across the ocean -- had government orders guaranteed for several years
ahead at the moment of going into operation. The Urals, with their patriarchal, semi-feudal traditions and
"national" capitals, remained a long way behind and it is only recently that British capital has begun to
eradicate barbaric "Russianness" in that part of the country as well.
The historical conditions of the development of Russian industry sufficiently explain the fact that, despite
its relative youth, neither small-scale nor medium-scale production plays any significant role within it.
Large-scale factory and plant production has not grown in Russia in any "natural" or organic manner. It
did not grow gradually out of artisanal trade and manufacture, since artisanal trade itself had no time to
grow out of the cottage industries and was doomed to economic death, even before its birth, by foreign
capital and foreign technology. The cotton mill had no need to fight the craftsman weaver; on the
contrary, it was the cotton mill that gave birth to cotton-producing cottage industries in the villages.
Likewise, the ironmaking industry of the south and the oil industry of the Caucasus were not obliged to
swallow up any small enterprises; on the contrary, such enterprises had to be brotight into existence as a
series of secondary and ancillary branches of the economy.
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