Early Economic Policy

Question 1

Economy when Bolsh took powrr

Answer 1

When the Bolsheviks took over Russia in October 1917 the economy was in chaos. It had been severely
damaged by the First World War and was to be devastated by the civil war that followed.

Question 2

The key measures of Lenin’s initial economic policy were as follows.

Answer 2

• The Land Decree of October 1917 abolished private ownership of land, which was now to be
in the hands of ‘the people’. It was a vague statement, but enough to please the peasantry, who
viewed the decree as giving them control over the land they farmed and worked.
The Decree on Workers’ Control of November 1917 placed control of the factories into the
hands of the industrial workers.
• On 27 December, all private banks were nationalised, and, along with the State Bank,
amalgamated into the People’s Bank of the Russian Republic.

Question 3

‘state capitalism.

Answer 3

Ideologically, the
Bolsheviks wished to see the means of production in the hands of the proletariat but, in reality, the
bourgeoisie had expertise in management and technical skills that were desperately needed. Lenin
talked of working with these groups, at least initially, until Bolshevik experts could take their place.
This transitional phase was termed ‘state capitalism.

Question 4

Result of Lenin’s initial economic policies

Answer 4

These measures gave considerable power to the workers and peasants, but it had a detrimental
effect on the economy. Workers’ councils voted to give themselves huge pay rises, which did little to
improve production and resulted in inflation. Managers were often dismissed, sometimes violently,
and those with industrial and technical expertise were removed by workers seeking revenge for
the way they had been treated previously.

Question 5

The Bolsheviks quickly recognised that the government

needed to exert greater control over the economy. What did they set up?

Answer 5

In December 1917, the Supreme Council of the
National Economy (Vesenkha) was set up to provide greater supervision of the economy.

Question 6

Why was War Communism introduced?

Answer 6

Faced with the desperate circumstances of the civil war, the Bolsheviks introduced a series of
measures to ensure that the Red Army was supplied with enough food and resources to emerge
victorious. These measures entailed much greater government intervention in the economy and
collectively became known as War Communism.

Question 7

Why was War Comm introduced? The ideological basis

Answer 7

The measures of War Communism went along with the long-term aim of the Bolsheviks to abolish
private enterprise and could be seen as the application of communist ideology. The result of this
optimism was a radicalisation of policy, pushing the Bolshevik leadership into implementing large-
scale nationalisation before it had originally intended to. The nationalisation of all industries with
ten or more workers in June 1918 was followed by a series of measures that showed the Bolsheviks
were mesmerised by the opportunities that presented themselves to extend government control.

Question 8

Why was War Comm introduced- The response to the reality of economic collapse

Answer 8

Bolsheviks
had inherited an economy that was in a state of near collapse and drastic measures were needed
if they were to fight and win the civil war.

Question 9

Why was War Comm introduced? A reaction to early Bolshevik excesses

Answer 9

response to the problems that resulted from the rush
of early Bolshevik decrees. Some of the Bolshevik policies for giving control to the workers
proved to be idealistic and unworkable, especially during the emergency context of the civil war.
The abolition of army ranks was reversed and factory managers had to be used to create some
order in industry.

Question 10

What were the key features of War Communism? Nationalisation of Industry

Answer 10

• Nationalisation (that is, state ownership) of all industry without compensation. Only workplaces
with fewer than ten workers were exempt.
All industry was placed under the control of the state through the Supreme Council of National
Economy (Vesenkha), set up in 1917.
• The reintroduction of hierarchical structures in industry. In factories, the Workers’ Councils
were replaced by management in order to instil discipline into the workers.

Question 11

What were the key features of War Communism? The death penalty

Answer 11

Harsh military-style discipline was introduced into the factories. The death penalty was
introduced for all workers who went on strike. The unemployed were forced to join Labour
Armies’ and set to work on projects such as road building and woodland clearance. All workers
were expected to volunteer for unpaid work on ‘Communist Saturdays’, days designated for serving the Party.

Question 12

What were the key features of War Communism? Private trading

Answer 12

• All private trading was banned. Trade was to be controlled by the state, but because it could
not satisfy demand a large black market in goods developed.

Question 13

What were the key features of War Communism? No money

Answer 13

Transactions using monev became limited due to massive inflation. Money was replaced by
bartering using goods, and many workers received their wages in goods rather than money.

Question 14

What were the key features of War Communism? The forcible requisitioning of food from the peasantry

Answer 14

The forcible requisitioning of food from the peasants in order to feed the army and the towns
. The government attempted to use
Committees of the Village Poor to spy on any peasants who might be hoarding food. The result
was a rise in tension in the countryside and serious outbreaks of violence, often directed at the
requisitioning teams. Malnutrition and starvation became commonplace.

Question 15

What were the key features of War Communism? Rationing

Answer 15

The introduction of rationing to ensure that, despite food shortages, the workers in the cities
were fed. Those industrial workers whose work was crucial to the war effort received preferential
treatment.

Question 16

Why was the NEP introduced in 1921?

Answer 16

The reality of the social and economic situation, coupled with
a worrying deterioration in the political position of the Bolsheviks, led the government to abandon
War Communism and replace it with the New Economic Policy (NEP). War Communism may have
delivered the resources needed to win the civil war, but it was at a huge cost in terms of its impact
on the economy and on the popularity of the Bolsheviks. The ending of the civil war produced a new
situation that required a different response from the government.

Question 17

Why was the NEP introduced in 1921? Economic considerations

Answer 17

By the end of the war, industry had ground to a virtual standstill. Production of heavy industry
had fallen to 20 percent of its 1913 level and, in some sectors, production had stopped altogether.
Food production had also fallen, to only 48 percent of the 1913 figure, and the breakdown in the
transport and distribution systems had resulted in widespread famine (see Source 2). Weakened
by a lack of food, many Russians succumbed to diseases such as typhus and smallpox and over
20 million died from famine and disease in the 1920s. In addition to this, army soldiers had to be
resettled into civilian life. It was clear that War Communism was not delivering the goods, nor
would it be able to cope with the post-war situation.

Question 18

Why was the NEP introduced in 1921? The unpopularity of War Communism

Answer 18

Several of the key features of War Communism were loathed by the Russian population.
The system of rationing was disliked, as the size of the rations was dependent on the social
classification a person was given. Members of the Red Army and industrial proletariat received the
most; members of the bourgeoisie received very little and, in some cases, none at all. The use of
managers and the return to hierarchical systems within the factories caused resentment among the
industrial workers, leading to violence on occasions. Many workers felt that their opportunity for
self-regulation was being undermined by the increasing dictates of the state.

Question 19

Why was the NEP introduced in 1921? The Tambov Rising

Answer 19

In the countryside, resentment of War Communism was greatest in relation to the forcible
requisitioning of food and the plans to get rid of the mir (village commune), which had become a
genuinely peasant organisation since the Revolution. Peasant resentment against the government
came to a head in a series of uprisings in 1920-21. There were risings in the important grain areas
of the Volga basin, North Caucasus and Western Siberia. The most serious was the Tambov Rising
in central Russia, where peasants reacted violently to requisitioning teams arriving in the area to
seize grain. The revolt was only put down after 50,000 Red Army troops were sent into the area.
The seriousness of these risings put pressure on the government to change its policy.

Question 20

Why was the NEP introduced in 1921? The Kronstadt Mutiny

Answer 20

This revolt by sailors at the naval base outside Petrograd increased pressure on the government.
The mutiny alarmed the Bolsheviks because it was by a group that had previously been a mainstay
of the Revolution and they could not be easily dismissed as counter-revolutionaries’. The mutiny
was over the increase in the power of the Party and its officials at the expense of the workers. Its
slogan was “Soviets without Bolsheviks. The mutiny was suppressed by Red Army troops, but the
revolt was a shock to the Bolshevik leadership and was a key factor in Lenin’s decision to change
his economic policy. To Lenin, the Kronstadt Mutiny had lit up reality like a flash of lightning!

Question 21

What was NEP

Answer 21

A series of measures, known as the NEP, that
saw a move away from the tight state control of War Communism towards a more mixed economy,
where a private sector could emerge in addition to that controlled directly by the state.

Question 22

What were the key features of the NEP? In agriculture:

Answer 22

• There was to be an end to requisitioning. It was to be replaced by a system of taxation, which
allowed the peasants to sell any remaining food at market for a profit.
The Bolsheviks also announced that there would be no forced programme of collectivisation. Without
collective farms, the mir would stay as the means of peasants self-regulating their farming activities.
These measures were clearly a compromise with the peasantry, but the Bolsheviks knew that,
without increased food production, the economy would never be able to revive.

Question 23

What were the key features of the NEp? Industry- small-scale industry and state owned factories

Answer 23

The NEP returned small-scale industry to private hands, although the state kept control of
heavy industry, transport and the banks. This allowed Lenin to claim that the party still held the
commanding heights of the economy
• In state-owned factories, piecework and bonuses were used to try to raise production. To some
Bolsheviks these were the techniques of the capitalist.

Question 24

What were the key features of the NEp? Some ideological limits

Answer 24

• The reintroduction of a currency for paying wages in 1921 was also viewed with suspicion by
many communists as the re-emergence of capitalism. The legalisation of private trading seemed the logical way of stopping a growing black markel a
factor that had already led to some local authorities allowing private trade.
• With the growth of small-scale business and private traders, the Soviet Union saw the
development of the so-called ‘Nepmen’, people who gained under the NEP.

Question 25

Was NEP popular

Answer 25

From a communist standpoint, the NEP with its acceptance of private industry and private trade.
Was a retreat back to capitalism. The left-wing Bolsheviks were particularly hostile to this watering
down of policy but, to Lenin, the Bolsheviks were in desperate economic circumstances and.
without making compromises, the Revolution would not be secure.

Question 26

a factor which persuaded many on the left of the Bolshevik Party that the EP could be
tolerated in the short term.

Answer 26

The introduction of the EP coincided with the arrest of many Mensheviks, and all political parties
other than the Bolsheviks were outlawed. Economic compromise clearly did not extend to political
relaxation

Question 27

NEP Success in industry

Answer 27

Industrial
output rose rapidly during the first three years of the NEP. Much of this was due to the repairing of
roads and bridges damaged during the civil war and putting existing factories back into production.
It was also helped by better harvests in 1922 and 1923 (see Source 4). Yet, much of the growth was
also due to enterprising Nepmen, those who saw opportunities under the return of private trade
to set up small businesses and make some money. Restaurants and market stalls were particular
favourites and an important part of returning life to the cities.

Question 28

Limits to NEP

Answer 28

There were some less desirable aspects to the NEP: corruption through a black market flourished.
prostitution was widespread, and gangs of children roamed the cities trying their luck stealing and
then selling goods. One major problem was the imbalance between agricultural and industrial goods,
as food prices fell, the price of industrial goods rose. These low prices for grain discouraged the
peasants from growing food for the market, a problem that Trotsky described as the ‘scissors crisis’
after the figures for prices were plotted on a graph (see Figure 2.1). State intervention was used to
resolve this issue. The government stepped in to regulate prices in December 1923.

Question 29

Grain (mil tons) 1921 vs 1926 NEP

Answer 29

37.6 -> 76.8

Question 30

Steel (million tons) 1921-26

Answer 30

0.2 -> 3.1

Question 31

Figure that shows NEP was a success

Answer 31

By 1924, industrial production was 45 percent of its 1913 figure. By 1926, much of the pre-war
economy had been restored.

Question 32

The key to further growth after the NEP was

Answer 32

The key to further growth was increasing food production in order
to support more industrial workers and gain foreign exchange for new technology and machinery.

Question 33

Stalin’s view on the NEP

Answer 33

While Bukharin and Stalin called for a continuation of the NEP. Trotsky and those on the left of the
Bolshevik Party called for greater state control over the economy in order to increase the pace of
growth. Stalin was able to outmanoeuvre the Left in 1926 and the NEP stayed, but circumstances
arose that led Stalin to change his mind.

Question 34

What changed Stalin’s mind about wanting to keep the NEP? Foreign threat

Answer 34

In 1927, a series of events occurred that raised the spectre of a
foreign invasion of the USSR. A raid by the British government
on the offices of the Soviet trade mission in London and attacks
on the Chinese communists in Shanghai seemed to confirm
Soviet fears of an imminent attack on the USSR itself. The Soviet
Union would have to be placed on a war footing. Many peasants
responded to the fear of invasion by hoarding food and this
seemed to confirm to Stalin that the peasantry were a key force in
holding back further economic growth.

Question 35

Why did STALIN change his mind about the NEP? Production figure

Answer 35

Soviet production figures were still far below the modern industrial
economies of Western Europe. State control under the proposed
Five-Year Plan would enable the government to
direct the economy and ensure the adequate production and
distribution of essential materials, including the food needed to
support industrial and urban growth. With government direction
and control, the economic resources of the Soviet Union could
be maximised. Since the Communist takeover in 1917, trade with
the rest of the world had been severely reduced. The Soviet Union
would have to rely on its own resources. State control would
ensure these resources were used to their full potential to bring
about rapid industrialisation.

Question 36

What changed Stalin’s mind about NEP? NEPmen

Answer 36

There was a political dimension to the decision to extend state
control over the economy. Greater state control would remove
the Nepmen and kulaks, who had become richer through the
compromises of the NEP. The Five-Year Plan, with its large-scale
nationalisation and state control, would get rid of these groups
detested by many Communist Party members.

Question 37

Why did STALIN change his mind about NEP? Personal power

Answer 37

Moving away
from the NEP also gave Stalin an opportunity to consolidate his
hold over the Party leadership. Having removed the Left in 1926,
he could now act against the Right. The Right, led by Politburo
members Bukharin, Tomsky and Rykov, were in favour of
retaining the NEP, arguing that forcing peasants onto collectives
would actually lead to a decline in food production. By 1928,
Stalin argued that the NEP should go because, as a result of a
compromise with the peasantry over their desire to farm as they
wished, it was holding back the industrialisation of the Soviet
Union. The launching of the Five-Year Plan saw the effective
removal of the leaders of the Right in early 1929, as well as the
extension of the state, through party-controlled planning agencies.
These were instruments of Stalin’s increasingly dominant power.

Question 38

What did both NEP AND WAR COMM COST and what was decided because the idea that workers could be in charge of their own factories and workplaces
had been a naive and idealistic notion.

Answer 38

Both of these
policies had succeeded in their aims, but at the expense of either
popular support or of the Communist ideals of the Revolution.
By 1928, the decision had been made to extend state control
and implement a command economy as the best way of bringing
about rapid industrialisation, while consolidating the power of the Communist Party

Question 39

Impact of Plans summarised

Answer 39

USSR emerged as a modern, industrialised
superpower: it was ‘Stalin’s Revolution’. The human cost of this
transformation was enormous.