Globalization, State Industrialization, and the Nineteenth Century Russian Petroleum Industry

Abstract

When the Russian imperial government decided to embark on a project of capitalist industrialization in the years following their military defeat by Britain and France in the Crimean War, the political regime would be challenged to maintain its authority while instituting the necessary reforms. Although this was unappealing to supporters of the autocracy, external dangers (in the form of industrialized militaries) constituted a geopolitical threat to the Empire that could not be ignored by the government. Accordingly, policy officials in the Ministry of Finance attempted to industrialize and modernize while maintaining as much power in the center as possible. This paper analyzes one of the most successful of Russia’s new industries, the petroleum industry. Centered in Baku and Transcaucasia, the Russian petroleum industry became the largest producer in the world by 1900. This paper will examine how poorly the public institutions of the Russian Empire supported growth in the oilfields, and how the regime’s disinclination to abandon its traditional centripetal power structure prevented the emergence of the capitalist incentives that would allow for industrial growth led by the private sector. However this paper will also show that access to the globalized nineteenth-century world, led by the British Empire, could be a catalyst for industrial growth regardless of that industry’s domestic institutional environment. This paper is broken up into two sections, the first analyzes the negative impact of the government’s policies on the petroleum industry’s development and growth, while the second analyzes the positive impact of the Russian petroleum industry’s embeddedness within nineteenth century global commercial networks on its ability to expand production. By firmly placing the Russian petroleum industry globally, the power of the central government is seen within its true context. As long as access to international commercial relationships were not substantially hindered, competitive industries were able to flourish despite poor policy making on the part of the central government.