In the early 1920’s Russia was recovering from the revolution and the following civil war. A famine was underway and the country was in disarray after the chaos of the last few years. In response the Soviet Union started enacting new policies to get the economy and the industrial section back on track. First they established the First Labor Army. This organization used men from the military to do labor in order to further the industrial sphere of Russia. The labor included coal, lumber, and others. It was enacted not only to further the industrial area of Russia but also to keep people alive. Russia was in the midst of a famine because of the disorder in the country. The workers in the factories were losing ground and a major act was necessary to turn things around. Also enacted was the New Economic Policy. In 1921 the Soviet Union changed the ways peasants were taxed. Instead of the grain requisitions, excess food was to be given to the government. As it became more common, this tax, in the form of supplies, transitioned into a monetary exchange. This policy was unusual for the Soviet government as usually exchange happened through the government rather than this people centered form. Both of these policies were criticized for their similarities to pre-revolution ideas. Many peasants believed that the labor army and the new form of taxation were too similar to serfdom. But these new policies fulfilled their purpose: rebuilding Russia.
John Maynard Keynes, one of the most important British economists of the 20th century, wrote The Economic Consequences of the Peace (1920) in response to the Treaty of Versailles. Keynes in his piece focuses on Germany and uses them as a representation as to what will happen, economically, if citizens of these countries follow this treaty.
Keynes argues that Germany, with a booming population and a rapidly increasing industry, can’t survive with the treaty’s proposed sanctions. He believes that the intellectual elite of the victorious countries fails to realize the stability of Europe, as a whole, and doesn’t promote economic solidarity in any way. The main danger here, Keynes believes, is that a rapid depression of the standard of life can leave to the starvation of many. He says, “Those who sign this treaty will sign the death sentence of many millions of German men, women and Children” (Keynes).
Although Keynes makes valid economic criticisms, his argument is more economic based and less political based. The political situation of 1919 has a lot of importance in what is happening throughout Europe and Keynes fails to address that and also fails to provide alternative solutions to the readers’ problems.
In this article, Keynes talks about the Treaty of Versailles, and it’s failure to address the economic issues of a post-Great War Europe. He states that victorious Allied powers fail to realize that the stability of Europe, and thereby the stability of both France and Britain as well, is reliant on a complicated system of continental and global trade, which the Treaty attempts to disintegrate.
He focusses on Germany and uses them as a representative of post-war Europe. He believes that the booming population levels, in relation to the rapidly increasing pre-war industrial levels, would not be able to survive with the territorial and financial sanctions the Treaty proposes. His prediction is proven by Mazower in his text “Dark Continent”. Mazower states that because the smaller Central and European nations did not have sufficient resources, they suffered in the post-Great War period. It was only with American loans were they able to initially recover, and thus through American liquidation during the Great Depression they were thrown back into economic turmoil. Alternatively, Russia was self-sufficient during the interwar period, and thus was an economic success, admittedly with a large human cost (Mazower, p.124-5). Finally, Mazower states that while autarky was a good short term plan, in the long run it was detrimental to the Russian economy (Mazower, p.119), especially in comparison to the trading-centric post-World War Two continental economies.
While Keynes’ criticisms are economically valid, he fails to address the volatile political situation of 1919. A perfect example of this revenge-based politics is the War guilt clause written into the Treaty of Versailles. This was unnecessary addition economically, but was an important political addition, especially to the democratic governments in Britain and France. In my opinion, Keynes, while economically correct, fails to acknowledge the context of the Treaty signing, and thus fails to provide viable alternative solutions.