The new coalition government in New Zealand gives some hope that democracy, universalism, and Enlightenment values can win out over identity politics and tribalism. This frees up time to explore other issues, such as why some inherently wealthy countries underperform compared to their potential.
Russia has for centuries produced a disproportionate number of the world’s greatest writers, composers, musicians, scientists, mathematicians, artists, singers and chess players. Yet it seems incapable of delivering competent political leaders who come to power democratically and under the rule of law, and then act in the Russian peoples’ interests. This failing results in a poorer economic performance than could be predicted from Russia’s human and natural capital endowments.
This database records per capita GDP by country using 2022 figures. It records Russia as poorer per capita than all of the Baltic states and such other countries as Turkey, Romania and Hungary.
Harvard University’s Atlas of Economic Complexity gauges the sophistication of countries’ export product mix. The raw trade data on goods are derived from countries reporting to the United Nations Statistical Division (COMTRADE). The trade data on services are from the International Monetary Fund (IMF) Direction of Trade Statistics database, via the World Development Indicators.
Comparative per capita income measures can be nominal or adjusted to reflect purchasing power parities (ppps). Using 2021 data avoids some data quality issues arising from President Putin’s “special military operation” in Ukraine that began in February 2022.
Using US$, as at 2021 Russia had a per capita income of $12,593 (ppp $34,043) as compared to Poland $17,999 (ppp $38,134), Germany $51,203 (ppp $58,798) Ukraine $4,827 (ppp $14,289), New Zealand $49,996 (ppp $48,443) and the USA $70,219 (ppp $70, 219). What is notable in these figures is that Poland, as well as New Zealand, are richer in per capita income than Russia, and that Ukraine is very poor by European and western world standards.
Ukraine suffered disproportionally from Stalin’s policies, the impact of the Nazi invasion from 22 June 1941, and from certain later events in the Cold War period and during and after the Soviet Union’s break-up. Ukraine has also long had corruption problems.
Economic performance is wider than incomes. It includes health, life expectancy, equity, self-assessed wellbeing, trust in institutions, and a sense of shared purpose. Politicians often promote narratives that build national pride, even when the factual basis of these narratives is questionable. Russia, for example, has long promoted the view that it is a beleaguered country, whether threatened with NATO attack, Ukrainian “Nazis”, or mysterious “enemies within”. This view necessitates regular revision of history textbooks to accommodate changes in narratives, and Russians simply accept that it is safest to go along with new narratives uncritically.
“Official narratives” that include starring roles for emerging leaders are popular in Russia, though sometimes short-lived. The Wagner Group’s leader Yevgeny Prigozhin started his career as a street mugger, and created a catering business that guaranteed it would not poison Vladimir Putin. Prigozhin then became a populist war hero, until he mutinied and was murdered two months later. Serious political opponents of the existing Russian President mostly end up dead, jailed or exiled. Such events are so predictable they may perversely increase social stability in that Russia’s political life becomes predictable. The key rules are to go along with the prevailing Kremlin narrative and avoid annoying Vladimir Putin.
However, authentic insights into even the most controlled societies can come from informal sources, including folklore, jokes, fables and satire. One lens on a society is folk songs that have survived through the generations and therefore have something enduring to say.
Bob Dylan opined on folk music in a 1966 interview:
“folk music is a word I can’t use…I have to think of all this as traditional music. There’s nobody that’s going to kill traditional music. All these songs about roses growing out of people’s brains and lovers who are really geese and swans that turn into angels – they’re not going to die. Songs like Which Side Are You On? And I Love You, Porgy – they’re not folk-music songs; they’re political songs. They’re already dead….traditional music is too unreal to die. It doesn’t need to be protected.”
Bob Dylan songs such as Only a Pawn in their Game and Lonesome death of Hattie Carroll elucidated what was wrong with America at a particular time. They remain brilliant songs, however they belong to a specific historical context and will eventually fade. Some of Dylan’s love songs will never fade.
Melodies are like public or non-rival goods that can be borrowed for a new song. The Seekers song, The Carnival is over, uses the melody of the Russian Song of Stenka Razin. Some folk songs go back centuries, with different lyrics added to repurpose a song to deal with a new context. The Red Flag’s lyrics were written in 1889, however it is sung to the melody of the old German carol “O Tannenbaum” (“O Christmas Tree“).
Most folk songs cross cultural barriers. This is a Ukrainian joke song that is also much loved and performed in Russia. You tricked me
Why is Russia not richer, given its resources and its talents? It faces no insurmountable human or physical resource constraints. Like other developed countries Russia has a low birth rate, however it has a far bigger population than any other European country. It has good educational levels. It is the wealthiest country in Eastern Europe. It is the biggest nation on earth, with the richest and most diverse natural resource base.
Many Russian people have a poor understanding of their history. Few in Russia are aware that American Relief Administration food aid organized by Herbert Hoover saved millions of Russians from famine from 1919 to 1923. Many Russians seem unaware that the Second World War began in September 1939 with a joint attack by Nazi Germany and the Soviet Union on Poland.
The Putin regime blames conflict in Ukraine on NATO, and implies the United States controls NATO. NATO was always a defensive alliance, formed in 1949 to guard against the Soviet threat to Europe. NATO did nothing when the 1956 Hungarian rebellion was brutally suppressed. It did nothing in 1968 when Soviet forces invaded Czechoslovakia to end the “Prague Spring” liberalization. NATO’s June 1999 intervention to end the violence in Kosovo is the closest it has ever got to large scale combat operations.
Over 2005 – 2021 Angela Merkel ran down the German armed forces to the extent of losing core operational capabilities. Hungary has refused to support Ukraine’s defense against Russia. Some NATO state leaders have been almost powerless to act because of internal political opposition. Donald Trump’s presidential candidacy creates more uncertainties.
However, while democracy has its weaknesses, throughout history the Russian head of state has always held too much power and this helps explain Russia’s poor economic performance. For simplicity, let’s argue that Russian history starts with the establishment of the Rus’ state in the north in the year 862, ruled by Varangians. These were Viking warriors, settlers and traders from what is now Sweden.
In England in 1215 King John acceded to the nobilities’ demands for protection of their property rights, for due process, and for the rule of law that cannot be overridden by the King in an arbitrary way.
Three centuries after Magna Carta, Russia through Ivan the Terrible chose a different path. Ivan was Grand Prince of Moscow and all Russia from 1533, and Tsar of all Russia from 1547 until his death in 1584. The term “formidable” rather than “terrible” better translates Ivan’s Russian title.
During the Ivan the Terrible/Formidable reign (1533 – 1584) Russia was engaged in many conflicts. The Livonia War 1558 – 1583 was fought for control of Old Livonia, that is present day Estonia and Latvia. This war in the west was not a Russian success. However Russia expanded its territory eastward into Siberia, including through what we might now term “public-private partnerships.” In 1558, Ivan gave the Stroganov merchant family the “license” to colonize “the abundant region along the Kama River” and, in 1574, lands in the Ural Mountains region along the rivers Tura and Tobol. The Stroganov family also received permission to build forts along the Ob and Irtysh rivers.
Around 1577 the Stroganovs engaged the Cossack leader Yermak Timofeyevich to protect their lands from attacks by Kuchum Khan, the last Siberian Khan leader. Yermak’s forces were instrumental in Russia’s eventual takeover of Siberia. Yermak is celebrated in folksongs such as: The storm roared.
Ivan’s reign saw the development of a centrally-administered Russian state and an empire that included non-Slavic territories. Ivan did draw on a “Chosen Council,” an informal advisory body. The Council’s influence waned, and then disappeared in the early 1560s. Ivan established greater autocratic control over the Russian nobility, which he violently purged using Russia’s first political police, the Oprichnina.
Under later leaders, such as Peter the Great in the late 17th and early 18th century territorial expansion continued, including into central Asia and the Caucasus and with the acquisition of territories along the Baltic Sea. Peter the Great embarked on sweeping reforms in the late 17th and early 18th centuries to modernize Russia and turn it into a major European power. His reforms encompassed the bureaucracy, the tax system, trade regulation and the military. He created from swampy land a new city, St. Petersburg, that became a great trade, commercial and cultural centre.
In Russia the winter cold and the steppe o steppe all around likely benefited Russia’s development as a great power. As Napoleon and later Hitler found, for geographic reasons and because of the tenacity of its people Russia was impossible to defeat and completely occupy. Even when Moscow was in the hands of the French.
In the lead up to “the Great War” breaking out in 1914, all of the continental great powers were in theory absolute monarchies. However, no one doubted that the Tsar was more powerful than his French, Austrian or Prussian peers. Neither statute nor common law protected even the most aristocratic subjects from the Tsar’s whims. By contrast, especially in France and Austria, aristocratic assemblies and supporting judicial institutions bridled a monarch’s power.
The Russian military was ill-prepared in 1914, just as it had been against the Japanese in 1905. Yet Russian folksongs at the start of the war were full of confidence In the yard or in the garden. As the war progressed in areas such as along the Carpathian mountains the mood in folksongs became more gloomy, with the Cossacks seen as key assets, though with some unease about their loyalty.
After the Russian Revolution, Civil War broke out between the Red (Bolshevik) and White armies. A young man is implored by his relatives to stay at home and not join the Red Army. The sadness in this song is that the idealistic youth would, if he survived the Civil War, then have to survive Stalin’s purges, after which he would face the Nazi invasion in June 1941. A more cheerful dance version of this song has been developed.
Low agricultural productivity held back Russia for centuries. Russian society held peasants in low esteem. A serfdom-based agricultural labour force system was introduced in the 16th century. Peasants were legally bound to the nobility and were obliged to provide labour services and a portion of their agricultural produce to their lords. This was at a time depicted in “Song of the Volga Boatmen” when men were cheaper than draught horses.
Serfdom was abolished in 1861. However, low productivity continued for over a century to be a drag on Russia (and the Soviet Union’s) economy. Kulaks (richer peasants) were often reviled in Russian literature and in Soviet times labelled “class enemies.” Stalin’s solution was to force peasants into communes and collectives.
On 17 November 1929 a Central Committee resolution began the collectivization of Soviet agriculture. On 11 September 1932 Stalin sent a letter to a Politburo ally, Lazar Kaganovich, demanding the subjugation of the Ukraine Soviet Socialist Republic (SSR). The Holodomor, also known as the Great Ukrainian Famine, was a man-made famine in Soviet Ukraine from 1932 to 1933 that killed millions of Ukrainians. Holodomor was part of the wider Soviet famine of 1930 – 1933 which affected the major grain-producing regions of the Soviet Union.
Markevich et al (2023) constructed unique panel data to study the causes of Ukrainian famine mortality (Holodomor) during 1932-33. They found that Ukraine (the Soviet Union) produced enough food in 1932 to avoid famine. Anti-Ukrainian bias in Soviet policy explains up to 92% of famine mortality in Ukraine and 77% in Ukraine, Russia and Belarus; approximately half of the total effect comes from bias in the centrally planned food procurement policy. “Mosquito” is a Ukrainian insurgent song reflecting bitterness with both Hitler and Stalin
This Ukrainian folk song gives an uncensored opinion of Stalin
Autocrats are typically corrupted by power and their decision making deteriorates further as their advisors become sycophantic. This was especially marked in Stalin’s time. Osip Mandelstam was brave to write his Stalin Epigram It cost him his life.
Eisenstein’s 1944 film Ivan the Terrible sought to burnish Ivan’s reputation as a strong leader, validating Stalin’s own image. Vladimir Putin’s partial rehabilitation of Stalin’s image may also be designed to enhance his own.
The Soviet economic system was always going to fail because the conflation of economic and political power misallocated resources and there was inadequate reward for individual effort. “Hrechanyky” is a folk song that spoofs the economic weaknesses of the Soviet system.
True democracy includes one person, one vote, and processes in place for peaceful transitions in power when, for example, an incumbent loses to a successful challenger. It also means that the rule of law must apply equally to all. The problem comes not from what is on the statute book, but that different judges interpret the law differently, typically in response to political expectations. The rule of law in Russia is, in reality, rule by those who interpret the law and who themselves may be above it.
There is a deeply-seated fatalism among Russian people which manifests in tendencies to follow the crowd rather than develop individual opinions. As Pasternak argued in Doctor Zhivago:
“…the root of all the evil to come was the loss of faith in the value of personal opinions. People imagined that it was out of date to follow their own moral sense, that they must all sing the same tune in chorus…”
Yet many folk songs celebrate rebels and rebellions, including those that challenge the existence of the Tsar in power.
“The Cliff” celebrates the Stenka Razin challenge to the Tsarist tyranny.
“Oh, it is not yet evening” is a song that alludes to Cossack rebellion in a more mystical way.
Vladimir Putin argued that the breakup of the Soviet Union was a great catastrophe. There is some truth in this. However, much of the real damage was done during the transitional period from around1991 – 1999. President Boris Yeltsin navigated economic and constitutional crises and conflict in Chechnya (the Chechen Republic). Yeltsin permitted oligarchs to take control of privatized assets, with billions being taken out of the country. Radical economic reforms sought to switch from state control to a market-based economy within impossible timeframes and without the supporting institutions required.
Without an effective tax system in place public services were badly degraded. Corruption and organized crime were rampant. Vladimir Putin was appointed Prime Minister in 1999 and elected President in 2000. Putin weakened the power of oligarchs and strengthened his own Presidential powers. He put much effort into paying off Russia’s foreign debt. He deserves some credit for key improvements in fiscal policy and central bank operations, for example to manage the fluctuations in earnings from commodity exports.
Putin’s first two Presidential terms 2000 – 2008 were in good economic times. Russia’s was an economy boosted by commodity prices, especially for oil and gas. Russia’s GDP and real incomes grew. The middle class expanded while the number of people living below the poverty line decreased dramatically.
By the end of the first decade of the 21st century, Russia was the world’s second biggest arms exporter, second in space launches, was exporting nuclear power plants, was significant in the IT industry, and was seeking to develop its civil aviation industry. A remarkable achievement for post-Soviet Russia has been its move from being a major food importer to becoming the world’s biggest wheat exporter.
However, exports were only 8.7% of GDP in 2007, compared to 20% in 2000. Russia’s recession during 2008–2009 reflected that Russia was still heavily dependent on oil and gas, fertilizers and other commodities.
High commodity prices can boost growth, however not sustainably. What motivates the innovation that makes a long-term difference is the esteem that society, especially those with power, confer upon entrepreneurs, that is those who will “give it a go.”
Russia’s financial crisis in 2014–2017 resulted from oil prices crashing and international sanctions imposed in response to Russia’s annexation of Crimea. The invasion of Ukraine in February 2022 triggered retaliatory actions that destabilized Russia’s financial markets and led to widespread disinvestment by foreign investors.
Until around 1800 economic growth around the world proceeded at a glacial pace for centuries. The Great Enrichment began firstly in Britain and rapidly thereafter in countries that valued economic liberalism. This meant esteem for entrepreneurs, freedom to start businesses and enter occupations that were open to qualified new entries, and a rule of law that excluded political and tribalistic favouritism.
Economic liberalism in recent times has driven rapid growth rates in economies such as China and India while other illiberal BRICs economies such as Brazil, Russia and South Africa have languished.
The conflation of political and economic power leads to productivity losses as economic agents respond to signals from politicians and bureaucrats rather than markets. When the political (and economic) power is held by one autocrat then risk is highly concentrated in one person. This led to such disasters as Mao Zedong’s “war on sparrows” and President Putin’s unilateral decision to invade Ukraine in February 2022.
Russia will do a lot better in future if political and economic power are as far as possible separated, free speech, authentic democracy and the rule of law are restored, and entrepreneurs come to be as esteemed as they are in the United States. Cossack songs are a treasure for humanity. It would be great if they could be complemented by folk songs about entrepreneurs that can also be passed on to future generations.
References
Harvard Kennedy School, Harvard Growth Lab.
Markevich, A. et al 2003: The Causes of Ukrainian Famine Mortality, 1932-33. NBER Working Paper: 29089.
Peter Winsley 
Peter,
This is a fascinating article and would be so even if the present crisis in the Ukraine were not a reality.
David