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New Economic Policy

Lenin's New Economic Policy

At the time of the Bolshevik Communist seizure of power in October 1917 Russia had, for more than three years, been involved in the First World War. The turmoils associated with this major war inevitably produced much economic dislocation and many shortages of essential items including food, fuel and clothing. Agricultural and Industrial production were down from the levels of 1913. Perhaps a third of Russia's working horses had been diverted towards direct services associated with the war. The railways were suffering from disrepair and parts shortages. Wartime inflation had seriously eroded the purchasing power of the Russian rouble.

The "Red" Bolshevik seizure of power was moreover fiercely contested by many "White" Russian interests (monarchists and conservatives), by peasant "social revolutionaries" and by several nationalisms over several years. Thus the background to the establishment of a would-be Communist economic system in Russia continued to be stressed by disputations over the political direction of society.

Had things been otherwise the Bolshevik administration may not have intervened overmuch in the economy beyond attempting to control key areas such as banking (in order to inhibit a reversion towards outright capitalism), critical war industries, and the grain trade. Even non Communist European states had established fairly far-reaching state controls on their economies in order to further their own war efforts.

As social and political conditions developed in Russia however there was an increasing tendency towards nationalisation of many industries including Sugar, Oil, the control of Foreign Trade, spices, coffee, clothing materials and matches. This tendency, as institutionalised in a decree of General Nationalisation of June 1918, had two main roots:-

(a) The displacement of those independent workers committees that had gone beyond the Bolsheviks decree of Workers Control of November 1917 to closely supervise the operation of privately owned industry.

(b) The establishment of state control in the hope that this would facilitate the Bolshevisation of Russia at a time of civil war.

The term - War Communism - was coined to refer to what ultimately became a most pervasive system of wartime state control over productive activity and economic resources that soon grew up moreso from the seeming necessities of the times than traditional communist theory.

In rural areas across Russia a Peasant Revolution had taken place, without particular reference to Marxism, that tended towards the seizure and reallocation of landed estates and the establishment of peasant ownership of small plots that would be worked with limited equipment virtually on a subsistence basis. This new system however tended to produce less of a marketable surplus than was required to provide for the needs of the urban population. A Bolshevik policy (1919) of control over the peasants newly assumed lands and actual seizure of any marketable surplus from the peasantry resulted in a complete lack of incentive to produce any surplus in the first place.

By 1920-21 the levels of production in both the rural and more particularly in the industrial aspects of the Russian economy were running well below pre-war levels. There was an actual flight from the towns as the then urban population (who often, as individuals, had rural connections) moved away from urban unemployment and privation and towards a rural existence where they could have more hope of providing some of the basic necessities of life through their own efforts.

A serious drought centered on the Volga region exacerbated the suffering of the Russian people and, as adult males began to be released in numbers from the Bolshevik forces from the autumn of 1920, following on from a Bolshevik victory in the civil wars that had been contested since October 1917, it was often the case that they turned to banditry and defiance of the Bolshevik state. In the spring of 1921 large areas such as the Tambov region were, for several months, under the control of peasant forces rather than those of the would-be Bolshevik state.

Although Bolshevism in Russia depicted itself as a movement of "Workers and Peasants" when it came down to it the Peasants real concern was land and its control. The period of peasant apparent co-operation with the Bolsheviks (1917-1920) was a period where landed estates were broken up in the interest of the peasants. Thereafter a underlying difference in aspiration between urban Communism and rural peasant life became a factor to be reckoned with.

In March 1921 there was a revolt at the Kronstadt naval base where sailors and soldiers, who were often peasants recently drafted into wearing uniforms, urgently sought freedoms of the peasantry from Bolshevik interferences. Freedoms of speech and of the press and for trades unionism were also demanded.

This Kronstadt revolt actually took place just prior to the opening of the Tenth Congress of the Bolshevik Party and some of the delegates to this Congress were called upon to join, with soldiers loyal to Bolshevism, in the forcible supression of the revolt.

Lenin had already been contemplating the adoption of a new approach towards the encouragement of production and had even submitted a draft outline of such a new approach to the Central Committee of the Communist Party. The serious implications of the Kronstadt revolt lent urgent political motivation to attempting to achieve some reconciliation with the peasantry if Russia was to progress towards the revolutionary goal of Communism.

Given these realities Lenin's draft outline provided the basis for the development of what became known as Lenin's New Economic Policy. The early stages of the development of this policy contemplated how the peasantry could be encouraged to produce more food for the towns and, in the later stages of planning, was extended towards encouraging economic exchange between town and country and to encouraging industrial production.

Lenin was prepared for some adaption of away from any attempt to immediately establish Communism as he fully accepted that Russia had not yet gone through the "Bougeois Capitalist" phase of the ordering of economic relations in society that was held to be strictly necessary in Marxist theory in order to provide the right conditions for a large and disaffected proletariat to demand Communism. Some compromise was therefore to be expected with the present aspirations of a numerous peasantry.

As far as the encouragement of agricultural production went the New Economic Policy accepted that peasants should only suffer the requisition of a graduated proportion of any surplus they produced. It was implied that the remainder of the surplus was eligible to be freely marketed to the benefit of the producer. The return of a free market as countenanced by the New Economic Policy gave rise, before long, to the emergence of a class of wholesalers known as the Nepmen who soon controlled the majority of retail trade in Russia. A recovery of economic activity in both rural and urban areas and between country and town was thus facilitated.

Lenin could however console himself, and reassure those who hoped to work towards Communism, by pointing out that the Bolshevik's retained control of "the commanding heights" of the economy - the large industrial plants, banking and foreign trade.