State control of industry and agriculture

How long the NEP was to last

• The NEP resulted in a mixed economy whereby private ownership coexisted alongside state control, yet the debate over the extent of state control in the Soviet economy, far from ending, intensified during the 1920s

• The Bolsheviks considered the NEP to be a temporary measure before moving on to a socialist system with greater state intervention

• The issue now arose as to when the NEP should be brought to an end

Success of the NEP: industrial output

• Industrial output rose rapidly during the first three years of the NEP. Much of this was due to the repairing of roads and bridges damaged during the civil war and putting existing factories back into production.

Success of the NEP: Nepmen

despite being helped by better harvests in 1922 and 1923 much of the growth was also due to enterprising Nepmen, those who saw opportunities under the return of private trade to set up small businesses and make some money.

Restaurants and market stalls were particular favourites and an important part of returning life to the cities.

Negatives of the NEP

• corruption through a black market flourished, prostitution was widespread, and gangs of children roamed the cities trying their luck stealing and then selling goods

• imbalance between agricultural and industrial goods: as food prices fell, the price of industrial goods rose

• These low prices for grain discouraged the peasants from growing food for the market, a problem that Trotsky described as the 'scissors crisis' after the figures for prices were plotted on a graph

• State intervention was used to resolve this issue

• The government stepped in to regulate prices in December 1923

The decision to move to a command economy: 1924- 26 statistics

• By 1924, industrial production was 45 percent of its 1913 figure

• By 1926, much of the pre-war economy had been restored

• The key to further growth was increasing food production in order to support more industrial workers and gain foreign exchange for new technology and machinery

The decision to move to a command economy: clash between people in the party

While Bukharin and Stalin called for a continuation of the NEP, Trotsky and those on the left of the Bolshevik Party called for greater state control over the economy in order to increase the pace of growth.

Stalin was able to outmanoeuvre the Left in 1926 and the NEP stayed, but circumstances arose that led Stalin to change his mind.

The decision to move to a command economy: fear of invasion

• In 1927, a series of events occurred that raised the spectre of a foreign invasion of the SR

• A raid by the British government on the offices of the Soviet trade mission in London and attacks on the Chinese communists in Shanghai seemed to confirm Soviet fears of an imminent attack on the USSR itself

• The Soviet Union would have to be placed on a war footing

• Many peasants responded to the fear of invasion by hoarding food and this seemed to confirm to Stalin that the peasantry were a key force in holding back further economic growth

The decision to move to a command economy: production figures in comparison to the rest of Europe

• Soviet production figures were still far below the modern industrial economies of Western Europe

• State control under the proposed Five-Year Plan would enable the government to direct the economy and ensure the adequate production and distribution of essential materials, including the food needed to support industrial and urban growth

• With government direction and control, the economic resources of the Soviet Union could be maximised

• Since the Communist takeover in 1917, trade with the rest of the world had been severely reduced

• The Soviet Union would have to rely on its own resources. State control would ensure these resources were used to their full potential to bring about rapid industrialisation

The decision to move to a command economy: political reasons for greater state controls

• Greater state control would remove the Nepmen and kulaks, who had become richer through the compromises of the NEP

• The Five-Year Plan, with its large-scale nationalisation and state control, would get rid of these groups detested by many Communist Party members

• Moving away from the NEP also gave Stalin an opportunity to consolidate his hold over the Party leadership

• Having removed the Left in 1926, he could now act against the Right

• The Right, led by Politburo members Bukharin, Tomsky and Rykov, were in favour of retaining the NEP, arguing that forcing peasants onto collectives would actually lead to a decline in food production

• By 1928, Stalin argued that the NEP should go because, as a result of a compromise with the peasantry over their desire to farm as they wished, it was holding back the industrialisation of the Soviet Union

• The launching of the Five-Year Plan saw the effective removal of the leaders of the Right in early 1929, as well as the extension of the state, through party-controlled planning agencies

• These were instruments of Stalin's increasingly dominant power.

The decision to move to a command economy: workers control

By 1928, it was clear to all that Lenin's declaration of 1917 that the workers were now in charge of their own factories and workplaces had been a naive and idealistic notion. Workers' control over the economy had proved to be incompatible with industrial efficiency and productivity. It was also a threat to Bolshevik control over the very people they were supposed to represent.

The decision to move to a command economy:

The Bolshevik realisation of these issues had produced, in turn, War Communism as a method of extending state control over an increasingly chaotic economy, and the NEP as a method of kick-starting an economy on the verge of collapse. Both of these policies had succeeded in their aims, but at the expense of either popular support or of the Communist ideals of the Revolution.

By 1928, the decision had been made to extend state contro! and implement a command economy as the best way of bringing about rapid industrialisation, while consolidating the power of the Communist Party.