Born to a Jewish family in Romny (now in Ukraine), Sokolnikov joined the Russian Social Democratic Labour Party in 1905, and was active as a Bolshevik during the 1905 Revolution.

In 1917, Sokolnikov returned to Russia and was elected to the party's Central Committee, and following the October Revolution, oversaw the nationalisation of banks, was a member of the delegation at the negotiations for the Treaty of Brest-Litovsk, and served as political commissar during the Russian Civil War.

Deported in February 1909, it took four months for him to reach his assigned destination, a village called Rybnoye, on the bank of the Angara River, and six weeks to escape, via Moscow to Paris.

When the truce broke down, and the Germans were advancing through Latvia towards Petrograd, he backed Lenin's line that the Soviet government would have to capitulate, although he saw this as a delaying tactic while they created a Red Army capable of conducting a 'revolutionary war'.

Sokolnikov later wrote that "the division of labour in capitalist society was brilliantly expressed in this contrast of unceremonial plunder at the front and mannerly gentlemanliness at the green table".

[10] Despite his intervention, in June 1918, Sokolnikov led a delegation to Berlin to negotiate a trade treaty with Germany, but the talks were aborted after the assassination of the German ambassador in Moscow, Wilhelm von Mirbach in July.

[11] In March 1918, he was appointed an editor of Pravda, but he spent almost the entire Russian Civil War on the front line, firstly as Political commissar with the Second Army, which was responsible for putting down anti-Bolshevik rebellions on the western side of the Ural mountains, around Vyatka and Izhevsk.

[14] During 1922, Sokolnikov argued persistently in favour of relaxing the state monopoly on foreign trade, to allow some of the private enterprises that came into existence under NEP to import equipment sell their produce abroad without going through government agencies.

He was supported by Stalin, Zinoviev, Kamenev and Nikolai Bukharin – i.e. by a majority of the Politburo – but met vehement opposition from Lenin, who warned: "Sokolnikov is making a great mistake, which is sure to ruin us, unless the C.C.

"[15] In October 1922, Sokolnikov persuaded the Central Committee to agree to partially lift the monopoly, provoking an angry reaction from Lenin, who missed the meeting through illness.

Speaking to the 11th Congress of the CPSU in March 1922, Sokolnikov flatly contradicted those who suggested that the state should print more paper money to finance the revival of war-damaged industry, likening it to poisoning the system by injecting opium.

More controversially, he warned that many factories were losing money and living off the state, and would have to pay their way by selling products in the new free market conditions of NEP.He became a candidate member of the Politburo of the Communist Party in May 1924.

According to Boris Bajanov, as minister of finance Sokolnikov proved himself to be a capable administrator, accomplishing every task he was asked to do, such as creating the first stable Soviet currency.

Even while publicly aligned with the opposition, he continued to argue that agricultural output had to be increased before industry could be expanded, and that consumer goods should be imported to give the peasants an incentive to take their produce to market.

He wrote: "The history of recent decades shows that even in countries where the principle of private property dominates, unlimited competition of private enterprises is steadily receding before the advance of gigantic financial and industrial corporations which ... actually plan production and marketing within the limits of certain branches, often carrying their operations across national frontiers ... A policy of non-interference by the state in such conditions would mean paralysis of state power.

Beatrice Webb who invited Sokolnikov and his wife to her home and introduced him to the Chancellor of the Exchequer Philip Snowden noted in her diary: “We are the only ‘Cabinet’ members who have consorted with them.

"[25] In 1932, Sokolnikov was recalled to Moscow (and replaced by Ivan Maisky, who spoke fluent English) and appointed Deputy People's Commissar for Foreign Affairs.

The British journalist Malcolm Muggeridge, who had met Sokolnikov in the United Kingdom, visited his Moscow flat just before the start of the Great Purge.

He was sufficiently broken under interrogation, either through torture or more probably through threats to harm his young wife and daughter, that he not only incriminated himself, but was made to confront Bukharin, in Lazar Kaganovich's office, and accuse him of being part of a conspiracy to restore capitalism in the USSR.

[27] In January 1937, he was a defendant at the Trial of the Seventeen at which he 'confessed' that he had been party to a terrorist plot against Stalin since 1932, and that Trotsky was conspiring with Adolf Hitler's deputy Rudolf Hess to incite a Nazi invasion of the USSR.