New Economic Policy

By: Natalie Viera, Manuela Mur, Savannah Criado, Kris Hallstrand

Creation and Reasoning behind the New Economic Policy

● The New Economic Policy was an economic policy of Soviet Russia imposed by Lenin. Lenin described it as a progression towards state capitalism within the workers’ state of the USSR. It was a temporary retreat from the previous policy of extreme centralization and doctrinaire socialism.

● The NEP was announced to help Russia’s economy from falling.● The Kronshtadt Rebellion of March 1921 convinced the communist party and

the leader, Lenin, that they needed to retreat from socialist policies in order to maintain the party’s hold on power.

● The NEP was viewed by the Soviet government as merely a temporary expedient to allow the economy to recover while the Communist solidified their power.

Effectiveness and Implications● The New Economic Policy reintroduced a measure of stability to the economy

and allowed the Soviet people to recover from years of war, civil war, and governmental mismanagement

● The NEP helped Russia recover from the effects of World War l and the Russian Civil War, but many sides still believed the NEP was a failure. This was mostly because it failed to meet the party’s desire for a socialist, industrial society.

● Although the NEP helped Russia prosper economically, some socialist believed it went too far with its free-market economic style and it could have aided the Soviet Union into permanently being a capital economy. The original plan was to have capitalism in place until their economy was strong enough to achieve socialism.

● It was still a successful temporary solution however, since it replaced war communism.

War Communism● Measures introduced in 1918 to restore order and discipline to the

economy● Included these main policies:

○ Nationalization of industries○ State control of foreign trade○ Strict discipline for workers → strikes were forbidden○ Requisition of food, grain, from peasants to feed the army○ Rationing of food○ No Private enterprise○ Military control of Railroads

Why War Communism Was Replaced● Workers had no incentives to grow surplus grain since it would be taken

from them○ Peasant production of grain plummets

● Control of the transport/distribution centers result in famine● By 1921 industrial production drops to ⅕ of its levels previously recorded in

1913● The wages of workers declined by ⅔● Uncontrollable inflation

○ Money became worthless● Over 20 million people die from lack of food and disease ● War communism was causing chaos throughout Russia

Why War Communism Was Replaced● By 1921 War communism was very unpopular among civilians; their revolts

put pressure on the government to make a change■ Tambov Rising- response from the peasants to the forced

requisitioning of their grain to feed the towns and the Red Army■ Kronstadt Mutiny- over the increase of Bolshevik power at the

expense of the workers; fought by sailors who were previously involved with the Bolshevik cause

■ These uprisings “lit up reality like a flash of lightning” according to Lenin

■ This realization caused the New Economic Policy to come into effect

Lenin and The New Economic Policy● Lenin sees the discontinuation of War Communism as temporary but

necessary for the Bolsheviks to remain in power● Was willing to compromise ideology due to the two revolts that had

happened in 1920-1921● Reasons for the NEP:

○ Increase food production by giving peasants an incentive to grow more○ Get the economy going after the Civil War→ private ownership provides

motivation for small businesses and helps increase industrial production and trade

○ Reduce opposition to the Bolsheviks○ Relax the unrest of the people○ Relax economic policies, especially the ones associated with War communism

War Communism VS NEPWar Communism

- Communist fundamentals; the people have no control/ no say Government overrides all

- Focused on the armies needs with no consideration for the peasants

- Gave the government complete control of the economy

- Government has control of production- Ended private businesses- Control of agriculture from peasants- Banned private trade- Economy began to fail under this

New Economic Policy

● Capitalist fundamentals; the person makes a profit

● the worker is now somewhat considered● Relaxed Government power● Peasants could now make money with the

new system of taxation allowing the sale of any remaining food; no more requisitioning

● Private trade Ban is removed- food can now move easily and people now buy goods with money reintroducing money

● Small Businesses are reopened which gave peasants another opportunity to make a profit

● Proves to be successful and helps benefit the economy

Factors which could be used to criticize the NEP~The left wing of the Bolshevik Party saw the introduction of the NEP as a betrayal of the communist ideas from the Revolution

~Agriculture and small business was privately owned

~Heavy industry was run by the state (to keep control)

~Uneven economy where agriculture was growing at much higher rates than heavy industry owned by the state.

~Exploitation of the system by NEPMEN (middlemen)

~It took three years for them to realize how bad War Communism was and then to fix it

Factors which could be used to defend the NEP~The right wing of the Bolshevik Party saw the introduction of the NEP as a necessary step

~It was needed in order to save the state from collapsing

~Got the economy going again

~Gave farmers incentives to grow their crops

Factors which could be used to defend the NEP (cont.)~Fixed the starvation problem

~Kept Bolsheviks in rule

~Necessary to move forward toward a more socialist system

~By 1928 the economy had been restored to the pre-World War I level

To What Extent Should the NEP be seen as a failure for Lenin?

★ From a communist standpoint, the NEP with its acceptance of private industry and private trade, represented a retreat back to capitalism

★ Although the Bolsheviks were hostile to this policy Lenin viewed the Bolsheviks in a desperate economic circumstance and needed to make compromises to secure the Revolution - the NEP was seen as a short term remedy

★ The economy would have to be restored before moving to socialism, as Lenin said “One step backwards, two steps forward.”

★ Development of groups who gained under the NEP - private trade and small businesses led to the growth of Nepmen- those who used concessions of the NEP to make money

To What Extent Should the NEP be seen as a failure for Lenin (Continued)

★ The concessions with the peasantry were seen to encourage the kulaks (wealthy peasants) to make profits from selling surplus grain - These groups of Nepmen became detested by the Left as capitalists holding back the development of socialism

★ The introduction of NEP also caused the arrest of many Mensheviks and all political parties other than the Bolsheviks were outlawed

★ Economic compromises clearly did not extend to political relaxation which persuaded many left wing Bolsheviks that the NEP could be tolerated in short term

★ Although the NEP was criticized by groups within the Bolshevik Party, it was a policy which enabled the Russian economy to recover gradually

To What Extent Should the NEP be seen as a failure for Lenin? (Cont.)

★ Under the NEP peasants were more inclined to grow the needed food surpluses

★ In industry, incentives encouraged the workforce to increase productivity★ The NEP also took away some of the main causes of discontent with the

Bolshevik government's policies ★ Overall, the NEP produced a stabilized economy which made it easier for

Lenin to deal with any criticism within his own party on his policy - mostly from the Left Wing of the Bolshevik Party

Views on NEP The Left Wing of the Bolshevik Party

❖ Saw the NEP as a betrayal of the communist ideals of the Revolution

❖ Disliked the reintroduction of capitalist elements such as private ownership and private trade and the failure of the government to collectivise agriculture

❖ The NEP could only be tolerated as a short-term measure

The Right Wing of the Bolshevik Party

❖ Saw the NEP as a necessary step to ensure that the economy recovered and the Bolshevik PArty remained in power

❖ This would have to occur before moving towards a more socialist system

❖ The Right also saw the NEP as a short-term measure