Industrial and agricultural change, 1917-85

- How did the government exercise control over the economy between 1917-1928 - What was the impact of the Five-Year Plans and Collectivisation under Stalin - How far did economic ploicy change between 1953 and 1985?

The Land Decree

October 1917, abolished private ownership of land, to be in the hands of the people.

The Decree on Workers’ Control

November 1917, placed control of the factories into the hands of the industrial workers.

Peoples bank of the Russian Republic

27th December, all private banks nationalised

Why War communism was introduced

• The ideological basis: aligned with the aim of Bolsheviks to abolish private enterprise.

• The response to the reality of economic collapse: The economy was in collapse, key element of state direction of the economy.

• A reaction to early Bolshevik excess: War communism being a response to the earlier rush of Bolshevik decrees.

The key features of War Communism June 1918

• Nationalisation of all industry without compensation

• All industry placed under the control of the Supreme Council of National Economy.

• Reintroduction of hierarchical structures in industry.

• Harsh military-style discipline introduced in factories.

• All private-trading was banned.

• Money replaced by bartering using goods.

• Forcible requisitioning of food from peasants in order to feed the army.

• Intro of rationing to make sure workers were fed.

Consequences of War communism

• Ensured the Red Army got the resources needed to fight and win the civil war.

• Left the economy in a collapsed state, 1921 industrial production one-fifth of the figure in 1913.

• Disease and starvation

Why the NEP was introduced in 1921

• Economic considerations- Production of industry fell to 20% of its 1913 level by the end of the war. Food production fell only 48% of the 1913 figure, breakdown in transport led to a famine. 20 million people died from famine/disease in the 1920s.

• Unpopularity of War Communism

• The Tambov Rising- Peasant uprising in 1920-21. Tambov Rising in central Russia peasants violently reacted to requisitioning teams.

• The Kronstadt Mutiny- Mutiny was over the increase in the power of the Party and it’s officials at the expense of the workers.

Key features of the NEP

• Agriculture: end to requisitioning and no forced collectivisation

• Industry: Legalisation of private trade, developed Nepmen, return small-scale industry to private hands

How successful was the NEP

• Rapid increase in industrial output

• Corruption from the black-market

• Widespread prostitution

• Imbalance between agriculture and industrial goods, food prices fell prices of industrial goods rose, discouraging peasants from growing food for the market ‘scissors crisis’

First Five Year Plan

• 1928-32

• Concentrated on rapid growth in heavy industry, saw an enormous growth in industrial production

• Consumer industries were neglected, justifying this was that it needed to focus on building up industry and communication networks.

Second Five Year Plan

• 1933-37

• Initially set higher targets for production of consumer goods

• Coal production rose (1927 35.4 million tons- 1937 128 million tons)

• Hitler rose focus on defence

• Heavy industry focus continued

Third Five Year Plan

• Launched 1938

• Directed to arms production to meet the threat of Germany

• 1928-41 saw a 17% growth rate, progress was unbalanced

Reasons for Collectivisation

• Industrialisation could only be achieved if agriculture was more efficient, because an increase in population would need to be fed, export of food to obtain foreign exchange.

• The economy: collectives in large farms would create economies of scale. Use of machinery would increase production.

• Politics: Extend socialism to the countryside. Get rid of the Kulaks (rich peasants).

Results of collectivisation

• Devastated the economy, removing kulaks was damaging as they were the most productive farmers, 1928-33 population of cattle halved due to the kulaks slaughtering them. 1930- 52.5 million 1933- 38.4 million

• Grain production fell in 1928 73.3 million tons to 67.6 million in 1934.

• Widespread famine 1932-33

Fourth Five Year Plan

• 1946-50, economic reconstruction

• Large industrial plants needed to be rebuilt

• Aimed to restore the economy to pre-war levels

• Focus on heavy industry

The Fifth Five Year Plan

• 1951-55

• Aimed to achieve continued growth

• was slower and more realistic

• Emergence of the Cold War led to increase in arms expenditure

Light Industry

• Khrushchev wanted to focus economic policy away from heavy industry into light industry, chemicals and consumer goods.

• Khrushchev made the following reforms: working week reduced from 48h to 41 1960, Managers of industrial enterprises were given more influence in factories, emphasis of vocational education.

Sixth and Seventh Five year plans

• Sixth (1956-60) development of the Virgin Land Scheme

• Seventh (1959-65) shift from coal to oil and gas, light industry, footwear and housing.

• Quality of the goods were poor, 1964 economic growth slowed

Virgin Land Scheme and results

• 1954, encouraged the opening of new areas to agricultural production

• Volunteers, young communist league were put to work in areas like Siberia and Kazakhstan

• 1952-58 incomes of farmers doubled

• 1953-58 food production increased by 51%

• Failed grain production target in Kazakhstan, poor harvest 1963

Ninth Five year plan

• 1971-75, Brezhnev push for greater consumer goods

• Greater increase in consumer goods than heavy industry

• Better living standards, 1980 85% of families had a TV

Economic Decline

By the 1980s economic growth in decline. The 1950s growth rate 7%. 1960s growth rate of 5%. 1970s decline to 3%.

Reasons for economic Decline ‘Legacy of the stalinist system’

Stalinist approach was towards rapid growth in industrialisation. However, this move was difficult to achieve

Reasons for economic Decline ‘Problems inherent in a command economy’

• Central control did not encourage initiative and creativity in the system

• Production of everything was decided by central planners

Reasons for economic Decline ‘The social contract’

• The contract between government and workforce in a failure to grasp the issue of inefficiency.

• Resulted in large numbers of workers doing very little of real productive use

Reasons for economic Decline ‘Lack of investment’

• Investment in agriculture increased during Khrushchev and Brezhnev years but was not enough to address the chronic underfunding from Stalin’s era

Reasons for economic Decline ‘Outdated technology’

• Soviet successes were in areas that advanced economies were moving away from and were becoming outdated i.e steal, coal

• The USSR was behind in areas that the post-industrial nations were now developing (computers and microchip technology)

• Brezhnev’s policy of coupling industries with scientific research centers in the 1970s helped but not solve the issue.

Reasons for economic Decline ‘Dominance of the military-industrial complex’

soaked up 18% of Soviet resources and employed 30 million people out of a working population of 150million