Capitalism passes through several stages in its development, but its most characteristic features remain essentially unchanged. Antagonistic contradictions are inherent in capitalism. Its main contradiction, that between the social nature of production and the private capitalist form of appropriation of the result of production, engenders anarchy of production, unemployment, economic crises, and an implacable struggle between the basic classes of capitalist society, the proletariat and the bourgeoisie; this basic contradiction predetermines the historical doom of the capitalist system.

The great geographical discoveries (mid-fifteenth to mid-seventeenth centuries) and the seizing of colonies (fifteenth to eighteenth centuries) secured for the nascent European bourgeoisie new sources of capital accumulation (the export of precious metals from the seized countries, the robbery of peoples, income from trade with other countries, and the slave trade) and led to the growth of international economic ties. The development of commodity production and exchange, accompanied by the differentiation of commodity producers, served as the basis for the further development of capitalism. Scattered commodity production could no longer meet a growing demand for goods.

Simple capitalist cooperation—that is, the joint labour of many people carrying out separate production operations under the control of capitalists—became the point of departure for capitalist production. The source of cheap labour power for the first capitalist entrepreneurs was the mass ruination of craftsmen and peasants as a result of property differentiation, “enclosures” of land, {i.e., the commandeering of ‘the commons’, the paltry vestiges of free-range hunter-gatherer territory, by privateers for exclusive use and enjoyment} the adoption of laws concerning the poor, devastating taxes, and other measures of extra-economic constraint. The gradual strengthening of the economic and political positions of the bourgeoisie prepared the way in a number of countries of Western Europe for bourgeois revolutions (the Netherlands in the late sixteenth century, Great Britain in the mid-seventeenth century, France in the late eighteenth century, and a number of other European countries in the mid-nineteenth century).

Having made radical changes in the political superstructure, the bourgeois revolutions accelerated the replacement of feudal productive relations by capitalist relations; they cleared the ground for the capitalist system, which had ripened in the womb of feudalism, and for the replacement of feudal property by capitalist property. The development of the productive forces of bourgeois society took a major step with the appearance of the manufactory (mid-sixteenth century).

However, by the mid-eighteenth century, the further development of capitalism in the advanced bourgeois countries of Western Europe had run up against the narrowness of the manufactory’s technical base. The need developed to shift to large-scale factory production involving the use of machines. The transition from the manufactory to the factory system was achieved in the course of the industrial revolution, which began in Great Britain in the second half of the eighteenth century and was completed around the mid-nineteenth century. The invention of the steam engine led to the appearance of a multitude of machines. The growing need for machines and machinery resulted in the modification of the technical base of machine-building and the transition to the production of machines by machines. The emergence of the factory system signified the establishment of capitalism as the dominant mode of production and the creation of the material and technical base corresponding to capitalism. The transition to the machine stage of production promoted the development of productive forces; the emergence of new branches and the incorporation of new resources into economic circulation; the rapid increase in the population of cities; and increasingly lively external economic ties.

It was accompanied by a further increase in the exploitation of wage labourers: that is, the broader use of the labour of women and children, the lengthening of the work day, the intensification of labour, transformation of the worker into an appendage of the machine, the growth of unemployment, and the sharpening of the opposition between mental and physical labour and between the city and the countryside. The basic laws of development of capitalism are identical in all countries. However, the genesis of capitalism has different features in different countries, features which are determined by the concrete historical conditions in each one.

The classical path of capitalist development—primitive accumulation of capital, simple cooperation, manufactory production, and the capitalist factory—is characteristic of a small number of Western European countries, chiefly Great Britain and the Netherlands. The industrial revolution was completed, the factory system of production emerged, and the advantages and contradictions of the new, capitalist mode of production were fully manifested earlier in Great Britain than in other countries. The growth of industrial production was extraordinarily rapid in comparison with other European countries and was accompanied by the proletarianisation of a substantial portion of the population, the deepening of social conflicts, and cyclical crises of overproduction which have been repeated regularly since 1825. Great Britain became the classical country of bourgeois parliamentarism, and at the same time the birthplace of the contemporary workers’ movement.

By the mid-nineteenth century, Great Britain had achieved world industrial, commercial, and financial hegemony and was the country where capitalism had attained its highest development. It was no accident that the theoretical analysis of the capitalist mode of production provided by Karl Marx was based primarily on the British situation. Vladimir Lenin noted how the major distinguishing features of British capitalism of the second half of the nineteenth century were “vast colonial possessions and a monopolist position on the world market”.

The formation of capitalist relations in France, the strongest Western European power of the era of absolutism, was slower than the process in Great Britain and the Netherlands, primarily because of the stability of the absolutist state and the comparative strength of the nobility’s social position and the strength of the small peasant economy. The dispossession of the peasants proceeded not by means of “enclosures”, but by the tax system. The system of farming out taxes and state debts and later the protectionist policies of the government with respect to incipient manufactory production both played a large role in the formation of the bourgeois class. The bourgeois revolution occurred nearly a century and a half later in France than in Great Britain, and the process of primitive accumulation stretched out over three centuries.

The Great French Revolution, which radically eliminated the feudal absolutist system which had hindered the growth of capitalism, simultaneously led to the emergence of a stable system of small peasant ownership of land which put its stamp on the entire subsequent development of capitalist productive relations in France. The extensive introduction of machinery did not begin there until the 1830’s. During the 1850’s and 1860’s, France became an industrially developed state. The distinctive feature of French capitalism was its usurious character. The growth of loan capital based on the exploitation of the colonies and on profitable credit operations abroad turned France into a rentier country.

In other countries, the genesis of capitalist relations was accelerated by the influence of the existing seats of developed capitalism. Thus, the United States of America and Germany set out on the path of capitalist development later than Great Britain, but by the end of the nineteenth century they had already joined the ranks of the capitalist countries. Feudalism had not existed in the United States as an all-embracing economic system. The displacement of the native population into reservations and the development by farmers of lands which had been opened up in the western part of the country played a major role in the development of American capitalism. This process established what is known as the American path of capitalist development in agriculture, a path based on the growth of capitalist farming. As a result of the rapid growth of American capitalism after the Civil War, as early as 1894 the United States of America was first in the world in terms of volume of industrial production.

In Germany, the liquidation of the system of serfdom was carried out “from above”. The redemption of feudal obligation on the one hand led to the mass proletarianisation of the population and on the other hand put into the landlords’ hands the capital necessary to turn Junker estates into large-scale capitalist farms using hired labour. It was thus that the preconditions for the Prussian path of development of capitalism in agriculture were created. The unification of the Germanic states into a single customs union and the bourgeois revolution of 1848-1849 accelerated the development of industrial capital. The railroads played an exceptional role in the industrial upsurge of the mid-nineteenth century in Germany, promoting the economic and political unification of the country and contributing to the rapid development of heavy industry.

The political unification of Germany and the war indemnities it received after the Franco-Prussian War of 1870-1871 became powerful stimuli to the further development of capitalism. During the 1870’s there was a process of rapid establishment of new branches of the economy and re-equipping of old ones on the basis of the most recent achievements of science and technology. Utilising the technological achievements of Great Britain and other countries, Germany was able to overtake France in terms of its level of economic development as early as 1870, and by the end of the nineteenth century it was approaching the level of Great Britain.

In the East, capitalism developed most fully in Japan, where, as in the Western European countries, it arose on the foundation of disintegrating feudalism. In the three decades after the bourgeois revolution of 1867-1868, Japan developed into one of the industrialised capitalist powers.

By the beginning of the twentieth century, as a result of the evolution of capitalism, a number of advanced capitalist states existed in the world and had achieved a high level of economic and military might. A fierce struggle unfolded among these powers for colonies in Africa and Asia, and as a result of this struggle, virtually all of the unoccupied territories on the earth were divided up. A world system of capitalism arose. Capitalist productive relations also began to appear in the countries of Asia, Africa, and Latin America, which had been drawn into the system of the world capitalist economy as markets and sources of raw materials and foodstuffs. The development of capitalism in the colonial and dependent countries was accompanied by cruel exploitation, oppression, and violence on the part of the imperialist states.

An all-around analysis of capitalism and the concrete forms of its economic structure in the pre-monopoly stage was provided by Karl Marx and Friedrich Engels in a number of works, primarily “Das Kapital”, in which they revealed the economic law of movement of capitalism. The doctrine of surplus value—the cornerstone of Marxist political economy—exposed the secret of capitalist exploitation. The appropriation of surplus value by the capitalists occurs as a consequence of the fact that the means of production and the means of livelihood are the property of the small class of capitalists. In order to live, the worker is forced to sell his labour power. With his labour he creates more value than his labour power costs. Surplus value is appropriated by the capitalists; it serves as the source of their enrichment and of the further growth of capital. The reproduction of capital is simultaneously the reproduction of capitalist productive relations, based on the exploitation of the labour of another person.

The pursuit of profit, which is a modified form of surplus value, determines the entire movement of the capitalist mode of production, including the expansion of production, the development of technology, and the increase in the exploitation of workers. In the stage of pre-monopoly capitalism, the competition of non-cooperating, scattered commodity producers is replaced by capitalist competition, which leads to the formation of an average rate of profit—that is, equal profit for equal capital. The value of goods produced assumes a modified form of the price of production, which includes the cost of production and the average profit. The process of averaging out profit takes place in the course of intrabranch and interbranch competition, through the mechanism of market prices and the infusion of capital from one branch to another and through the sharpening of the competitive struggle between capitalists.

In perfecting the technology in various enterprises, using the achievements of science, developing the means of transportation and communication, and improving the organisation of production and commodity exchange, the capitalists automatically develop social productive forces. The concentration and centralisation of capital promote the emergence of large-scale enterprises, in which thousands of workers are concentrated, and lead to the growing socialisation of production. However, the enormous, constantly increasing wealth is appropriated by individual capitalists, which leads to a deepening of the basic contradiction of the system. The greater the degree of socialisation in capitalist production, the wider the gap between the actual producers and the means of production, which are private capitalist property.

The contradiction between the social nature of production and capitalist appropriation assumes the form of antagonism between the proletariat and the bourgeoisie. It is also manifested in the contradiction between production and consumption. The contradictions of the capitalist mode of production are revealed most acutely in periodic economic crises. These crises, which are the objective form of the forcible overcoming of the contradictions of capitalism, do not resolve the contradictions but further deepen and aggravate them—evidence of the inevitability of the downfall of capitalism. Thus, capitalism itself creates the objective preconditions for a new system based on social ownership of the means of production.

The antagonistic contradictions and historically foredoomed nature of capitalism are reflected in the superstructure of bourgeois society. The bourgeois state, in whatever form it takes, always remains the instrument of the class rule of the bourgeoisie, the organ for suppressing the toiling masses. Bourgeois democracy is restricted and formal in nature. In addition to the two main classes of bourgeois society (the bourgeoisie and the proletariat), the classes inherited from feudalism, that is, the peasantry and the owners of landed estates, are preserved under capitalism. With the development of industry, science and technology, and culture in capitalist society, the social stratum of the intelligentsia grows—that is, the people performing mental labour.

The main tendency of development of the class structure of capitalist society is the polarisation of society into two main classes as a result of the erosion of the peasantry and intermediate strata. The main class contradiction of capitalism is that between the workers and the bourgeoisie, which is expressed in the sharp class struggle between them. In the course of this struggle, revolutionary ideology is worked out, political parties of the working class are created, and the objective preconditions of socialist revolution are prepared.

Monopoly capitalism: In the late nineteenth century and early twentieth century, capitalism entered a higher, final stage {!sic!; and is still in its ‘higher, final stage’ a century later!} of its development—imperialism, that is, monopoly capitalism. At a certain stage, free competition resulted in such a high level of concentration and centralisation of capital which it naturally entailed the emergence of monopolies. It is these monopolies which determine the essence of imperialism. Rejecting free competition in individual branches, the monopolies do not eliminate competition as such, but (according to Vladimir Lenin), “exist above it and alongside it, and thereby give rise to a number of very acute, intense antagonisms, frictions, and conflicts”. He worked out the scientific theory of monopoly capitalism in his work “Imperialism, the Highest Stage of Capitalism”. He defined imperialism as “capitalism at the stage of development at which the dominance of the monopolies and finance capital is established, in which the export of capital has acquired pronounced importance, in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed”.

In the monopoly stage of capitalism, the exploitation of labour by finance capital leads to the redistribution, to the benefit of the monopolies, of the portion of the total surplus value falling to the share of the non-monopolistic bourgeoisie and of a part of the necessary product of wage labourers, through the mechanism of monopoly pricing. Certain displacements in the class structure of society occur. The rule of finance capital is personified in the financial oligarchy—the big monopoly bourgeoisie, which subordinates most of the national wealth of the capitalist countries to its own control. Under the conditions of state-monopoly capitalism, the leading circles of the big bourgeoisie are substantially strengthened; they exert a definite influence on the economic policies of the bourgeois state. The economic and political weight of the nonmonopoly middle and petite bourgeoisie decreases. Fundamental changes in the composition and size of the working class take place.

In the advanced capitalist countries taken together, while the growth of the total gainfully employed population was ninety-one percent from 1900 to the 1970’s, the number of people working for wages increased by nearly two-hundred percent, and the proportion of them in relation to the total number of employed people grew during this period from fifty-three to seventy-nine percent. Under the conditions of modern technological progress, with the expansion of the service sphere and the growth of the bureaucratic state apparatus, the numbers and relative weight of office employees have increased. The social position of these workers approaches that of the industrial proletariat. Under the leadership of the working class, the most revolutionary forces in capitalist society and all toiling classes and social strata are waging the struggle against their oppression by the monopolies.

In its process of development, monopoly capitalism evolves into state monopoly capitalism, which is characterised by the interlocking of the financial oligarchy with the upper echelons of the bureaucracy, the increased role of the state in all spheres of social life, the growth of the state sector in the economy, and increasingly active policies aimed at mitigating the socio-economic contradictions of capitalism. Imperialism, particularly in the state-monopoly stage, signifies a profound crisis of bourgeois democracy, an intensification of reactionary tendencies, and the increased role of force in domestic and foreign policy. It is inseparable from the growth of militarism and of military expenditures, the arms race, and tendencies toward the unleashing of aggressive wars.

Imperialism sharply aggravates the basic contradiction of capitalism and all other contradictions of the bourgeois system which follow from it, contradictions that can be resolved only by socialist revolution. Vladimir Lenin made a profound analysis of the law of the uneven economic and political development of capitalism in the era of imperialism and reached the conclusion that the victory of the socialist revolution, initially in a single capitalist country, was inevitable.

World War I and the victory of the Great October Socialist Revolution, which abolished capitalism in Russia, inaugurated the general crisis of capitalism, which decisively influenced the internal contradictions of imperialism on the one hand and the course of the world revolutionary process on the other. The general crisis of capitalism is characterised primarily by the formation of two opposite socio-economic systems (the capitalist and socialist systems) and by the struggle between them, in the course of which the forces of socialism steadily gain strength and the positions of capitalism steadily weaken; the disintegration of the colonial system of imperialism takes place. The internal contradictions of the imperialist states and of the world capitalist economy become aggravated, the crisis of bourgeois politics and ideology is intensified, and the struggle between labour and capital grows, as does the struggle between the toiling and exploited classes and the monopoly bourgeoisie.

The general crisis of capitalism accelerates the development of state-monopoly capitalism and a further increase in the socialisation of production. Such new phenomena as state regulation of the economy, programming, capitalist integration, and the shift from the old colonial rule to neo-colonialism signify a certain modification of the basic characteristics of imperialism without the alteration of its essence. Free competition capitalism, imperialism, and state-monopoly capitalism all represent different stages of a single socio-economic structure. During this historical development, the structure of production and the mechanism of appropriating surplus value change, but the basic features of capitalism—commodity production, private property in the means of production, and the exploitation of wage labour by capital—remain unchanged.

The characteristic feature of contemporary capitalism is how it has been forced to adapt to new circumstances in the world. With a contemporary condition of economic competition and the struggle between two opposite systems, the ruling circles of the capitalist countries fear the development of the class struggle into a mass revolutionary movement; thus, the bourgeoisie strives to employ more disguised forms of exploiting and oppressing workers, and often readily carries out partial reforms to keep the masses under their ideological influence and political control. The monopolies use the achievements of scientific and technological progress to strengthen their own positions and increase exploitation of the toiling masses. But the adaptation to new conditions and processes, which has been prompted by the general laws of development of productive forces and by the scientific and technological revolution, does not mean the stabilisation of capitalism as a system.

The general crisis is deepening. Even the most developed capitalist countries experience serious economic shocks, accompanied by growing inflation and unemployment and the crisis of the currency and financial system. At the beginning of the 1970’s, there were about eight million unemployed people in the advanced capitalist countries. None of the attempts of contemporary capitalism to adapt to the new conditions eliminate the contradictions between the imperialist states. The economic and political struggle unfolds among the main centres of imperialist rivalry: the United States of America, Western Europe, and Japan.

Historical place of capitalism: In its time, capitalism played a progressive role as a natural stage in historical development. It destroyed the patriarchal and feudal relations among people based on personal dependence and replaced them with money relations. Capitalism created large cities, sharply increased the urban population at the expense of the rural population, did away with feudal fragmentation, which led to the formation of bourgeois nations and centralised states, and raised the productivity of social labour to a higher level.

As early as the mid-nineteenth century, Karl Marx and Friedrich Engels wrote: “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, the application of chemistry to industry and agriculture, steam navigation, railroad, the electric telegraphs, clearing of whole continents for cultivation, the canalisation of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?” From that time on, the development of productive forces, despite unevenness and periodic crises, continued at an even highly accelerated rate.

By the twentieth century, capitalism was able to place at its service many achievements of the modern scientific and technological revolution: atomic energy, electronics, automation, jet technology, and chemical synthesis, to name a few. But under the conditions of capitalism, social progress is continued at the price of a marked aggravation of social contradictions, the wasting of productive forces, and the suffering of the masses of people of the whole world. The era of primitive accumulation and capitalist “development” of the outlying areas of the world was accompanied by the annihilation of entire tribes and nationalities.

Colonialism, which served as the source of enrichment of the imperialist bourgeoisie and the so-called worker aristocracy in the parent countries, resulted in protracted stagnation of the productive forces in the countries of Asia, Africa, and Latin America and was conducive to the preservation of precapitalist productive relations in these countries. Capitalism used the progress of science and technology to create means of mass destruction and annihilation. It bears responsibility for the enormous human and material losses in the increasingly frequent destructive wars.

Solely in the two world wars unleashed by imperialism, more than sixty million people died and a hundred and ten million were wounded or became invalids. In the stage of imperialism, economic crises became more acute in character. In the context of the general crisis of capitalism, there is a steady narrowing of the sphere of capitalist domination: the worldwide socialist economic system is developing rapidly, and its share in world production is growing steadily, while the share of the capitalist world economic system is decreasing.

Capitalism cannot cope with the productive forces it has created, forces which have outgrown capitalist productive relations, which are like fetters on their further development. The objective material preconditions for the transition to socialism are created within the womb of bourgeois society in the process of the development of capitalist production. Under capitalism, the working class grows, unites, and organises; in alliance with the peasantry, at the forefront of all toiling people, it makes up a mighty social force capable of overthrowing the obsolete capitalist system and replacing it by socialism.

In the struggle against imperialism, the embodiment of capitalism under contemporary conditions, three revolutionary streams are united—world socialism, the antimonopoly forces in the advanced capitalist countries, headed by the working class, and the world national liberation movement. Imperialism is powerless to regain the historical initiative it has lost, to reverse the development of the modern world. The main path of development for humanity is determined by the world socialist system, the international working class, and all revolutionary forces.

By means of apologist theories, bourgeois ideologists attempt to prove that contemporary capitalism is a system devoid of class antagonism and that in highly developed capitalist countries factors giving rise to social revolution are generally absent. However, such theories are defeated by reality, which exposes more and more the irreconcilable contradictions of capitalism.

The development of capitalism in Russia was accomplished essentially on the basis of the same socio-economic laws as in other countries, but it had distinctive features of its own. The history of capitalism in Russia is divided into two main periods: the genesis of capitalist relations (second quarter of the seventeenth century to 1861) and the consolidation and dominance of the capitalist mode of production (1861-1917). The period of the genesis of capitalism consists of two stages: the origin and formation of the capitalist structure (second quarter of the seventeenth century through the 1760’s) and the development of the capitalist structure (1770’s to 1861). The period of capitalist dominance is also divided into two stages: the stage of progressive, ascendant development (1861 to the end of the nineteenth century) and the stage of imperialism (the beginning of the twentieth century to 1917).

(The question of the genesis of capitalist relations is a complex and controversial one in the history of Russian capitalism. Certain historians adhere to the periodisation given above, and others see the genesis of capitalism beginning earlier, in the sixteenth century; still others date the beginning of capitalism at a later period, the 1760’s).

It is an important characteristic of the development of capitalism in Russia that the genesis of capitalist relations was a slow process, stretching out for more than two centuries in the context of the dominance of feudal relations in the economy. Simple capitalist cooperation developed increasingly in industry beginning in the second quarter of the seventeenth century. At the same time, the manufactory was becoming a stable and ever growing form of production. In contrast to the Western European countries where the capitalist manufactory prevailed, Russian manufactories were divided into three types in terms of their social nature: capitalist manufactories, in which hired labour was utilised; serf manufactories, based on forced labour; and mixed manufactories, which employed both forms of labour. At the end of the seventeenth century, there were more than forty metallurgical, textile, and other manufactories of all types in the country. Capitalist relations developed a great deal in the area of river transport. In the first half of the eighteenth century, simple capitalist cooperation developed and the number of manufactories grew. At the end of the 1760’s, there were six-hundred and sixty-three manufactories, including four-hundred and eighty-one in manufacturing industry and a hundred and eighty-two in mining and metallurgy.

During this period, the nature of social relations and industrial production underwent important and contradictory changes. In the first two decades of the eighteenth century, it was primarily enterprises of the capitalist type which formed in the manufacturing industry. However, the narrow market in labour power and the rapid growth of industry gave rise to a shortage of free hands. For this reason, the government began to attach state peasants to mills on a broad scale. The edict of 1721 allowed merchants to purchase peasant serfs to work in their enterprises. This edict was applied particularly extensively in the 1730’s and 1740’s. At the same time, laws were promulgated registering hired workers to the enterprises in which they were working, and the attachment of state peasants increased. The industrial activities of peasants and merchants and artisans were restricted. As a result, the serf manufactory held the leading position in the mining industry right up until 1861. The use of unfree labour also increased in the manufacturing industry during the 1730’s and 1740’s.

However, in this branch, the feudal serf system retarded the development of capitalist relations only briefly. From the early 1750’s, the use of hired labour in manufacturing again began to grow rapidly, particularly in newly built enterprises. The attachment of peasants to manufactories came to an end after 1760. In 1762, the edict of 1721 was revoked. Restrictions on the industrial activity of peasants and members of the urban commune were gradually removed, and so by 1767, by official statistics, of the forty-three thousand six-hundred workers employed in manufacturing industry, seventeen-thousand nine-hundred (forty-one percent) were hired labourers and twenty-five thousand seven-hundred were forced labourers (fifty-nine percent). The use of hired labour in river transport continued to increase. In the 1760’s, there were a hundred and twenty thousand hired workers on ships. In industry as a whole, the number of hired workers, including those employed in small industry and in water transport, amounted to about two-hundred-and-twenty thousand in the 1760’s. Capitalist relations arose in agriculture in the second half of the seventeenth century, and the process of stratification of the peasantry began in Russia.

There emerged among the rural population a small group of rich peasants who organised commodity production in agriculture, employing the hired labour of impoverished peasants. Another indicator of stratification was the appearance of migratory workers among the peasantry, that is, peasants who went to work for wages in industrial enterprises and in river transport. During this period, the capitalist stratification of the peasantry was most noticeable in the northern coastal areas and the Urals. The substantial weight of wage labour in industry, the new tendencies in government economic policy of the 1750’s and 1760’s, the increased stratification of the peasantry, and changes in the sphere of ideology which were expressed in progressive circles’ realisation that serfdom had to be ameliorated or even abolished —all these factors make it possible to assert that by the 1760’s capitalist elements had already formed a system of social relations and that the capitalist structure was forming in the womb of the feudal serf system.

The dominant serf order hindered the formation of new capitalist relations but could not halt the process completely. By the end of the eighteenth century, there were as many as two-thousand two-hundred and ninety-four manufactories—two-thousand and ninety-four in manufacturing and two-hundred in mining and metallurgy. Between the 1770’s and 1790’s, there was intensive development of the economy from small-scale commodity production to the capitalist manufactory. The number of industrial villages increased, particularly in the central provinces of the country. The newly rich peasant became a noticeable figure among capitalist entrepreneurs. By official data, eighty-one thousand seven-hundred and forty-seven workers were employed in the manufacturing industry in 1799; of this figure, thirty-three thousand five-hundred and sixty-seven were hired workers (forty-one percent) and forty-eight thousand one-hundred-and-eighty were forced labourers (fifty-nine percent). By the end of the eighteenth century, the total number of hired workers in industrial production in the country had nearly doubled since the 1760’s, reaching four-hundred-and-twenty thousand. In certain industrial provinces, the departure of peasants for industrial and agricultural employment involved as much as twenty percent of the male population. Capitalist relations developed still more intensively in the first half of the nineteenth century.

An important feature in the development of large-scale manufacturing was the further increase in the numbers and relative proportion of hired workers: in 1799—thirty-three-thousand-six-hundred (forty-one percent), in 1825—one-hundred-and-fourteen thousand six-hundred (fifty-five percent), and in 1860—four-hundred-and-sixty-two thousand (eighty-two percent). The cotton industry became a leading capitalist branch: hired workers made up ninety-two percent of the total. Capitalist relations were becoming consolidated in the linen, silk, and broadcloth industries. In this area, hired workers numbered about sixty-five percent of the total. Forced labour remained dominant in the sugar-beet industry and the mining and metallurgy industry. Hired labour was also employed in the gold fields of Siberia, which were developed precisely in this period.

The industrial revolution began in Russia in the mid-1830’s. The manufactory based on manual labour was replaced by the factory. The development of capitalist relations continued in agriculture. By approximate calculations, there were about four million hired workers in industry and agriculture on the eve of the reform of 1861. The formation of the basic classes of capitalist society, the proletariat and the bourgeoisie, proceeded along with the development of capitalist relations; a national Russian market took shape. At the same time, the feudal serf system gradually disintegrated, and in the 1830’s it entered a period of profound crisis.

The victory of capitalism as a system occurred in Russia as a result of the implementation of the peasant reform of 1861 and not by revolutionary means. Consequently, vestiges of serfdom were preserved in the economic and political areas (estate land ownership, autocracy, and so forth), and these determined a number of features in the subsequent development of capitalism.

The development of industry accelerated after the abolition of serfdom. Enterprises using forced labour shifted to hired labour or closed down. New, purely capitalist branches of heavy industry appeared: in the Donbas, coal mining and metal smelting; in Baku, oil drilling; and in St. Petersburg, machine building. Railroad construction assumed enormous dimensions. A capitalist credit system was created. During the 1880’s and 1890’s, the influx of foreign capital into Russia increased. Crises arose in the Russian capitalist economy in 1867 and 1873. A sharp increase in industry began in the 1890’s and continued to the end of the century: coal mining increased more than three times and oil drilling and iron smelting by nearly three times, the length of railroads almost doubled, and so forth. During these years, Russia’s industry developed more rapidly than that of Germany or the United States of America. The process of the formation of the proletariat was accelerated. At the end of the nineteenth century, there were about ten million hired workers in the country, including about three-and-a-half million agricultural workers. *Including their families, the proletariat numbered no less than twenty-two million people, that is, eighteen percent of the entire population of the country*. [emphasis added].

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