Nationalisation of industry- State Capitalism 1917-18

Economic problems faced by the Bolsheviks

• ECONOMIC DEVELOPMENT

  • Economy backwards and unsophisticated.

• Russia began to industrialise.

  • Economy grew significantly from 1890-1914

  • Economy still far behind the more developed nations.

• POLITICAL PROBLEMS

  • Kronstadt mutiny March 1921

  • Tambov Uprising 1921

• ECONOMIC COLLAPSE

  • Grain requisitioning = hunger, lower rates of production and lack of incentive- industrial production declines

  • Shrinkage of industrial workforce- 3 million in 1917, 1.2 mill in 1922

• MASS POVERTY

  • 1920- Workshops closing due to lack of fuel- govt orders destruction of wooden buildings in Petrograd for fuel

  • Rising unemployment

  • Harvest decline- famine- 6 million died

• GROWTH OF THE BLACK MARKET

  • 60% of food by bartering

  • stealing govt resources

Lenin’s vision and early ideas for a socialist economy

• EARLY IDEAS

  • War Communism- intense labour discipline

  • Land reform- large land estates belonging to church and aristocrats split up and owned amongst peasants

  • State capitalism- Large companies nationalised under Vesenkha- Smaller companies controlled by workers or capitalists

  • Abolition of the market- due to chaotic conditions of the civil war

• VISION

  • Believed that economy required modern technology, expert management and a well-educated and highly disciplined workforce.

  • Better pay and treatment of workers- workers would be free from Capitalists and no longer resent work

  • Little time for leisure

Land decrees October 1917

Abolished private ownership of land, which was now to be in the hands of ‘the people’- vague statement but enough to please peasantry, who viewed decree as giving them control over land they farmed.

Large land estates belonged to by church and aristocrats split up amongst peasants

Decree on workers control November 1917

Placed control of the factories into hands of industrial workers

December 1917- Nationalisation of Banks

Nationalisation of private banks and amalgamated with state Bank into- Peoples Bank of the Russian Republic

Vesenkha - December 1917 (Supreme council of national economy)

• Established to oversee the nationalisation of large scale industry- Well paid specialists used to lead this

• All large industries nationalised

Successes of State Capitalism- Ideological and political

• IDEOLOGICALLY

  • Success for Communist party and Lenin- peasants and workers began to believe in transition to communism and supported the change.

• POLITICALLY

  • Creation of VESENKHA and some nationalisation gave the new state greater control over economy and removed it from private ownership

Failures of State capitalism - Economic and Ideological

• ECONOMICALLY:

  • Failure. Workers councils voted to give themselves huge pay rises resulting in inflation

  • Managers often violently dismissed, those with industrial and technical expertise removed- Bolsheviks realised lack of control was hugely detrimental to economy and Supreme council of national economy -Vesenkha set up to supervise

• IDEOLOGICALLY

  • State Capitalism unpopular in some sectors, e.g Radical leaders like Bukharin felt workers should be in control of all factories, not just smaller ones

  • Many suggested lives same as before the war if they were in factories under supervision of Vesenkha

State capitalism- definition

• Term given by Lenin to the transitional stage between the old bourgeois economy and a new proletarian one. The idea of state Capitalism highlights the tension between placing the economy into Bolsheviks hands yet ensuring the economic production returned to levels preWW1. By mid 1918, state capitalism submerged beneath that of war communism, the extension of state control occurring during the civil war