Income inequality in times of war and revolution: the city of Moscow in 1916

by Elizaveta Blagodeteleva (National Research University Higher School of Economics)

This research will be presented during the EHS Annual Conference in Belfast, April 5th – 7th 2019. Conference registration can be found on the EHS website.

 

Moscow,_Kremlin,_Voznesenskaya_Square,_1900s
Voznesenskaya Square, 1900s. Available at Wikimedia Commons.

In autumn of 1916, a big scandal roiled the Moscow public: local landlords petitioned the municipal government for the permission to raise rents, which was prohibited by the military administration a year before amid the escalating refugee crisis. Newspapers fumed at the selfishness of the rich, who not only avoided serving their country at the battlefield but exploited wartime hardships to get even richer. Health inspectors, lessees and workers of the largest industrial plants publicly raised their objections to the proposal.

Although the concerted effort of the city landlords to increase revenue eventually failed, the public outrage persisted. The occasional evidence of huge war profits and rumours about the luxurious life of industrialists and rentiers stoked anger among the urbanites, who struggled to make ends meet under the increasing pressure of galloping inflation and food shortages. The rent scandal highlighted the growing animosity towards the rich that the Bolsheviks would later channel into fully-fledged class warfare.

In 1916, Moscow residents sincerely believed that the gap between the wealthy and the rest of the population was enormous and it kept widening at an alarming pace. But did their beliefs match reality? In other words, how unequal was urban society in Russia in the last year of the old regime? To answer this question, a student of social and economic inequality would usually refer to income tax records. Unfortunately, there are very few of them in case of imperial Russia.

The Russian authorities had been extremely wary of income taxation up until the beginning of the Great War, when the national political mobilisation elevated the issue of the personal responsibility of each and every subject of the tsar. As a result, the state legislature passed an income tax in the spring of 1916. Its political objectives overwhelmed fiscal practicalities as lawmakers wanted it to bring the state closer to the ‘pockets’ and ‘hearts’ of the people. The progressivity of the new tax was supposed to ensure the levelling of the great fortunes and make the body politic more cohesive.

Since tax collection began in March 1917 and continued through the period of an intense power struggle and regime change, surviving records are patchy. Neither the tsar’s local treasures nor early Soviet fiscal authorities left comprehensive accounts of the sums collected in 1917. Nevertheless, Moscow archives have preserved some tax rolls that document the personal incomes for the year 1916, reported by taxpayers and then ascertained by tax collectors in the first half of 1917.

The records allow a tentative reconstruction of the level of income inequality in the city. Given that the adult population of Moscow amounted to 1.1 million in the spring of 1917, the estimates show that the wealthiest 1% and 5% must have received and then reported about 45.9% and 58.8% of their total income. With the Gini coefficient standing at 0.75, those shares display an extremely high level of income inequality among the city residents in 1916. A huge gap between the rich and the others not only felt real but was real.

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