The New Economic Policy

The New Economic Policy

1. Introduction of NEP

   • Economic situation
     • Industry production fraction of pre-war.
     • Peasant uprisings.
       • War communism and grain requisitioning.
     • Tambov Uprising.
       • So serious red army sent to restore law and order.
       • First signs of major famine appearing.
   • Growing opposition
     • Mensheviks increasing support in local soviets.
       • Workers opposition movement - disapproval of gov. control of trade unions.
   • Kronstadt Reb. march 1921
     • One of Lenins most loyal supporters.
       • Unhappy with conscription = relax economic control and freedom of speech.
         • Red army attacked naval base.
   • Tenth party congress 1921
     • Announced end of war communism.
       • Replaced by NEP.
         • Peasants only give part of produce to gov, sell rest and pay tax.
     • Private trading allowed - increase availability of goods.
       • Gov still controlled 'heights of economy' - banks, transport foreign trade and heavy industry.
     • New currency 1922 - end inflation.

2. 'Democratic centralism' - ban on internal factions

   • NEP betrayal of communist ideas - Lenin aware it could split party.
   • Ban factions within communist party.
   • Decisions made by Lenin and the Politburo would be binding on all other communists - all other political parties banned.
   • Intro. of NEP - loosening of economic control but tightening of political control.
     • 1921 - governed by dictatorship more absolute than any gov. under Tsarist autocracy.

3. Impact of NEP on economy

   • Immediate effect.
     • Markets returned, more goods available, food shortages disappeared and famine of 1921 ended.
       • By 1923, 85% of firms in private hands, peasants began cultivating more land and livestock increased. Coal and textile production doubled.
   • Scissor crisis - widening gap between agricultural prices and industrial prices.
     • Agricultural production rose = price of goods fell.
       • Industrial prices rose due to shortages.
       • Peasants had to pay more at a time when they were getting less for their goods.
   • Communists accused NEP of encouraging greed, independance and self-interest.
     • For this group, the shorter the NEP lasted, the better.
       • By Lenin's death in 1924 - debate over future on NEP was a serious issue for communists.