Lenin - Economics

Economic issue caused by WWI and the Civil War:

• Russia lacked enough goods to be distributed equally amongst its citizens. 

• Forced Bolsheviks to increase state control over the industry, leading eventually to the Command Economy under Stalin.

Economic transition:

• Lenin had no clear plan for how to move capitalism → communism (Marx had not outlined the transition phase).

• Lenin intended to work with the bourgeoisie until workers gained necessary skills.

Decrees and reforms under State Capitalism:

1. Land Decree.

2. Decree on Worker’s Control.

3. Workers’ Decree.

4. Banking Reform.

Land Decree

1917

• Gave peasants ownership of farmland and abolished landlordism. 

Decree on Worker’s Control 

1917

• Allowed workers to manage/own factories and workplaces.

Workers Decree

1917

• Established an 8-hour working day and minimum wage.

Banking reform

1917

• Private banks were merged with state banks to form the People’s Bank of the Russian Republic. 

Years of State Capitalism establishment: 

1917-1918 

Problems with State Capitalism:

• Corruption → Workers’ council (soviets) raised wages and dismissed managers. 

• Vesenkha (Supreme Council of National Economy) → Created to supervise and centralise control over the economy.

• Conflict →  Tension arose between workers’ self-management and central government control (weakened central party authority). 

Years of War Communism establishment:

1918-1921

Reasons War Communism was introduced:

• Ensure victory for the Red Army by centralising decision making, distribution of resources and controlling production and supply lines. 

Debated factors:

• ideological measure to destroy capitalism.

• Pragmatic response to economic collapse and wartime needs. 

Ideological aspects of War Communism:

• Abolished private enterprise in line with communist principles.

• Lenin blamed Kulaks for food shortages.

• The Mir was seen as a threat to Party control. 

• Currency collapsed as it was replaced with bartering ( end to capitalism).

• June 1918 - industries employing over 10 people were nationalised. 

Why was War Communism seen as essential?

WWI and Civil War devastated the economy and full state control would allow the economy to be rebuilt. 

Reaction to early Bolshevik excesses:

• Early Bolshevik decrees (land/factory control) were reversed to stabilise the situation.

• Military-style control was reintroduced: managers and army ranks reinstated.

Key Features of War Communism (a)

• 11-hour workday; compulsory labour for all men aged 16–50.

• “Labour armies” formed (e.g. for road building).

• Unpaid “Communist Saturdays” to demonstrate loyalty.

• All industry nationalised without compensation; run by Vesenkha.

Key Features of War Communism (b)

• Factory managers reinstated to restore order (reinstated hierarchy) .

• Strikes banned; death penalty for striking.

• Private trade banned; led to black market.

• Collapse of currency due to severe inflation led to trade via bartering.

Grain requisitioning during War Communism:

• Red Army, Cheka, and 150,000 Bolshevik volunteers seized grain and surplus food.

• Estimated 13,000 peasants killed during requisitioning (modern estimate ≈ 300,000).

• Food rationing prioritised for workers and soldiers; peasants faced starvation (bourgeois got even less).

Consequences of War Communism:

• By 1921, industrial production had fallen to 1/5 of 1913 levels.

• Agricultural collapse led to famine and millions of deaths.

• Economic chaos, rural revolts, and urban unrest grew rapidly.

• Riots between workers and managers over control.

Tambov Rebellion (1920-1921):

• Sparked by grain requisitioning.

• Crushed by 50,000 troops with extreme brutality.

• Pressured Lenin to reconsider policy.

• Also reflected Bolshevik efforts to destroy the Mir system.

Kronstadt Mutiny (1921):

• Sailors (long-time Bolshevik supporters) rebelled against Party control and requisitioning.

• Suppressed by 100,000 Red Army troops.

• Convinced Lenin to abandon War Communism and introduce a new policy — the NEP.

When was the NEP introduced?

10th Party Congress (March 1921).

Why was the NEP introduced?

• To re-stabilise the economy following the effects of War Communism (strategic retreat).

• Response to economic collapse and social unrest.

• Revive production by reintroducing limited market mechanism - mixed market.

Economic considerations for the NEP (effects of civil war + war communism):

• Grain production down 20% of 1913.

• Food 48% of 1913.

• Industrial workforce declined from 2.6mil to 1.2mil (1917-1921) - moved to the countryside in search for food. 

• 20mil killed in famine in the 1920s. 

Agricultural features of the NEP:

• Ended grain requisitioning, replaced by a tax in kind — peasants paid a portion of their produce to the state.

• Peasants could sell surplus grain on the open market for profit.

• No forced collectivisation; Mirs continued to exist.

• Bolsheviks compromised with peasants to rebuild food supply.

Peasant classes:

• Kulaks – wealthier peasants (~6%)

• Middle peasants

• Poor peasants

• Landless peasants

Bolsheviks sought class war, but peasants aspired to become Kulaks — weakening Party control.

Before 1917, Kulaks supplied 71% of market grain — vital to feeding cities.

Industrial features of the NEP (a):

• Small-scale industry, returned to private ownership (20 workers or less) — owners could keep profits.

• Heavy industry, transport, and banking: Remained under state control.

• Bonuses introduced in state enterprises to boost productivity (capitalist incentive).

• Currency reintroduced (1921) to stabilise the economy.

Industrial features of the NEP (b):

• Private trading legalised, ending much of the black market.

• Emergence of NEPmen — private traders and businessmen who profited under NEP.

• Lenin justified this temporary return to capitalism as essential for the long-term transition to communism.

• Electrification campaign (1927) extended electricity to rural homes for the first time.

Economic impact of the NEP:

• 1922–23: Good harvests, repaired infrastructure, revived private trade.

• Production rose; economy stabilised; NEPmen helped restore urban life.

Social and economic issue with the NEP:

• Rise in corruption, crime, and the black market.

• Imbalance between industrial and agricultural goods:

  • Food prices fell while industrial goods rose → Scissors Crisis (1923).

  • Peasants reduced grain production to raise prices, causing shortages.

• Government intervened to regulate prices and restore balance.

Ideological divide caused by the NEP:

• Rightists (e.g. Bukharin) supported NEP as a necessary recovery step.

• Leftists (e.g. Trotsky) opposed it as a betrayal of socialist principles.

Lenin insisted it was a temporary phase — “One step backward, two steps forward.”