Leap into Modernity – Political Economy of Growth on the Periphery, 1943–1980

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Chapter 1. A brief history of backwardness

1. Malthus was right

In 1825 on orders from the British government, Englishman William Jacob travelled the length and breadth of what was then Congress Poland, Galicia and the Baltic provinces of Russia. His journey had a very practical purpose. The United Kingdom needed grain to feed the workers in its rapidly expanding industrial cities. Jacob had been instructed to determine how much grain could be supplied by the lands of “ancient Poland”, and at what prices. He was also to assess the possibilities for exporting grain through Gdańsk, East Prussia and Riga. He fulfilled these tasks brilliantly. After returning to England, he issued a comprehensive report in which he also characterized – in the style of travel narratives of the day – the inhabitants of the Polish lands.¹ He noted the reluctance of the nobility to involve themselves professionally in anything outside of military service, the dominant position of Jews in commerce, and of the Germans in the skilled trades. (Germans, he noted, felt ill at ease in Poland and dreamt only of returning to their homeland once they had made their fortune.) He also devoted much attention to the Polish peasantry:

Jacob’s account is all the more telling if we consider its context. The reference point for the author was England – then the richest country in the world, but one with rapidly growing expanses of abject poverty. According to estimates by historians today, in 1820 the wages of workers in England were only 10 percent higher than in 1770. At the same time, we have good reason to believe that living and working conditions for most of these workers were in many respects worse than a few decades earlier.3 Soon after Jacob’s report on the Polish lands, several widely-discussed books depicting the misery of British workers were published in London; this included the publication in 1833 of a book by Peter Gaskell about English workers that provided the inspiration for Engels’ writing The Condition of the Working Class in England.⁴ Jacob had visited the Polish lands at an important historical moment; never before and never again during the English Industrial Revolution was there a greater contrast between the rapidly growing economy and stagnant wages (and even of deepening poverty, in the opinion of many). Both Jacob and his readers still had fresh in their memory the times of the French Revolution and the Napoleonic wars, when sudden and dramatic rises in food prices left many British workers with too little income to avoid starvation. Every few years, the country was shaken by waves of revolts by the working classes; English society, at least according to contemporary opinions, was like a volcano ready to explode. It is from such an England – the one described by Dickens, Gaskell and Engels – that Jacob travelled to Congress Poland. And once there he was struck by its poverty and backwardness.

Jacob also noted that Polish peasants worked much less efficiently than English agricultural labourers. The Englishman attributed this laziness not to any innate features found in the Polish peasantry, but to a “system of duty work” in which they had no personal investment.

This brief description of the Polish countryside contains all the elements that can be found in different images of social, cultural and economic backwardness. We thus have here an inefficient and anachronistic social order (in the Polish case this was actually still a feudal system of forced labour, although the peasants had been formally freed); a rural and agricultural society, rather than an urban and industrial society divided into fixed and impermeable classes; a low level of labour productivity, outdated technology, economic stagnation and an uneven distribution of income; and finally, a low level of formal education, consumption and material culture, so low, in fact, that the filth, ignorance and misery of the peasantry aroused disgust in an observer who harkened from the centre of European civilization. Jacob was a generally dispassionate observer – as dispassionate as only the author of a thick tome on grain prices and transport costs could be. In spite of this, he could not hide his disgust. He was overpowered by it – despite being an intelligent traveller and being fully aware that the people he was describing were not to blame for their misery.

His description of the civilizational gap between the centre and periphery contains so many historical, social and economic dimensions that it is hard to encompass them all in a single definition. The eminent historian Eric Hobsbawm once said it all boils down to finding an answer to the question: “why is Switzerland richer than Albania?”⁶ This question only seems to be unreasonable: the two countries share similarities – both are small, mountainous, and lack natural resources and fertile soil; over the centuries, both have also experienced extreme poverty, fiercely defended their independence, and sent their young to serve as mercenaries in foreign armies out of economic need. (Switzerland does not even have access to the sea!) To answer to the above question, we have to refer back to a number of historical, religious and economic causes; the story of the evolution of both countries is a long and complicated one, which cannot be summed up in a single sentence or encompassed in a single set of numbers.

Notwithstanding, it is impossible to discuss notions of accelerated development without attempting to describe backwardness. How large was the distance that separated the centre of European civilization and those countries that were ← 9 | 10 → peripheral and backward? How can this distance be measured? How was it shaped by history?

Statistics do not provide answers to these questions. They do not reach sufficiently deep into the past – rarely further than the nineteenth century – and, moreover, they often cannot be trusted. They were not even trusted in their own time. Jerzy Jedlicki quotes the Director of the Government Commission for Internal Affairs in the Kingdom of Poland (and therefore a high official who had a good idea of how the administration under him operated), who wrote in 1860 that the data provided by the local authorities was completely unreliable. In response to a question from another office, which had doubts as to whether the data provided to it by the local administration were accurate, one dignitary he wrote: “Purely administrative centralised statistics yield accurate results only where they relate to receipts or expenditures of public money, only where they are strictly controlled and where there is accountability for falsehoods.”7 Given such thinking among contemporaries, historians should be all the more cautious about quoting these numbers.

This leaves us with indirect methods. Using sophisticated statistical methods, economists attempt to assess the gross domestic product of various countries in the past, up to the beginning of our present era.⁸ By means of archival research, we can attempt to determine what factors influenced earnings in different periods and in different countries: when they rose, when they fell, and what this money could buy – and this provides us with an idea of the standard of living. We can also describe the level of material culture: counting how much furniture and how many spoons, pots and other objects were listed in wills or court documents. On the basis of field work in cemeteries, we can determine the average height of people in different historical periods, with the assumption that these ← 10 | 11 → changes correspond roughly to changes in the level of nutrition and living conditions (although this relationship is not always straightforward). We can also look at wills, parish registers, and other documents, attempting to determine the average lifespan. Still, these methods provide us with few definitive answers. All of them are imperfect, and they sometimes lead to seemingly conflicting conclusions. Taken together, however, they give us an approximate image of the past.

About what is there any certainty? That Malthus was right when he described the logic of economic life in the centuries before the industrial revolution (and in many countries, perhaps still today). In An Essay on the Principle of Population, first published in 1798, Pastor Thomas Robert Malthus argued that the human economy was governed by the same rules as the “natural economy” of animals; the same criterion – the availability of food – defined the living conditions of both animals and humans.9 People, like animals, multiply as long as have enough to eat; an increase in food production, Malthus argued, will always lead to an increase in population. Therefore, an influx of new workers will cause wages, according to the law of supply and demand, to move toward a minimum, subsistence level. Sometimes this can take time – and a generation or two can enjoy a slightly greater level of prosperity. However, in a Malthusian world, a steady increase in the standard of living is impossible: technological progress only leads to population growth (assuming, as Malthus wrote, that “the passion between the sexes” is constant and the population always increases faster than food production).¹⁰

The consequences of this principle lead to interesting paradoxes. As the historian Gregory Clark How put it – perhaps with some exaggeration – the Malthusian world is from today’s perspective turned on its head: what today is an obstacle to increased prosperity, then promoted it:

In the Malthusian world, a second paradox – social differences – also had a different meaning than today. Effectively raising the standard of living of the majority was impossible in the long run. Therefore, regardless of how much land and wealth was held by the ruling class, the standard of living of their subjects changed very little: their numbers merely rose or declined. A rise in the standard of living of the masses was always temporary, and the vast majority of humanity always lived on the brink of starvation. The biblical description of the exile from Eden, where God says to Adam: “Cursed is the ground because of you / through painful toil you will eat food from it / all the days of your life / It will produce thorns and thistles for you, / and you will eat the plants of the field” (Genesis 3: 17–18), was until very recently a good metaphor for the fate of the common man: there was no escape from it.

The key to freeing oneself from the Malthusian trap was technological progress. For real incomes to rise, food production had to increase faster than the population. For many centuries, however, technological change occurred too slowly. If we assume that the population grew at a rate equal to the pace of technological development (according to the logic of the Malthusian world), it turns out that the increase in productivity from 1000 to 1820 did not exceed an average of 0.05 percent per annum – that is, it reached only one-thirtieth of its current level.¹² Differences in productivity associated with the culture of work – for example, that described by Jacob in his comparison of Polish peasants to English agricultural labourers – were most likely real, though not measurable (especially by historians today). However, they translated into only minor differences in living standards. If, for example, in the seventeenth century productivity on the Vistula was lower than on the Thames, in practice this meant only that the Polish lands were much less densely populated than those in England.¹³ The fact that Jacob was so deeply moved by what he saw indicated that he had travelled from a country that was already on the road to the industrial revolution, in which real wages – although still at starvation levels from today’s point of view – had ← 12 | 13 → already risen significantly.14 They would soon begin to grow at a rate previously unimaginable.¹⁵

Although a constant increase in prosperity in the Malthusian world was impossible, differences in standards of living between different countries and eras could be considerable. Experts explain these through culturally imposed restrictions on fertility – for example, a later age of marriage in northern Europe than in southern Europe or infanticide in China (according to a universal principle: the fewer the people, the greater the prosperity). There were also differences in the culture of everyday life that cannot easily be made to fit Malthusian principles. The Romans, for example, mass-produced very cheap items for daily use, and developed an extensive trade network, which meant that these items were also available to the poor in many parts of the empire.¹⁶ The study of Roman pots may seem not a very inspiring pastime, but it says a lot about the lifestyles of their users. At excavation sites from Roman times, one can find an abundance of functional kitchenware used to prepare food; elegant tableware for display and use; and amphorae, large vessels used in the Mediterranean to transport and store wine and olive oil. An outstanding archaeologist described it thus:

This organised world of mass production disappeared along with the invasion of the barbarians; starting from the fifth century, the items used in everyday life in Europe became more primitive, and evidence provided by archaeologists shows ← 13 | 14 → the gradual dying off of trade routes from ancient times. Meaningful evidence is also provided by Monte Testaccio in Rome, a fifty-metre high heap of amphorae shards from the second and third century A.D. According to estimates by archaeologists, the 53 million amphorae contained there are the remnants of 6 billion litres of oil imported to the imperial capital. Goods were also imported in the sixth and seventh centuries, but the quantities were minimal. “This was a society with similarities to our own—moving goods on a gigantic scale, manufacturing high-quality containers to do so, and occasionally, as here, even discarding them on delivery. Like us, the Romans enjoy the dubious distinction of creating a mountain of good-quality rubbish”, archaeologist Bryan Ward-Perkins wrote about ancient Rome.18 Researchers studying arctic ice have also recorded high levels of air pollution, produced by the smelting of lead and copper in Roman times, which immediately after the fall of the empire dropped to levels recorded in prehistoric times. These metals were not produced again on a scale similar to that in Roman times until the sixteenth and seventeenth centuries.¹⁹

Despite the well-developed organization of production and trade, and the mass production of items for daily use, Roman society continued to operate under the rules of the Malthusian economy.²⁰ Historical estimates of per capita income show a decline between the fall of the Empire and the late Middle Ages, associated with the collapse of the imperial economic system and a decline in labour productivity.²¹ The population decreased even more drastically: in comparison with the days of ancient Rome, the European continent in the early Middle Ages was not only rural but empty. Since productivity had fallen, population density had declined, as well.

The paradoxes of the Malthusian economy mean that economic historians today can write seriously about what a great boon the Black Death was for Europe – the plague epidemic in 1346–1347 killed, according to various estimates, ← 14 | 15 → between a third and half of the inhabitants of the West.22 The population loss resulted in a rapid increase in wages and in the standard of living – which lasted until the population increased once again (in the case of England, this occurred only around the year 1600; the population had dropped from six to less than three million in the fifteenth century, and had reached seven million in the times of Queen Elizabeth).²³ While some died because of war or plague, the income of the remaining population increased, because in practice this meant that agricultural production per capita was higher – and that was what really mattered in an economy in which more than 90 percent of the people lived in the countryside, and 70 percent made their living directly from farming.

Some historians, such as Nico Voigtländer, even believe that the plague provided the first impetus for the accumulation of capital. Since the number of people who could work the land had declined, it was necessary to come up with ways to take better advantage of those who were available, for example, by investing in improved agricultural technologies – capital had to compensate for the deficit in labour. This is only a step from the idea that the plague was one of the root causes of the Industrial Revolution, which first occurred in those areas most affected by the epidemic four hundred years earlier.²⁴ Even the jump in income caused by the Black Death looks today like a tiny twitch of the seismograph compared to that brought about by the industrial revolution.

Yet Malthus still has something to say about the modern world. As modern-day economists have estimated, the poorest countries in the world – despite international aid, low-cost transport enabling the delivery of food to any place on earth, and giant food surpluses in rich countries – we are still unable to break out of the closed circle that he described.²⁵ ← 15 | 16 →

In around 1640, there was probably only one place on Earth – England – where the rules described by Malthus were beginning no longer to hold true.26 This breakthrough occurred slowly. By 1800, the population had grown from six to seven million to ten million, while the standard of living had not fallen, but risen (though only very slightly: average income had increased by 0.2 percent annually, or 10 percent per generation). At the beginning of the nineteenth century, the income of the working class in England was twice as high as in 1250, and three times higher than in 1600, but only slightly higher than in the decades following the Black Death.

2. Wealth and poverty in the past

On April 20, 1697, an advertisement appeared in the newspaper Amsterdamsche Courant for a new gadget, the Zak-aardebol, or pocket globe. As advertised by its manufacturers, cartographers Abraham van Ceulen and Gerrit Drogenham, it was “very appropriate for all devotees of astronomy and other sciences, as well as [all those] who would customarily carry a pocket watch with them.” The globe was five centimetres long in diameter and was sold in a decorative leather case, in the centre of which was a tastefully and stylishly painted sky with constellations of stars – it was, according to one modern-day historian, one of the earliest geocentric representations of the heavens.²⁷

Not without reason, the producers were looking for customers among the devotees of pocket watches (and therefore gadget lovers: like their globe, watches were then a technical novelty). The mini-globe’s ability to indicate its owner’s position in space was meant, according to its producers, to supplement a watch’s ability to indicate the time. It did not catch on, perhaps because – in contrast to the very practical watch – it remained an expensive toy. (It is known that Tsar Peter the Great bought one while visiting Holland, but he did not have to concern ← 16 | 17 → himself with costs). At the end of the eighteenth century, European watchmakers were producing 400,000 pocket watches per year. Although they became cheaper as production methods improved, they remained expensive from today’s point of view: they cost an artisan the equivalent of several weeks’ work, and served the owner – according to various estimates – for an average of four to twelve years, and thus, not very long. Nevertheless, people bought them willingly. In 1780, 70 percent of the servants in Paris had them, as did one in three workers, traders and artisans. Watches were bought during good times by many families who had nothing to put into the pot in harder times when prices were high.

The history of the zak-aardebol and pocket watches shows how difficult it is to compare the standard of living in the past with that of today. Economists can estimate per capita income and write that GDP per capita in Africa today is lower than in Western Europe in 1820 or in England in 1700, but the cognitive value of such rankings is limited: both the structure of expenses and the goods you could buy with this money vary too greatly.28

This seems obvious, but it is worth recalling for two reasons. First, it is easy to forget about the distance that separates us from the past, even the most recent past. Secondly, even today, comparisons between the standard of living in the poorest and richest countries are difficult for very similar reasons. Differences in price structures and available goods – whether these are between the past and present, or between developed and developing countries – mean that simple statements of income are misleading. Hiring a servant costs tens of dollars per month in Nairobi, a few hundred in Rio de Janeiro, and several thousand in London. These differences have grown sharper since the era of the industrial revolution. Since the industrial revolution, the disparities have increased between the rich industrial countries and the poorest countries of Africa and Asia, where some goods – for example, expert medical care – are very expensive or unavailable, while others, particularly services that do not require qualifications, such as, the work of a janitor, are cheap. Of course, Africans and Asians today do not live in medieval conditions: in 2009, every second Nigerian had a cell phone, even though his income estimated in U.S. dollars was significantly lower than that of a British citizen two hundred years ago. Nor can the difference in living standards between Lagos and London today be easily converted into monetary terms – just like the differences between Warsaw during the Gomulka era and Paris during the times of Pompidou. ← 17 | 18 →

A significant part of this difference can be reduced to technology. This is how the apartment of an intellectual in Warsaw was described two hundred years ago in one diary:

What does the homeowner lack? A telephone, automobile, electric lighting, central heating, air conditioning, gas cooker, washing machine, refrigerator, dishwasher, private bathroom with hot running water and a toilet – not to mention a computer, Internet access, mobile phone, television and a music system. This list could easily be extended. Many modern comforts were unavailable at any price; others, such as in-home music on demand, could be afforded by only a few (the emperor of Austria had his own personal opera).³⁰ In times when doing the laundry required a day of tiring labour, maintaining a life of relative comfort demanded hard work from full-time domestic workers. The level of medical care was incomparable to that of today.

It is also difficult to compare differences in the lifestyles of the rich and the poor in the past, and not only due to a lack of data. Although we know that until the mid-nineteenth century, the average worker spent 80 percent of his income on food – roughly the same as in the Middle Ages – the consumption patterns of those even slightly wealthier underwent a much greater change. Modern-day research shows slow but steady economic growth in Europe in the two centuries leading up to the Industrial Revolution: in Western Europe the proportion of city-dwellers among the population increased from 5.6 percent in 1500 to 10 percent in 1800.³¹ ← 18 | 19 →

Since the beginning of the modern era, more and more exotic spices, coffee and tea had been consumed in wealthier homes. In Western Europe, beginning in the seventeenth century, even in poor homes, the number of everyday household objects rapidly increased. According to a study conducted on wills and judicial acts, in one rural province in the Netherlands, between 1630 and 1670, the average household owned 241 items (divided in 47 categories); the average for the period 1700–1795 was 538 items (divided into 71 categories).32 This is telling testimony of a revolution in consumption. Studies in England and France have yielded similar results. In these countries, the increase mainly represents imported and luxury goods: ornamented furniture (bureaus, commodes, desks, stylish sofas and chairs), luxurious tableware (often made from Chinese porcelain), clocks, paintings, curtains, and, of course, coffee and tea services. At the end of the eighteenth century, all of these items were in 80 percent of Dutch homes, although according to the estimates of economists from that century, the average earnings in the Netherlands had either decreased or remained flat. (This is further proof that statistics on income do not tell the whole story.)

Yet, a different story of how Europeans freed themselves from the Malthusian trap is told by studies on their height over the centuries. The average change in height reflects both the quality of nutrition and the degree of social inequality: in simple terms, it can be assumed that the greater the disparity in living standards between the rich and the poor, the greater the differences in height among the people of a given country and time.³³ The average inhabitant of the Roman Empire measured about 169–170 cm in height. The barbarians who settled on the former Roman lands in the fifth and sixth centuries were markedly taller, which experts attribute to a diet richer in protein and the fact that the barbarians did not live in unhealthy cities – as well as, perhaps, to certain genetic differences and less distinct social differences among the Germanic tribes. Again, this information still does not tell everything about the standard of living: “A Northern barbarian living in the sixth century was tall and certainly lived relatively long, […] but in the event that he was amusement-loving and fond of consumer goods, he would most probably have preferred to live in second century Rome, write the authors of one recent study.”³⁴ By the early seventh century, however, the Germans who had ← 19 | 20 → settled on the former Roman territories were shorter than the Romans – shorter even than those born during the collapse of the empire.

Judging from the average height of Europeans, the quality of their food varied little between 1000 and 1800, even if their lifestyle and the availability of consumer goods had changed significantly. According to the rules of the Malthusian economy, the greater the population density, the poorer the quality of nutrition, and thus, the lower the average height; these variations are noticeable, but they are not large. However, the data show a clear difference in the quality of nutrition in modern times: while almost all the Romans examined were of roughly the same height (which seems to contradict the view that there were enormous social differences in Rome), height differences among men in modern times reached 6 cm, which according to specialists reflects growing social distances and progressive urbanization, as the sanitation and general quality of nutrition in cities were terrible.35 The workers living in British industrial centres began to grow progressively taller only in the latter half of the nineteenth century, when the Industrial Revolution was already at least eighty years old.³⁶

A decline in living standards was accompanying economic expansion on the other end of the continent, in Russia, as well, though for different reasons. New studies of lists of Russian recruits from the eighteenth century show the effects of a different but likewise interesting mechanism: in the eighteenth century – a period of unprecedented economic growth and military power in Russia – the average height of a twenty-year-old decreased by 5 cm. The economy grew, but all the benefits from increased productivity went to the state; empire-building necessitated an increase in taxes and a reduction in the standard of living of ordinary people. In this respect, Stalin was to be heir to a Russian tradition: in the eighteenth century, the shortest generation of recruits were born in the times of Peter the Great and Catherine the Great.³⁷ ← 20 | 21 →

In the story of ideas about accelerated development after 1943, this distant historical background is important for two reasons. First of all, it shows that the relationship between expansion of the economy and production and a rise in living standards is by no means directly proportional: in the past, there have been many examples of countries where economic growth has been coupled with a decrease in the average standard of living. Secondly, it appears to show that the only path from backwardness to development (or from a “traditional” to “modern” society) is through blood, sweat and tears. This was well known long before Marx, and the authors of the concept of accelerated development after World War II also seemed well aware of this issue, although they did not have at their disposal such precise historical research as is available today.38 Widely cited was a well-known article published in 1955 by future Nobel laureate Simon Kuznets, a pioneer in research on national income, which showed a decline in average earnings in the first phase of industrialization.³⁹ This observation had political consequences. It was easier to justify a decline in living standards during periods of state-led planned industrialization. If even England had to pass through a purgatory of working-class indigence on the way to achieving industrial might and bourgeois prosperity, then perhaps we were dealing with a regular pattern in economic development. There was simply no other path. This was an important argument, which – as we shall see – continues to return in various forms, providing justification for the growing social disparities in China and other rapidly developing countries of the developing world.

The purgatory through which England passed looks today more like a hell – an inescapable abyss. For many decades, up until the mid-nineteenth century, the wages of workers in British cities grew only slightly, while the wages of agricultural workers fell.⁴⁰ Even the best-paid workers in most industries, the employees of some textile factories, for example, had to resign themselves to a drastic decline in living standards following a move from the countryside to the city. The mortality rate in cities was extremely high: in times of epidemics, which recurred regularly every few years, diseases such as typhoid and cholera were responsible for nearly every second death. In London, even in years in which there was no such pestilence, at least a third of all deaths were caused by tuberculosis. An infant born in ← 21 | 22 → the 1840s in Liverpool to parents from the upper or middle classes – a businessman, lawyer or doctor – could expect to live to the age of 35; the child of a small merchant or a shopkeeper, to age 22; the child of a mechanic or worker, to age 15, due to a very high rate of mortality not only in childhood, but at every stage of life. (In Liverpool, most workers lived in cellars. In the 1830s, as one journalist of that day noted without surprise, the “fluid matter of the court privies” flowed into several such cellars, carving out a one-metre deep channel under one family’s bed.) In addition to descriptions from the period, a range of data confirms the dreadful living conditions in cities at that time: for example, the average height of British-born recruits during this period was shorter by 5 cm than that of previous and later generations (they began to grow taller only after 1870).