Tugan–Baranovskii, Mikhail I.

views updated

Tugan–Baranovskii, Mikhail I.



Mikhail I. Tugan-Baranovskii (1865-1919), Russian economist, writer on public policy, and economic historian, is internationally known for his contributions to business-cycle theory.

Tugan-Baranovskii was born in Solyonoye near Kharkov in the Ukraine. In 1888 he was awarded a degree in the natural sciences and two years later received a degree in law and economics from Kharkov University. From 1895 on he was intermittently connected with St. Petersburg University, and in 1913 he was elected to the chair of political economy and statistics, but the government refused to endorse his election. He did take the chair in 1917, but after the Bolshevik revolution he moved to Kiev, where he became dean of the law faculty and a member of the Ukrainian Academy of Sciences. He also served as finance minister of the Ukrainian republic established in 1918.

In 1889 Tugan-Baranovskii had married Lydia Karlovna Davydova, whose mother was the founder and owner of Mir Bozhii (“God’s World”), a review with Marxist leanings. Through his wife’s connections, Tugan-Baranovskii was launched into the world of St. Petersburg publicists and soon gained a pre-eminent position among them.

Debate with Narodniki. Russian intellectual life since the 1860s had by and large been dominated by the Narodniki (populists). They believed that Russia could bypass capitalism altogether and could develop as a socialist country based on peasants, who would be organized in communes, and cottage workers (kustars), who would be organized in associations. However, vigorous economic activity in Russia during the 1890s and the impact of Marxist ideology caused the Narodniki to modify their views somewhat. From Marx they borrowed the idea that capitalism has an inherent tendency to undermine its own home market by creating a pauperized proletariat. The Narodniki argued that whereas advanced industrial nations counteracted this tendency by seeking foreign markets, backward Russia was hardly in a position to compete for such markets; that the Russian government was therefore bound to fail in its efforts to foster capitalism through tariffs and subsidies; and that Russian socialists must effect social change through the peasants and not through the factory workers.

Tugan-Baranovskii, taking issue with the extreme and primitive underconsumption theories of the Narodniki and also drawing heavily on Marxist literature, evolved and sharpened his theories concerning the problems of a developing industrial economy in general and the problems of Russia’s economic development in particular. His debate with the Narodniki was carried on at the meetings of the Free Economic Society in St. Petersburg and in the periodical literature. Tugan-Baranovskii’s two most important books, which established his reputation as a scholar and with which he earned his master’s and doctor’s degrees (1894; 1898), both resulted from his desire to refute Narodnik theories about the future of Russia’s economic development.

Theory of crises. The first book, an examination of industrial crises in England, was a pioneer piece of historical investigation, based on research done in the British Museum and in Russian libraries. With Narodnik theories in mind, Tugan-Baranovskii showed that even in Britain, where the role of foreign trade was paramount, capitalism was the product of internal evolution and was based on the domestic market; he also showed that small-scale “independent” domestic industry inevitably collapsed under the impact of mechanized factory production, although small industry often continued to spring up at various stages of capitalistic development.

In this book Tugan-Baranovskii also presented his main theoretical contribution, the disproportionality theory of crises. According to this theory, crises arise when some sectors of industry are allowed to expand out of proportion to other sectors because of the irrational allocation of investment between the capital-goods industries and the consumer-goods industries. Tugan-Baranovskii believed that the danger of such disproportion, and of a consequent crisis, arises only when capital has been newly accumulated, for then there is no sound basis in experience for estimating which sector will require new investment.

Tugan extended his theory to account for entire business cycles as well as for crises by taking into account the workings of the credit system. He maintained that crises and depressions are periods during which idle loan capital accumulates and interest rates are low. Presently, new investment activity begins again, but the length of time required to complete many of the new projects is such that any latent disproportion in the allocation of the newly invested capital does not become evident until a considerable period of prosperity has been enjoyed. Only when the new projects are well under way does the disproportion come to the surface and lead again to the inevitable crisis.

Critique of Marxism. Tugan-Baranovskii’s interpretation of crises implied a fundamental criticism of Marxist theory and earned him the epithet “revisionist,” although his critical approach to Marxism antedated the appearance of revisionism among Western Marxists. In one of his earliest articles, “Uchenie o predel’noi poleznosti khoziaistvennykh blag” (1890; “The Doctrine of Marginal Utility of Economic Goods"), Tugan-Baranovskii attempted to revise Marxist theory by arguing that marginal utility theory and the labor theory of value supplement each other. His unorthodox approach to Marxism can also be seen in his early biographical sketches of P. J. Proudhon and J. S. Mill (1891; 1892). Indeed, he was one of a group of intellectuals and publicists known as the Legal Marxists. While it is commonly thought that they were called Legal Marxists either because they refrained from illegal activities or because they published their works only in legal publications, neither view is, according to R. Kindersley, quite correct: instead, he believes they were called Legal Marxists because of their strict intellectual honesty (1962).

Tugan-Baranovskii rejected the two explanations of crises that Marx had advanced. The first explanation, that crises are produced because the rate of profit falls as the proportion of capital increases, he dismissed as not in accordance with observed fact. In Theoretische Grundlagen des Marxismus (1905a), he argued that according to Marx’s own labor theory of value, a rising organic composition of capital, far from leading to a falling rate of profit as Marx supposed, must lead to a rising rate of profit. The second Marxist explanation, that crises result from underconsumption by the masses, he disposed of by arguing that production creates its own demand and that hindrances to the expansion of capitalism lie not in consumer demand but in production. Unlike Marx, Tugan-Baranovskii did not believe that the breakdown of capitalism is an economic necessity.

Assessment of the disproportionality theory. Already during Tugan-Baranovskii’s lifetime, Russian industrialization policy developed along lines he considered possible. Later, during the Stalin era, large-scale expansion of productive capacity was planned and achieved without a proportionate increase in the effective demand of the final consumer, vindicating Tugan-Baranovskii’s belief that production rather than consumer demand is crucial for expansion. It would appear, political overtones apart, that his analysis may be of value to developing countries in the early stages of industrialization. There is, however, the danger that the expansion of producer-goods industries will be carried out too consistently or too long, for reasons of strategy or prestige.

When Tugan-Baranovskii’s work became known in its German translation, it was at once acclaimed as a positive contribution to business-cycle theory. Werner Sombart (1904) called Tugan-Baranovskii the father of new cycle theory. Arthur Spiethoff, Gustav Cassel, Ludwig Pohle, and many others are known to have been influenced by Tugan-Baranovskii’s theory and to have used it as the point of departure for their studies of the causation of crises. In the Treatise on Money, Keynes indicated his strong sympathy “with that school of writers of which Tugan-Baranovskii was the first and the most original” (1930, vol. 2, p. 100). Two writers of such disparate views as Paul M. Sweezy and Joseph A. Schumpeter have stressed the originality of the disproportionality theory. In particular, Schumpeter highlighted the importance of Tugan-Baranovskii’s emphasis on the distinction between the reactions of producer-goods industries and consumer-goods industries to the swings of the cycle (1954, p. 1126).

History of Russian industry. Tugan-Baranovskii’s second major work, Geschichte der russischen Fabrik (1898), traced the development of large-scale industry in Russia since the seventeenth century. He argued that contrary to common belief the industries fostered by Peter the Great were not hothouse growths. They had been preceded by the industries of the seventeenth century, and behind these lay a fairly substantial capital accumulation resulting from the commerce of the sixteenth and seventeenth centuries. With the underconsumption theories of the Narodniki in mind, Tugan-Baranovskii produced statistics showing that the cyclical fluctuations in Russian industry, above all in the capital-goods industries, were more closely related to cyclical fluctuations in Great Britain than they were to the harvest results in Russia. In his description of the history of cottage industry and its relation to factory production, Tugan-Baranovskii aimed at disposing of the Narodnik idea of the peculiar role of cottage industry in Russia. Yet his research into the Russian factory during the nineteenth century led him to conclusions that could easily be construed as supporting the Narodnik idea that Russia’s economy was different from other European economies: he found that while the number of industrial workers had increased, the number of workers per plant was declining compared with the eighteenth and early nineteenth centuries. However, Tugan-Baranovskii insisted that what was happening in Russia was due to special circumstances that would cease to operate as the economy expanded. Among these circumstances were a shortage of capital, difficulties of transportation that isolated regional markets, and, above all, the low technological level of the individual plant. Where machinery began to be used, as in the spinning industry, the tendency toward dispersal was much less marked. Tugan-Baranovskii argued that the Russian entrepreneur who dispersed production and the Western entrepreneur who concentrated production were prompted by the same capitalistic motive: both were trying to reduce overhead in order to maximize profit.

Soviet writers have ascribed Tugan-Baranovskii’s findings to an incorrect interpretation of statistical data that led him to classify many small workshops as factories. Although the statistics at his disposal were far from perfect, it is unlikely that a man of his experience would have made such a fundamental error, especially since his findings played into the hands of the Narodniki. Despite Soviet criticism of Tugan-Baranovskii’s theories, Geschichte der russischen Fabrik has been reprinted several times in the Soviet Union.

Later views. In the first years of the twentieth century, under the influence of the German criticism of Marxism, the spread of Neo-Kantian philosophy in Russia, and the psychological crisis created by the death of his wife, Tugan-Baranovskii consciously abandoned not only Marxist economics, which he had never fully accepted, but also the general philosophical determinism that Marxism implies. He still called himself a socialist but asserted that he found Utopian socialism more scientific than Marx’s scientific socialism. He rejected the concept of class struggle and stressed the importance of moral and psychological factors in social relationships. After the 1905 revolution he concerned himself with such topical questions as land reform, currency problems, and, above all, cooperation. He was the editor of Vestnik kooperatsii and wrote a valuable study on the theory of co-operation (1916).

Olga Crisp

[For the historical context of Tugan-Baranovskii’s work, see the biography of Marx; for discussion of the subsequent development of his ideas, see Business cycles; Industry, Small; and the biographies of Cassell; Spiethoff.]


1890 Uchenie o predel’noi poleznosti khoziaistvennykh blag (The Doctrine of the Marginal Utility of Economic Goods). Iuridicheskii vestnik 10:192-230.

1891 P. Zh. Prudon, ego zhizn’ i obshchestvennaia deiatel’-nost’: Biograficheskii ocherk (P. J. Proudhon, His Life and Social Activity: A Biographical Sketch). St. Petersburg: Erlich.

1892 D. S. Mill: Ego zhizn’ i ucheno-literaturnaia deiatel’-nost’ (J. S. Mill: His Life and His Scientific and Literary Activity). St. Petersburg: Pavlenkov.

(1894) 1913 Les crises industrielles en Angleterre. 2d ed. Paris: Giard & Brière. → First published as Promyshlennye krizisy v sovremennoi Anglii, ikh prichiny i vliianie na narodnuiu zhizn’.

1896 Ekonomicheskii faktor i idei (The Economic Factor and Ideas). Mir Bozhii [1896] no. 4:269-291.

(1898) 1900 Geschichte der russischen Fabrik. Zeitschrift für Social- und Wirthschaftsgeschichte, Ergänzungshefte, No. 5-6. Berlin: Felber. → First published as Russkaia fabrika v proshlom i nastoiashchem. A sixth Russian edition was published in 1934.

(1903) 1907 Ocherki iz noveishei istorii politicheskoi ekonomii i sotsializma (Notes From the Recent History of Political Economy and Socialism). 4th ed. St. Petersburg: Aleksandrov.

1904a Bor’ba klassov, kak glavneishee soderzhanie istorii (Class War as the Major Content of History). Mir Bozhii [1904] no. 9:242-259.

1904b Psikhicheskie faktory obshchestvennogo razvitiia (Psychological Factors of Social Development). Mir Bozhii [1904] no. 8:2-28.

1905a Theoretische Grundlagen des Marxismus. Leipzig: Duncker & Humblot. → Published in the same year as Teoriticheskiia osnovy marksizma.

1905b Zemel’naia reforma: Ocherk dvizheniia v pol’zu zemel’noi reformy i prakticheskie vyvody (Land Reform: An Outline of the Land Reform Movement and Practical Conclusions). St. Petersburg: Skorokhodov.

(1906) 1910 Modern Socialism in Its Historical Development. London: Sonnenschein. → First published as Sovremennyi sotsializm v svoem istoricheskom razvitii.

(1909) 1918 Osnovy politicheskoi ekonomii (Foundations of Political Economy). 5th ed. Petrograd: Pravo.

1912 K luchshemu budushchemu (Toward a Better Future). St. Petersburg: Energiia.

(1916) 1921 Sotsial’nyia osnovy kooperatsii (The Social Bases of Cooperation). 2d ed. Berlin: Knigoizdatel’stvo “Slovo.”


Hansen, Alvin H. (1951) 1964 Business Cycles and National Income. Enl. ed. New York: Norton. → Contains a detailed summary of Tugan-Baranovskii’s business-cycle theory.

Kindersley, Richard 1962 The First Russian Revisionists: A Study of “Legal Marxism” in Russia. Oxford: Clarendon.

Kondratieff, N. D. 1923 Mikhail Ivanovich Tugan-Baranovskii. Petrograd: Izdatel’stvo “Kolos.”

Mendel, Arthur P. 1961 Dilemmas of Progress in Tsarist Russia: Legal Marxism and Legal Populism. Russian Research Center Studies, No. 43. Cambridge, Mass.: Harvard Univ. Press.

Moiseev, Moise 1932 L’évolution d’une doctrine: La théorie des crises de Tougan-Baranovsky et la conception moderne des crises économiques. Revue d’histoire économique et sociale 20:1-43.

Schumpeter, Joseph A. (1954) 1960 History of Economic Analysis. Edited by E. B. Schumpeter. New York: Oxford Univ. Press.

Sombart, Werner 1904 Die Störungen im deutschen Wirtschaftsleben während den Jahren 1900ff. Verein für Socialpolitik, Berlin, Schriften 113:121-137.

Sweezy, Paul M. (1942) 1956 The Theory of Capitalist Development: Principles of Marxian Political Economy. New York: Monthly Review Press.

Vlasenko, Vasilii E. Teorii deneg v Rossii: Konets xixdooktiabrskii period xx veka. (Monetary Theories in Russia: End of the 19th Century-Pre-October Period of the 20th Century). Izdatel’stvo Kievskogo Univ.