New Economic Policy
[1] The NEP represented a more market-oriented economic policy (deemed necessary after the Russian Civil War of 1918 to 1922) to foster the economy of the country, which had suffered severely since 1915.
[3] In addition, the NEP abolished forced grain-requisition and introduced a tax on farmers, payable in the form of raw agricultural product.
To survive, city dwellers sold personal valuables, made artisan craft-goods for sale or barter, and planted gardens.
[9] Drought and frost led to the Russian famine of 1921, in which millions starved to death, especially in the Volga region, and urban support for the Bolshevik party eroded.
[11] Leon Trotsky had also proposed the principles which would underlie the NEP in 1920 to the Politbureau in an effort to mitigate urgent economic matters arising from war communism.
[12][13] The laws sanctioned the co-existence of private and public sectors, which were incorporated in the NEP, which was a state oriented "mixed economy".
[17] Lenin understood that economic conditions were dire, so he opened up markets to a greater degree of free trade, hoping to motivate the population to increase production.
Lenin took the position that in order to achieve socialism, he had to create "the missing material prerequisites" of modernization and industrial development that made it imperative for Soviet Russia to "fall back on a centrally supervised market-influenced program of state capitalism".
Lenin was following Karl Marx's precepts that a nation must first reach "full maturation of capitalism as the precondition for socialist realization."
[18] The main policy Lenin used was an end to grain requisitions and instead instituted a tax (Prodnalog) on the peasants, thereby allowing them to keep and trade part of their produce.
[19] NEP economic reforms aimed to take a step back from central planning and allow the economy to become more independent.
The NEP gave opportunities for the government to use engineers, specialists, and intelligentsia for cost accounting, equipment purchasing, efficiency procedures, railway construction, and industrial administration.
He also states that in the recent Central Committee plenum there were speeches made which were incompatible with communism, all of which were ultimately caused by the NEP.
Stalin believed that creating a socialist society was achievable in the Soviet Union without aid from outside sources or capitalist ideology.
Backed by Stalin's Bolshevik-leaning ideology, he believed there was no need to build a basis of capital upon communism and implemented the first five-year plan.
In order to stimulate economic growth, farmers were given the opportunity by the Bolsheviks to sell portions of their crops to the government in exchange for monetary compensation.
[17] This incentive, coupled with the breakup of the quasi-feudal landed estates, resulted in agricultural production surpassing pre-Revolution levels.
The agricultural sector became increasingly reliant on small family-farms, while heavy industries, banks, and financial institutions remained under state-ownership and -control.
To lower the price of consumer goods, the state took measures to decrease inflation and enacted reforms of the internal practices of the factories.
[4] The austere social practices and social-equality theories of revolution and war communism gave way to a more stratified society in which a new bureaucratic elite flaunted conspicuous status symbols: Vladimir Sosnovsky dubbed this "the automobile-harem factor".
[27] Stalin then enacted a system of collectivization during the Grain Procurement Crisis of 1928 and saw the need to quickly accumulate capital for the vast industrialization programme introduced with the Five Year Plans starting in 1928.
The Bolsheviks hoped that the USSR's industrial base would reach the level of capitalist countries in the West, to avoid losing a future war.
However, it proved highly unpopular with the Left Opposition in the Bolshevik Party because of its compromise with some capitalist elements and the relinquishment of state control.
[4] The Left saw the NEP as a betrayal of Communist principles, and believed it would have a negative long-term economic effect, so they wanted a fully planned economy instead.
[citation needed] Pantsov and Levine see many of the post-Mao economic reforms of the Chinese Communist Party's former paramount leader Deng Xiaoping away from a command economy and towards a socialist market economy during the 1980s as influenced by the NEP: "It will be recalled that Deng Xiaoping himself had studied Marxism from the works of the Bolshevik leaders who had propounded NEP.
