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A BRIEF LOOK AT THE HISTORY OF BUSINESS DEVELOPMENT IN RUSSIA
Abstract
The paper provides a brief overview of the historical conditions for the emergence and development of business in Russia. Business development in Russia has become one of the most important areas of economic transformation in the country. It took place in several stages, each of that is characterized by the specific economic and political circumstances.
Keywords
entrepreneurship, economy, entrepreneur, trade, business activity, development, industrial boom
AUTHORS
Lyudmila Dzilikhova
PhD in Education, Senior Lecturer Financial University under the Government of the Russian Federation Vladikavkaz, Russia dzilikhova@yandex.ru
Agunda Plieva
Student
Financial-Economic Department Financial University under the Government of the Russian Federation Vladikavkaz, Russia
Business - is the art of extracting money from someone else's pocket without resorting to violence.
Max Amsterdam
It is difficult, or rather impossible, to find out exactly how many years ago emerged on our planet entrepreneurship. Probably, since production of primitive men did not go into a common pot, and exchanged for an equivalent amount of weapons or instruments of production.
Everything in our life is based on the exchange of goods in order to meet your own needs. Thus, each person can consider himself to a certain extent a businessman or an entrepreneur.
Entrepreneurship appeared in antiquity. According to the Roman lawyers, "business" activities considered as an especially commercial business and an entrepreneur - the renter, a man leading a public building.
In the ancient world, the main component of the economy was agriculture and the accompanying production for processing of agricultural products. At the same time the cities actively developed, and handicraft production and trade in them became widespread. With the state strengthening system began trade booming between countries and cities. A lot of extant cuneiform, clay tablets and papyrus records contain commercial nature. So the development of entrepreneurship led to the emergence of letters and numbers, writing and mathematics.
The concept of "entrepreneur" had several meanings. First of all, entrepreneurs were people involving in foreign trade. Marco Polo, the traveler and merchant who was at the beginning of trade between Europe and China, we can consider him as such entrepreneur. Business in those days was as follows: first, the trader (entrepreneur) signed a contract with the merchant (the Bank) for the sale of goods. The organizers of parades, booths and presentations, leaders of major industrial or building projects were also entrepreneurs in that time.
And how did business in Russia emerge? How did Russian business develop? Let's try to find answers to these questions.
Business in Russia is closely connected with geographic, natural, economic and political factors. In order to understand the specifics of the business relationship it should be taken into account tremendous efforts for the defense of the vast territory and the development of new land. Huge state was forced to mobilize their financial resources to meet these goals. Hence it was necessary to tax heavily. Without strengthening serfdom it was problematic to keep numerous troops. All this have positive trends in the development of entrepreneurship. Thus, it was born in the Kievan Rus' in the form of trade and fisheries. Entrepreneurial activity was characterized by two main areas: trade and commerce. Trade is a prototype for industrial production. The first tradesman worked on himself, being both workers and employers. The other form of production in Russia was artels that required a large number of people. At the head of these associations were people with organizational skills and had their own personal capital.
Even more elements of entrepreneurial activity were in trade. There were two types of trading: transit and domestic. The development of transit trade was facilitated by the fact that Kievan Rus was situated on transit routes between the East and the West. The inland trade carried out between north and south: bread was brought from the north, and in exchange for it handicrafts.
The greatest development of entrepreneurship was during the reign of Peter I (16891725). During that time in Russia were established manufactories, such industries as mining, weapon, cloth, linen were expanded. The most famous entrepreneurial dynasty at that time was the Demidovs.
The Demidovs was the richest Russian businessmen family. They established a lot of weapon and mining enterprises in the Urals and Tula. They also were founders of many cities in the Urals who had made an invaluable contribution to the development of the Urals. History of the Demidovs goes back into the Petrine era and has its origin in Tula blacksmith Demida Grigoriev's son Antufeev. His son, Nikita Demidovich, was a weapons maker and was personally familiar to Peter I. In 720 he received the nobility with the name Demidov and was the founder of the powerful family tree.
Further development of entrepreneurship was restrained by the existence of serfdom. After the abolition of serfdom in 1861 started the construction of railways, reorganized heavy industry, began stock activities. A great contribution to the development and restructuring of the industry has made foreign capital.
At the beginning of the XX century. entrepreneurship became a mass phenomenon in Russia. Especially profitable were cotton production, trade and credits. Together with these forms of production began the process of monopolization of firms.
According to historical facts, the most favorable period in the development of the domestic business was the period from 1861 till 1917. In this period there was the dynamic growth of business activity regardless of the reform efforts of tsars, government or crisis.
By the beginning of the reforms after the abolition of serfdom in Russia, there were 128 joint-stock companies with a capital of 256 million rubles, more than two hundred mechanical plants and foundries with of workers. This reform gave impetus to wide and intensive development of private entrepreneurship. In 1861 in St. Petersburg appeared the first Russian private commercial joint-stock bank. Thus such form of business as joint-stock form which takes the leading position in a modern market economy developed rapidly.
Cancellation of serfdom in Russia in 1861 was an important event in the history of the business. New economic system - capitalism- began its development, which involved outskirts of Russia into the world commodity circulation, the spreading of wage labor, the growth of capitalist relations.
Cancel serfdom concerned a small part of the Siberian population. The landed serfs accounted for only one-thousandth of the inhabitants of Siberia. In 1858 -1859 years in Siberia, there were only 36 landowners who owned populated estates. But the abolition of serfdom had an impact on the growth of resettlement in Siberia and the spread of capitalism in the Siberian margin. It led to the economic development of new lands, gave impetus to the decomposition of the peasantry in the field of the new settlement. Lack of landlordism boosted capitalist relations in agriculture, but the remaining vestiges of pre-capitalist slowed it down.
For industrial and commercial center of the bourgeoisie it was not profitable the development of the local industry. They were afraid of competition from the Siberian products. To eliminate it was done the credit system of the Siberian merchants by the capitalists from center. Siberian merchants received credit primarily in goods rather than in money. First of all they became the intermediaries between the Siberian and European markets, and not independent entrepreneurs owning large net worth both for trade and for industrial purposes. Not by chance in management reports of the Siberian province noted the lack of cheap credit and capital for the local industry development.
Siberian bourgeoisie, selling high-margin products, buying and reselling furs and agricultural products, considered trading more profitable than the organization of industrial enterprises. Siberian merchants had industrial companies, but they held them on the subordinate place in comparison with the trade. The exception was gold mining.
The reason of the weak industrial development of Siberia was the lack of population and economic development of the vast region, which led to the restriction of industrial products market, remoteness from the major industrial centers because of poor lines of communication. Local industry could not compete with more industrialized European part of Russia and the Urals. Rent and land purchase existed in Siberia in a small extent. Land was the property of the state (except for private, Cossack, city, monastery).
The industrial boom of the 90s and the construction of the Siberian Railway caused a significant recovery of the regional economy, the Russian-Japanese war gave impetus to the rapid growth of the kulak farming, who enriched on the supply of products for the army. After the first Russian revolution Siberia experienced powerful industrial boom, which was replaced during the First World War chaotic reorganization of production.
Siberia remained industrially backward margin. Its vast natural resources were used poorly. The largest industrial groups prevented the development of Siberia and metallurgical engineering. Almost all metal products were imported from the center of the country or from abroad. The rich hydropower resources were also used poor. It caused
for the disproportion between the different branches of mining and manufacturing industries. A considerable part of raw materials (ores, wood, agricultural products) exported without processing.
Capital has transformed economically the patriarchal Siberian village. There was a specialization of agricultural production; grain farming and cattle trade were developing by that time. Sales of agricultural products went to the large Russian and foreign companies.
Availability of vacant land provided investment of capital into the land. There was , the US dominated evolution of agrarian type in Siberia. On the eve of the First World War Siberia was one of the main granaries of the country due to the relocation of millions of peasants to the outskirts.
The resettlement of peasants to the outskirts and especially in Siberia had great significance during the Stolypin reforms, the aim of which was to preserve the landlordism by creating support - the kulaks. Siberia had backward industry. It showed the structure of its trade with the European part of Russia.
Exported arable products amounted 58%, livestock products - 19 %, products of the mining industry - 23%, and among the imported products industrial products accounted for 99%.
The First World War (1914) has had a serious impact on the economic development of Siberia. The war has created conditions for widespread development of the cooperative movement. Large-scale speculation of the big capitalists and an acute shortage of industrial goods have caused a massive influx of the peasantry into the consumer cooperatives.
After the October Revolution were nationalized large, medium and small businesses. After that were also nationalized transport, trade, and all banking and credit institutions eliminated commodity and stock exchanges.
But after a few difficult years the government realized the need for "radical change" This change was socialism.
The main content of the new economic policy was to stimulate commodity-money relations, economic enterprise, initiative, a material interest in the results of work of each enterprise and each worker.
With the transition to the new economic policy (NEP) were lifted restrictions on private sector activities. In July 1921, legislation has been admitted the existence of simple partnerships, in July 1922 - the joint stock companies, general partnerships, limited liability partnerships. The new economic policy has contributed to the restoration of agriculture. The main place in food production and agricultural raw materials took individual peasant farming.
But during the reign of Stalin these democratic tendencies were suppressed. The most characteristic features of the administrative-command system created at the time were the total nationalization of the economy and social life, general bureaucratization, suppression of democracy and transparency, mass repressions. Most of all this affected the trade. Establishment of maximum retail prices created a stable position on the market, private trade had to reckon with the state prices. First a private large wholesaler was displaced from the market. The network of state and cooperative trade expanded in a large scale. Changes in private trade led to its crushing: the wholesale - in wholesale and retail and then to the small retailing. By the end of 1926 private capital occupied a subordinate position in relation to the public capital and was only in the retail trade.
NEP years have created favorable conditions for the revitalization of private entrepreneurship. Since it was promoted by two circumstances: the denationalization of small enterprises and legislative authorization promoters' activities. Without notice of local authorities individuals could open a manufacturing plant with number of hired workers from 10 to 20 people. Since the official recognition of entrepreneurs began their
competition with state-owned enterprises. Small production allowed to respond flexibly to changes in market conditions, and small business enjoyed immediate errors and difficulties of state enterprises. Of course, it is impossible to exaggerate the successes of entrepreneurs because their activities had quite a few negative traits (ruthless exploitation of wage-workers, unhealthy crime situation, etc.).
Next stage in the history of domestic business has been the longest and most dramatic. It included about 60 years - from the late 20s until the second half of the 80s. It was a period of unchallenged dominance of administrative - command system. Entrepreneurship was practically driven from the legal sector of the economy and became illegal shadow economy.
Radical economic reforms in the 80s in Eastern Europe, the growth of economic difficulties in our country forced to rethink many of the realities. As a strategic objective of the further economy development was a radical restructuring of the economic system. Administrative - command system began to break down, It was created conditions for the transition to a market model of society. It required a fundamental change to private property, competition and entrepreneurship.
The domination of the bureaucratic oligarchy eventually led to a crisis of our society. And this is the main price we have paid for decades of bureaucratic absolutism. The roots of the crisis lie in the alienation of every citizen of the ownership and management of society, a lack of democratic relations between the authorities and society in deficit of publicity. To overcome the crisis, it was necessary restructuring, which opened the current stage of development in Russian business.
Entrepreneurship, as the experience of developed countries, is an indispensable force of economic dynamics, competitiveness and social prosperity. Because an entrepreneur is always the innovator, implementing commercial new technologies, new forms of business organization; an initiator that connects all factors of production into a single process of goods and services production for profit; production manager, a person that is not afraid of risk and takes risk in order to achieve his goal.
Lack of own practical experience of entrepreneurship makes to borrow it from the West. This is natural. But it is not necessary to copy the West. It will not lead to positive results. The development of business in Russia is a long way and this way is not always smooth.
REFERENCES
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3. Dzilikhova, L.F. (2012) "Marketing tricks", Youth and Science: current issues in social and economic development of Russian regions, Vladikavkaz, pp.30-33.
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