THE CAPITALIST REVELATIONS OF A SOCIALIST

THE ECONOMIC IDEAS OF LENIN

CIA-1, MEC135- HISTORY OF ECONOMIC THOUGHT

SUBMITTED BY:
BRIJIT SARA JOSEPH (2337015)
1ST SEMESTER MA APPLIED ECONOMICS

SUBMITTED TO:
DR. RAJIB SUTRADHAR
DEPARTMENT OF ECONOMICS

DATE OF SUBMISSION- 16TH AUGUST, 2023

ESSAY OUTLINE AND RESEARCH QUESTIONS
Vladimir Lenin, one of the most celebrated figures in the Socialist realm of the 20th century
advocated for the tyranny of the proletariat as an overture to Communism. The central economic
reflections of Lenin were blent into his notable “New Economic Policy,” (NEP) introduced in
March 1921. It materialized from his contemplation that some level of capitalism was
indispensable until the state was potent enough to embody full-fledged Socialism.

The NEP did fetch capital to the state and aided its economic recovery, however, the policy was
heavily renounced by Socialists as it goes against the fundamental canon of their ideology. They
feared that Lenin’s endeavors went too far to the extent that Russia stood every chance to
transform itself into a purely Capitalist economy. This essay attempts to make a genuine effort to
unveil how Lenin proposed the synchronization of opposing economic ideologies. The main
research questions addressed include: (1) How can differing economic systems like Socialism
and Capitalism coexist as Lenin put it? (2) What is its relevance in today’s world where most
countries follow a Capitalist culture?

BACKGROUND
The Bolshevik Revolution of 1917 overthrew centuries of monarchial traditions in Russia to
replace them with a socialist structure under the designation of “The Communist Party of the
Soviet Union,” the first of its kind Communist state of the planet. It surfaced under the mighty
leadership of Vladimir Ilyich Ulyanov, better known as Vladimir Lenin. When Lenin assumed
command as the first head of the Soviet State Union, he found the Russian economy in shackles.

Initially, he committed the gravest blunder of resuming with “War Communism,” typified by the
forceful acquisition of private property, businesses, and industries. The most harsh one was the
confiscation of food grains from the peasants, also termed “grain requisitioning” to feed the
starving inhabitants of the cities. It deterred cultivators from selling their surplus produce in
markets. People were also forcibly drawn into rendering services to the state. This induced
famines and crop failures, unemployment rates soared, and the industrial sector deadlocked. The
furious population clashed with the Bolsheviks on every possible level. At last, even Lenin
admitted that War Communism took them to the worst phase of their historic struggle. Finally,
this roused him to furnish his ultimate economic solution- The New Economic Policy.

THE NEW ECONOMIC POLICY

As mentioned earlier, the New Economic Policy (NEP) allowed for capitalist elements to operate
within the War Communist system of the Soviet Union. This yelled for the return of free
markets. In Lenin's words, it was considered a “breathing space” for the deteriorating economy.
The building blocks of the New Economic Policy are condensed as follows:-

The Agriculture Policy- The most significant agrarian reform introduced by the NEP was the
“Tax in Kind” policy introduced on April 25, 1921. The prior policy in place was that of grain
requisitioning otherwise called surplus appropriation, where the state wiped away the entire
agricultural glut of the peasantry to be distributed among the industrial workforce and the army.
But under the latest setup, the farmers were only required to pay a tax to the government that was
decided in advance. Lenin recognized that it will enable the cultivators to work with renewed
spirits when they realize that their surpluses will not be taken away by the state and that they can
reap profits by selling the excess produce in freely regulated markets. Many farmers also
reinvested their profits into buying new land and employing more laborers.

Industrial Sector and Foreign Trade- This involved revamping factories that languished during
the years of War Communism and accommodating the working class into the newly initiated
employment prospects. The new entrepreneurial outfits that came into being included private
firms, and state-owned enterprises that operated on profits. The New Economic Policy also
allowed for leasing of the state-owned firms by private entities. The NEP also permitted the flow
of goods and capital across borders by maintaining good diplomatic relations with foreign
capitalist nations.

IMPACT OF THE POLICY

The policy lost momentum after the most unprecedented death of Lenin on 21st January 1924.
But despite the short span of the policy, it had a phenomenal impact on the Soviet economy. The
effects of the NEP were not immediate. Changes became evident only after one year of its
undertaking. In 1921, the agricultural produce was less than 50 million tons. This rose to 73
million tons in 1925. The wages of the factory workers almost doubled during this period and the
industrial output expanded considerably. But beyond everything else, food security was restored.

ANALYSIS AND KEY TAKEAWAYS

Even though Lenin introduced capitalistic features for mending the Soviet economy, it also
retained many socialistic facets. It is worth noting that even under the newly emerged free
agriculture markets, the state exercised monopoly powers in controlling finances and banking.
And even when industries were liberalized, Lenin was headstrong in allowing manufacturing
units to produce only commodities that were socially useful. The State also seized the reins of
critical activities such as heavy industries, mining, and currency regulations.
This can be a lesson for every contemporary economy that Socialism and Capitalism, enclose
starkly different properties that can sometimes be executed by complementing each other. In
particular, the Socialist economies of the world today can execute these aspects of Lenin’s
economic thinking. Temporarily adopting capitalist measures will not do any harm to the
socialist structures, but rather will give them the boost they have always needed. This can also be
taken up by the Capitalist economies by incorporating a larger role for the government and other
public entities.

CONCLUSION
It was for the first time in history, that a Communist accepted that capitalistic reforms could be
vital for an economy to equip itself for Socialism. Vladimir Lenin’s thoughtful economic design
is what rescued the drowning Soviet Economy. The New Economic Policy signaled the
possibility of a relatively unexplored domain in Economics that blended capitalism and socialism
into what we now call a mixed economic system.
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