Jarmo T. Kotilaine

Property Rights and the Economic Development of Early Modern Russia

February 19, 2004

Abstract

The alleged lack of formally codified property rights has established itself as a standard explanation for Russia's economic and political "backwardness" in the early modern period and even thereafter. Under the most pessimistic interpretation Russia is said to have had "no guarantees of civil rights and no economic security (emphasis mine)." It is suggested that the absence of such rights resulted in a lack of incentives to invest and produce beyond the necessary minimum. Moreover, no economically independent "bourgeoisie" was able to emerge to serve as an effective counterpoise to the all-powerful tsar, so as to modify the autocratic character of the Russian government.

The main problem with this "standard story," as well as with most of its critics, is that it views property relations almost entirely through a judicial, political, or sociological prism. Russia was clearly evolving towards an absolutism of sorts and its law codes did not appear to provide for anything comparable to, say, Anglo-Saxon notions of property. This choice of sources has led many scholars to effectively ignore many of the crucial economic aspects of ownership.

The chief tenet of the approach adopted in this paper is that economic efficiency was a more important consideration for the long-term development of Russia than de jure property rights. It will be argued that Anglo-Saxon notions of property are an inappropriate reference point in trying to understand the evolution of property relations in Muscovy. Instead of merely assessing how far Russian law codes diverged from their Western counterparts, we should try to analyze the administration of property relations which was often done outside of the realm of formal law.

The Russian approach to property saw countless significant instances where de facto claims, rather than any judicial or political decisions, created the relevant set of incentives driving productive behavior. The importance of such claims was further enhanced by the enormous size and low population density of Russia, which imposed considerable transaction costs on any attempts to enforce juridical rights. Ultimately, it will be argued, Muscovite Russia gradually moved towards more economically efficient institutions and found increasingly effective ways of administering its available resources.