The term peasant economy refers to modes of rural economic activity with certain defined characteristics. The first characteristic is that the basic unit of production is the household; therefore, the demographic composition of the household was of paramount importance in determining the volume of output, the percentage of output consumed by the household, and, thus, the net remainder to be used for investment or savings. Second, the majority of household income is derived from agricultural production, that is, the household is dependent upon its own labor. Third, because the household depended upon agricultural production for survival, peasant households were assumed to be conservative and resistant to changes that would threaten their survival. In particular, a school of thought called the "moral economy" arose, which argued that peasant households would resist the commercialization of agriculture because it violated their values and beliefs—their moral economy—and attempted to replace the patterns of interaction among personal networks in the villages with impersonal transactions based on market principles.
Perhaps the greatest theorist of the peasant economy was a Russian economist named Alexander Chayanov, who lived from 1888 to 1939. Chayanov published a book entitled Peasant Farm Organization, which postulated a theory of peasant economy with application for peasant economies beyond Russia. He argued that the laws of classical economics do not fit the peasant economy; in other words, production in a household was not based upon the profit motive or the ownership of the means of production, but rather by calculations made by households as consumers and workers. In modern terminology, the family satisfied rather than maximized profit.
According to Chayanov, the basic principle for understanding the peasant economy was the balance between the household member as a laborer and as a consumer. Peasant households and their members could either increase the number of hours they worked, or work more intensively, or sometimes both. The calculation made by households whether to work more or not was subjective, based upon an estimate of how much production was needed for survival (consumption) and how much was desired for investment to increase the family's productive potential. Those estimates were balanced against the unattractiveness of agricultural labor. Households sought to reach an equilibrium between production increases and the disutility of increased labor. In short, households increased their production as long as production gains outweighed the negative aspects of increased labor. This principle of labor production in the peasant economy led Chayanov to argue that the optimal size of the agricultural production unit varied according to the sector of production at a time the official policy of the Communist Party of the Soviet Union was pushing for large collective farms. As a result of this disagreement with Marxist economists and the Party line, Chayanov was arrested in 1930 and executed in 1939.
Josef Stalin's collectivization, begun in 1929, fundamentally changed the basis of the Russian peasant economy by forcibly incorporating households into large farms, the latter becoming the basic production unit of Soviet agriculture. Moreover, production decisions were removed from the household and were no longer based upon the demographic composition of the household.
Even during the Stalin period, however, peasant resistance to mass collectivization and food shortages forced a compromise that allowed continued small-scale agricultural production by households in kitchen gardens or so-called private plots, and the sale of a portion of their produce at farm markets, which were free from state control. Consequently, peasant agriculture did not disappear with collectivization and continues to survive in Russia during the early twenty-first century, but on a much reduced scale.
See also: chayanov, alexander vasilievich; collectivization of agriculture; peasantry; stalin, josef vissarionovich
Chayanov, A. V. (1966). The Theory of Peasant Economy, ed. Daniel Thorner, Basile Kerblay, and R. E. F. Smith. Homewood, IL: Irwin.
Danilov, Viktor P. (1988). Rural Russia under the New Regime. Bloomington: Indiana University Press.
Stephen K. Wegren