The economy of Tsarist Russia comprises the economic history of Russia from the late middle ages until the October Revolution of 1917 (which ushered in a period of civil war, culminating in the creation of the Soviet Union).
Russian national income per capita increased and moved to closer to the most developed economies of Northern and Western Europe from the late 17th century to the mid 18th century. After the mid 18th century, the Russian economy stagnated and declined. In the 18th century, Russian national income per capita was about 40–70% of British per capita income but higher than Poland's. By 1860, Russian GDP per capita was similar to that of Japan; one-third of GDP per capita in the United States or the United Kingdom; and twice that of China or India. Russia was a late industrializer. Over the course of the late 19th century and early 20th century, Russia's railroad system expanded considerably, enabling greater industrialization.
Serfdom, which held back development of the wage labor market and created a shortage of labor for industry, was abolished in 1861. In the aftermath, GDP per capita was volatile and did not substantially increase. Steady economic growth began in the 1890s, alongside a structural transformation of the Russian economy. By the time World War I started, more than half the Russian economy was still devoted to agriculture. By the early 20th century, the Russian economy had fallen further behind the American and British economies. From the late 19th century to the early 20th century, the economy grew at a similar pace as the Japanese economy and faster than the Brazilian, Indian and Chinese economies.
Historical overview
Grand Principality and Tsardom economies (15th to 18th centuries)
The economy of the Kyivan Rus was one of the strongest in High Medieval Europe at a point, but following the severing of trade ties between the Kyivan Rus and Byzantium, the collapse of the state, and the Mongol Conquest, the economy floundered as cities were despoiled and the East Slavs were forced to pay tribute to their new Tatar overlords. In the 15th century, as the Mongol successor state of the Golden Horde began to collapse following the Timurid invasions, the Muscovites began expanding their trade network, with merchants going to Crimea and trading with the Crimean Goths and the Genoese in Kaffa. Crimea also served as the vantage points for Armenian and Genoese merchants to enter into Russia. Trade along the Volga also increased during this era, with Kazan replacing Bolgar as the principal trading center along the river. Kazan and the neighboring Nogai Horde provided Russia with many traded goods, most notably horses.
Since the days of the Kyivan Rus, Novgorod had served as the central trading city of the Russian people, and their outlet to Western Europe. As the gathering of the Russian lands occurred, the Novgorodian Republic was annexed into Muscovy, and Novgorod's trade importance was as such inherited by the Grand Prince. Muscovy, and later Russia's importance in the Baltic trade increased at the turn of the 16th century, as the Hanseatic League went into decline; Peterhof, the Hanseatic kontor in Novgorod, was closed by Ivan III in 1494. Despite this, Ivan sought to open up external trade as much as possible, setting up numerous trading outposts during his reign, most notably the fortress of Ivangorod on the Narva. This was continued by his successors, including Ivan the Terrible, who established contract with the English via the Muscovy Company, establishing a trade route via the White Sea through Archangel, bypassing the often hostile Swedes and Polish-Lithuanians in the Baltic. Especially following the loss of Ingria in the aftermath of the Livonian War at the end of the 16th century, the Archangel route became the principal conduit of Russo-Western trade. Anglo-Russian relations experienced a downturn in the mid-17th century during the English Civil War, as the Muscovy Company was accused of harboring Parliamentarian sympathies; this culminated in the expulsion of all English merchants from Russia outside of Archangel in 1649, as a reaction to the trial and execution of Charles I; Royalist refugees were also taken in and settled in Moscow during this period. Although tensions thawed following the Royalist Restoration in 1660, the English never managed to recover their position as the dominant western merchantry in Russia, a position that for the remainder of the 17th century was replaced by the Dutch.
During the appanage era, the Rus principalities were more often than not oriented around a town, often eponymously. As Muscovy absorbed these lands into its domain, they promptly became centers of Grand Princely and later Imperial administration. Typical Russian towns during the Muscovite and Tsardom eras consisted of artisans who produced a variety of goods, typically for the domestic Russian market. The countryside produced most long-distance trade items, such as fish or salt. The economy during this time largely remained agricultural, with most of the population being subsistence farmers. The pomestye system, whereby land grants given in exchange for military service, was the backbone of Tsarist military capacity, tying the fate of the agricultural economy closely with that of the state. As Russia increasingly centralized in the 16th century, more strain on the peasantry occurred. The reign of Ivan the Terrible unleashed great economic disruption via the Livonian War, Crimeo-Tatar raids, and the rapaciousness of the new oprichniki, who destroyed the great trading city of Novgorod, severely uprooted productive land, and abused the peasantry to the extent that many began fleeing their lands. The extensive disruption helped precipitate the Time of Troubles, in which many peasant leaders and wannabe-Tsars utilized peasant support to amass power.
Following the Time of Troubles, serfdom was formalized as the predominant institution of labor in Russian society. The broad social and economic upheaval inflicted upon Russia from the Time of Troubles prompted this as the Russian nobility needed to be kept solvent, and permanently tying the peasantry to their lords was seen as the way to accomplish this. The Sobornoye Ulozheniye of 1649, a revised legal code implemented by Tsar Alexis, effectively codified the institution of serfdom in Russia; serfdom in Russia closely resembled that of chattel slavery, especially as the 17th century marched onwards and the rights of the serfs further eroded.
Russia's main exports before the Petrine reforms was fur, as the age of fur intensified during the mini-ice age. Control of the fur trade informed the Muscovite conquest of Novgorod in 1478, as well as the expansion into Siberia starting in the 1580s and its related colonial efforts in the New World. Salt was also important; the House of Stroganov, which spearheaded the initial colonization of Siberia, initially built themselves off the salt trade. Domestic manufacturing was essentially absent and there was strong state interference in the economy, with monopolies being held by the Tsars over certain luxury goods.
The Petrine and Cathrinian economies (18th centuries to 1861)
Under Peter the Great, Russia's first major manufacturing enterprises were founded, largely pertaining to metallurgy and textiles, often in service of his wars. The Urals began to be developed as a center of iron production during his reign via state-sponsored foundries making armaments. He also encouraged the development of merchant companies and improving domestic infrastructure, such as the Vyshny Volochyok Waterway, a canal system linking the Baltic and Volga. After Ingria was recaptured from Sweden during the Great Northern War, Peter ordered the construction of the city of Saint Petersburg on the mouth of the Neva, finally replacing the long in-decline Novgorod as the country's principal Baltic trading outlet and Archangel as its main trading outlet. The new Baltic port city swiftly became Russia's principal commercial hub. The Russian economy evolved under Peter to have a surface-level modernizing, exporting economy over a layer of a serf-based agricultural economy. The next great Russian monarch, Catherine the Great, would see the acquisition of the Black Sea littoral and Crimea via the takeover of the Crimean Khanate. The expansion of Russia into these rich lands of the Pontic Steppe, known by the Polish-Lithuanians as the Wild Fields would provide access to some of the most fertile lands on Earth, prompting an influx of settlers to populate what was now called New Russia; these new agricultural resources, as well as other exports, were now also more easily able to be shipped with access to the Black Sea, which by proxy granted access to the Mediterranean. As a result of the Petrine and Catherinian developments, Russia's foreign trade expanded significantly throughout the 18th century, with grain becoming increasingly important. Great Britain was the country's most important trading partner during this era.
During the age of the Grand Princes, the taxation system constituted of levies on land ownership and personal property, industrial and commercial production, service obligations, and judicial fees. Landowners were required to pay a tribute, or dan, a "recension squirrel" (pischaya belka), and sometimes an additional "supplement" (primet). Marriage was also taxed and commerce as well via tolls introduced during the Kyivan and Mongol eras. Commoners were obliged to assist in the transit of goods as well as fund the yam, or the Mongol-era postal service that was preserved following independence. As the peasantry became less free with the arrival of serfdom, taxation became more onerous throughout the Tsardom era. The Petrine reforms and wars were often funded via aggressive taxes, most famously the beard tax, which forced the Russian nobility to shave their facial hair in an attempt to fit into contemporary western fashion trends. More significantly, the soul tax in 1722 implemented a per-capita tax on all male serfs and state peasants; payments that were the responsibility of their landlords, which further entrenched serfdom. The soul tax remained the principal source of Tsarist revenue for over a century. Under Peter III in 1762, the Russian nobility were granted tax-exempt status, which was reinforced by his wife, overthrower, and successor, Catharine the Great, who was under the influence of French Physiocratism. Catherine further granted the nobility preferential treatment in 1785, when she granted them full ownership of the serfs and their lands, further entrenching the Nobility's dominance, but also locking the Empire into a serfdom-oriented model right as the Industrial Revolution was kicking off.
Industrialization (1861 to 1917)