New Economic Policy

From Academic Kids

The New Economic Policy, or NEP (Template:Lang-ru) was a system of economic reforms, partly market-oriented, that Vladimir Lenin instituted in the Russian SFSR and then Soviet Union.

Introduction of NEP

The emergency policy of War communism, introduced during the Russian Civil War, was terminated, and the NEP replaced it in March of 1921 as a recovery measure. The transition to NEP was declared by Lenin at the 10th Congress of the Russian Communist Party. It was promulgated by decree on March 21, 1921, "On the Replacement of Foodstuff and Natural Resource Assessment by a Natural Tax." In essence, the decree required the peasantry to give the government a specified amount of any surplus agricultural, raw product, and fodder, and allowed them to keep the remaining surplus to use as capital or to trade for industrial goods. Further decrees refined the policy and expanded it to include some industries.

The NEP restored some private ownership to small parts of the economy, especially farming. It replaced the policy of "War Communism", which had been used during the Russian civil war and which was deemed unsustainable in an underdeveloped country like Russia, with a kind of "Market Socialism", whereby nationalised (government owned) industries were allowed to operate autonomously, while a market system was introduced in agriculture. To explain the NEP, Lenin had said "We are not civilized enough for socialism", referring to the fact that Russia was still a primarily agrarian nation, with a very small urban population and a weak industrial base, and thus it did not meet the economic criteria necessary for full socialism.


With the changes to agriculture production increased greatly. Instead of the government taking all agricultural surpluses it added incentive to the farmers to allow them to sell their surplus yields in an open market. These incentives coupled with the break up of the quasi-feudal landed estates not only brough agricultural production from levels before the Revolution, but further improved them. While the agricultural sector became increasingly privatised the heavy industries, banks and financial institutions continued to be run by the state. Unfortunatly this would create an imbalance in the economy where the agricultural sector was growing much faster then the heavy industry. With the lowered production of the factories and the lack of market competition the factories would sell their products at higher prices. Due to the cost of manufactured good, peasents had to produce much more wheat to purchase these consumer goods. When peasents began withholding their surpluses to wait for higher prices, which in turn was opposed by many members of the Communist Party who considered it an exploitation of urban consumers. To combat the price of consumer goods the state took measures to decrease inflation and enact reforms on the internal practicies of the factories.

The NEP succeeded in creating an economic recovery after the devastating effects of the First World War, the Russian revolution and the Russian civil war.

End of NEP

By 1925, the year after Lenin's death, Nikolay Bukharin had become the foremost supporter of the NEP. It was abandoned a few years, in 1928 when grain shortages prompted Joseph Stalin, by then the country's paramount leader, to forcibly eliminate the private ownership of farmland and to collectivize agriculture under the state's control. At the time, Soviet authorities explained that the original objectives of the NEP had been achieved and it was time to move on.

The NEP was generally believed to be intended as an interim measure, and proved highly unpopular with the strong Marxists in the Bolshevik party because of its compromise with some capitalistic elements. They saw the NEP as a betrayal of communist principles, and they believed it would have a negative long-term economic effect, so they wanted a fully planned economy instead. On the other hand, Lenin has been quoted as saying: "NEP is for serious (real) and for a long time." Sometimes this has been used to claim that if only Lenin were to stay alive longer, NEP would have continued beyond 1929, and the controversial collectivization would have never happened, or it would have been carried out differently. Such claims are debatable.

Lenin's successor, Stalin, eventually introduced full central planning (although this had originally been the idea of the Left Opposition, which Stalin purged from the Party), re-nationalised the whole economy, and from the late 1920s onwards introduced a policy of rapid industrialization. Stalin's collectivization of agriculture has been his most notable, and most destructive departure from the NEP approach. It is often argued that industrialization could have been achieved without any collectivization just by taxing the peasants more, much like it has happened in Meiji Japan, Bismarck's Germany, and in post-war South Korea and Taiwan. It is also argued, however, that such an industrialization would have taken much longer than Stalin's ultra-rapid version, leaving the Soviet Union far behind Western countries like Germany in terms of industrial and military output, thus possibly resulting in a victory for Nazi Germany in World War ÷konomische Politik it:NEP nl: Nieuwe Economische Politiek pl:NEP ro:Noua Politică Economică ru:НЭП tt:NEP


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