The Development of Capitalism in Russia in the Works of Marx, Danielson, Vorontsov, and Lenin

Class History and Class Practices in the Periphery of Capitalism

ISBN: 978-1-78973-592-5, eISBN: 978-1-78973-591-8

ISSN: 0161-7230

Publication date: 3 September 2019


While working on the final draft of Das Kapital Volume I, Marx discovered that the assumption that he had previously held: as it circulated capital extended its sphere of operation and at the same time absorbed earlier forms of economic organization was not supported by empirical evidence. From 1869 he began to study how in fact capital began to circulate in Russia, a country which had begun to create a capitalist economy after the liberation of the peasantry in 1861. Marx was aided in this project by Nikolai Danielson, who sent him materials on the Russian economy and who himself made a study of contemporary trends in Russian economic development. Marx contributed to the article Danielson published in 1880 on this subject. One of the works Marx acquired was the book by Vorontsov, who concurred with Danielson that only some features of capitalism were present in the Russian economy and that peasants were dispossessed without being re-deployed in capitalist enterprises. Marx died without incorporating his Russian material into the second volume of Das Kapital. Engels failed to see any problem with the circulation of capital and published the manuscripts as he found them, dispersing Marx’s Russian materials. Unlike Danielson, Engels was convinced that Russia’s economic development did not differ in any way from that of Western Europe, a conviction shared by Plekhanov and Lenin, who classed Danielson and Vorontsov as “narodniki.” Lenin’s book The Development of Capitalism in Russia is a polemic against Danielson and Vorontsov, but does not directly address the points they made.



White, J.D. (2019), "The Development of Capitalism in Russia in the Works of Marx, Danielson, Vorontsov, and Lenin", Class History and Class Practices in the Periphery of Capitalism (Research in Political Economy, Vol. 34), Emerald Publishing Limited, Bingley, pp. 3-31.



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Marx’s Purpose in Studying Russia

Toward the end of the nineteenth century, three important works appeared devoted to investigating the direction taken by the Russian economy in the aftermath of the 1861 liberation of the peasantry. These were Nikolai Danielson’s 1 Studies in the Development of our Post-Reform Economy (1893), V. V. Vorontsov’s The Fate of Capitalism in Russia (1882), and V. I. Lenin’s The Development of Capitalism in Russia (1899). The significance of the three works is not only that they provide valuable insights into the extent to which capitalism had made inroads into the Russian economy by the time they were written, but also that they reflect the two dominant ideological currents within the Russian socialist camp: “Narodism” (“Populism”) represented by Danielson and Vorontsov, which deplored the destructive effects of capitalism on the social fabric of the country, and “Marxism,” represented by Lenin, which welcomed the development of capitalism in Russia, as it would lead in the long run to the establishment of a socialist society. However, an examination of the three works reveals that the intellectual relationship of Marx to Danielson and Vorontsov was particularly close, whereas Lenin’s approach to the Russian economy was one that was derived from Engels and Plekhanov.

The determining factor in Marx’s relationship to Danielson’s and Vorontsov’s works was his evolving perception of the way capital circulated and reproduced itself. Up to the time that Das Kapital Volume I was published in 1867, Marx had assumed that the repeated circuits of capital through the cycle of money–commodity–money would extend the sphere of capital’s operation. He thought that the social relations that made capitalism possible – the division into capitalists and proletarians – would reproduce themselves on an expanded scale; that new enterprises would arise and peasants, who had hitherto made their living from the land, would be turned into industrial workers. In this way the pre-conditions for capitalist production would be created anew, as the cyclical process returned to its point of departure (White, 1996, pp. 168–170, 191).

The concept of circulation was a crucial one for Marx’s entire project. It provided the dynamic by which capitalism expanded outward and would eventually become the universal economic system with the creation of the world market. In the early drafts of the second volume, it is possible to see that there was a philosophical dimension to the question of circulation which is no longer in evidence in the published version (White, 1996, pp. 194–195). From his observations in Volume III, it emerges that Marx intended what were to become the three volumes of Das Kapital to form a progression from the more abstract to the more concrete, the third volume dealing with phenomena which appeared “on the surface of society” (Marx, 1981, p. 117). It was this kind of progression that determined the distribution of material throughout the three volumes. The close integration of the volumes meant that some aspects of capital’s circulation were prefigured in the drafts of Volume I and were carried over to Volume III. One can well imagine that if it had been completed Marx’s treatment of capitalism in the three volumes would have formed an elegant and well integrated whole.

What prevented the completion of this scheme was Marx’s belated realization that in its circuits capital did not necessarily expand the sphere of its operation by dissolving earlier forms of social and economic organization. In fact, as he indicated in a letter to Engels of 25 March 1868, capitalism and traditional communal forms of agriculture could easily coexist (Marx & Engels, 1987, p. 558). Later, he was to discover that the opposite was also possible: that traditional forms of society and economy could be destroyed by capitalism without their being absorbed into the capitalist system.

From 1867 Marx embarked on two courses of action. One was to remove from his writings any suggestion that the circulation of capital was necessarily destructive to earlier economic systems. He did this by removing explicit references to capital’s subjugating role in the first edition of Das Kapital, a process he carried further in the second edition of Das Kapital Volume I published in 1872 and in the French translation published between 1872 and 1875. Since Marx’s exposition of the economic categories of the capitalist system was structured on analogy with Hegel’s Science of Logic, these philosophical underpinnings were greatly reduced in the second edition of Das Kapital and eliminated entirely in the French translation.

The other course of action that Marx embarked upon was to investigate how the circulation of capital actually took place. For this purpose, he had the ideal material for study to hand. In 1861, the Russian government had liberated the serfs in the expectation that Russia would then develop along capitalist lines, as the countries of Western Europe had already done. This gave Marx the opportunity to chart the emergence of capitalism as it took place. For this purpose he began in 1869 to learn the Russian language and to collect first-hand sources on the development of the Russian economy.

Marx and Danielson Correspond and Collaborate

Marx was singularly fortunate to have as one of his Russian contacts Nikolai Frantsevich Danielson 2 , who, along with his friends Herman Lopatin and N. N. Liubavin, had translated the first volume of Das Kapital into Russian (1872). He also assiduously supplied Marx with materials for his study of the Russian economy. Danielson himself carried on research into the subject, making extensive use of statistical materials that were available to him in his capacity as an employee of the Society of Mutual Credit, a subsidiary of the State Bank, in St Petersburg (Grin, 1985, p. 11). In these researches, he was encouraged by Marx. In his letter of November 15, 1878, Marx requested Danielson to supply him with information on the state of Russian finances, information that Danielson doubtless possessed, being someone who was a banker by profession (Marx & Engels, 1991, p. 344).

By the spring of the following year, Danielson had carried out the requisite research and presented his findings in a letter to Marx dated March 5 (17), 1879. This letter was in effect the first draft of the article that Danielson published in the journal Slovo in 1880. The letter was accompanied by statistical tables illustrating the part played by the railways and the banks in the economy of the country. These institutions made it possible for grain to be exported abroad while the peasants who produced the grain were impoverished and starved. Danielson was especially struck by the fact that while the railway companies made vast profits, they were in considerable debt to the exchequer (Marx & Engels, 1967, pp. 357–371). As he remarked:

But what does the government gain in incurring these colossal expenses? Their result is a significant development of trade, which at the same time was helped by the credit and land banks, founded in the same period. That is why one should look at the influence of all these institutions taken together. (Marx & Engels, 1967, p. 363)

On April 10, 1879, Marx commented on the draft article contained in Danielson’s letter of 5 (17) March. Marx found this “remarkable” and made some observations on what Danielson had written. These were:

The railways sprang up first as the ‘couronnement de l’oeuvre’ in those countries where modern industry was most developed – in England, United States, Belgium, France etc. I call them the ‘couronnement de l’oeuvre’ not only in the sense that these were the last (together with steamships for oceanic intercourse and the telegraphs), the means of communication adequate to the modern means of production, but also in so far as they were the basis of the immense joint-stock companies, forming at the same time a new starting point for all other sorts of joint-stock companies, to commence by banking companies. They gave in one word an impetus never before suspected to the concentration of capital and also to the accelerated and immensely enlarged cosmopolitan activity of loanable capital, thus embracing the whole world in a network of financial swindling and mutual indebtedness, the capitalistic form of ‘international’ brotherhood.

On the significance of railways for capitalist development, Marx continued:

On the other hand, the appearance of the railway system in the leading states of capitalism allowed, and even forced, states where capitalism was confined to a few summits of society, to suddenly create and enlarge their capitalistic superstructure in dimensions altogether disproportionate to the bulk of the social body, carrying on the great work of production in the traditional modes. There is, therefore, not the least doubt that in those states the railway creation has accelerated the social and political disintegration, as in the more advanced states it hastened the final development, and therefore the final change of capitalistic production […] Generally, the railways gave of course an immense impulse to the development of Foreign Commerce, but the commerce in countries which export principally raw produce, increased the misery of the masses. Not only that the new indebtedness, contracted by the governments on account of the railways, increased the bulk of imposts weighing upon them, but from the moment every local production could be converted into cosmopolitan gold, many articles formerly cheap, because invendible to a great degree, such as fruit, wine, fish, deer etc., became dear and were withdrawn from consumption, while, on the other hand, production itself, I mean the special sort of produce, was changed according to its greater or minor suitableness for exportation, while formerly it was principally adapted to its consumption in loco. (Marx & Engels, 1991, pp. 356–357)

On July 14 (26), 1879, Danielson wrote to Marx expressing his delight at Marx’s favorable reception of his ideas. He also expressed regret that Marx was still some way off the completion of the second volume of Das Kapital. In the meantime, Danielson had been continuing his researches into the Russian peasant economy and he reported his findings to Marx in some detail. Danielson reiterated his conviction that in Russia “all our efforts are directed, not at the organization of production (which does not develop), but to the organization and development of circulation.” In this connection, he added that:

That is why it is extremely interesting and instructive to study the contemporary economic development of Russia: we see a country with a very weakly developed productivity, a social organism which is infected with the disease of capitalism in its most dangerous form. (Marx & Engels, 1967, pp. 382–393)

This was a view from which Marx did not dissent.

In his letter to Marx of August 21 (2 September), 1880, Danielson reported that the tables of statistics he had accumulated now complemented each other in such a way that they showed:

not only the close connection of all the phenomena in our economic life, but also the almost full adaptation in the course of the evolution of each separate phenomenon to all the others and vice versa.

He surmised that the second volume of Das Kapital would examine these economic phenomena and explain what gave rise to them. But since such phenomena had not only a purely theoretical, but also a practical interest, it would be desirable to communicate them to the public. It was for this reason that Danielson proposed that Marx write for some Russian journal an article on the subject of “our post-reform economy.” If Marx agreed to do this, Danielson would supply him with all the statistical tables he had collected. If he declined to write such an article, Danielson would attempt to do so himself, giving a summary of his research findings. He hoped that Marx would allow him to cite his comments on Danielson’s letter of March 5 (17), 1879 (Marx & Engels, 1967, pp. 423–424).

Marx answered, assuring Danielson that under normal circumstances, he would gladly do as Danielson requested, but that at the present time the state of his health and concern for that of his wife would not permit him to engage in theoretical work. “However,” Marx continued:

the most important part for the public in general is that which you have already performed – the drawing up of the statistical tables and the interpretation of the facts which they imply. It would be a pity if you delayed the publication which I expect myself with the greatest impatience.

Whatever you may have found useful in my letters for that purpose, you may freely dispose of. Only I fear it is not much, since I sent you only a few fragmentary scraps. (Marx & Engels, 1992, pp. 30–31)

On receipt of this letter, Danielson began to write the article “Studies in Our Post-reform Economy,” utilizing the information and the statistical tables that he had sent to Marx. On the completed article, Danielson told Marx: “You will not find anything new in it (with the exception of the table on p. 129, note). As you will see, I have made wide use of your kind permission to cite your letters.” Danielson also explained that for lack of time he had limited himself to only part of the area he had intended to cover. Moreover, there were external constraints to what he could say in the article. Besides the censor, there was the publisher of the journal, who was averse to even Marx’s name being mentioned in his presence (Marx & Engels, 1967, p. 430).

Danielson’s article “Studies in Our Post-reform Economy” was published in the journal Slovo in October 1880 under the pseudonym of Nikolai-on. Danielson begins his study by showing the interdependence of the Russian railway companies and the banks. Initially it had been the government which had organized and financed the building of railway lines. For this purpose, it had raised loans abroad and decided to involve the private sector in the undertaking. But since private companies did not have at their disposal the kind of finance that railway construction required, they turned to the banks for credit. Before 1864, the only institution supplying credit was the State Bank, but in the 1870s with the railway-building fever, private banks began to proliferate. These supplied credit to the railway companies and dealt in the companies’ shares and securities. By 1879 of the 2,033 million roubles invested in joint-stock companies, 1,383 million roubles came from shares in railway companies (Daniel’son, 1880, pp. 78–79).

If one looked at the profitability of the railway companies themselves, one encountered an amazing paradox. There was extraordinary growth in net income between 1870 and 1877 of 145 percent, but an even stronger growth in expenses for the same period of 162 percent. The difference between income and expenditure also grew significantly, from 32.5 million roubles in 1870 to 71.7 million roubles in 1877: that is, a growth of 120 percent. But despite this increase not only in gross, but also in net income, the debts of the railways to the state over the period rapidly increased (by 150 percent). This was explained by the fact that whereas the income from the profitable lines went into the pockets of private persons, the losses from the remaining lines were covered by the state (Daniel’son, 1880, p. 85).

How, Danielson asked, did the state recoup these enormous expenses? The answer, he suggested, was in the extraordinary development of trade, especially in the export trade in grain. Grain was Russia’s main export and was also the main item of freight carried on the railways. Using the information from the publication Survey of Internal Trade, Danielson analyzed the implications of rail traffic for the Russian economy. He first of all looked at the movement of peasants by rail throughout the agricultural year. These were peasants who traveled for “agricultural subsidiary occupations,” that is, in order to supplement the meager income which they received from their own allotments of land. Because these allotments were insufficient to provide a livelihood and the means of paying taxes, other sources of income had to be sought. Not finding work nearby, the peasants set off to find employment elsewhere, in regions of the country where agricultural workers were in demand.

The figures showed that in March with the beginning of field work the number of passengers, which earlier had been falling, began to rise. This number reached its highest in August with the ending of agricultural work, as the peasants returned home. In September, the number of passengers declined steeply and continued its fall until March. This completed the cycle, from which it could be inferred that most of the subsidiary occupations that the peasants engaged in were agricultural. Another set of figures showed that when the peasants had completed their work, the railways began to transport the product of their labor, the grain. The conclusion to be drawn was that the traffic on the railways was determined by agricultural activity (Daniel’son, 1880, pp. 87–91).

A similar picture emerged if one looked at the figures for the export of grain. After the harvest, in September, the export increased, reaching its highest level in October, slackening off in winter, the lowest point being in January. This movement fully coincided with the movement of freight on the railways and once again showed the dependence of the railways on the agricultural cycle.

Not only the railways, but the banks too lived at the expense of the peasant. Money deposited in the State Bank for transfer to the provinces increased markedly in August and September, reaching a peak in October and decreasing in November. Its lowest level was in the winter months, when the State Bank withdrew banknotes from circulation. These were reissued in the spring with the start of the agricultural year and the increasing traffic on the railways.

There were, in Danielson’s view, two waves of financial activity during the year, in the spring and in the autumn. Although to outward appearance they were the same, in fact they were different in quality. The spring wave represented the change in ownership of a commodity long ago alienated from its producer and that was all. In this wave production played no part; this had been done in the previous year. The autumn wave was something different: here everything was directed at receiving from the producer the product of his summer labor. The money is made available for the purpose, and it is in September, the month in which the peasant sells his grain, that he is momentarily in possession of money.

But where, Danielson enquired, does the enormous income from the export of grain go? This is shown by the movement of securities, shares, etc., paid into the State Bank as deposits. As autumn approaches the flow of money into the provincial banks strengthens, as their income begins to rise with the end of the harvest.

An examination of the statistics for the annual production of grain revealed that the level had remained the same over the past decade. This meant that the rapid development of railways and banks has not been prompted by any increase in grain production. But, in Danielson’s view:

once we had come into the economic family of Europe, although as a junior member, to maintain the shadow of our economic independence, we directed our forces not to the development of production itself, but to the development of the results of this production, and banks and railways are exactly what the results of capitalist production are. (Daniel’son, 1880, p. 103)

Danielson added that the railway network had encouraged exchange, the circulation of commodities, a development that could be observed even from the first appearance of railways in the country.

The railways and banks had opened the way for Russian grain to be sold on the world market. Contact with the world market had also encouraged the development of an exchange economy within the country. It also subjected Russian grain to competition from foreign producers. As Danielson observed: “Once we have fallen into the retort of world circulation, willy nilly we have to submit to its laws. And these laws are extremely severe and despotic for us” (Daniel’son, 1880, p. 107).

A consequence of the grain export was that it diverted food from the peasant producers and severely reduced their consumption. Danielson was adamant that the main beneficiary of the people’s impoverishment was not the state, but the capitalist class. He readily conceded that the taxes were a heavy burden on the peasants and that they were disproportionate to the peasants’ income, but he maintained that taxes by themselves were not responsible for the peasants’ reduction in consumption. Most of the agricultural product went not to the state, but to the railways, bankers, merchants, share-holders, and other members of the capitalist class. Capital accumulation took place at the expense of the impoverishment of the peasantry.

Danielson believed that this situation was not sustainable, that a crisis was in the offing. He believed also that the causes of this crisis were to be sought in the development of capitalist relations, and primarily in the way the process of circulation was taking place. Exchange increased with no corresponding increase in the product exchanged. It was for this reason that Danielson saw no remedy for the impoverishment of the peasants in a reform of the taxation system or in the encouragement of the peasants to emigrate into less populated parts of the Russian Empire.

Danielson drew a comparison between the pattern of capitalist development in Russia and in Western Europe. Whereas in the West the emergence of railways and the banks had been the result of commodity circulation, in Russia these institutions had appeared before an economy based on exchange values had developed (Daniel’son, 1880, pp. 103, 134). In elaboration of this idea Danielson quoted almost verbatim Marx’s comments on the letter Danielson had written to him on March 17, 1879. The only indication that the ideas came from Marx was contained in a footnote quoting from Marx’s letter to the effect that:

They gave in one word an impetus never before suspected to the concentration of capital and also to the accelerated and immensely enlarged cosmopolitan activity of loanable capital, thus embracing the whole world in a network of financial swindling and mutual indebtedness, the capitalistic form of “international” brotherhood. (K. Marx) (Daniel’son, 1880, p. 135)

Danielson did not give the source of his quotation, and this could not be ascertained by readers of his article until 1908, when Danielson published Marx’s and Engels’s letters to him in Russian translation.

Marx was highly complimentary of Danielson’s article, calling it “in the best sense of the word ‘original’”. A more indirect, but more significant compliment was to compare the boycotting of Danielson’s article with the similar reception that had accompanied the publication of his own Das Kapital. In Marx’s opinion, the next aspect of the Russian economy that Danielson should examine was:

the wonderfully increasing indebtedness of the landlords, the upper class representatives of agriculture, and show them how they are “crystallised” in the retort under the control of the “new pillars of society”. (Marx & Engels, 1992, p. 61)

In his notes on Danielson’s article, Marx copied out the figures supplied in the statistical tables. He observed that the production of grain, upon which the economy of the Russian state depended, was in a state of absolute stagnation and that the productivity of labor had declined, with more people working on the land. Consequently, he concluded, paraphrasing Danielson:

in Russia, the development of railways, as distinct from Western Europe, was evoked not by the mass growth of production, but the fact that the Russians, as younger brothers of the Europeans, in order to preserve the shadow of their economic independence, directed their efforts not to the development of capitalist production, but to its results – banks and railways. (Koniushaia, 1952, p. 119)

Over the winter of 1881–1882, Marx drafted out a work surveying the 1861 reform and its aftermath. The draft concluded with a section on the economic development of Russia in the post-reform period. By and large, this was a summary of Danielson’s Slovo article, reproducing extensively the statistical data that Danielson had used (Koniushaia, 1952, pp. 3–28).

Another place in which Marx used Danielson’s findings was in his drafts of the letter to Vera Zasulich. Zasulich had written to Marx in February 1881 to enquire whether he believed that the peasant commune was capable of developing in a socialist direction, or whether it was destined to disintegrate, as it had in Western Europe, preparing the way for the emergence of capitalism. The answer to this question would determine the tactics of Russian socialists. In his draft reply, Marx favored the first of these alternatives. He thought that the peasant commune could be the basis of a socialist society in Russia and that it could appropriate the positive achievements of capitalism without undergoing its negative attributes. Marx continued, drawing upon Danielson’s findings:

If the Russian admirers of the capitalist system should deny the theoretical possibility of such an evolution, I would put to them the question: was Russia forced, as the West was, to pass through a long period of incubation of the mechanical industry before it could make use of steamships, railways etc. Let them also explain to me how they managed to introduce instantaneously all the mechanism of exchange (banks, credit societies etc) which took the West centuries to develop. (Marx & Engels, 1985, p. 220)

With regard to the implications for the peasant commune, Marx continued, using information supplied by Danielson’s statistical tables:

If at the time of the emancipation the rural communes had been initially placed in conditions of normal prosperity, if further, the immense public debt paid for the most part at the expense of the peasants, with the other enormous sums furnished through the agency of the state (and also at the expense of the peasants) to the “new pillars of society,” transformed into capitalists – if all these expenses had served for the further development of the rural commune, no one would be dreaming today of the “historical inevitability” of the annihilation of the commune: everyone would recognise in it the element of regeneration of Russian society and an element of superiority over the countries still enslaved by the capitalist regime. (Marx & Engels, 1985, p. 220)

In the drafts of Marx’s letter to Vera Zasulich, one can also discern the influence of his other Russian contacts – Nikolai Sieber and Maxim Kovalevsky. Unlike these two writers, Marx did not think that the development of capitalism in Russia was inevitable and that if the evils it brought with it could be avoided, they should. This, however, was not a view shared by all of his Russian followers.

Vorontsov’s The Fate of Capitalism in Russia

When the book The Fate of Capitalism in Russia by V. P. Vorontsov, writing under the pseudonym of “V. V.,” appeared in 1882 Marx acquired a copy and made a careful study of it. Vorontsov was well acquainted with Marx’s ideas from Das Kapital, but, unlike Danielson and his circle, had not been party to Marx’s researches on Russia. His impression of Marx’s standpoint, therefore, was derived from published sources, including articles by Sieber, who considered the development of capitalism in Russia to be inevitable. This impression was reflected in the introduction to Vorontsov’s book, where he stated: “the socialists of Marx’s school consider that in Russia capitalist production must necessarily become dominant.” This passage was underlined by Marx in his copy of the book (Institut marksizma-leninizma pri TSK KPSS, 1979, p. 44).

Vorontsov’s researches into the post-reform Russian economy were in agreement with Danielson’s findings in his 1880 article in Slovo. Like Danielson, Vorontsov drew a distinction between capitalist production, which he denied that Russia had, and capitalist circulation, which he regretted that it did. For Vorontsov, the kulaks represented the parasitic capitalist element in the Russian economy, and it was these who threatened to impoverish the peasantry as a whole.

As he observed:

One must remark here that in denying the possibility of the domination in Russia of capitalism as a form of production, I do not rule out its potential as a form and degree of exploitation of the popular masses. Therefore, theoretically, it is possible that together with the consolidation of small industry there will go the development of kulakdom, the destruction of the peasant commune etc. (Vorontsov, 1882, p. 5)

Vorontsov added that, of course, it was a matter of indifference to the workers who exploited them, be it a kulak, a rentier or a factory boss, but it did matter a great deal for the way production developed in the country, whether, in one case, it would retain its small-scale form or, in the other, it would be transformed into large-scale industry. It also had profound implications for Russia’s political development: in Western Europe, it had been the bourgeoisie that had been the bearer and promoter of liberal and enlightened ideas. If in Russia there was no domination of capitalist production, there would be no class similar to the liberal European bourgeoisie, and consequently no social support for political freedom. The Russian government would have no need to make concessions to liberalism, as Western governments had.

In Vorontsov’s view, Russia stood on the brink of capitalist development, but it had the privilege of backwardness. Countries which embarked upon the path of their historical development later than the rest had the great advantage of being able to learn from the experience of others. The historical peculiarity of large-scale industry in Russia was that it had emerged at a time when that of other countries had attained a high level of development. This had two implications: the first was that Russian large-scale industry could adopt techniques already elaborated by the West, without having to crawl at snail’s pace (cherepashim shagom) through all the intermediate stages. It therefore had the possibility of rapid development. The second implication was that Russian large-scale industry had to compete with countries in which industry was already well established, and, in competition with such countries, emergent Russian industry could be completely crushed.

The later that countries embarked on industrialization, Vorontsov believed, the more difficult it was for them to accomplish this by the capitalist route. It also meant that the possibility of dispossessed peasants finding work in the factories would be severely limited. This was because the pressure of external competition forced capitalism in countries in which the system had recently been introduced to develop intensively rather than extensively: to increase the productivity of labor of workers already in employment rather than bringing new workers into production. In other words, for the development of capitalism in a country like Russia, there was no necessity to free the population from the means of production on the scale on which this took place in the West. The peasants who were deprived of their land did not become proletarians working in factories, but landless peasants with no means of livelihood.

This state of affairs rendered famines endemic in Russia. It also limited the possibility for the growth of industry. Because large-scale industry was mainly reliant on the internal market, its success was in direct proportion to the prosperity of the mass of the population. But every landless peasant who had to abandon his land reduced the effective demand for the products of industry (Vorontsov, 1882, p. 31).

Despite its imposing façade, Vorontsov was inclined to consider capitalism in Russia more of an illusion than reality. It was true, he conceded, that 20,000 versts of railways had been constructed, but this did not count as proof of capitalist relations in general or of commodity relations in particular. Although the railways were in private hands, they were maintained not by industry, but by the government. This was only too vividly illustrated by the billion roubles of debt transferred from them to the exchequer. Despite the existence of banks and joint-stock companies, concentrating capital, the government was constantly called upon to support industry, to subsidize the banks, and to impose prohibitive tariffs. The capitalists’ complaints about the expensiveness of workers, their aspirations to destroy the peasant commune and other alleged manifestations of a young capitalism struggling against the restrictions preventing its development were, in Vorontsov’s opinion, indication of Russian capitalism’s moribund character rather than of its vitality.

Vorontsov’s treatment of Russian industry carries especial weight because he is able to illustrate it with the history of individual firms. These were often created by the Russian government in response to a particular need. In the 1840s, with the construction of the Nikolaev railway, it was decided to build the locomotives, waggons and other rolling stock in Russia. Engineers were invited to Russia from America to organize the enterprise, and as a result, several private factories were established, for the most part producing simple cast iron articles. All this activity stopped, however, with the completion of the railway. In the mid-1850s, the stimulus to machine-building was the Naval Ministry, by its orders in expectation of the Crimean War. This occasioned the establishment of the shipbuilding firms of Duke Leichtenberg and Carr and MacPherson (later the Baltic Iron and Shipbuilding Works). The operations of these firms came to an end when the orders had been fulfilled.

Another stimulus for the machine-building industry was provided by the Polish uprising of 1863, when many factories were set up to equip the Russian army. These included the engineering companies Semiannikov and Poletik, Putilov, and the cannon-casting firm of Obukhov. All these factories curtailed their activities with the end of government orders, there being no other market for their products (Vorontsov, 1882, p. 37).

Because they owed their existence to government contracts, Russian firms had a speculative character. They did not specialize in any particular product, but manufactured any product for which there was a profit to be made. Thus, the Nevsky factory received an order for locomotives from the government, but at the same time it was building battleships, iron bridges, and other products. The Kolomensky engineering company, besides locomotives and waggons, was building iron bridges and beams. The Baltic company (the former Carr and MacPherson) ceased shipbuilding to take up the construction of locomotives and waggons. This lack of specialization caused the goods produced to be of poor quality, and they would not have found a buyer other than the Russian government.

Whereas in the West, economic progress was stimulated by competition, this element was absent in Russia. Russian manufacturers insisted that the government institute high tariff barriers to keep out foreign goods and allow the development of indigenous industries. In fact, nothing of the kind happened. Foreign firms established themselves in Russia behind the tariff barriers and took advantage of the protection they offered to maintain high prices for their goods. Vorontsov points out that the presence of foreign firms did not have the effect of training the Russian work force in industrial skills. He gives the example of John Hughes, the Welsh iron master, who set up business in the Ukraine. Hughes imported his skilled workers from Britain and poached unskilled workers from the Putilov factory in St Petersburg.

In contrast to the artificiality of Russian large-scale industry, Vorontsov presented the handicraft industries as being on a much sounder footing. When not engaged in agriculture, peasants produced a great variety of goods, each area with its own specialization. The articles manufactured were primarily for domestic use, but they were often purchased by an agent (skupshchik) and marketed more widely. Handicraft manufacture might involve a sophisticated division of labor and the items produced could be of very high quality. Hats made in this way were sold in the St Petersburg shops. The crockery made in Gzhel was widely used throughout the country and could compare with articles made in the English potteries. Some of the furniture produced by local craftsmen could be taken for foreign imports and was sold in Shmit’s, the best furniture shop in St Petersburg. Vorontsov thought that the Russian handicraft industries should receive government encouragement and support, and that this “people’s (narodnyi) production” should form the basis of the Russian economy. As an example of how successful handicraft industry could be for the national economy Vorontsov cited the clock-makers of Switzerland (Vorontsov, 1882, p. 119).

Handicraft industries, according to Vorontsov, were in decline. The reason for this was that, as peasants were dispossessed of their land and forced out of agriculture, they increasingly concentrated on handicraft industry. However, competition with each other and overproduction made these industries unsustainable. It would be sound policy, Vorontsov believed, for the government to intervene and come to their help rather than continue with the failed strategy of subsidizing large-scale industry. In his opinion, Russia should not imitate the West, but try to increase the welfare of the people (Vorontsov, 1882, p. 238).

Vorontsov concurred with Danielson that the peasants were being impoverished by the economic policies currently being pursued by the state and that the railways and banks were supported not by industry, but by agriculture. He added, however, that the railway traffic indicated that the peasants would rather rent out land from landowners than go to work for them as farm laborers. This aspiration to retain their status as independent producers was a peasant attitude that made capitalism in Russia impossible (Vorontsov, 1882, p. 298).

Nikolai Sieber reviewed Vorontsov’s book in the journal Vol’noe slovo in 1882. At that time, Sieber was Marx’s most eminent populariser in Russia. He had published a monograph on Marx’s economic ideas and had defended them against the criticisms of Yu. G. Zhukovsky and B. N. Chicherin. It was in reply to Zhukovsky’s remark that Marx’s scheme of capitalist development was not universal, that Sieber found in Das Kapital one of the few passages in which Marx had implied that the processes that had taken place in England would be repeated elsewhere. Sieber was convinced that Marx believed that capitalism was destined to take root in Russia, and this idea was reflected in his review of Vorontsov’s book (Ziber, 1959, pp. 661–673).

Engels and Plekhanov

In the decade after Marx’s death in 1883, a number of important developments took place that would determine how Marx’s ideas would be received in Russia and in the wider world. These developments centered round the activities of Friedrich Engels and Georgii Plekhanov.

It fell to Engels as Marx’s literary executor to complete the works that Marx had left unfinished. Danielson had expected that with regard to the second volume of Das Kapital, which consisted to two sections or books, one on the circulation of capital and the other on the income from capital, Engels would continue to utilize Russian material in his investigation. Engels, however, thought himself too old to embark upon the kind of extensive study of Russian material that Marx had made in the past decade, and, in any case, did not regard Marx’s preoccupation with the Russian economy as anything other than a distraction that prevented him from finishing writing the second volume of Das Kapital. With the consent of Marx’s daughter Eleanor, Engels gifted the library of Russian books and periodicals that Marx, with Danielson’s help, had collected over the years, to his friend Petr Lavrov. He explained to Lavrov that his priorities were to publish the second volume as soon as possible, and that what was published should be from the hand of Marx himself (Marx & Engels, 1993, p. 88).

Accordingly, how Engels went about the task was to divide the second volume into its two component Books and publish them separately as Volumes II and III of Das Kapital. For Volume II, he made a compilation of the various drafts that Marx had left, in an attempt to present them as a coherent whole. These were drafts, however, that had been made in the 1860s and 1870s and reflected Marx’s views on the circulation and expanded reproduction of capital that he had held at that time, that is, after he had become aware that in its circuits capital did not necessarily dissolve earlier economic forms, but before he was able to incorporate his findings from the Russian material. There is no indication that Engels was aware that Marx’s Russian studies were undertaken precisely to make good a serious deficiency in conceptions embodied in the drafts he was working with.

Danielson, on the other hand, as a close collaborator of Marx and privy to the direction of Marx’s thinking over the past decade, was dismayed by this turn of events. In 1908, he reflected:

It is a very great pity that all these hopes were dashed. The whole of Marx’s enormous labours in studying the materials on Russian economic life were lost to science. The second and third volumes of “Capital” appeared just as they had been written in the 1860s. The Russian material of the 1870s remained unused […]. (Daniel’son, 1908, pp. 4–5)

The omission of the Russian material was also greatly deplored by those who recognized the significance of Marx’s Russian studies and had contributed toward them. In July 1884, Maxim Kovalevsky wrote in a letter to Lavrov:

You know of course that Marx’s notes on Russia, made in the past few years, are not to go into Volume II. What if one were to insist that they be printed, at least in extract, in your journal? His notes on the Reports of the Fiscal Commission are in all probability extremely interesting. (Institut marksizma-leninizma pri TSK KPSS, 1969, p. 206)

The economist A. I. Chuprov, who knew the extent and importance of Marx’s Russian studies, remarked in a letter to Danielson of January 11, 1886:

It would be a very great pity indeed if Marx’s enormous preparatory work were to disappear without trace. Couldn’t one ask the Editor to publish these works, if even in the form of fragmentary notes, if not all, then at least those containing the imprint of their author’s thoughts and personality. (Institut marksizma-leninizma pri TSK KPSS, 1983, p. 363)

Engels, the “Editor” in question, however, did not take this course. Danielson, who translated Volume II into Russian at the proof stage, was eager to know if perhaps the researches into Russian economic development that Marx had considered so important would appear in Volume III. In reply, Engels explained that the manuscript of Volume III had been written in the years 1864–1866, that is, the time before Marx began his Russian studies and so contained no Russian material (Marx & Engels, 1993, p. 294). The omission of the Russian material from both volumes, Danielson observed, was “a double loss” for readers in his country (Daniel’son, 1885b). As a last resort, on August 25 (6 September) 1885, Danielson sent Engels a long letter containing an anthology of extracts taken from the Marx/Danielson correspondence mentioning how Marx intended his studies of Russia to be used. 3 These extracts, Danielson suggested, might be utilized by Engels in writing the foreword to Volume III (Daniel’son, 1885a).

Danielson’s letter was an eloquent reproach to Engels for his failure to complete Das Kapital in the way that Marx had intended. It also shows clearly that Danielson was much better acquainted with the direction of Marx’s thinking than Engels was. Besides his correspondence with Marx, Danielson was kept informed of Marx’s plans for Das Kapital by his friend and fellow-translator Herman Lopatin, who visited Marx in London. For that reason, Engels’s reply must have dumbfounded Danielson by its stubborn refusal to take Marx’s Russian researches seriously, relegating them to the role of an excuse for postponing serious work. Engels remarked:

I thank you very much for your extracts from the author’s letters from 1879 to 1881. I could not read them without a sorrowful smile. Alas, we are so used to these excuses for the non-completion of the work! Whenever the state of his health made it impossible for him to go on with it, this impossibility preyed heavily upon his mind, and he was only too glad if he could only find out some theoretical excuse why the work should not then be completed. All these arguments he has at the time made use of vis-a-vis de moi; they seemed to ease his conscience. (Marx & Engels, 1993, pp. 348–349)

In the event Engels made use of none of the extracts Danielson had sent. The only mention Engels made of Marx’s Russian studies in the Preface to Volume III was a short paragraph where he stated that Marx intended the Russian materials to be used in a new version of the section on ground rent (Marx, 1981, p. 96). In Marx’s presentation, ground rent was one of the various forms of surplus value. To class his studies of Russia only under this head was to reduce their significance immeasurably. It made their omission from Das Kapital seem no doubt regrettable, but a relatively minor matter, certainly not one which would affect the overall argument of the work. Danielson queried Engels’s statement and on January 29, 1895 inquired whether Marx had left any manuscript recording his intention to use the Russian materials as Engels claimed. In reply Engels reported that he had not been able to find any such manuscript (Daniel’son, 1895; Marx & Engels, 2004, pp. 455–456).

From his published works, therefore, the impression would be created that Marx believed that the development of capitalism in Russia was inevitable and even desirable. This had been the opinion of Sieber, Marx’s most prominent Russian follower. It was also the view of Georgii Plekhanov, originally a disciple of Bakunin, but who in 1884 founded the political grouping Emancipation of Labor. Plekhanov was convinced that the revolution in Russia would not be the mass peasant uprising envisaged by Bakunin that would base its socialist organization on the peasant commune, but a revolution whose driving force would be the urban working class. The idea committed Plekhanov to the opinion that the development of capitalism in Russia was assured, an opinion difficult to justify in the 1880s, when there were so few urban workers in a country where capitalism was in its initial stages, and whose future was precarious. When Plekhanov’s critics pointed out that the class he proposed to base his revolution upon still had to be created, Plekhanov responded in a pamphlet entitled Our Differences (1884), which branded them “narodniki,” disciples of Herzen and Chernyshevsky, who, in the manner of the Slavophiles, had believed that Russia had a destiny quite different from that of Western Europe (Plekhanov, 1961, p. 187).

The only indication that Marx could see the possibility of a socialist society emerging in Russia, not as the outcome of capitalist development, but as being based on a transformed version of the peasant commune was a letter that he had written to the editorial board of the journal Otechestvennye zapiski in 1877, but first published in 1886 through the efforts of Danielson and Lopatin (Grin, 1985, pp. 128–145). The letter Marx had written to Vera Zasulich, later an associate of Plekhanov’s, in 1881 had a similar content, but Marx had specified that it was not for publication. In January 1882, Marx and Engels had provided a preface to the Russian edition of the Communist Manifesto that Plekhanov had translated. This had stated that the peasant commune could serve as the basis for socialism in Russia, provided that the Russian revolution was accompanied by a proletarian revolution in the West (Marx & Engels, 1985, p. 296). This idea belonged to Engels rather than to Marx, who was suffering from ill health at this time. There is, moreover, an indication that Engels had written the passage in question. The preface speaks of the peasant commune being an “age-old” (uralt) form of landownership. Marx could hardly have used this term, since in the recently written drafts of his letter to Vera Zasulich he had drawn attention to the fact that the peasant commune was the latest stage in the historical evolution of the institution. It was from his reading of Maxim Kovalevsky’s book Communal Landownership (1879) that Marx knew that the peasant commune was not “age-old” and was unlikely to describe it as such in the preface.

The Famine of 1891–1892

Although in Russia of the nineteenth century barely a year passed without some province or provinces experiencing some degree of famine, the famine of 1891 was exceptional because of its severity and its extent. It embraced eighteen provinces from the Black Sea to Tobolsk in Siberia, with a population of around 40 million. The famine and the outbreak of cholera which followed it in 1892 were responsible for the deaths of an estimated 400,000–500,000 people (Johnson, 2015, p. 103; Robbins, 1975, p. 171). A contemporary observer described the situation thus:

The population is divided into two distinct classes: those who are physically able to leave their villages and wander about in search of employment, and the old and young, the infirm, and the females who needs must stay at home. The former are roaming about seeking for work which they never find […] The inhabitants of numerous villages, having nailed up their huts, are now scouring the country begging for work in return for food. (Lanin, 1891, p. 643)

In his articles of the time Plekhanov described the extent of the famine and its disastrous consequences in great detail, noting the inadequate response of the authorities and the cynical ways in which the exploiting groups took advantage of the peasants’ misery to advance their own interests. For Plekhanov, however, the famine was not an unmitigated disaster; he saw it as part of an objective historical process that would eventually lead to the transformation of peasants into proletarians and thus to establishment of a socialist society in Russia. He ridiculed the apprehensions of the narodniki and Slavophiles on the transformation of the peasants into proletarians, because through this process the sufferings caused by the autocratic regime would be alleviated (Plekhanov, 1925, p. 385).

Engels, writing in Die neue Zeit in 1892, took a view similar to Plekhanov’s. In his opinion, the famine in Russia was not simply the result of a bad harvest; it was part and parcel of the profound social revolution that Russia had been undergoing from the time of the Crimean War. The bad harvest had only made the chronic illness associated with this revolution acute. He went on to say that if anyone wanted to know what the Russian peasant had been suffering for the past 30 years it was sufficient to read the chapter entitled “The Formation of the Internal Market” in Volume I of Das Kapital (Engels, 1891–1892, pp. 587, 588–589). In other words, the Russian famine should be viewed as an integral part of the emergence of capitalism in Russia.

The radical publicist N. K. Mikhailovsky was appalled at the attitude of the Russian Marxists to the famine, which he thought unconscionable. Some, he alleged, had even gone as far as to deny aid to the famine victims on the grounds that this would “obstruct the process of capitalist accumulation.” And what was the necessity for this accumulation of capitalism? It was nothing but the dialectical doctrine of “economic materialism” of the negation of the negation: the peasants had to be separated from their means of production in order to be reunited with them in the socialist society. Sieber was no longer alive at the time of the 1891 famine, but Mikhailovsky singled him out as a Russian Marxist holding views that encouraged indifference to human suffering. He quoted Sieber as saying: “Until the peasant is boiled down in the factory cauldron, we shall get nowhere.” Citing Marx’s recently published letter to Otechestvennye Zapiski, Mikhailovsky maintained that these views were not shared by Marx himself, who denied that he had any universally valid “historico-philosphical” theory (Mikhailovskii, 1909, p. 327).

Danielson’s Studies in Our Post-reform Economy

The first section of Danielson’s book Studies in Our Post-reform Economy published in 1893 reproduced his 1880 article written in conjunction with Marx. The second, and largest, section of the book, however, was written in response to the famine of 1891, and sought to analyze the economic conditions that had brought it about. Danielson noted that of late there had been a significant upsurge in capitalist development throughout Russia, both in the various regions of the country and in the various branches of industry. It was the manner in which this had taken place, in Danielson’s view, that had been so disastrous for the country.

After 1861, the demand for factory products had increased significantly, and the factory industries that had been established in Russia at that time were able to take advantage of techniques that had been developed in Western Europe, and to deploy the latest types of machinery. The textile industry was so mechanized that it was unnecessary to employ skilled male workers; the machines could be operated by women and even by children. The effect of this was to produce clothing that was substantially cheaper than anything that could be produced by peasants working in traditional handicraft industry. Consequently, these industries gradually died out, as articles for personal consumption were purchased from factory industries.

According to Danielson, peasant labor had typically been of three kinds: one type was the labor spent in cultivating the land; the second type was the labor devoted to the subsidiary occupations in handicraft industries, the manufacture of articles for personal consumption; the third type was the labor expended in the factory, where commodities were produced for the market. Increasingly the type of labor for manufacturing articles for personal consumption was eliminated, leaving the peasants to divide their time between agriculture and the factory.

However, opportunities for the peasants to find work in the factories were severely restricted. This was because the high degree of mechanization of industry, which demanded less labor power, and therefore enabled the capitalist entrepreneur to undercut the products of handicraft industry, also meant that fewer and fewer workers were required by factory industry. Danielson gave the example of the processing of cotton, which took place mainly in Moscow, and to some extent in St Petersburg. The demand for articles of clothing was satisfied by a handful of workers, while millions of peasants, who had become unemployed through the closure of handicraft industries, were unable to find work.

From these facts Danielson concluded that with the expansion of capitalist production the relative number of workers employed grew not only significantly slower than such expansion, but might even remain constant, or even fall. It followed that the idea that workers uprooted from the land would find employment as factory workers, as writers like Sieber had assumed, was profoundly mistaken. In this connection Danielson observed:

If we took it into our heads to consider the golden age in Russia only after “every peasant has been boiled in the factory cauldron” – and this is the opinion of N. I. Sieber, shared by many – then we would have to give up waiting for any long-term economic improvement. (Daniel’son, 1893, p. 342)

Moreover, as the growth of capitalist industry made more and more handicraft workers redundant, it also contracted the internal market, since this was dependent on the purchasing power of the majority of the population. This power was diminishing as a result of the impossibility for the peasant population to find paid employment that would provide the means to purchase the articles of personal consumption.

The collapse of handicraft industry left the peasants with the land as the only means of subsistence and of raising money to pay taxes and zemstvo dues. This forced them to work the land more intensively. Being unable to improve the productivity of the land for lack of resources and knowledge, they resorted to extending the cultivated area, adding to the allotments they had received at the time of the emancipation by renting land from local landowners. By so doing, they in practice reverted to the arrangement that had existed before 1861, when in return for rented land, the peasant gave the landowner half of his harvest.

The intense cultivation of the land without measures to improve it led to the land’s exhaustion, leaving it in a state to give only a meager harvest. When, in addition, it was exposed to a prolonged period of drought it yielded practically nothing, as happened in 1873, in 1880 and other years in a number of localities. But as the process of the separation of manufacture from agriculture extended wider and wider, this finally led the country to the situation in 1891 in which the famine embraced 18 black-earth provinces.

Danielson recalled that in his 1880 article he had drawn attention to the disproportion between the meager earnings of the peasants and the high rate of taxation they were required to pay. The data he had given to document this situation referred to the 1870s, but at the time of writing this imbalance had increased even further. Nevertheless, Danielson could not see in the taxation system the root cause of the impoverishment of the peasants. The main obstacle to raising the standard of living of the peasantry was the extension of capitalist relations throughout the country. Thus, even if one removed all the taxes, the share of the product received by the peasantry would still go into the hands of capitalists.

On the government’s policy of protectionism, Danielson remarked that this policy had fostered a development of capitalism in the country that without it would have taken several decades. But that development had been achieved at an extremely high cost. It had raised domestic prices and had at the same time curtailed the production and consumption of the population. It was one of the causes of the disaster that occurred in 1891.

In Danielson’s view, the famine was the direct result of the imbalances in the Russian economy that had been fostered by a mistaken government policy for the past 30 years. What should have been done was to give encouragement to handicraft industry, which had close ties with agriculture. The achievements of Western-European science should have been applied to develop forms of industry based on peasant ownership of the means of production. Danielson conceded that under present conditions the peasant commune was threatened with inevitable destruction. He believed, nevertheless, that communal agriculture was “one of the basic material conditions of production on which can be constructed the building of the future social economy.” (Daniel’son, 1893, p. 344)

With regard to Engels, in his correspondence with Danielson he showed that he genuinely believed that Marx’s Russian studies had been entirely superfluous. He refused to countenance any difference between the way capitalism had developed in Western Europe and the way it was developing in Russia.

For it is one of the necessary corollaries of grande industrie, that it destroys its own home market by the very process by which it creates it. It creates it by destroying the basis of the domestic industry of the peasantry. But without domestic industry the peasantry cannot live. They are ruined, as peasants; their purchasing power is reduced to a minimum; and until they, as proletarians, have settled down into new conditions of existence, they will furnish a very poor market for the newly-arisen factories. (Marx & Engels, 2001, p. 537)

Danielson must have been consumed with exasperation that Engels could not understand that there was no chance of the peasants “settling down” as proletarians, because there were too few “newly-arisen factories” to employ them. As he pointed out to Engels in the following letter of October 3 (15), 1892: “You saw that capitalism freed up many millions of workers and that it gave employment to scarcely one million.” He went on to say that the crises which happened in Russia were not crises of production which occurred every 10–15 years, as in Western Europe; these were crises caused by the exhaustion of the soil, which repeated themselves every three, four, or five years. These were crises, moreover, which subordinated human beings to nature and subordinated the capitalist form of production to meteorological conditions. They grew more and more serious, so that in the previous year 24 million people, or 40% of the population of European Russia, had been affected by famine (Daniel’son, 1892).

In April 1893, Danielson sent Engels a copy of his book Studies in Our Post-reform Economy, but even the reading of this work did not shake Engels’s belief that Russia was following the Western-European model of capitalist development. In his letter to Danielson of October 17, 1893 Engels remarked:

But for all that it still seems to me that you take a gloomier view of the case than the facts justify. No doubt the passage from primitive agrarian communism to capitalistic industrialism cannot take place without terrible dislocation of society, without the disappearance of whole classes and their transformation into other classes; and what enormous suffering, and waste of human lives and productive forces that necessarily implies, we have seen – on a smaller scale – in Western Europe. (Marx & Engels, 2004, p. 213)

By way of consolation, Engels assured Danielson that capitalism opened up new vistas and new hopes, just as it had done in Western Europe. But, one may ask, how could Engels be sure that capitalism on the Western-European model would emerge in Russia? What he was offering Danielson was a statement of belief, not a conclusion drawn from an analysis of evidence.

In 1894, Plekhanov published his book On the Development of the Monist View of History. It was conceived mainly as an answer to Mikhailovsky’s criticisms of Marxism, but it also attempted to discredit Danielson’s contention that the famine had been brought about by the particular way that capitalism had developed in Russia. He did this by implying that Danielson belonged to the “narodnik” camp, which Plekhanov now accused of being “subjectivist” and moralizing in its approach to Russia’s economic development. That is, the “narodniki” could not accept the reality that Russia was rapidly progressing toward capitalism, and deluded themselves, in the spirit of Slavophilism, that Russia’s national peculiarity would ensure that capitalism would not take root in the country.

Influenced by Plekhanov’s characterization of Danielson’s and Vorontsov’s works as products of “narodism,” in 1894 Engels wrote a postscript to his essay “On Social Relations in Russia” in which he restated arguments that he had advanced in his correspondence with Danielson. In the postscript, which contained lengthy quotations from Plekhanov’s Our Differences, Engels left no doubt that he considered Russia to be in the process of becoming an industrial capitalist state, with the proletarization of a large part of its peasantry and the destruction of the peasant commune (Marx & Engels, 1977, p. 435). Plekhanov was delighted with the postscript and immediately published it in Russian translation, with an introduction pointing out how Engels had decisively refuted Vorontsov and Danielson (Plekhanov, 1894, pp. 3–6).

The postscript had not mentioned Danielson by name, but in a letter to Plekhanov of February 26, 1895, Engels confided that:

As for Danielson, I fear there is nothing to be done with him. I sent him […] the 1894 afterword, which was written, in part, directly with him in mind. He received it, but, as you see, it is useless. There is no way of discussing with the generation of Russians to which he belongs, which always believes in the spontaneo-communist mission which distinguishes these Russians, the true Holy Russia, from other profane peoples. (Marx & Engels, 2004, p. 450)

In the letter Engels gave vent to his irritation that he could not convince Danielson that the capitalism that was emerging in Russia was the same capitalism that had developed in Western Europe and that it would conform to the same laws of operation. It is symptomatic that in his commentary on Marx’s letter to Otechestvennye Zapiski in the postscript to “On Social Relations in Russia” Engels focuses on Marx’s warning that if the present economic trends continued, Russia would become subject to the same economic laws as other profane peoples. He does not mention the important methodological passages in the letter where Marx cautions that the historical account of the origins of capitalism that he has given in Das Kapital applies only to Western Europe, that he has not elaborated “a historical-philosophical theory of the general path that every people is fated to tread, irrespective of the historical circumstances it finds itself in” (Marx & Engels, 1985, p. 116).

In their researches on Russian economic development, both Marx and Danielson adopted an empirical approach, analyzing statistical data, whereas Engels approached Russian economic phenomena from an a priori standpoint, one more in the spirit of a “historico-philosophical theory.”

In 1894, Peter Struve published his Critical Notes on the Economic Development of Russia as a response to Mikhailovsky’s criticisms of the Russian Marxists. Like Engels, Struve took his conception of narodism from Plekhanov’s Our Differences, but Struve added some features of his own to his characterization of narodism. In particular, he compared the alleged views of the narodniki to Sismondi’s aversion to capitalism and his nostalgia for pre-capitalist society: As Struve observed:

But at the same time as Sismondi and other kinds of reactionary economists considered it necessary and desirable to return to earlier forms of organisation of labour, Marx always placed his hopes on the further development of the capitalist order, only the latter, in his opinion, being capable of creating the material and psychical prerequisites of the new, more just, social order. (Struve, 1894, p. 130)

In 1894, when Struve’s book appeared, Lenin published his reply to Mikhailovsky, What the Friends of the People Are and How They Fight Against the Social Democrats. For Lenin at that time Struve was a useful ally in the campaign against the narodniki. In an article written in 1897 entitled “A Characterisation of Economic Romanticism” Lenin took up and considerably developed Struve’s idea of comparing the narodniki – in this case Danielson and Vorontsov – with Sismondi (Lenin, 1972, pp. 134–265). The assumption behind the comparison is that the economic processes at work in Russia in the 1890s, and in England in the first decades of the nineteenth century, were basically the same. That, however, is a point at issue. The other unstated assumption of Lenin’s article is that since the ideas of Danielson and Vorontsov can be equated with those of Sismondi, if you refute Sismondi you have refuted Danielson and Vorontsov. But why bring in Sismondi at all? Why not simply refute Danielson and Vorontsov directly? The answer must be that it is easier to discredit Sismondi than to refute the arguments presented by Danielson and Vorontsov. One finds this tactic also employed in Lenin’s The Development of Capitalism in Russia where Danielson and Vorontsov are held to idealize the pre-capitalist past in the manner of Sismondi, an assertion manifestly untrue.

Lenin’s The Development of Capitalism in Russia

In the preface to The Development of Capitalism in Russia, published in 1899, Lenin states that the aim of his book is to examine the question of how a home market is being formed for Russian capitalism, a question previously raised by the principal exponents of narodnik views Danielson and Vorontsov, and that it is his intention to criticize these views (Lenin, 1960, p. 25).

The impression created by this statement of intent is that the works of Danielson and Vorontsov are mainly, if not entirely, concerned with the topic of the formation of a home market. It is true that this topic is discussed in these works, but it is not the only one, or even the main one. Both writers are concerned to examine the overall direction of the Russian economy in the post-reform years and to show the disastrous consequences for the peasant population of the capitalist elements in the economy, in particular, how these elements contribute to widespread periodic famines. What Lenin does not do in his book is to set out systematically what the views of Danielson and Vorontsov are as a preliminary to presenting his own arguments and evidence against them. Throughout the book, the ideas of Lenin’s opponents are presented only in short snatches, without context, and in a disparaging manner. From the quotations from the writings of Danielson and Vorontsov, the reader would find it impossible to reconstruct what exactly the ideas of these authors were.

From Lenin’s point of view the advantage of focusing on the market question in the works of Danielson and Vorontsov was that, on the theoretical level, it seemed to him that the answer was to hand in the shape of the second volume of Marx’s Das Kapital (Lenin, 1960, pp. 44–47). Accordingly, at some length, Lenin expounded what Volume II said in relation to the question of the formation of the home market, reproaching Danielson and Vorontsov for their ignorance of the text in question. But, as we now know, the part of Volume II which had direct relevance to the development of the Russian economy was never completed by Marx, and the preparatory materials remained unused by Engels in the editing of the volume. The sources which did embody the direction of Marx’s thought on the subject of the Russian economy were Danielson’s 1880 article “Studies in Our Post-reform Economy” and his 1893 book of the same name. These were works that Lenin was intent on discrediting.

Both Danielson and Vorontsov produced works which examined the specific ways in which capitalism had developed in Russia, and how these had impacted on Russian society. This approach was classed by their detractors as “narodism.” Engels, Plekhanov, and Lenin argued that by maintaining that capitalism in Russia had developed differently from the way it had developed in Western Europe, implied a separate historical destiny for Russia, distinct from that of the West. They, for their part, were sure that Russia’s economic future would be a repetition of the emergence of capitalism on the Western-European model.

Whereas for Danielson and Vorontsov the famine of 1891–1892 was the inevitable outcome of a disastrous economic policy that should be abandoned forthwith, Lenin, following Engels, interpreted it as a stage in the emergence of the home market. In Lenin’s book, there is a single mention of the famine and that is a quotation from Engels’s 1892 article in Die neue Zeit (Lenin, 1960, p. 166).

But what is Lenin’s answer to the problem caused by Russia’s unbalanced economy that Danielson, Vorontsov, and Marx identified? This was that capitalist industry destroyed indigenous manufacture and dispossessed millions of peasants, but it could not employ them and provide them with a means of livelihood. The only answer that Engels could give to this conundrum was that these dispossessed peasants would eventually find jobs in capitalist industry. But what jobs? What industry? And in the meantime there was periodic famine.

Lenin does not set out the problem directly, just as he does not in general give meaningful quotations from the works he criticizes. But in a passage on the subject of the dispossession of the peasantry Lenin says:

The decline in the well-being of the patriarchal peasant, who formerly conducted a mainly natural economy, is quite compatible with an increase in the amount of money in his possession, for the more such a peasant is ruined, the more he is compelled to resort to the sale of his labour-power, and the greater is the share of his (albeit scantier) means of subsistence that he must acquire in the market. (Lenin, 1960, p. 42)

In other words, in order to survive, a peasant who has been dispossessed must find employment in a capitalist enterprise in order to have wages to purchase the necessities of life. Lenin has no answer to the problem; he can only repeat the proposition that somehow the dispossessed peasants will find employment in industry, an industry that does not yet exist and perhaps will never exist. The inability to give a satisfactory answer to his opponents explains much in the character of Lenin’s book. It is not a direct reply to the arguments presented by them, but an attempt to discredit them by misrepresenting them and attributing to them views which they did not possess.

An important part of The Development of Capitalism in Russia is devoted to the stratification of the Russian peasantry in the process of capitalist development. Using zemstvo statistics, Lenin shows that a process of differentiation is taking place in the villages, by which peasants are being divided into an upper minority of wealthier peasants, who have comparatively more land, more livestock, and better methods of cultivating the land, sometimes with agricultural machinery. At the opposite end of the spectrum are the poor peasants who have little or no land, few livestock, and are often in debt to their wealthier neighbors. Between these two groups are the middle peasants, whose economic situation allows them to provide adequately for themselves only in good years. The fortunate ones might aspire to the top group, but every crop failure would reduce them to the status of poor peasants or hired laborers. Lenin’s argument is that the inroads of capitalism in the countryside, with the creation of a commodity economy, are leading to the creation of a rural bourgeoisie and a rural proletariat, with the gradual elimination of the intermediate group of middle peasantry (Lenin, 1960, pp. 172–176).

It was also Lenin’s contention that the differentiation of the peasantry creates a home market for capitalism. This was because the rural proletarians, being unable to produce articles of consumption for themselves, were forced to purchase them on the market. The peasant bourgeoisie, on the other hand, purchased less, but created a market by buying means of production and by expanding their personal consumption, of, for example, cotton goods (Lenin, 1960, p. 181).

While it is true to say that the impoverishment of the peasantry created a demand for articles of consumption, this could not be an effective demand, since unemployed peasants had no means of purchasing the articles they needed. That was precisely the problem that Danielson and Vorontsov had identified, Danielson making the point that the whole country’s demand for cotton goods (the example that Lenin gives) could be satisfied by a handful of workers in Moscow and St Petersburg.

Of course, it is pertinent to ask: How long has the process of stratification been going on and how does the present situation compare with the structure of peasant society in past years? Lenin admits that he cannot answer this question because it is only now that data have been collected on the subject. Yet, unless there is a historical dimension to the study, it is impossible to draw any meaningful conclusion. The fact that the Russian peasant commune carried out periodic redivisions of its land to restore a measure of equality among the families presupposes that in the intervening period inequalities had appeared. That such inequalities existed is testified, for example, by the study of peasant society in the first work in Russian to be read by Marx: V. Bervi-Flerovsky’s Condition of the Working Class in Russia, published in 1869. There the contrast between the kulak usurers and the poor peasants is described in vivid detail (White, 1996, pp. 247–248).

A related question is: What effect did the equalizing tendencies of the peasant commune (the mir) have on the process of differentiation? This question is one that Lenin avoids posing. He does so by the parameters he imposes on his subject at the outset. In the Preface to his book, Lenin explains that he intends to deal “exclusively with the economic aspect of the process” (Lenin, 1960, p. 25). By classifying the commune as a social or ethnographic phenomenon, it could be left out of consideration of the treatment of the peasantry. This means that the commune, its dynamics, or how communal life influenced the economic situation of the peasantry in the post-reform era, is not discussed. From reading Lenin’s book, one would never guess that most Russian peasants continued to live in village communities (and would do so until the mass collectivization in 1930) (Male, 1971, p. 1).

Lenin intends the reader to interpret the tables he produces of the distribution of resources in peasant villages as though this was the situation in real life, one in which each peasant household had access only to the labor, livestock and implements that it formally owned. Lenin does not envisage that any cooperation or pooling of resources took place. But he provides no evidence to show that it did not. This underlying assumption of Lenin’s was contradicted by Vorontsov when he mentioned that the agricultural machinery acquired by the well-to-do peasants was used by all the peasants. On this statement, Lenin remarks scornfully “Comment is superfluous” (Lenin, 1960, p. 87). In fact, it is quite the contrary. Since it is an essential element in Lenin’s case that in the countryside all the inhabitants act in a purely individualistic way, this proposition requires not only comment, but also proof. Nowhere in Lenin’s book, however, is there any evidence for the unlikely phenomenon of this extreme rural individualism. His curt response to Vorontsov’s information may be taken as the consequence of Lenin’s inability to supply it.

Lenin focused his study on the question of the home market for polemical purposes, believing that on this question his opponents ware particularly vulnerable. But the focus on internal economic developments had the perverse consequence of leaving the influence of foreign investment in Russia out of the reckoning almost entirely. In the whole lengthy work, only two sentences refer to foreign capital (Lenin, 1960, p. 489). The Development of Capitalism in Russia, moreover, was written and published at the time when Sergei Witte was the Minister of Finance and when foreign investment was being encouraged by government policy. For Lenin to have discussed the question of foreign investment and the tariff policy which encouraged it at any length would have meant conceding that capitalism in Russia was not entirely an indigenous growth, and so did not conform to the Western-European pattern of development. Vorontsov’s account of the contribution to the Russian economy made by foreign firms working largely on government contracts remained unchallenged.


  • (1)

    It is regrettable that “narodnik” or “Populist,” the polemical label that Plekhanov and his followers attached to Danielson and Vorontsov, has been allowed to persist. The term was coined to imply that these two writers and those who shared their views belonged to a current of thought that was different from, or even hostile to, Marxism. Nothing could be further from the truth. Both Danielson and Vorontsov have valid claims to be classed as Marxists, and Danielson in particular was one of Marx’s closest collaborators in the last decade of Marx’s life. The article “Studies in Our Post-reform Economy” published in 1880 under Danielson’s name was in fact a joint work by Danielson and Marx.

    In Soviet times, the ideology of Marxism-Leninism made it obligatory for Danielson and Vorontsov to be classed as “narodniki.” This is reflected in Tsilia Grin’s otherwise objective biography of Danielson published in 1985 (Grin, 1985). In Western literature Plekhanov’s genealogy of Populism beginning with Herzen was incorporated in Franco Venturi’s history of 19th century Russian socialist thought Il populismo russo (1952), whose English title is Roots of Revolution (Venturi, 2001). More recently, the same scheme can be found in the collection of essays edited by Teodor Shanin, Late Marx and the Russian Road. There, Haruki Wada sees Marx’s hostility to Herzen and his collaboration with Danielson as evidence of Marx’s changing attitude toward Populism (Shanin, 1984, pp. 8, 43–4). More serious, because more authoritative, is the description of Danielson as a “Populist” (Volkstümler) in the Marx/Engels Gesamtausgabe (MEGA) (Marx & Engels, 1999, pp. 40, 703). This is a mistaken designation and a misleading one for a writer who worked closely with Marx and whose 1880 essay has a claim to be included in MEGA itself.

  • (2)

    The evaluation of the 1891–1892 famine highlights a profound difference in methodology between Engels, Plekhanov, and Lenin, on the one hand, and Marx, Danielson, and Vorontsov on the other. The latter writers based their analysis of the famine on the particular features of the Russian economy, whereas the former viewed it as the manifestation of a general pattern of economic development. Danielson reacted to the famine with the demand that the government end the policies that had brought it about; Engels, Plekhanov, and Lenin, on the other hand, thought that the famine should be regarded as a necessary stage in capitalist development by which the internal market was created. Lives would be lost in the present, for the sake of an eventual socialist future. It is not surprising that Mikhailovsky should see in the attitude of the Russian Marxists an indifference to human suffering that was paradoxical in people who thought of themselves as socialists.

  • (3)

    The approach to the Russian economy which was represented by Engels, Plekhanov, and Lenin was a radical departure from the method employed by Marx. The works of Danielson and Vorontsov, on the other hand, maintained continuity with Marx’s method in their analyses of Russia’s post-reform economic development.

  • (4)

    Whereas Lenin’s The Development of Capitalism in Russia is a polemical work concerned to show that Russia already is, or is fast becoming, a capitalist country on the Western-European model, Danielson and Vorontsov investigate the specific character of Russia’s economic development. As a result, the latter two writers give the more faithful picture of the Russian economy and its imbalances, and in doing so provide an important insight into why the Russian economy should collapse under the strain of World War I. Danielson’s and Vorontsov’s works, consequently, have a lasting value for historians of Russia’s economic development as well as for students of Marxism in Russia.



The transliteration from Russian is Daniel’son. This spelling has been retained in the references and the bibliography, but for ease of reading the apostrophe representing the Russian ‘soft sign’ has been omitted in the text.


The original letters from Marx to Danielson are in the Department of Manuscripts of the British Library. They are accompanied by a letter from Danielson dated October 10, 1910, saying:

I have the honour to forward to the Library of the British Museum 47 letters addressed to me by Karl Marx and Fr. Engels.

Since these letters are of public interest perhaps the Library of the British Museum will find the opportunity to add them to its treasures in order to give possibility to the economists and sociologists to use their contents in [the] public interest […]


The extracts were from the following letters: (1) 12 December 1872, Marx Engls Collected Works (MECW), Vol. 44, p. 457; (2) 10 April 1879, MECW, Vol. 45, pp. 354–356; (3) 12 September 1880, MECW, Vol. 46, p. 31; (4) 19 February 1881, MECW, Vol. 46, p. 62; (5) 13 December 1881, MECW, Vol. 46, p. 161.


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I am grateful to Paul Zarembka for suggesting this subject to me.