1, New Economic Policy

2, Creation and Reasoning behind the New Economic Policy

• The New Economic Policy was an economic policy of Soviet Russia imposed by Lenin. Lenin
described it as a progression towards state capitalism within the workers' state of the USSR.

• It was a temporary retreat from the previous policy of extreme centralization and doctrine of
socialism.

• The NEP was announced to help Russia's economy from falling.

• The Kronshtadt Rebellion of March 1921 convinced the communist party and the leader, Lenin,
that they needed to retreat from socialist policies in order to maintain the party's hold on power.

3, Effectiveness and Implications

• The New Economic Policy reintroduced a measure of stability to the economy and allowed the
Soviet people to recover from years of war, civil war, and governmental mismanagement but
many sides still believed that the NEP was a failure because it failed to meet the party's desire for
a socialist, industrial society.

• Although the NEP helped Russia prosper economically, some socialist believed it went too far
with its free-market economic style and it could have aided the Soviet Union into permanently
being a capital economy. The original plan was to have capitalism in place until their economy was
strong enough to achieve socialism. It was still a successful temporary solution however, since it
replaced war communism.

4. Why War Communism(1918) Was Replaced

• Workers had no incentives to grow surplus grain since it would be taken from them so, peasant
production of grain decreased.

• Control of the transport/distribution centers result in famine. By 1921 industrial production

drops to 1/5th % of its levels previously recorded in 1913 which also led to decline in the wages of
workers which also led to Uncontrollable inflation, Money became worthless Over 20 million
people died from lack of food and disease

• War communism was causing chaos throughout Russia.

• By 1921 War communism was very unpopular among civilians; their revolts put pressure on the
government to make a change.

• Tambov Rising- response from the peasants to the forced requisitioning of their grain to feed the
towns and the Red Army

• Kronstadt Mutiny- over the increase of Bolshevik power at the expense of the workers; fought
by sailors who were previously involved with the Bolshevik cause.

• These factors caused the New Economic Policy to come into effect in 1921.
5. Reasons for the NEP:

• Increase food production by giving peasants an incentive to grow more and to get the economy
going after the Civil War.

• private ownership provides motivation for small businesses and helps increase industrial
production and trade though Heavy industry was run by the state (to keep control) which led to
uneven economy where agriculture was growing at much higher rates than heavy industry owned
by the state

• Reduced opposition to the Bolsheviks

• Relax the unrest of the people

• Relax economic policies, especially the ones associated with War communism.

6. War Communism VS NEP

War Communism New Economic Policy

War Communism New Economic Policy

• Communist fundamentals; the people • Capitalist fundamentals; the person

have no control/ no say and Government
overrides all
• Focused on the armies needs with no
consideration for the peasants
• Gave the government complete control of
the economy
• Government has control of production
• Ended private businesses
• Control of agriculture from peasants
• Banned private trade
• Economy began to fail under this
makes a profit
• the worker is now somewhat considered
• Relaxed Government power
• Peasants could now make money with the
new system of taxation allowing the sale
of any remaining food: no more
requisitioning
• Private trade Ban is removed- food can
now move easily and people now buy
goods with money reintroducing money
• Small Businesses are reopened which
gave peasants another opportunity to
make a profit
• Proves to be successful and helps benefit
the economy

7. To What Extent Should the NEP be seen as a failure for Lenin?

• From a communist standpoint, the NEP with its acceptance of private industry and private
trade, represented a retreat back to capitalism

• Although the Bolsheviks were hostile to this policy Lenin viewed the Bolsheviks in a desperate
economic circumstance and needed to make compromises to secure the Revolution - the NEP was
seen as a short term remedy.
• The economy would have to be restored before moving to socialism, as Lenin said "One step
backwards, two steps forward."

• Development of groups who gained under the NEP - private trade and small businesses led to
the growth of Nepmen(middlemen)- those who used concessions of the NEP to make money.

• The concessions with the peasantry were seen to encourage the kulaks (wealthy peasants) to
make profits from selling surplus grain - These groups of Nepmen became detested by the Left as
capitalists holding back the development of socialism

• The introduction of NEP also caused the arrest of many Mensheviks and all political parties other
than the Bolsheviks were outlawed

• Although the NEP was criticized by groups within the Bolshevik Party, it was a policy which
enabled the Russian economy to recover gradually.

• Under the NEP peasants were more inclined to grow the needed food surpluses

• In industry, incentives encouraged the workforce to increase productivity

• The NEP also took away some of the main causes of discontent with the Bolshevik
government's policies.

• But overall, the NEP produced a stabilized economy which made it easier for Lenin to deal with
any criticism within his own party on his policy - mostly from the Left Wing of the Bolshevik Party.

8. Views on the NEP

The Left. Wing of the Bolshevik Party The Right Wing of the Bolshevik Party

• Saw the NEP as a betrayal of the
communist ideals of the
Revolution
• Disliked the reintroduction of
capitalist elements such as private
ownership and private trade and
the failure of the government to
collectivise agriculture
• The NEP could only be tolerated
as a short-term measure
• Saw the NEP as a necessary step to
ensure that the economy recovered
and the Bolshevik Party remained in
power
• This would have to occur before
moving towards a more socialist
system
• The Right also saw the NEP as a
short-term measure