Industrial and Agricultural change, 1917-85

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Lenin's Economy

Economic revolution was esential to building socialsim

Modernisation (believed socialsim required the construction of a highly advanced economy)

Consolidation ( He needed economic stability to retain his power)

Military Victory (needed economy to provide for Red Army during the Civil War)

Destroy Capitalims (wanted to create an economy that was more efficeint than capitalism and end equality)

Lenin often had to put pragmatic ideas above ideological ones

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State Capitalist

From March 1918 Lenin began the nationalisation of industry and introduced sate capitalism

Was and economic phase between capitalism and socialism

Based on nationalisation of large-scale industry

Involved passing the ownership of industry from capitalists to the new state

Nationalisation would lead to greater efficiency as the government could employ experts to run the economy

Centralised by the vesenka

Re-establish worker discipline

Ensure factories were properly managed

Co-ordinate economic production

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War Communism

The Civil War in 1918 led to the introduction of a series of emergency economic measuers

Goal was to ensure Communist victory in the Civil War

War Communism entailed:

The nationalisation of all industry

Food dictatorship (Grain requisitining, smallest rations given to bourgeoise)

Labour disciplin (Introduction of 11 hour day and forced labour of all able bodied me aged 16-50)

The abolition of the market (Money became worthless due to hyperinflation, private trade made illegal)

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Consequences of War Communism

Destroyed incentives to work

Consequently there was economic catastrophe

By 1920 there was a famine in the countryside (1921 harvest was only 46% of the 1913 harvets which led to the deahs of around 6 million people)

Workers fled to the cities in search of food (The industrial workforce declined from 2.6 million workers in 1917 to 1.2 million in early 1921)

The economic crisis of 1921 led to the New Economin Policy (NEP)

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The New Economic Policy

Designed to:

Retain political power (Described as an economic retrerat to stop political defeat)

To revive the economy (stimulate grain production to end the famine)

To bulid socialism (generate wealth that could be used to industrialise and modernise the Soviet economy)

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Compromise with Capitalism

NEP created a mixed economy

Farming was left to the free market (Grain requisitioning replaced by tax in kind)

Small factories and workshops denationalised and allowed to trade freely

Large factories and major industries remianed nationalised

Money was re-introduced

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Consequences of the NEP

Ending grain requsitioning was popular amongst the peseants , free trade also encouraged to grow more food (ending famine)

Led to industrial grwoth, however recovery was slow

The "Scissor crisis" agriculture recovered more quickly than industry, leading to an imbalance of between the farmers income and a rise in the price in industrial goods (government had to cut the prices of industrial goods and cap it)

The re-emergenc of inequality, NEPmen would travel around the country selling desired goods and consequently making a profit (every now and then the cheka would arrest NEPmen)

Gambling, prostitution and drug dealing took place

Right-wing approved of NEP

Left wing opposed NEP

Centre supported as it was rebuliding the economy

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Natyre of Stalin's plans

Stalin's "revolution from above" was launched in 1928

Industrialisation was achieved through a series of five-year plns formulated by Gosplan

Propaganda inspired workers to support the new system

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Reasons for the plans

Ideology (Stalin wanted to abolish capitalism and lay the economic foundations for socialism)

Economics (NEP failed to lead to further industrialisation)

Military (Russia had to industrialise in order to prepear for war with capitalist nations)

Political (Abolishing capitalism won the support of the Party's left-wing)

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Aims of the plans

Build up heavy industry

Goverbnment invested heavily in bulidung new factoirs (Magnito gorsk)

From 1936 Stalin prioritised rearmament

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Achievments to 1941

Stalin's first five-year plans succeeded in industrialising the Soviet Union

Heavy was the biggest success (Electricity output increased alomst 10 folds, Coal and Steel production went up almost five times, there was a three-fold increase in oil production)

The Moscow Metro's first trian lines opened in 1935, The Moscow -Volga Canal opened in 1937

Labour productivity was extremly low (Stalin authorised a system of higher payments to reward the most productive workers)

Productivity rose between 25-50% in Russia's major industries

By 1940 on third of government spending was devoted to the military

Product quality was low as managers werer rewarded for qunatity not qulaity

40% of products waster

Gosplan had no idea how big the factories they controlled were

Industrial managers lied about production rates/falsified data

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The Stalin era: Agricultural collectivisation and

Between 1928 and 1941 Soviet agriculture was collectivised (small farms merged into large farms of 20 to 150 famillies, ownership of farms take over by state0

This was a extremly violent and led to a decline in agricutural production

Had a series of cause:

Ideology ( Under NEP farming run in capitalist way. Wanted to abolish capitalism by anning private ownership of farms)

Economic (Government collected small tax under NEP, with collectivisation governemnt could take much more and use in on industrialisation)

Failure of NEP (Production fell in 1927 causing food shortages in the cities)

Political (Stalin could win support of the left side of the CP)

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Process of Collectivisation

Introduced in late 1929

Farms forcibly merged

Equipment taken of richer peasents and given to poorer ones

Peasents destroyed crops, animals and machinery in protest

Government exceuted or deported the kulaks who resisted collectivisation

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Consequences of collectivisation

Led to destruction of 17m horses, 26m cattle, 11m pigs, 60m sheep and goats

Grain production decreased from 73.3m tons in 1928 to 68.4m tons in 1933

Led to famine in Ukrain (government took produce and livestock causing famine between 1932 and 1933, resulting in 5m deaths)

Came with modernisation (around 75,000 tractors hired out but did not make much difference to Soviet farming)

Government could procure much more grain than under NEP (In 1928, government procured 10.8m tonnes of grain and had risen to 22.6m tonnes in 1928, exports rose from less than 1m in 1928 to 4.7m tons in 1930 and 5m tons in 1931)

Agriculture recovered slowly (Harvests regularly smaller than they had been in the best years of the NEP, private farms priduced 410k of grain per hecter whilst collective farms produced 320k of grain per hecter)

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Recovery from war after 1945

WW2 devestated Soviet economy

Economic planners set about rebuilding industry and reviving agriculture

Industry grew rapidly, but agriculture grew more slowly

Consumer goods and housing remiand in short supply

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Econommic consequences of the war

By 1945:

25m people were homeless

Soviet industry was producing around 1/3 of what is had in 1940

Soviet agriculture was producing around 1/2 that grain it had in 1940

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Industrial recovery

Post-war plans focused on heavy industry and rearmament

90% of economic investmant ws focused on heavy industry

BY 1950, producing more coal, oil, electricity, iroon,steel than it was in 1940

Economy growing fast

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Military spending

Development of Cold War meant that Soviet Union continued to prioritised military spending

By 1952 25% of government spending spent of military

Led to real achievments

By 1949 scientists successfully tested the first atomic bomb

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Economic problems

Problems between 1945 and 1953:

Economy was still inefficient because of problems associated with command economy 

Light industry failed to grow beacause less than 12% of industrial investment went on light industry

Consumer goods remained scarce due to the lack of investment in light industry 

High-tech production lagged behind other modern economies 

Tractors, truks and other high-tech goods poorly made 

Farming remained labour-intensive and a lack of incentives meant that productivity was low 

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Stalin's economy

Stalin industrialised the Soviet Union 

Economic grwoth did not lesd to a better standard of living 

His economy reflected his gigantomania (love of giant things) 

He wanted to build massive factories ect...but had no interest in consumer goods or efficiency

Economy under Stalin served his giantomania not the needs of the Soviet people

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Lenin and Stalin's achievements

From the 1930's Soviet Communists credited Lenin with laying the political foundations for Communism, and Stalin wih establishing the world's first socialist economy 

Lenin's one party state and Stalin's command economy remained at the heart of the Soviet system until the late 1980's

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Investment in agriculture (Khrushchev)

Khrushchev's reforms led to further optimism, between 1956 ad 58 soviet economy preformed well (however, growth slowed in 1958 and within a decade the economy was stagnatnt 

Khrushchev paid farmers higher prices for their produce (this was an incentive for production and boosted farm incomes by 250% between 1952 and 1956)

Khrushchev also wanted to increase the amout of land that was being farmed (he launched the Vigin Land Scheme and the Corn Campagin)

Tried to make farming more efficient through investing in Artificail fertilisers (boosting production by 40%) and tractors (boosting production by 30%)

Investment in agriculture grew from 3% of the Soviet budget in 1954 to 12.8% in 1959

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Agricultural successes 1954-58

Policies (Khrushchev) were initially highly sucessful

Agricultural production increased by around 35.3% from 1954-58

In 1956 Khrushchev set a hugly ambitions target for overtaking the US farm production by 1960

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Agricultural problems 1954-64

Virgin Land Scheme required complex irrigation systems, making cost pf production high

Agriculture was very labour intensive (1950's and 60's, 50% of the population worked in agriculture compared to 5% in US, Us produced double that in the USSR)

Between 1959 and 1964, agricultural growth slowed (farm production grew by around 15% and failed to meet the target of overtaking US)

Central planning mean that farms didn't alwyas use the right fetilisers and so often so often went to waste

Khrushchev repeatedly reformed ministers dealing with agriculture 

Soviet farms often had inadequate storage and so produce would be wasted 

Pay for workers increase but was still low

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Agriculture 1964-85

Brezhnev wanted to manage the system Stalin had put in place 

Largley abandoned the attempt to make agriculture more productive 

Authorised large imports from the West to keep food prices low

Able to buy large amounts of grain by selling oil

Oil prices high during the 70's and so sellig oil generated a lot of income for the soviet union 

Some of this was used for food

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Industrial problems

Three major problems 

Military Spending (due to the Cold War and arms race had to spend lots of money on military and so was less to spend on indusrty)

Command economy (Good at producing large quantities of basic things such as steel and iron but not good at producing comsumer goods like cars and radios)

Inefficiency (command economy was highly inefficient and so wasted resources)

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The promotion of light industry

Khrushchev's 7 year plan launched in Jan 1959, increased investment in light industry (increase production of consumer goods, increae production of chemical fertilisers to support his agricultural plans)

The plan boosted production of consumer goods (production of consumer goods 5% below target, production of chemicals was around 20% below the target)

Ownership of cars and the roadios increased

However, by 1966 the Soviet Union still lagged behind european countries

Khrushchev introduced contradictory reforms (de-centralised economic planning and then 1958-64 his reforms reasserted central planning)

Changed targets og the plan in 1962 seting more ambitious goals 

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Economic Decline

Unde Khrushchev growth rates slowed , this continued under Brezhnev

By 1980 economi grwoth had stopped

Refusal to change (after 1964 major reforms stopped)

Brezhnev increase military investment,diverting resources away from economic grwoth

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The Soviet economy 1964-85

Brezhnve abandoned Khrushchev's commitent to building Communism 

Subsidising prices (Government kept the prices of consumer goods low, led to shortages as demand for goods as highe thn supply)

A second economy (Brezhnev allowed growth of black market allowing soviet citizens to buy consumer goods illegally)

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Andropov's reforms

Andropov wanted to address long term problems in the Soviet Economy through "Opertion Trawl"

KGB officials cracked down on drunkeness and absenteeism in n attempt to boost productivity

By 1985 Soviet economy was stagnant.

Succeive leaders had failed to solve the problems of the command economy 

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