Unit 2 - Soviet Economy

Question 1

What industries were nationalised? (Lenin / State Capitalism)?

Answer 1

Only large industries were nationalised. Small factories and workshops were either controlled by workers or handed back to capitalists.

Question 2

Aims of War Communism (Lenin)

Answer 2

High levels of production of war goods
Efficient allocation of workers
Food production for the soldiers/workers

Question 3

Successes of War Communism (Lenin)

Answer 3

• Allowed government to increase power
• Won the civil war
• All the unemployed were conscripted into the workforce.
• Ensured that the Red Army got the resources it needed to fight and win the civil war
• Public services such as trams and trains were free (due to the abolition of money and hyperinflation making money worthless)

Question 4

Failures of War Communism (Lenin)

Answer 4

Economic collapse:
Grain requisitioning = lower rates of agricultural production, Cheka authorised to seize grain from anyone without payment

Industrial production declined because no incentive to work - By 1921, only ⅕ of the figure from 1913 - Strict Labour rules - punishments for workers who were late/slacking and the working day extended to 11 hours - death penalty was introduced for strikers - peasants not paid for grain

Industrial workforce declined from 3m in 1917 to 1.2m in 1922

Led to a rise in unemployment and famine - only 43% of the 1917 harvest was met in 1921

Political crisis: Rebelling such as the Kronstadt and Tambov rebellion

Growth of black market: 60% of goods - workers forced to steal government resources
40% of food consumed was acquired through rationing (Bourgeoisie got the least)

Disease and starvation - many left cities to try find more accessible food on farms

Forced volunteering was introduced and workers were expected to work on projects such as road fixing for free.

Question 5

Aims of New Economic Plan

Answer 5

Retain political power, revive the economy & build socialism.

Also, unpopularity of War Communism (such as rationing)

Question 6

Successes of New Economic Plan

Answer 6

Industrial growth: Stimulated production, government used taxes to reopen closed factories and by 1926, industrial production recovered to 1913 levels
The level of production of electricity, cattle, pigs and grain, coal and steel grew drastically

Political and economic stability: Ended grain requisitioning, free trade ended famine and food of all kinds available in city markets

Peasants and small factory owners could make a profit meaning they could grow more grain to eat and sell
A greater sense of incentive was created through the NEP which allowed for greater growth of production

Living conditions improved

Question 7

Failures of New Economic Plan

Answer 7

Industrial growth: Failed to provide money necessary to build new large-scale factories. From 1926-28, the economy plateaued.

The pay of minors, metal workers and engine drivers was lower than before 1914

Scissor crisis 1923: Uneven economic growth, reached crisis point by 1923 and showed NEP was incapable of industrialising the economy.

Corruption: NEP men emerged.

Question 8

Stalin’s 1st Five Year Plan 1928-32

Answer 8

Neglected consumer goods in favour of heavy industry

Question 9

Stalin’s 2nd Five Year Plan 1933-37

Answer 9

Initially set targets for consumer goods but became increasingly focused on defence and heavy industry

Question 10

Stalin’s 3rd Five Year Plan 1938-41

Answer 10

Mainly geared towards heavy industry and arms production

Question 11

Stalin’s 4th Five Year Plan 1945+

Answer 11

Reconstruction, reconverting and rebuilding factories

Question 12

Aims of Stalin’s Five Year Plans

Answer 12

• Industrialise - catch up with the West
• Eliminate inefficiencies
• Improve the military
• Assert his authority

Question 13

Successes of Stalin’s Five Year Plans

Answer 13

• Heavy industry increased: Production of Iron, steel, coal and electricity all increased massively. By building new factories they were able to exploit the Soviet Union’s natural resources.
• Transportation of goods became more efficient with the building of Moscow’s first train lines 1935
• Rearmament: In the 1930s, it was clear war was coming - ⅓ of government spending on military
• Improved incentives: Authorising higher payments and rewards for the most productive workers; Alexei Stakhanov became famous as a heroic leader in the Soviet Union as he mined 102 tons of coal in six hours (14 times the average miner). - he was rewarded and used as an example of a hardworker.

Question 14

Failures of Stalin’s Five Year Plans

Answer 14

The Terror: members of Gosplan were heavily targeted which meant that the third five year plan could never be finished

Production distribution: Did not specify what they would use materials for and there was little coordination between factories. Led to materials being stored or wasted

Low labour productivity: Low pay and lack of incentives

Housing shortages: housing was never built. Most workers lived in shacks. Houses that were built had problems such as lack of running water

Unrealistic targets: put factory members under too much pressure and lied about their productivity levels

Black market: thrived due to the inefficiencies within the plan

Poor working conditions - workers were forced to work 7 days a week and work hours were long. Lateness and absence were criminalised

Consumer goods: huge shortage in consumer goods (clothes and furniture). Caused by priorities being elsewhere and underestimating the demand through poor planning. Goods were rationed.

Production quality: often low, targets set on quantity (amount) not quality. Resulted in factory managers focusing on producing large amounts of material without thinking about what it was like.

Agriculture suffered: five year plans were focused on industrial growth. Agriculture was used as a vessel for funds for the five year plans and growing industry

Question 15

Aims of Agricultural Collectivisation

Answer 15

• To replace the NEP
• There was an Agricultural production fall in 1927-8
• Communists believed Kulaks were holding the government to ransom
• Needed new policy to deal with Kulaks and restore economic growth
• Allowed Stalin to lean left and defeat Trotsky, Kamenov and Zinoviev
• To help aid with industrial growth
• Gave tighter control for the government

Question 16

Successes of Agricultural Collectivisation

Answer 16

• Benefitted industry and rearmament
• Mechanisation (Short Term): led to huge increase in production equipment (75,000 tractors) there was only a limited impact.
• Achieved its aim as collectivisation released much more money to fund industrialisation
• Centralised power for Stalin and his government

Question 17

Failures of Agricultural Collectivisation

Answer 17

Destruction of Soviet farming (Short Term): huge opposition led to purposeful destruction of soviet farms, 26 million cattle were slaughtered, 17m horses, 11m pigs, 60m sheep and goats

Grain procurement (Short term): huge amounts if grain were seized (22.6mil tons in 1933, risen from 10.8 million in 1928)

Grain harvests (Long Term): record harvest in 1937, but grain production declined again from 1938-40

Agriculture effectively sacrificed for industry growth

Agriculture during WW2 (Long term): Soviet government relied on US imports to feed the red army, Bread rations fell by 40%, Potato rations fell by 80%, harvest declined from pre-war high of 95.5 million tonnes to 46.8 million tonnes in 1945. Failures were blatant in WW2 as farming was consistently unable to meet the needs of the citizens and the army.

Dekulakization

Private farming (Long term): 7% of farms stayed independent of the collective system. Private farms produced double the amount of meat and milk produced in state farms

Famine (Short term): 1932-1933 famine led to the deaths of 5million. Ukraine government orchestrated a famine to punish resistance

Crops, machinery and animals were destroyed as a consequence of collectivisation

There was a reduction of agricultural production due to:

• The execution or deportation of kulaks who were often the most experienced farmers.
• the absence of incentives as farmers were unable to make profits

Collective farms were less productive causing low harvests. They produced 320 kilos per hectare whereas private farms produced 410 kilos per hectare

Collectivisation led to famine in the Ukraine. The famine was orchestrated by the government as an answer to the resistance to collectivisation by farmers
The famine lasted from 1932 - 1933
5 million deaths were caused by the famine

Question 18

Aims of Recovery after the War (Stalin’s Fourth Five Year Plan)

Answer 18

• WW2 had destroyed all progress made in the Five Year Plans. The fourth five year plan 1945-50: focused on growing soviet industry after WWII.
• Extreme high levels of industrial growth - 88% of investment went into heavy industry
• The plan also focused on military spending just like the previous plans. This was due to the emergence of the Cold war in 1946
• The Fourth five year plan focused on reconstruction of infrastructure; mainly factories were rebuilt.

Question 19

Successes of Recovery after the War (Stalin’s Fourth Five Year Plan)

Answer 19

• Industrial output grew by 80% from 1945 - 1950
• Although still scarce, production of consumer goods doubled
  after the war.
• Between 1945 and 1950 the soviet economy was the fastest growing economy in the world.
• Some factories and mines in Ukraine and Siberia were able to exceed or achieve pre-war production rates.

Question 20

Failures of Recovery after the War (Stalin’s Fourth Five Year Plan)

Answer 20

• The Cold War emerged to high levels of military spending. By 1952, the total military expenditure was almost a quarter of the government’s budget
• 25 million people were homeless
• Wages for workers were low and reconstruction rather than homes
• Agriculture suffered severe shortages of resources and workers from 1946 - 1949
• Private farms were ended leading to production dropping.
• Only 12% of investment went into food production and consumer goods.

Question 21

Agriculture under Khrushchev - Investment in resources

Answer 21

• Investment in better fertiliser - 40% rise in production

- Investment in better and improved quality of equipment - Build tractor factories - 30% rise

Question 22

Agriculture under Khrushchev - Corn campaign

Answer 22

Khrushchev visited the USA and saw that they grew maize - He replicated this in the USSR. More efficient crop, the idea was to boost meat production too. Encouraged farmers in Ukraine to move away from wheat production in order to grow maize.

Question 23

Agriculture under Khrushchev - Virgin lands scheme

Answer 23

To farm new lands, there had to be an increase in the number of farmers - By 1964, 2.9m to 8.6m. Volunteers from the Komsomol (young communist league) were sent to work on the previously unfarmed lands. Turned unfarmed land in northern Caucasus, Kazakhstan and western siberia into new farms (considered his most ambitious plan). Wheat production moved to previously unfarmed lands in siberia.

Question 24

Agriculture under Khrushchev - Improved incentives

Answer 24

• Lowered quota for amount farms had to produce - Anything past quota was profit for farms
• Anything made over quota was given a higher price - Led to 250% rise in farm incomes
• Changed relationship between the government and collective farms, so they could earn more from what they produce by raising the prices of farm goods.

Question 25

Agriculture under Khrushchev - Successes

Answer 25

Greater availability of food in soviet shops
Better standard of living for soviet citizens
Greater production: 400% rise in farmers income
Allowed Khrushchev to consolidate his power
In 1956: Khrushchev introduced new commitments

Significant increase in farmed land, 18.2 million hectares in 1953 to 97.4 million hectares in 1964
Agriculture production increased by 35.3%

Question 26

Agriculture under Khrushchev - Failures

Answer 26

Machines and tractor stations abolished: Farm workers less able to obtain modern farming equipment

Maize was ineffective and inappropriate for Soviet climate

Soviet planners did not deliver the correct fertiliser to farms

Administrative chaos

Inefficient systems: Inadequate storage facilities - Waste

Investment fell from 12.8% to 2% from 54-59

Virgin land scheme was expensive due to the need of irrigation systems which were expensive to run and maintain

Soviet agriculture was labour intensive.

Harvests in 1959 and 1960 were slightly below the levels in 1958

Corn Campaign

Failed Soviet farms only able to produce 50% of the corn per hectare that US farms managed due to climate and resources, animal feed down to 30%

Question 27

Agriculture under Khrushchev - Aims of Investment in agriculture

Answer 27

Wanted to improve incentives, productivity, standard of living, to produce similar amounts as the USA, invest more in agricultural resources & increase soviet agricultural production by turning unfarmed lands into new farms. (Virgin land scheme launched in Sep 1953 as investment grew from under 3% a year to 12.8%)

Question 28

Aims of Khrushchev’s Seven Year Plans

Answer 28

• Reduce military spending
• Focus on light industry (consumer goods)
• Move away from heavy industry
• Increase chemical production
• Boost agricultural production
• Improve the standard of living for the soviet people
• Overtake the UK by 1970

Question 29

Successes of Khrushchev’s Seven Year Plans

Answer 29

• Synthetic fibre production increased by 241,000 tons
• In Jan 1959, 60% increase in consumer goods
• Fertilisers / chemical production grew by 19 million tons.

Question 30

Failures of Khrushchev’s Seven Year Plans

Answer 30

The reforms were counterproductive due to the constant change of plans and additions of new reforms. Khrushchev continually introduced economic reform / reorganisation.

Poor leadership - inconsistent (1957: decentralised power from Gosplan which destroyed central coordination of the Plan; then 1958-64: centralised) - showed confusion.
Overconfident (success of space race and virgin lands scheme until 1958)
Poor policy decisions (1962: Split party between agriculture and industry) - making him unpopular with the party and unorganised.

Cold War - Tried to reduce military spending but ended up having to maintain it because of Cuban crisis

Setting targets too high - Tried to catch up with the West and wanted to achieve communism by 1980

Economy set up by Stalin - Soviet economy was designed for heavy industry, designed to meet targets not consumption, planners often had to guess consumption, based on quantity not quality and command economy not responsive to demand; wasn’t built to produce in light industry / consumer goods e.g. factories produced thick sheet steel but light industry required thin sheet steel.

Industries produced a small number of expensive goods rather than large amounts of cheap goods to meet targets. This meant that they produced goods consumers couldn’t afford.

Question 31

How did Brezhnev cause a declining economy?

Answer 31

Kosygin reforms - Were designed to cut investments in the most inefficient collective farms and divert the money to light industry. Additionally he proposed giving power over production to factory managers and judging their success not by production levels, but by the profit they made.

Developed Socialism: Brezhnev dropped the idea of achieving a full communist system by 1980, recognised that slow economic growth and high military investment would stop that being achieved. Did want to raise living standards and argued for “developed socialism” - aimed to achieve this by importing large amounts from the West to lower prices of goods. Although goals were not fulfilled, living standards did improve under Brezhnev (85% had televisions and 70% had washing machines by 1980)

Acceptance of black market: Known as the “second economy”, Brezhnev accepted the sale of illegal goods. Living standards improved but hindered economic growth.

High military spending - Nuclear parity reached by 1970 and Afghanistan war

Question 32

How didn’t Brezhnev cause a declining economy?

Answer 32

Outdated technology: Soviet technology couldn’t keep up with the west. Soviet tech started to become outdated and worn out

Stalin’s command economy & legacy of the Stalinist System: due to Stalin’s system being dominant and hugely impacted the soviet economic structure, problems from his system still persisted

Impact of oil: Oil prices and revenue made it seem economy was doing better than it actually was and was unsustainable

Military investment: High due to events such as the cold war - Cuban missile and Berlin crisis. Military spending increased by 13%. The military industrial Complex was dominant and employed 30 million out of 150 million workers. It made decisions without informing the politburo.

After the 1950s, the golden age for the economy, stagnation occured from 1964 to 1985. During this period growth rates declined, military spending increased and the government was forced to import large amounts of grain to feed its own citizens. Inefficiency in the economy was also never solved.

Question 33

What (limited) reforms were there after 1964? - Andropov’s reforms

Answer 33

Andropov’s reforms focused on improving productivity. These reforms included the Anti-corruption campaign Nov 1982, Anti-alcohol campaign and Operation trawl which was an anti-drunkenness and anti-absenteeism campaign

Question 34

Command Economy

Answer 34

A planned / command economy is a type of economic system where investment, production and the allocation of capital goods take place according to economy-wide economic plans and production plans - Soviet government (Gosplan) set targets / quotas for industries to meet.

Question 35

Other reasons for Soviet economy declining?

Answer 35

• The “social contract”: contract between government and workforce
• Lack of investment
• Dominance of the military-industrial complex

Question 36

What changes did Chernenko do?

Answer 36

Chernenko was a Brezhnev man and made no changes in his short leadership. He died in March 1985.

Question 37

Why was State Capitalism unpopular? (Lenin)

Answer 37

Little difference between state capitalism and life before the revolution. Therefore, many workers and radicals such as Bukharin rejected state capitalism in favour of worker’s control.

Lenin ignored the opposition and state capitalism was the official policy of the new government from March to June 1918, when policy had to change due to the outbreak of civil war.