New Economic Policy

In 1921 the Russian economy was on the brink of collapse due to the combined effects of the Russian Civil War and the government’s policy of ‘War Communism’, a system of almost total centralization and hardcore socialism. Grain requisitioning, vital under War Communism as peasants weren’t willingly giving up surplus grain, were pushing the farmers into massive and successful rebellion. Meanwhile millions of demobilized soldiers (the Red Army had risen to five million strong during the Civil War) were about to flood back into society. Towns were emptying as people travelled into the country for food, the industrial workforce more than halved, and the remainder frequently went on strike. Given that the ruling Bolsheviks counted on the urban ‘proletariat’ for support, they were in danger.

These problems were bought into sharper focus by the Kronstadt rebellion of March 1921, when a unit considered heroes of the revolution turned against it, and Russia’s leader, Lenin, decided a more pragmatic approach was needed. Consequently, they began to introduce the ‘New Economic Policy’. This was to be a hybrid of socialist and free market ideas, retaining state control of sectors like heavy industry and transport, but allowing light industry, agriculture, and retail to revert back to private ownership. Money was made common again and peasants were allowed to own their own land. The government took a tax, first in kind and later in cash, and peasants could sell the rest of their surplus. Lenin called NEP a “strategic retreat” to gather strength for future changes and protect the revolution, and theorists have argued it was an attempt to modify socialism so it could work in a peasant country which hadn’t experienced the bourgeois or industrial phase Marxists believed was a precursor to socialism.

The New Economic is controversial. Some historians argue it allowed the Soviet economy to solidify and begin to recover, and also allowed the Bolsheviks to retain control over Russia. Others, like Figes in his ‘A People’s Tragedy’, state it was ultimately a failure, arguing that under the NEP the peasants grew away from the Bolshevik regime, inviting a future, and brutal, reassertion of central control.

A whole sector of small businessmen, who became known as NEP Men, managed to do well. However, the NEP was regarded as a short term measure by many and had opponents at the highest levels of Russian government. Lenin called it temporary, but admitted it would need to be in place for more than a decade, but after he died opposition grew. One problem of the NEP was the government’s inability to procure enough food for the urban population, which it wished to grow in tandem with industry, and in 1928 the Soviet Union’s new leader, Stalin, effectively ended the NEP with his new policy of Collectivization, a new, much closer state control of agriculture; a much more centralized approach to industry wasn’t far behind.

While NEP is now seen as a period of consolidation and growth experiencing ever greater difficulties – agricultural and industrial production reached pre-war levels by 1927/8 - there were many contemporary communists who were unhappy with it from the start. They saw too much of the old regime in it, and agitated for further change.