New Economic Policy (NEP)

10th Party Congress

• Communist Government crisis in 1921
• Economic - By 1921 the peasants were refusing to plant more than they could eat for fear of confiscation. Towns were shrinking: Petrograd had only one–third of its former population. A famine would kill about 5 million Russians by 1922.
• Peasantry - The peasants were alienated by the confiscations of War Communism, and had no real links with the Communist Party. Lenin viewed them as a separate group within the country, with whom his proletariat would have to make an agreement.
• Political - The Communist Party seemed to be splitting up internally between:
  • those who wanted increased Party democracy, but inside the Party structure (Democratic Centralists) and others
  • those who wanted a swift transition to a planned economy and workers’ armies (Trotsky, Preobrazhensky)
  • those who wanted more democracy based on Trade Union power (Alexandra Kollontai and the Workers’ Opposition)
  • These ‘platforms’ threatened the existence of the Party. Its membership was falling and it was isolated within the country.

This was held in Petrograd in March 1921 against a background of crisis. The delegates were used to raise the morale of the troops putting down the Kronstadt Revolt. The peasant uprising in Tambov took place at the same time.

The Congress passed two major resolutions.

• The Syndicalist and Anarchist Deviation within our Party: this directly criticised the Workers’ Opposition.
• On Party Unity: defined factions within the Party as ‘groups with special platforms ‘ and called for their immediate dissolution on pain of expulsion. Party discipline was greatly reinforced.

The Congress was blamed for the move towards dictatorship inside the Party after Lenin’s death.

The New Economic Policy (NEP)

Lenin enforced a truce with the peasantry. This was the opposite of War Communism.

• Forced requisitioning of farm produce was replaced by a smaller ‘tax in kind’ (i.e. tax paid in produce). This allowed peasants to sell their surplus on the free market.
• Small-scale businesses were denationalised. This allowed a large sector of the market to return to normal.
• ‘The commanding heights of industry’ (coal, steel, transport etc.) remained in government hands.
• A purge of Party membership, a reduction in persecution of ‘class enemies’
  
  and the creation of law codes to allow a return to normal life

Many people in the Communist Party hated these measures. They thought they were compromises. Lenin justified them as ‘one step backward in order to take two steps forward’.

During the NEP, communist organisation was greatly strengthened. This made the later move to real dictatorship and centralised control possible.

The Communist Party remained in control and the economy began to recover, but the NEP was never regarded as a permanent feature.

Divisions in party over NEP

• Many believed needed to attack peasants to create extra grain
• Complained over re-emergence of middle class NEPmen and Kulaks
• Disliked concession to capitalism
• Lenin had to take steps to deter opposition to NEP after Bolsheviks split
• Banned factionalism in party – creation of groups within party with complaints over rule
• Declared all political parties other than Bolsheviks were outlawed as only Bolsheviks capable of training and organising a proletarian working class

The success of the NEP

The NEP seemed a success. It returned the economy to pre-1914 levels and gave the Communist Party the breathing space it needed to survive:

• Production figures show the NEP was success
• By Lenin’s death in 1924 marked recovery on all major industry
• Grain – 1921 37.6 million tonnes in 1924 51.4 million tonnes
• Factory output – 1921 2004 million roubles in 1924 4660 million roubles
• Average monthly wage – 1921 10.2 roubles in 1924 20.8 roubles
• Showed mixture of capitalist agriculture and state controlled industry could create economic growth

The failure of the NEP

• Growth slackened after 1926. Once spare capacity in the economy had been taken up, the NEP did not maximise industrial development. There could be no communist future without industrialisation.
• The Communist Party could not rely on free enterprise for very long. They thought it was morally wrong. They thought the economic disease of capitalism would infect the proletariat.
• The Soviet Government was worried about external security. The Treaty of Locarno 1925 weakened the friendship that had existed between Russia and Germany since Brest–Litovsk. The Soviet Union was worried that capitalist powers would re-invade Russia, especially after Britain broke off relations in May 1927, and communism suffered reverses in China in 1927. There were inescapable connections between defence and industrialisation.
• There were problems within the economy, especially the ‘scissors crisis’. From 1923 until 1926 particularly, agricultural output increased faster than industrial output. A ‘goods famine’ meant the peasantry made large amounts of money but could not spend it. It was difficult to move this money into the development of heavy industry, as the government wished.
• High unemployment in urban areas and industry failed to expand as quickly as independently owned agriculture.