Markets, Productivity, and Happiness in a Historical Perspective

Public welfare and the idea of productivity in works of Sergei Witte

Kalmychkova Elena, MSU Lomonosov

Sergei Yulyevich Witte (1849-1915) was a Russian economist and statesman in Russia at the end of the XIX – the beginning of the XXth century. He was a paradoxical historical figure. On the one hand, he paid much attention to the role of the nobility in the development of Russia (he raised from the employee of the Ministry of Railways to the Minister of Finance under Nicholas II). At the same time, Witte has repeatedly noted, that Russia’s national development is compatible with a constitutional monarchy and religious freedom. Witte’s views on public welfare combined features of liberalism and nationalism. In his projects of the reforms, he relied on the ideas of the German historical school, although he largely agreed with the theory of classical economists (Adam Smith in particular). He was a mathematician by training, not an economist. A practitioner whose goal was the desire to achieve maximum social welfare for the entire population of Russia. Witte believed that public welfare and happiness cannot be considered as individual phenomena. Welfare should be understood as the welfare of the nation, which does not coincide with the individual benefits and is not the sum of the benefits of individuals. It’s more than that. And in this matter, his views echo the works of economists of the German liberal movement of the 1940 - the 50s. Ordoliberals (Walter Eucken, Franz Böhm) and supporters of the social market economy (Alfred Müller-Armack and Ludwig Erhard), as well as representatives of neoliberalism and the humanistic tradition (Alexander Rüstow and Wilhelm Röpke with his concept of “morality and institutions”). Witte himself referred to the writings of Friedrich List, who believed that national unification is a historical, cultural, and spiritual phenomenon. Witte believed that it is not enough to understand welfare only as а material wealth, as the classical political economy does. The welfare should be understood as an inseparable system of elements that include not only the sum of all the material wealth of the country, but also productive abilities, the historical unity of the nation: the potential of nature, labor and capital productivity, the degree of infrastructure development, science, culture, economic and social activity of the population, knowledge, and experience by all members of society. Witte considered public welfare as a consequence of the national economic development in general. This probably explains why one of the very first reforms that Witte carried out as finance minister were monetary and financial reforms. These endeavors, together with the general policy of protectionism, were continued in Stolypin’s policy and his reforms of the peasant farms. Witte believed that if an advanced capitalist economy developed in Russia, it would benefit everyone. Since everyone will have the opportunity to take part in the economic life of society and will be able to serve for the benefit of the state.


Keywords: social welfare, happiness, liberalism, nationalism, German historical school, Ordoliberals, social market economy, humanistic tradition, productive abilities