Harvest of Despair

NEW ECONOMIC POLICY

The New Economic Policy (NEP) was a series of economic reforms carried out by the Soviet government. NEP was in effect from the 10th Party Congress (March 1921) until 1927. The reforms of NEP represented a pragmatic retreat from the tenets of Marxism-Leninism, in an attempt to overcome the serious economic crisis facing the USSR.

A worldwide proletarian revolution and the immediate establishment of Communism, which Lenin predicted would happen after the ‘chain of imperialist capitalism’ was broken at ‘its weakest link’ (Tsarist Russia), had not materialized. The USSR was faced with famine, the destruction of the infrastructure of both agriculture and industry, and an economic crisis that threatened the existence of the Bolshevik regime. The policy of War Communism had virtually destroyed the Soviet economy. In response, the government took a “step backward” – Communist ideas lost their monopoly and some forms of capitalism were reintroduced.

The expropriation of grain and other agricultural products was curtailed; under NEP the state introduced a tax. This allowed the peasantry to sell or use whatever was left over after the tax was paid. Small and medium-sized industries were re-privatized; private trade was permitted. Money returned to wide circulation and the tsarist class structure was partially restored.

NEP revitalized the Soviet economy. The existence of private property provided incentives for both the peasantry and the urban class; by 1924 agricultural production rose to 80% of the pre-war level. The most impressive growth was in small industry, which did not require capital investment. The crisis in the economy was reversed.

During NEP, however, corruption in the ruling bureaucratic apparat reached epic proportions. Partially in response to this and partially to facilitate the construction of “socialism in one country,” the Soviet government reverted to the use of terror and violence. And, in order to pay for the large-scale industrialization that Stalin, upon his ascendancy to power, had ordered, the countryside was collectivized. Five-Year Plans were introduced; hereafter there would be no room for private initiative within the Soviet economy, which became totally controlled by the state.