Lessons from the Gulag? Enemies of the people had entrepreneurial spirit
A recent study mapping the link between gulags and regional growth in Russia can teach us something about reviving our own left behind towns, writes economist Paul Ormerod
One of the first academic articles published by the American Economic Association in 2025 began, almost certainly for the first time ever in the history of this august body, with quotes from Lenin and Stalin.
The title of the paper, “Enemies of the People”, is a phrase which has entered the English lexicon. It was famously used by the Daily Mail to describe the Supreme Court judges who tried to block Brexit.
But its first use was in the Soviet Union in the 1930s, when Stalin began his project of liquidating his internal rivals in the Communist Party.
The terror escalated very rapidly. Many were shot, but a much greater number were sent to the labour camps, the notorious Gulag complex scattered all across the Soviet Union.
The paper may from this initial description seem to be merely of esoteric historical interest. But its findings are very relevant to today, and specifically to the challenging problem of how to revive the left behind towns and cities in the UK and elsewhere in the West.
Gulags and growth?
After Stalin’s death in 1953, the number of executions of political prisoners fell to almost zero. But the camps persisted.
An important feature was that after serving a sentence, many prisoners faced restrictions on where they could live in the Soviet Union. Many were debarred from the major cities such as Moscow and, as it then was, Leningrad. As a result, many settled in the vicinity of the camp from which they were freed.
The chances of being branded an enemy of the people were very much higher for members of the Communist Party than they were for ordinary citizens. So the camp population contained substantial numbers of well-educated individuals.
The authors document this very carefully, using for example a dataset on Gulags collected from microfilms at the State Russian Archive.
In a tour de force of applied economics, they then spatially matched the locations of camps with current economic activity, measured using a dataset covering the universe of Russian firms.
In the short summary of the paper, the authors write that “we use this large-scale episode of terror as a natural experiment to provide evidence on the long-run persistence of human capital across generations and its effect on economic growth.”
The conclusion is clear. The greater the proportion of a camp’s inmates which was made up of the better educated enemies of the people rather than common or garden criminals, the higher now are both the current wages and profits per worker of firms located near the former camp.
The education transferred from forcedly displaced enemies of the people to their descendants is a key explanatory factor of why prosperity across localities of Russia differs today.
What the UK can learn from this
In short, not only is education a key determinant of the current prosperity of a particular town or city, but it is transferred across the generations and the effect persists.
How can this information help us today? I’m certainly not suggesting we forcibly banish the young professionals out of London, but we need to find ways to make the UK’s left behind towns attractive for well educated people to both work and live there. And it is the “living” bit which is the key. Having a house in a town and bringing up a family there creates roots, which can ensure regions benefit for generations.
The centres of our big provincial city regions are doing well. The young professionals can still work in the centre, but in order to benefit the outlying boroughs many more of them need to live there. This in turn requires not just good transport links but, crucially, attractive housing.
A strategy of overriding NIMBY objections and allowing good houses to be built is a key part of any strategy to revive poor towns in our major conurbations.
Paul Ormerod is an economist at Volterra Partners LLP