Soviet Union, with industry playing the role of sugar in the
Caribbean. Industrial growth in the Soviet Union was further
facilitated because its technology was so backward relative
to what was available in Europe and the United States, so
large gains could be reaped by reallocating resources to
the industrial sector, even if all this was done inefficiently
and by force.
Before 1928 most Russians lived in the countryside. The
technology used by peasants was primitive, and there were
few incentives to be productive. Indeed, the last vestiges of
Russian feudalism were eradicated only shortly before the
First World War. There was thus huge unrealized economic
potential from reallocating this labor from agriculture to
industry. Stalinist industrialization was one brutal way of
unlocking this potential. By fiat, Stalin moved these very
poorly used resources into industry, where they could be
employed more productively, even if industry itself was very
inefficiently organized relative to what could have been
achieved. In fact, between 1928 and 1960 national income
grew at 6 percent a year, probably the most rapid spurt of
economic growth in history up until then. This quick
economic growth was not created by technological change,
but by reallocating labor and by capital accumulation
through the creation of new tools and factories.
Growth was so rapid that it took in generations of
Westerners, not just Lincoln Steffens. It took in the Central
Intelligence Agency of the United States. It even took in the
Soviet Union’s own leaders, such as Nikita Khrushchev,
who famously boasted in a speech to Western diplomats in
1956 that “we will bury you [the West].” As late as 1977, a
leading academic textbook by an English economist
argued that Soviet-style economies were superior to
capitalist ones in terms of economic growth, providing full
employment and price stability and even in producing
people with altruistic motivation. Poor old Western
capitalism did better only at providing political freedom.
Indeed, the most widely used university textbook in
economics, written by Nobel Prize–winner Paul
Samuelson, repeatedly predicted the coming economic
dominance of the Soviet Union. In the 1961 edition,
Samuelson predicted that Soviet national income would
overtake that of the United States possibly by 1984, but