New Economic Policy

The New Economic Policy

In 1921 the Bolshevik’s abandoned War Communism and introduced an alternative economic strategy – ‘The New Economic Policy.’

Why was War Communism abandoned?

In 1921 the Bolshevik leaders were shocked at the mutiny of sailors in Krondstadt. These sailors had always been amongst the most ardent supporters of the revolution and for them to mutiny and make demands for change was a major indicator that things needed to change.

Also, War Communism was detested by many. The Peasant farmers disliked requisitioning and were far from motivated to produce large quantities of food. This, of course, led to further food shortages and a continued need to enforce production. In short, War Communism wasn’t providing enough food.

Ideologically there was also an argument for change. A Marxist / Communist state was seen as being the final stage in the development of a nation. In order for it to work, the economy needed to have gone through several stages of industrialisation. In Russia, this hadn’t happened, so there was an argument that the economy needed a period of limited capitalism in order for it to be able to sustain communism at a later date.


What were the key features of the New Economic Policy?

Social: Some of the main political changes and concessions recognised the vast array of cultures within the Russian empire. Under War Communism the varied national identities had been suppressed. The New Economic Policy reversed this to some degree, allowing Muslim parts of the empire to make use of the Qu’ran, permitting use of languages other than Russian in local administrations and encouraging education. These changes might not appear to have much to do with economics – but they have a crucial role to play in the success of the NEP. Workers in non Russian parts of the Russian Empire were now able to express their own national identity and live according to their own cultural beliefs. Allowing use of languages other than Russian means that administration of the economy could be done quickly and effectively, with translation only being required for administrators, rather than for each individual worker or farmer. This makes communication more effective and is more likely to motivate workers.

Investment: Whilst major industry remained under direct control of the government, there was a recognition that efficiency and production levels were far from ideal. The NEP saw investment in machinery to improve productivity and also resulted in exerts in different industrial fields being called upon to advice on efficiency and improvements.

Enterprise: The most controversial element of the New Economic Policy was the decision to allow some Private Enterprise. Requisitioning of food was halted and replaced by a new system. In the new system, farmers could sell their surplus grain. This encouraged an increase in production and the government would benefit by taxing the sales. Small scale businesses were also permitted. This included returning smaller factories to their previous owners and the granting of licenses to people who wanted to start new shops or enterprises. The people who took advantage of this scheme are referred to as ‘nepmen.’

Who supported the introduction of the New Economic Policy?

Upon it’s introduction there was broad agreement within the Bolshevik Party that a compromise needed to be agreed. The economy was in tatters and Russia was on the verge of famine. After years of war, something needed to be done to stabilise the economy and cement the Bolshevik’s rule over Russia. For the short term, at least, most Bolshevik’s were supportive of the changes. Lenin’s argument for the NEP was that at that time, “We are not civilized enough for socialism,” adding that perhaps it had been a mistake in 1919 when, “deciding upon an immediate transition to communist production and distribution”.

Support for the NEP wavered over the years. It’s main supporter after Lenin died was Nicholas Bukharin. Amongst the people, the NEP was popular with nepmen, the Kulaks who benefited greatly from it and the workers in general as the NEP improved their living conditions.

Opposition to the New Economic Policy.

As the economy adapted following the introduction of the NEP, there were several criticisms of it. Some peasants made large profits as a result of the changes which disturbed many socialists. The impact that the NEP had on prices also prompted questioning of the policy. The difference between Industrial and Agricultural prices quickly altered, creating what was called the ‘Scissors Crisis’. Most opposition to the NEP was based on ideology. as the economy stabilised and returned to pre-war levels of productivity, socialists began to question whether prolonged acceptance of capitalism in the economy was justified.

Russian and Soviet HistoryRussian History Homepage
Russia before the First World WarOpposition to Tsarist RuleImpact of the First World War
1917: Abdication of Tsar Nicholas IIBolshevik RevolutionLenin and the Bolshevik Revolution
Leon TrotskyBolshevik Rule 1918-1924Russian Civil War
New Economic PolicyLenin's LegacyDevelopment of Communist Rule
Life in the Soviet UnionFailure of Reform and Decline of the Communist StateStalinism
Collectivisation of Soviet AgricultureWomen in the USSRDe-Stalinisation
Khruschev's Reform ProgrammeDecline of the Soviet UnionCollapse of the Soviet Union
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