The Witte System

Description of Sergei Witte’s economic program called the “Witte System” (Professor Sergei D. Martynov, St.Petersburg University, “Sistema Witte” 2002).

“The Witte System is considered to be a series of opinions, decisions and processes concerning state management in the process of modernization.” (Professor Sergei D. Martynov)

“The efficiency of the Witte System was probably related to that fact that Sergei Witte was at the same time the author and the executor of the system. Among his works were lectures concerning agriculture and state economy where he gives a systematic picture of the whole Russian economy.” (Professor Sergei D. Martynov)

“The word “capitalism” was also first mentioned in Russian official papers in 1890’s when Witte was in power.” (Professor S. Martynov, St.Petersburg University.” (Professor Sergei D. Martynov).

According to the member of politburo Malenkov, Stalin criticized the politburo, that they neglected their theoretical studying. Malenkov started immediately to prepare a studying plan which consisted of works of Stalin. Stalin refused the plan with the words. “What kind of politburo members are not acquainted with the works of Stalin?” “In that case what should we study”, asked Malenkov. “For example Witte. How can anyone rule Russia, not knowing Witte?” After that remark of Stalin the memoirs of Witte was republished. Witte had a real plan of developing Russia, it was called the plan of industrialization” (Svjatoslav Rybas: Josef Stalin “Zhertvy i lischenija ne straschili evo” 2004).

The Witte-system “Introduction of capitalism in Russia” can be summarized as following:

  1. Reorganization of state Bank to issue loans for industry and creation a network of state savings banks.
  2. Placed Russia on the gold standard calling this “one of the greatest success in the peaceful cultural development of mankind”. This made ruble first time in the whole history of Russia a convertible currency and guaranteed the influx of foreign capital.
  3. Under Witte’s direction government structural and financial policy were reorganized, in order, as he put it, to give the country such industrial perfection as has been reached by the United States, which finally bases its prosperity on two pillars - agriculture and industry.
  4. When the social laws and measures were implemented in foreign countries and even by a such conservative person as Chancellor Otto von Bismarck was also Witte obliged to make similar actions.
  5. Designed also Manifesto which made Russia a constitutional monarchy. It gave people fundamental civil freedom, including real personal inviolability, freedom of conscience, speech, assembly and association. Participation of Duma was granted first time to those classes of the population which were before deprived of voting powers.

Reformation of the educational system

In order to maximize the benefit of all citizens to the state Witte wanted to reform the educational system. Witte’s view was “that man is capable of improving the fate of the mankind through his creativity. Isn’t this a wonderful thing? The cognitive powers of human beings enable man to produce ideas - immaterial things - and these immaterial things lead to scientific and technological progress, which in turn, increases the productivity of the production process, which increases the living standard of the population, and longevity, and so forth.”

”Two objectives must be aimed for in education: first, to secure a high level of scientific organization in the education system, thereby expanding the field of scientific thought, to which we owe the most fundamental discoveries; and second, an expanded dissemination of general practical knowledge, which contributes to raising the quality of labor, both physical and intellectual, on all levels. Scientific and practical knowledge, simulated through such an organization of education, develop ever closer and firmer bonds, as we observe in Germany, by which the process of production and the capitalization associated with it are advanced

Witte reformed the educational system in Russia: he created a system of polytechnic high schools and three polytechnic universities, seventy-three commercial institutes, established or reorganized few industrial-technical schools and thirty-five schools of sea trade.

His aim was to create and educate a new social class - young generation of capitalists or market economists.

Minister of Finance created a “State Capitalism” where whole society was concentrating to build a functioning market economy by recreating and modernizing the state institutions and funding the first industrialization. To be able to implement this goal the Minister of Finance had to reform the educational system. (Professor Sergei D. Martynov).