The New Economic Policy

The NEP was intended to meet Russia’s need for food, as war communism had failed to deliver. State terror deterred the peasants, it was clear that they needed to be persuaded into producing food ‘Lenin – Must be a certain amount of freedom for the small private proprietor’. Although disagreement soon followed the NEP, the grim famine and conditions were bad enough to give Lenin full support for his new policy.

Its essential features were as followed:
- Centralisation relaxed (occupation of factories)
- Requisitioning replaced with Tax in Kind (only took a fixed amount of grain rather than all)
- Peasants keep surpluses and could sell for money
- Restoration of small markets.

Lenin knew this was going back on state control of the economy, restoring mixed economy with some forms of capitalism. This made many Bolsheviks uneasy, Lenin stressed that it was temporary and a necessity to stop a similar mutiny to that of Kronstadt, famine and to restore the economy, and he also mentioned how they still had control of banking, industry and foreign trade. NEP proved the Bolsheviks could not form a successful economy purely on their ideological ideas.

Lenin put his political theories aside in order to restore Russia’s economy. It troubled many members, such as Trotsky who had regarded war communism as fantastic and exactly the correct strategy to follow. It disturbed him that they were being ‘appeased’ and not ‘squeezed’ as the proletariat revolution suggested. A main complaint of the Bolshevik objectors was the ‘Nepmen’ who gained from the trade under the NEP and made themselves rich. Lenin took steps to remove disunity and a split in the party over the issue of the new ‘capitalism’, he introduced ‘On Party Unity’ which announced that any groups or ‘factions’ that formed within the party against NEP must part or face expulsion. A ban on factionalism greatly stifled any objectors. He also outlawed all other political parties in soviet Russia, suppressing all opposition, making it very difficult for anyone to voice negativity over the New Economic Policy, as it would be ‘Challenging the party itself’. Bukharin, the soviet economist, put aside any opposition to say that the NEP would stimulate the economy as the peasants would use any extra money to buy manufactured goods.

The NEP itself was a success and it was this reason why the party accepted it. The policies figures show that the economy made a recovery, with grain harvests increasing by 20M tons, Factory output doubling to just under 5000M roubles, average wage doubling to 20.8 roubles per month and most notably, a 3x increase in the kWh of electricity production (1562). Lenin was also right in saying they still controlled the ‘heights of the economy’.

However the NEP was not a complete a success, as its opponents criticised it that it industry failed to expand as quick as agriculture, as the Nepmen may have done well but around the factories and the urban areas, the workers were mainly unemployed. This was known as the SCISSORS CRISIS, as industrial prices were becoming high and agricultural lower. It was caused partly by the ending of famine, as greater harvests led to a fall in the price of food. Industrial good however did not fall in price, as factories took much long to recover from the Civil War (and war communism). The scarcity of products drove the prices up. This resulted that peasants were selling at too low of a price to afford the high manufactured goods. Over time, the Bolsheviks argued continually about Gosplan’s (vesenkha) failure to produce afirm economic plan. However as time went on, industry recovered as it was less interfered and the scissors gap decreased, although this was no guarantee that it was permanent.

SUMMARY

Reasons for NEP
- Disruption of Economy (Civil War and War Communism)
- Famine
- Kronstadt Rising

Main features included
- Markets being restored
- Peasants allowed to sell surplus
- Relaxing of centralisation
- Tax in Kind

Justifications
- Food Shortage
- Temporary and 'Still controlled heights of economy'
- Peasants had to be persuaded

Consequences
- Recovering economy and end of famine
- Ban on Factionalism
- Some Divisions
- Scissors crisis (which decreased)