Mark Harrison: Current Research

Work in Progress

  • Capitalism at War. Paper to the XVIth World Economic History Congress, 9-13 July 2012, Stellenbosch University, South Africa. CAGE, University of Warwick. This version: April 19, 2012. Previous versions: CAGE Working Paper no. 60/2011, University of Warwick, Department of Economics: October 19, 2011. This is a draft chapter for the Cambridge Economic History of Capitalism, edited by Larry Neal and Jeff Williamson for Cambridge University Press. First draft: June 13, 2011.

The nineteenth century witnessed the triumph of capitalism; the twentieth century saw the bloodiest wars in history. Is there a connection? The paper reviews the literature and evidence. It considers first whether capitalism has lowered the cost of war; then, whether capitalism has shown a preference for war; both questions are considered comparatively. Neither question receives a clear cut answer, but to simplify: Yes; No.

  • Accounting for Secrets. Paper to the XVIth World Economic History Congress, 9-13 July 2012, Stellenbosch University, South Africa. CAGE, University of Warwick. This version: April 19, 2012. Previous versions: CAGE Working Paper no. 59/2011, University of Warwick, Department of Economics: October 17, 2011. This is a paper to the national convention of the Association for Slavic, East European, and Eurasian Studies, November 17-20, 2011, Washington, DC. First draft: September 26, 2011.

The Soviet state counted people, resources – and secret papers. The need to account for secrets was a transaction cost of autocratic government. This paper finds archival evidence of significant costs, multiplied by secrecy’s recursive aspect: the system of accounting for secrets was also secret and so had to account for itself. The evidence suggests that most Soviet officials complied most of the time. Numerous instances also imply that careless handling could take root and spread locally until higher authorities intervened. The paper uses the case of a small regional bureaucracy, the Lithuania KGB, to estimate the aggregate costs of handling secret paperwork. Over the period from 1954 to 1982, accounting for secrets makes up around one third of this organization’s archived records. This figure is surprisingly large, and is the main new fact contributed by the paper. There is much time variation, some of it not easily explained.

  • Russia’s Home Front, 1914-1922: The Economy. With Andrei Markevich. CAGE Working Paper no. 74/2012, University of Warwick, Department of Economics. First draft: February 7, 2012. This is a draft chapter for Russia’s Home Front: Politics, Economy and Society in War and Revolution, 1914-1922, edited by Sarah Badcock, Adele Lindenmeyr, Eric Lohr, Liudmila Novikova, Christopher Read, and Peter Waldron, a volume in the series Russia’s Great War and Revolution: The Centennial Appraisal, edited by Tony Heywood, David McDonald, and John Steinberg for Slavica publishers.

This paper describes the main trends of the Russian economy through the Great War (1914 to 1917), Civil War (1918 to 1921), and postwar famine (1921 to 1922) for the general reader. During its Great War mobilization the Russian economy declined, but no more than other continental economies under similar pressures. In contrast, the Civil War inflicted the greatest economic trauma that Russians suffered in the course of the twentieth century. The paper identifies the main shocks in each period evaluates the relative contributions of circumstances and policy, and sums up their historical significance.

This paper is about the costs of doing business under a harsh, secretive dictator. In 1949 the Cold War was picking up momentum. The Soviet state had entered its most secretive phase. The official rationale of secrecy was defense against external enemies. One of the Gulag’s most important secrets was the location of its labour camps, scattered across the length and depth of the Soviet Union. As this secret was guarded more and more closely, the camps began to drop out of the Soviet economic universe, losing the ability to share necessary information and do business with civilian persons and institutions without disclosing a state secret: their own location. For some months in 1949 and 1950, the Gulag’s camp chiefs and central administrators struggled with this dilemma and failed to resolve it. This episode teaches us about the costs of Soviet secrecy and raises basic questions about how secrecy was calibrated.

Shorter Papers from the Hoover Archive

This paper provides a preliminary view of the KGB’s work to prevent the spread of subversive ideas and behaviors in Soviet Lithuania in the 1970s, based on the technique of “profilaktika,” or preventive warnings. The paper considers the rationale, mode of operation, scope, and effectiveness of preventive warnings. The paper is short, because it is based on a first impression of extensive documentation. I have no intention to write a longer version. Rather, I hope the paper may attract other scholars to work on this fascinating and important subject.

The paper provides a rare case study of terrorism and counter-terrorism within a closed society, carried out under a blanket of official secrecy. This case is unexpectedly revealing in what it tells us about terrorism, counter-terrorism, and the relative strengths of open and closed societies. Documents from the archive of the Lithuania KGB show how the Soviet authorities managed the hunt for the perpetrators of bombing attacks carried out in Moscow in January 1977. Lithuania, a sensitive border region with a troubled history, was far distant from the epicenter of the conspiracy in Soviet Armenia, but the authorities did not know this beforehand, and made considerable efforts to establish or rule out a Lithuanian connection. It was a problem that the KGB, like other Soviet organizations, was vulnerable to box-checking and other kinds of perfunctory working to the plan. The career concerns of regional KGB leaders appear to have countered this tendency. The paper evaluates the strengths and weaknesses of a counter-terrorist operation carried out under conditions of the intense secrecy that was normal in the Soviet police state.

This paper tells the story of a pensioner’s fight against a local mafia of Soviet party and government officials and farm managers in a remote rural locality in the 1950s. To Moscow, he was a whistleblower. To the leaders of his local community, he was a troublemaker. Working together, the local people went to extraordinary lengths to suppress his criticisms. Eventually, Moscow intervened to vindicate him. The story illustrates vividly the political and economic issues that arose when a centralized dictatorship that relied on mass mobilization over a vast territory with sometimes poor communications tried to contain local rent seeking while moving away from mass terror as its chief instrument of control.

In the mid 1980s Soviet leaders began to regret the price they were paying in the international arena for extreme secrecy in military affairs. New evidence shows that in the autumn of 1986 they decided in principle to release more information about military force levels and defense outlays. They went on to agonize over this commitment over the next two and a half years. Senior military and other officials resisted and delayed implementation. The new figures that Gorbachev announced in 1989 may not have the whole truth, but were probably better than a half-truth. The episode throws more light on the burdens of secrecy than on the supposed burdens of military spending.

Inactive (papers that I am not currently trying to publish)

Military procurement in the Soviet economy under Stalin provides a novel historical context for a standard problem of market organization, that of contracting for quality. The Soviet ministry of defense was engaged in the procurement of military goods from Soviet industry. An internal market was formed and contracts were made. In the market, the contractor had power over the buyer and typically used this power to default on quality. In the background loomed a dictator, imperfectly informed, but with the power to tear up any contract and impose unlimited penalties on the contractor. The buyer’s counter-action took the form of deploying agents through industry with the authority to verify quality and reject substandard goods. The final compromise restored quality at the expense of quantity. Being illicit, it had to be hidden from the dictator. Our case provides an historical illustration of the limits of dictatorship.

Richer countries had an advantage in both world wars, because they were able to mobilize the greatest quantity of military resources. To investigate the impact of income on mobilization statistically, we analyzed pre-war income, as well as structural (persistence of agriculture) and institutional (financial and political) mechanisms. In mobilization of total economic resources, pre-war income had a positive impact. Neither income nor institutions played a substantial role in mobilizing troops, but fiscal mobilization was explained well by all the mechanisms. Income had a positive impact, as did various financial and political institutions. The richer countries possessed an advantage in fiscal mobilization due to their superior institutions.

We draw on the experience of the major combatant countries in World War I to analyse the role of economic factors in determining the outcome of the war and the effects of the war on subsequent economic performance. We demonstrate that the degree of mobilisation for war can be explained largely by differences in the level of development of each country, leaving little room for other factors that feature prominently in narrative accounts, such as national differences in war preparations, war leadership, military organisation and morale. We analyse the effects of the war on subsequent economic performance in terms of the scale of destruction of physical and human capital. Although the growth rate between 1918 and 1929 was highest in the economies which experienced the worst destruction, over the period 1913-1929 as a whole, per capita income growth in Europe was reduced. Thus there was some rebound, but not enough to undo the negative effects of the capital destruction and the damage to the international institutional framework caused by the war.

In Stalin’s command system secrecy was used to conceal information and decisions. We look at the uses of secrecy in a hierarchical system of the Soviet type in the context of the fundamental problem of command. Secrecy was a conditional choice. Principals gained by making economic information secret when the agent’s expected profit opportunities in private trade were tempting, horizontal trust was fragile, and secrecy itself was cheap. It paid them to make decisions in secret when unexploited opportunities, and the wage that the principal could afford to pay the agent, were both low. Under some circumstances secrecy benefited both principal and agent. Secrecy was one element in an equilibrium that enabled principals and agents to participate in the command system and enabled the system itself to persist.

  • Are Command Economies Unstable? Why Did the Soviet Economy Collapse? This version: 19 February 2003. Paper to the second Oxford-Houston conference on "Initial Conditions and Russia's Transitional Economy," University of Houston, 19 to 21 April 2001. Previously circulated as The Warwick Economics Research Paper Series no. 604, University of Warwick, Department of Economics. First draft: 3 May 2001.

The collapse of the Soviet economy that began in 1989 was not a "transformational" recession; there was a recession, but little transformation. The economy collapsed when the stability conditions required for a successful command system, that had been present in the Soviet Union for seventy years, ceased to hold. These conditions can be defined by the equilibrium of a game of strategy played by a dictator and a producer. The available output must be able to cover the producer’s effort costs and the dictator’s monitoring costs. Adverse trends in production and monitoring costs eventually rendered the command system unsustainable.

The paper considers the influence of the budget for military spending in the Soviet command economy. A specific problem is that the Soviet strategy of concealment left us without good measures of the military burden on Soviet resources. The paper surveys previous western attempts to fill this gap alongside post–Brezhnev revelations. A new documentary source from 1982 that appears authoritative suggests much higher figures than anything proposed or revealed so far, and supports these higher figures in detail. However, the figures contain many puzzles and the authenticity of the document itself cannot be fully assured.

Postscript. Following circulation of this paper, and the "Konoplev Report" that provided the occasion for it, I received helpful advice and comments from many colleagues. My paper also aroused comment on the Russian internet, for example on Boris L'vin's Journal. The arguments and other evidence that were put forward inclined me more strongly to the conclusion that the "Konoplev Report" is a forgery. Thus my paper has proved to be more useful in terms of the authentication of historical documents than for historical economics. I thank in particular Julian Cooper, R. W. Davies, James Noren, and Lennart Samuelson for their advice.