1921 to 1927 were the years of the NEP. VSNKh can be said to have just regulated the economy during the NEP as opposed to doing anything else. However in all fairness, it is difficult to even talk about a planned economy between the years of 1924 and 1928, whatever the role of the state planning institutions, as the state did not run the most effective parts of the economy. The state’s ability to plan was greatly hindered by the fact that it ran heavy industry and not agriculture. Between 1921 and 1927 the state industrial sector stagnated while agriculture flourished in the private sector.
The 1921 famine had led to a decline in the amount of land sown in the following year due to a shortage of seed and peasants fit to work in the affected provinces. However, the harvest in 1922 was of an acceptable standard, with the land sown in the following year just short of 90 per cent of the pre-war level. Although at this time the harvest was still below 1913 levels it was able to reduce the shortage of food. As stated by Nove, in contrast, the industrial structure took much longer to reconstruct with industry still significantly below 1913 levels in 1923 in comparison to agriculture. This led to the parting of the “price scissors”, in the sense that industrial prices were very much above while agricultural prices were below their 1913 prices. 1923 figures state that industrial prices were 276 per cent of those in 1912 and agricultural prices 89 per cent. The majority of economy cannot be planned. Those in positions of power did not fully anticipate the “scissors crisis” and were thus unable to deal with it quickly and effectively and plan properly for the future economy.
Agriculture and industry were dramatically transformed from 1927 on with the end of the NEP and the following introduction of the Five Year Plans and rapid industrialization. It had been decided that the NEP was not a solution to the state’s agricultural needs nor its need for rapid industrialization. However, far from being planned, it was a panic measure resulting from domestic and foreign problems.
In 1926, a General Strike took place abroad, in Britain. As part of the government’s action against the strikes, the Russian oar company was raided in London under the pretence that the Russians were using their trading network to encourage a revolution in the city. Diplomatic relations were broken off with Russia following the Arcos raid and as war usually follows such an action, the Russians feared a military strike from Britain. We now know that Britain would not have declared war on Russia and that her actions were more for the sake of propaganda in her own country. However, at the time the Russians did not know this and feared that with her backward army and weak agricultural economy, Russia would fall once under attack.
A massive shortfall in grain deliveries to the state formed the basis of the domestic problems experienced by the regime at the time. Although agriculture was in the private sector the state controlled the price of the grain and agricultural produce. In an effort to reduce the cost of industrialization the state deliberately kept the price of grain very low; so low that the peasants preferred to hoard their food (to create a shortage) or feed it to their animals. 1927 saw grain production at 72 million tons, despite a good harvest, when it had been 76.8 million tons in 1926. Food shortage forced the government to import grain to feed those in the cities sending the state into panic as they had what appeared to be a peasant grain strike against the state on their hands.
The combination of domestic and foreign problems led the government to embark on an impossibly accelerated industrialization programme, the first stage of Stalin’s Second Revolution being the First Five Year Plan of 1928-1932.
On the face of it, the Soviet government began to demonstrate planning in their economy with the First Plan. Targets were set by Gosplan for increased production for each industry and after initial success these were replaced with even higher ‘optimal’ targets come 1929. It would be a grand understatement to brand the First Plan as overly ambitious what with Gosplan increasing already high targets of 400 per cent in the electrical industry and 200 per cent in iron after a few months. However, although Gosplan did appear to be doing some sort of planning, it did not take all factors into consideration and plan properly. It is not enough to demand high production targets, a rational plan must be concocted to achieve these targets and what the Soviet government seemed to be seriously lacking at this time was rationality. As stated by Oxley, much of the plant that was needed to meet the set targets did not even exist. New towns and factories needed to built, more of ten than not in distant regions. These new towns then needed to be connected to other industrial plants and mines via train and/or road. The new industrial enterprises also required labour, power, new technology and tools and adequately skilled staff and workers to manage and use them. Quite frankly, Gosplan did not make extensive enough plans to make such work plain sailing. Obviously a great economic advance was made in this period, however, facts such as targets being constantly revised, unreliable figures and propaganda, the occurrence of massive dislocation due to impossibly high targets and the wasting of money due to the use of incompetent, untrained workers means that this advance must surely be questioned. Lack of, or careless planning is shown by something as important as the need of skilled workers or people who could train others to use the complex machinery being overlooked. Production could stop for days when a part broke or had to be replaced because nobody knew how to repair or change it.
“A census in 1934 found that one-quarter of the new coal cutting machines was not been used, and one-third of the new pneumatic drills. This was presumably either because miners had not been trained to use them or because they were broken and no one knew how to repair them.”
Some of the projects, such as the Belomor Canal were wrongheaded from the start. The Canal was built to connect the Baltic and the White Sea, however, despite the enormous human cost it took to build it, it was too shallow to take the warships it had been designed to take.
During rapid industrialization a real threat to the regime was posed by the Kulaks, as one would be told by Russian propaganda of the time. The creation of a modern state involved economically ridding itself of the ‘backward’ peasantry who formed approximately 80 per cent of the population. The state showed a chilling ability to plan to get rid of the peasantry by pretending to liquidate the kulaks as a class and replacing them with workers. In truth, liquidation of the kulaks and collectivisation was destroying the peasantry as a whole, with the kulaks being used as an excuse.
With reference to agriculture, the government failed to predict the horror that would emerge with forced collectivisation. For hundreds of years Russia had been an exporter of grain, however, ever since forced collectivisation she has been an importer of grain. She has never recovered.
The Second Five Year Plan was a little more thought out, less ambitious and possibly more fruitful. The targets, being a little more realistic were better met. However, it is also claimed that the Second Plan was probably more successful as it set about clearing up the mess made by the First Plan.
“The First Five Year Plan…landed the country in such chaos that it took at least two years to straighten things out.”
