1.2 Industrial & Agricultural Change

• Bolsheviks came to power with an unsophisticated and backward economy - not industrialised - and was shattered by WW1
• Marxists believed socialist revolutions could only happen in advanced economies so believed that in Russia, socialism would only follow after several years of capitalism
• Lenin's belief


  Socialism was possible in 1917 Russia and that aspects of the economy should be in the hands of workers and peasants
• Lenin argued that as the revolution spread across Europe, advanced countries would send aid to developing countries so there was no need for capitalism
• Lenin believed a socialist economy would be highly efficient with highly disciplined workers who found fulfilment in their work and so needed no time for leisure - reflected in his economic policies
• Nationalisation of Industry


  Lenin argued that the October Revolution created a society between capitalism and socialism but economy was not strong enough to start building socialism - and ideologically Bolsheviks wanted means of production controlled by proletariat but in reality capitalists and bourgeoisie had expertise needed - transitional phase 'state capitalism'
• The Land Decree 1917 abolished private ownership of land - church and aristocratic land broken up and peasants could own the land which they worked - popular with peasants
• Decree on Workers' Control Nov 1917 placed control of factories into the hands of the workers
• 27 Dec - all private banks nationalised, along with the State Bank being amalgamated into the People's Bank of the Russian Republic
• Workers' councils gave themselves pay rises - little improvement in production + led to inflation. Managers and those with technical expertise were dismissed (sometimes violently) by workers (revenge), so Bolsheviks quickly recognised further state control of the economy was necessary
• Dec 1917 - Supreme Council of the National Economy (Vesenkha) set up - designed to ensure factories were properly managed - placed under control of well-paid specialists and coordinate economic production to meet the needs of the new society
• Large industries nationalised - small factories/workshops either controlled by workers or handed back to capitalists
• State capitalism was extremely unpopular - in many ways there was little difference between state capitalism and life before revolution - many workers and radicals (e.g. Bukharin) rejected it in favour of workers' control - Lenin ignored opposition till June 1918 after which more government intervention would be necessary
• War Communism


  Introduced to ensure the Red Army was supplied with enough food and resources to emerge victorious → greater government intervention in the economy
• Aspects of War Communism

  • Nationalisation of industry without compensation - only workspaces with fewer than ten workers were exempt and all industry placed under control of the State through the Vesenkha
  • Reintroduction of hierarchical structures in industry - in factories workers' councils replaced with managers to instil discipline in workers
  • Labour discipline introduced: working day extended to eleven hours (1918), work made compulsory for all able-bodied aged between 16 and 50 - the unemployed were forced to join 'Labour armies' set up to work on projects (e.g. road building and woodland clearance). Death penalty introduced for workers who went on strike and all workers expected to volunteer (unpaid) on 'Communist Saturdays' - days designated for service to the Party
  • All private trading banned - trade controlled by the State. Money was limited/abolished due to hyperinflation - replaced by baterting of goods + workers received wages in goods
  • Forced requisitioning introduced to feed the army and towns - 150,000 Bolshevik volunteers used to seize the grain. Government attempted to use the Committee of the Village Poor to spy on any peasants who might be hoarding food - rise in tension in countryside + serious outbreaks of violence-often directed at requisitioning teams. malnutrition and starvation became commonplace
  • Rationing introduced - the supply commissariat rationed the seized food - largest rations went to workers and soldiers, smallest to bourgeoisie
• Succeeded in keeping the Red Army supplied - allowing them to win the Civil War
• Economic collapse - grain requisitioning led to lower rates of agricultural production as unpaid peasants had no incentive to work. Industrial production declined significantly - few incentives to work hard and hungry workers left cities to work on farms - higher chance of being fed. 3 million workers (1917) to 1.2 million (1922). Agricultural production at 60% of 1913 level in 1920 and Industrial production at 21% of the 1913 level in 1920
• Growth of the black market - 60% of food consumed came through black markets + workers would steal resources, make goods and barter for food. Metal workers stole scrap metal and fuel to make cigarette lighters
• Very unpopular - system of rationing was disliked (unfair) + use of managers caused resentment amongst workers - occasionally violent
• The Tambov Uprising - forced requisitioning caused peasant resentment against government - series of uprisings 1920-21 - volga Basin, north caucasus and western Siberia-most serious in Tambov - violent peasants-put down by 50000 Red Army troops
• The Kronstadt Mutiny- revolt by sailors at naval base outside Petrograd - previously supported the revolution - could not be dismissed as counter-revolutionaries - slogan was 'soviets without Bolsheviks'- felt power of party increased at the expense of workers. Suppressed by the Red Army
• Mass Poverty - by 1921 there were shortages of all kinds of commodities and by late 1920 workshops in cities were closing because of a lack of fuel - fuel in such short supply that the government ordered wooden buildings in Petrograd to be destroyed and used for fuel. Unemployment rose and harvests declined further - 1921 only 46% of 1913 harvest - rural areas a famine began - 6 million deaths + army soldiers had to resettle to civilian life. Lack of food - in the 1920s over 20 million died from famine and disease
• Overall war communism led to a military and ideological victory but economic ruin - Lenin believed War Communism was the foundation for a new society. Bukharin even welcomed the economic crisis - argued the destruction of capitalism needed to be complete before building socialism - senior Communists didn't see a reason to stop the policy but the political tensions (rebellions) forced Lenin to accept an economic crisis
• New Economic Policy (NEP)


  Introduced to retain political power, revive the economy and build socialism (by 1921 it was clear a revolution would not sweep across Europe so no chance of foreign aid)
• Measures taken under the NEP

  • Agriculture - requisitioning replaced by a system of taxation (10% on profits) - peasants could sell food at a profit. Bolsheviks also announced there would be no forced programme of collectivisation - without collective farms, the mir (peasant communities) would stay as the means of peasants self-regulating farming activities
  • NEP returned small-scale industry (fewer than 20 people) to private industry but the state retained control of heavy industry, transport and banks
  • In state-owned factories, bonuses (incentives) were used to try to raise production
  • Reintroduction of a currency in 1921, for paying wages - Lenin emphasised the need for a stable currency and all factories and workshops to make a profit - even government-run industries expected to make money - so people expected to pay for services, e.g. transport which was free of charge during the civil war
  • Legalisation of private trading to stop the black market and with the growth of private trading - rise in the 'nepmen', people who grew rich under the NEP - nepmen accounted for 75% of trade in 1922
• Introduction of the NEP coincided with the arrests of Mensheviks and all political parties (except Bolsheviks) were outlawed. Economic compromise clearly did not extend to political relaxation - a factor that persuaded many on the left that the NEP could be tolerated in the short term
• Political and economic stability - end of grain requisitioning encouraged peasants to grow more food - famine ended as food production more than doubled between 1921 (37.6 mil tons) and 1926 (76 mil tons) - was popular with peasants (80% of Russian population)
• Industrial growth - market stimulated production and government invested money gained from taxing peasants. Lenin authorised a major electrification campaign (GOELRO - aim to reach 8.8bn KwH of electricity up from 1.9bn (1913) achieved in 1931) which revived an industry destroyed by the civil war. By 1926, industrial production largely recovered to 1913 levels
• Scissors crisis


  NEP led to uneven economic growth. Agriculture recovered quickly, greater food supplies led to a drop in agricultural prices. Industry recovered much more slowly, therefore industrial prices (low during famines) grew steadily - gap opened up between agricultural and industrial prices - Trotsky nicknamed it the 'scissors crisis'. By 1923 the gap reached a crisis point - rise in industrial prices meant that farmers could not buy industrial goods - coupled with low prices gave farmers no incentive to keep producing large quantities of grain. In Dec 1923 the government had to intervene and subsidise the prices of industrial products - affordable to peasants - now meant there was less money available to improve the economy - so radicals, like Trotsky, thought the NEP was not capable of industrialising the economy
• Inequality and corruption - NEP led to the re-emergence of inequality and widespread corruption. Nepmen spotted gaps in the market and would travel the country transporting highly desirable goods from factories + farms to markets. The Communist Government saw nepmen as parasites as they produced nothing. Nepmen sometimes arrested by the Cheka for profiteering - but continued to operate till the end of the NEP - grew rich whilst peasants and workers stayed relatively poor despite hard work. Corruption grew - Gambling, prostitution and drug dealing all took place under NEP. By 1923, 85% of firms were in private hands
• NEP stabilised the economy, replaced an unpopular policy preventing rebellion thus ensuring the Communists' hold on power - but led to slow industrial growth, an unbalanced economy, inequality and growth of various types of crime - was extremely unpopular within some sections in the Communist Party
• 1924 - industrial production at 45% 1913 figure but by 1926 much of it had been restored. Key to further growth was increasing food production and gaining foreign exchange for new technology and machinery
• Trotsky and those on the Left favoured greater state control of the economy in order to increase the pace of growth - favoured a policy of forced agricultural collectivisation - argued it would allow the state to take agricultural profits to industrialise quickly. Argued it would end capitalism and thus inequality. But Stalin and Bukharin outmanoeuvred the Left in 1926 and the NEP stayed
• In 1927 a series of events occurred that raised the spectre of a foreign invasion - raid by the British government on offices of a Soviet trade mission in London and attacks on the Chinese communists in Shanghai. Many peasants responded to the fear of invasion by hoarding food - confirmed to Stalin that the peasantry were a key force in holding back economic growth
• State control would allow the government to direct the economy and ensure economic resources were being fully maximised. Since the 1917 communist takeover, trade with the rest of the world had been severely reduced so the USSR would have to rely on its own resources
• State control would ensure these resources were used to their full potential. Political dimension to extend state control - would remove kulaks and Nepmen (detested by communist party) and moving away from the NEP gave Stalin the opportunity to remove the Right (which argued collectivisation would lead to a decline in food production) and consolidate power - the introduction of the First Five-Year Plan (early 1929) saw this happen and extended the power of the state (through Party agencies) over the economy
• The realisation that (Lenin's) workers' control over the economy was incompatible with efficiency and productivity and was a threat to Bolshevik power produced War Communism and then the NEP which both succeeded in their aims (extending state control to win the civil war and kick-starting the economy) but at the expense of either popular support or the revolution. By 1928 the decision had been made to extend state control and implement a command economy as the best way to bring about rapid industrialisation, while consolidating power of the party
• The Five-Year Plans and Industrial Change, 1928-41 saw a transformation in the Soviet economy - all aspects of industry and agriculture would be brought under state control - a truly socialist economic system (no capitalism - no inequality + exploitation)
• Aims of the Five-Year Plans

  • Primary objective was to industrialise the USSR by combining centralised planning with large-scale investment - industrialisation goals were extremely ambitious - Stalin claimed that the Soviet Union was 100 years behind advanced economies (USA, Britain), but through planning, the Soviet Union could catch up in 10 years
  • Eliminate the inefficiencies of the NEP, specifically nepmen - believed government-controlled production + distribution was more efficient than small-scale NEP trading. Stalin argued the plans were necessary because of failings of the NEP
  • Plans reflected Soviet military concerns - Stalin + many in government feared a German invasion - defending Soviet territory would require a modern industry (weapons)
  • To assert Stalin's personal authority - the Five-Year Plans were more ambitious than any of Lenin's schemes - would demonstrate Stalin initiating a new phase of building socialism
  • Overall to industrialise the USSR to be able to be self-sufficient and be able to catch up to, compete with and be independent of western capitalist Europe + USA
• Decision to abandon the NEP and focus on rapid industrialisation was made after the Fifteenth Party Congress (1927)