How Successful was the NEP?

University Degree Business and Administrative studies

Agnieszka Lovell

The New Economic Policy was introduced in Russia in March 1921 after the Bolsheviks party 10th Party Congress. It was implemented primarily because massive peasant revolts all over Russia threatened Bolshevik power. The peasants were revolting against the former policy of War Communism. In the Tambov region for example, it took one year to put down the revolt, or in the Volga or the Ukraine.

The NEP was introduced as the new policy of the Bolshevik party. War Communism had failed and something new had to replace it. However the NEP did not only replace it, but it was radically different than its predecessor in its aims and outcome. The main difference was that it was capitalist, while War Communism was socialist.

War Communism had caused many problems in Russia. Grain requisitioning had led to less production and widespread famine, and nationalisation had not halted the decline of industry. Extreme inflation had occurred too. The NEP was in effect set up to solve these problems and be successful where War Communism had failed.

It was Kronstadt that led directly to the introduction of the NEP. It was the catalyst of the introduction of the policy, however Lenin did himself recognised the need for reconstruction. Lenin thought it necessary to appease the peasants as they made up most of the population in Russia, and to avert the possibility of another Kronstadt.

The NEP was a mixture of socialism and capitalism and was referred to as a “step back” for the Bolsheviks as they had just defended socialism in the civil war but were now retreating into capitalism and the “old ways”.

The success of the NEP can in reality only be measured by its aims. The NEP was set up primarily to stabilise the economy; this included decreasing inflation, increasing agricultural and industrial production and re-establishing trade outside of the country. The other major aim of the policy was to minimise the gap between the worker and the peasant in order to get peasant co-operation and support. Due to the fact that the NEP was set up as a result of Kronstadt its other aim is to demolish the possibility of such a rebellion happening again. Many reforms took place in Russia due to the NEP. .

Under the NEP the government stopped its policy of requisitioning the peasants entire crop and instead began to take only what was needed to meet the minimum requirements of the army and the urban workers. Fixed tax in kind was introduced and although the peasants were forced to pay the tax, they were now allowed to sell the remainder of their crop for profit. They could sell either privately or to the state. This gave peasants the initiative to grow more crops as a result the grain harvest went up from 37.6 million tons in 1921 to 72.5 million tons ...

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Nationalisation was minimised with only the large industries remaining under state control. However, this was still a lot as 85% of the workforce worked for state enterprises, the rest for private enterprises or co-operatives. Also conscription of the

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workforce was abandoned. Over the course of five years, the NEP allowed industrial and agricultural output to rise to its pre-war levels. In this sense, the NEP did achieve economic recovery. However, the NEP was bitterly disliked by many leading communists who saw it as a reversal of everything they believed.

Although industrial production increased at a slower pace than agricultural production, which caused many problems such as the scissors crisis in 1923, it did increase. For example, coal in 1921 did not exceed 8.9 million tons while in 1925, it was around 18.1 million tons, and steel production increased nearly 10 times from 183 thousand tons being produced in 1921 to 2135 thousand tons in 1925. However industry did not attain the same levels of recovery as agriculture and did not reach the pre-war level. This shows that the NEP was successful in increasing industrial production. However, the increase in heavy industry was not as great as light industry, consequently it suffered in comparison.

Trade with foreign countries was also reintroduced, as earlier it had been prohibited. The ban against free trade was lifted too so the whole population was permitted to trade with one another. The state only had control over 15% of the trade, the rest was under Nepmen or co-operative control. However, the boom in private trade led to a widening gap between rich and poor. This can clearly be seen by the sudden rise in unemployment in the first two years of the setting up of the NEP. There was a lot of anger focused on the Nepmen, who were seen as the ‘new class’, between rich and poor. The workers also felt resentful towards the Bolsheviks as they felt the NEP was sacrificing their class interests in favour of the peasantry. Therefore although the NEP allowed free trade and re-established foreign trade, not everyone benefited from it. And in fact this lead to the very thing communism went against class. Nepmen became the new beneficiaries, as they grew rich. Also, the gap between rich peasants and poor ones increased as class, once again became an issue.

In addition, a new currency was set up to ease the economic problem. This currency was known as the chervontsy. However, they were in heavy demand and only available in large denominations. The rouble was still legal tender until February 1924. Inflation can clearly be seen as in January 1921 there was 1,169 milliards of roubles in circulation and by January 1923 there were 1,9994,464 milliards. This clearly shows that a change in currency was needed. Although this helped the economy as the rate of inflation decreased slightly, it did not do enough to help the people and their financial difficulties.

The NEP did minimise the gap between workers and peasants. The policy meant that peasants could make more of a profit as they were allowed to sell their own produce and trade with others. It also encouraged them to work harder. However, it was the peasants who suffered most due to inflation. Although they made money, it was worth little in industry. In this way the NEP had been partly a success as it had minimised the gap and made things better for the peasants but did not improve everything.

As for the NEP’s other aim, that being avoiding another rebellion like Kronstadt, the policy was successful as there was no threat of them ever losing power. Although

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there were protests against the NEP or some parts of it, overall these were unthreatening to Bolshevik power and were ignored or came to an end after a while.

Because of the New Economic Policy the Soviet economy revived quickly. There was more food from the farmers; there were goods in the shops and outdoor markets, However many Bolshevik members did not consider the NEP as socialism and thought that it was a betrayal of communist principles. Lenin saw the NEP as a temporary expedient from socialism, not a departure from it. He called it “state capitalism”. He had, in fact, tried briefly to implement a similar system in spring 1918, calling it the New Course” but he abandoned it after a short while.

On the whole the NEP was a success. It met most of its aims. The policy helped stabilise the crumbling economy and re-established pre-war levels. The policy decreased the rate of inflation, it increased agricultural and industrial production, it allowed free trade and re-established foreign trade. However, some of these aims it only met partly. For example although the rate of inflation did decrease it was still very high and the NEP did not stop it completely. Industry production also suffered as a result of the NEP. Although its production increased its prices rose due to the fast increase of agriculture. Trade also caused problems like the re-establishment of classes. So these aims were only partly successful and created many other problems. On the whole the NEP did stabilise the economy.

The NEP tried to minimise the gap between peasants and workers. Many of the aims in stabilising the economy were for the peasants benefits like the end of requisitioning and allowing them to trade. However, the high prices in industry and high inflation left the peasants with money which was not worth as much. However, the policy did try to get peasant support. It was partly successful in bringing workers and peasants together, however many workers felt let down by the party that was supposed to cater to their needs.

The fact no major rebellions threatened the Communists shows that the policy had kept many people happy and those that protested were insignificant or in such small numbers they were unable to mount a decent threat on the party.

In conclusion the NEP was one of the major factors that had enabled the survival of Communism in Russia. The step back from socialism and the reintroduction of capitalism had worked. Peasant uprisings virtually ceased, the economy recovered and the Bolshevik regime was consolidated.

BIBLIOGRAPHY:

Internet,

Nove “An Economic History of the USSR”

Figes “A People’s Tragedy”

Carr “The Russian Revolution….”

Robertson “Russia in Revolution”