Russian Economy - Lenin

Russia

Revolution and Early Economic Policies: 1917–1918

Bolshevik Seizure of Power (October 1917):

• Aimed to establish a socialist system.

  • Decree on Land (1917): Confiscated land from landowners and distributed it to peasants.

  • Decree on Workers’ Control (1917): Allowed workers to manage factories, though this often led to inefficiency.

  • Nationalisation of Banks (1917): The banState Monopoly on Foreign Trade (1918): The government took control of imports and exports.king system was centralised under state control.

Problems:

• Nationalisation and worker control led to chaos in production.

• Industrial output declined as inexperienced worker committees mismanaged factories.

• Agricultural production suffered as peasants hoarded grain instead of selling it to the state.

• Inflation soared as the government printed money to pay workers and soldiers.

War Communism and Economic Collapse: 1918–1921

• The Bolsheviks fought against the White Army (anti-communist forces) and foreign intervention. → Lenin introduced War Communism, a set of extreme economic policies designed to support the Red Army and centralise the economy.

War Communism Policies:

• Grain Requisitioning (1918): The state forcibly took food from peasants to supply cities and the Red Army.

• Abolition of Private Trade: The state took full control of trade, banning private businesses.

• Nationalisation of All Industry (1918): Factories were placed under direct government control.

• Labour Discipline: Strikes were banned, and workers were forced to follow state orders.

• Rationing System: Food and goods were distributed based on class loyalty, with priority given to workers and soldiers.

Consequences:

• Grain production fell by 40% compared to pre-war levels.

• Industrial output dropped to 20% of 1913 levels.

• Widespread food shortages led to 5 million deaths from famine 1921-22

• Tambov Rebellion (1919): saw 50,000 peasants rise against Bolshevik grain requisitioning.

• Kronstadt Rebellion (1921): Sailors, once Bolshevik supporters, revolted against War Communism, demanding free trade and democracy. The uprising was brutally crushed.

The New Economic Policy (NEP): 1921–1924

• Lenin abandoned War Communism in favour of a mixed economy that allowed some elements of capitalism to revive the economy. The NEP was a temporary retreat from full socialism to prevent economic collapse.

• Grain Requisitioning Ended: Peasants could sell surplus grain on the open market after paying a tax.

• Small Businesses Legalised: Private trade and small-scale industry were allowed.

• State-Controlled "Commanding Heights": Heavy industries (steel, coal, railways outlined in Marxism as key sectors) remained under government control.

• New Currency Introduced (1922): The Soviet chervonets was introduced to stabilise the economy. (Gold backed and used for foreign trade)

• Industrial output doubled between 1921 and 1924. Grain: 50mn tonnes in 1921 to 72.5mn tonnes in 1924.

• Many Bolsheviks saw the NEP as a betrayal of socialism. - Saw “Nepmen” as bourgeoise.

• Lenin insisted the NEP was temporary, meant only to stabilise the economy.

Legacy of Lenin’s Economic Policies

• Achievements:

  • NEP stabilised the economy after the disasters of War Communism.

  • Industrial and agricultural production recovered significantly.

  • Set the foundation for future Soviet economic planning.

• Failures:

  • War Communism caused economic devastation, famine, and uprisings.

  • The NEP created inequality and was unpopular with many Bolsheviks.

  • Lenin never solved the fundamental issue of how to transition to a fully socialist economy.