The nationalisation of industry

- Lenin’s economic policy in the period 1917 to 1921 went through a series of radically different phases.

- These reflected the array of problems Russia faced at the time and Lenin’s own hopes for the future and his fundamental beliefs about economics and politics

- In short, the nationalisation of industry was a revolutionary response to an unprecedented set of problems

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Capitalism and Communism

- One of the key problems facing Lenin was uncertainty about what a communist economy would entail

- Marx had produced a detailed analysis of the strengths and weaknesses of capitalism but he had been deliberately vague about the nature of future communist society

- He argued that once capitalism was abolished, the economy would be organised according to a “common plan” but he refused to speculate about the future, arguing it would be impossible to describe the future in detail

- However, Marx was clear that a communist society would have an extremely advanced economy with most communists of the early 20th century believed the revolution would occur in the UK, USA, Germany or France as they were the most advanced economies at the time

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Problems facing Russia:

- Russia had serious economic problems in the early 20th century especially in contrast with western European countries and the USA which made Russia’s look unsophisticated

- Russia had begun to industrialise and between 1890 and 1914 the economy grew significantly

- Even so, Russia was still far behind more developed nations in terms of industrialisation

- Therefore, most Marxists and socialists at the time of the February revolution believed it would lead to capitalism and that the socialist revolution was many years away

- Furthermore, the Russian economy was shattered by the first world war

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Lenin’s vision for the socialist economy

 In relation to exam questions relating to the economy, typically this would be indicative criteria for evaluative and conclusive stances. In turn, it’s imperative to include this throughout questions, such as how far was NEP a betrayal of communism, as it allows you to evaluate initial aims in comparison to actual policy.

-Lenin believed that a true socialist economy should be highly efficient and requires modern technology, exert management and well educated and highly disciplined and highly disciplined workers.

-workers would be liberated as they no longer would be working for greedy capitalists, in turn resulting in better pay and labour standards subsequently resulting in employees no longer resenting the work they do

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Lenin's revision for the socialist economy

-Lenin’s vision of socialism had little time for leisure and recreational activities, with no sympathy for laziness (as it equates to low initiative, in turn impacting efficiency which is counterproductive)

-Lenin assumed that after the revolution, people would find work extremely fulfilling and therefore large amounts of leisure time would be unnecessary. (relates to what Marx posed in his communist manifesto about the alienation and estrangement of individual’s form work which derives from the root cause of capitalism as it transforms work from a positive medium which one can use to express themselves into a commodity which is produced by the commands of other)

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state capitalism 2

- The purpose of the Vesenkha was to ensure factories properly were managed by placing them under the control pf well paid specialists and to co-ordinate economic production to meet the needs of society. Only large industries were nationalised, small factories and workshops were either run by workers or returned to capitalist This emphasises how little differences there was between state capitalism and pre-revolutionary life as through extending management to capitalist there will inevitably be greed which perpetuates discrepancies between the classes

- State capitalism was extremely unpopular as it, to workers was no different to their former pre revolution lives.

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state capitalism 3

Therefore, many workers and radicals like Bukharin rejected state capitalism in favour of workers control

- However, Lenin ignored his opposition and state capitalism became the official policy of the new government from march to June 1918, when the civil war called for changes in policy. One could argue that Lenin’s inability to consider compromising on policies such as this cultivated social unrest which possibly factored into the beginning of the civil wa

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state capitalism 1

- The essence of state capitalism is based upon the nationalisation of industry and Is the dismantling of capitalism as it takes the ownership of industry from the middle class

- All nationalised industries were run by the supreme soviet of the national economy, or Vesenkha, a group of economic experts. The Left Communists naturally criticized the employment of bourgeois specialists and experts in the industrial committees and centres as dangerous bureaucratization of the administration of the national economy; but such criticisms were necessarily ignored because the services of these specialists were urgently needed to check the growing confusion and chaos in the management and operation of Russian industry

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Land reform:

- In order to win support and stimulate agriculture, Lenin introduced Land Reform

- Following the 1917 decree on Land, large estates belonging to the church or to aristocratic landowners were broken up and peasants were allowed to own the land they worked on, which was obviously popular with peasants

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War communism:

War communism was created as a series of emergency economic measures to ensure communist (Bolshevik) victory in the civil war

- Alternatively, due to how loyal war communism was to the fundamentals of the ideology some radicals believe it was a needed step to achieve true communist economic policies

- War communism was designed to ensure high levels of industrial production of war goods, an efficient allocation of workers, and accelerated food production to feed soldiers, workers and civilian population

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war communism 2

Food dictatorship: These are a series of measure to ensure food for both soldiers and workers

- Grain requisitioning: Cheka squads were authorised to seize grain and other forms of food from peasant without payment

- Rationing: The supply commissariat rationed the seized foods. The largest rations to workers and soldiers, the smallest rations were given to members of the bourgeoisie

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Labour discipline:

- In 1918 the working day was extended to eleven hours

- In 1919 work was made compulsory for all able bodied people between 16 and 50 years of age

- Harsh punishments were given to workers who were late or caught slacking

It’s evident that these reforms were merely a necessary means to acquire the aims outlined initially Lenin on war communism

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The abolition of the market:

The chaotic condition of the civil war led to a breakdown of the existing market. The following measures were introduced to try to abolish the market:

- The abolition of money: In the short term, the government simply printed more money which led to hyper-inflation. Money became worthless and workers were paid through rations and many public services such as trains were provided freely

- The abolition of trade: private trade was made illegal

- Complete nationalisation: al businesses were taken by the state

- Conscription: workers were assigned to either work in factories or fight in the army

Lenin argued that the abolition of money was also a step away from capitalism towards a socialist economy in which economic production and distribution were centrally planned. Bukharin too argued that the abolition of the capitalist market was a major revolutionary achievement. Both agreed that these measures destroyed the capitalist class.

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Economic collapse

- Grain requisitioning led to lower rates in agricultural production. Peasants went unpaid for both their grain and labour. (in turn resulting in a lack of incentive to work which factors in to the depleting agricultural production)

- Industrial production declined significantly, also as a result of a lack of incentive

- Huger led to increased rural to urban to rural migration due to hunger. In total the industrial workforce declined from 3 million workers in 1917 to 1.2 million in 1922

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growth of the black market

parallel economy arose from Lenin’s extensive economic controls ultimately failing

- Historians estimate that only 40% of the food consumed in Russian cities came from rationing during the civil war; around 60% came from the black market

- Workers were forced to teal government resources in order to make goods that could be bartered for food e.g.; metal workers would steal scrap metal and fuel to make cigarette lighters

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Mass poverty

- By 1921, the Russian economy was near collapse

- By late 1920 workshops in the major cities were closing due to lack of fuel

- Fuel was in such short supply that the government ordered the destruction of wooden buildings in Petrograd in order to use the wood for fuel

- Unemployment rose and harvests declined further

- The 1921 harvest was only 46% of the 1913 harvest

- In rural areas a famine began, which led to the death of 6 million people

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Political crisis:

- Mass starvation and poverty led to an arguably inevitable political crisis due such failures

- In 1921 peasants in Tambov rebelled against the communist government

- In Kronstadt sailors who had supported the communists unquestioningly in 1917 turned against the government demanding free trade and new multiparty elections to the soviets, and in march 1921 the sailors mutinied

- The communists responded with extreme force, defending the government with extreme force

- Although both uprisings were crushed, through such staunch oppositions Lenin understood that war communism was over

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New Economic Policy:

To retain political power To revive the economy To build socialism;

Measures:- Agricultural production was left to the free market. Peasants would buy, sell and produce freely. Grain requisitioning ended and was replaced by a tax in kind

- Small factories and workshops employing fewer than 20 people were denationalised. small factories were allowed to trade freely with many returning to their former capitalist owners

- Large factories and major industries remained nationalised

- Money was reintroduced

- NEP was a major economic compromise with Lenin emphasising the need for a stable currency and for all factories and workshops to make a profit

- Therefore, with profit being produced individuals were now expected to pay for government services that were free during war communism, such as transport

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Consequences of NEP

Political and economic stability:

- Ending grain requisitioning was extremely popular among peasants and free trade offered the valuably incentive of motivation to grow more food


- Therefore, the famine ended and food of all kinds became widely available in country and city markets and the growth in grain production going from 37.6 million tons in 1921 to 50.30 the following year


- The end of grain requisitioning led to a return of political and economic stability by ending famine and ending policies that were unpopular among the peasants, who made up 80% of the population and therefore their opinion had the power to cultivate widespread political unrest

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Industrial growth:

- The NEP also led to industrial growth. The market stimulated production and the government invested money gained from taxing the peasants to reopening factories that had been closed during the civil war

- Lenin authorised a major electrification campaign which revived industry that had been effectively destroyed during the civil war

- By the end of 1921 Lenin argued that NEP was not merely the right policy for creating economic growth but claimed that the NEP was the best way to industrialise the Soviet Union and therefore lay the foundation for socialism

- Lenin argued NEP was a form of state capitalism, a continuation of the economic policy of 1918

- By the end of 1926, industrial production, with the exception of pig iron and steel returned to the levels of 1913

- However, whilst taxing peasants provided sufficient funds to reopen and modernise existing factories, it failed to provide the money to build new large scale factories. Therefore, from 1926 to 1928 the industrial economy plateaued

Scissor crisis:

- The NEP led to uneven economic growth. Agriculture recovered quickly. Greater food supplies led to a drop in agricultural prices

- Industry recovered far slower therefore industrial prices which were low during the famine grew steadily but this discrepancy led to a gap between farmers’ incomes and industrial prices

- By 1923 the gap between framers incomes and industrial prices had reached a crisis point

- The rise in industrial prices meant farmers could not afford to buy industrial goods and therefore there was no incentive for farmers to keep producing large quantities of grain

- The government intervened and subsidies the prices of industrial goods to make them more affordable to peasants

- However, this meant that there was less money available to improve the economy. In this sense the scissor crisis indicated to radicals such as Trotsky that the NEP was incapable of industrialising the economy

Inequality and corruption:

- The NEP led to the re-emergence of inequality and widespread corruption

- First the NEP led to the emergence of the nepman traders who made money by spotting gaps in the market

- Nepmen would trade all over the country, transporting highly desirable goods from factories and farms to the market

- The government regarded nepmen as parasites as they produced nothing of the own and made money through selling luxury goods

- From time to time nepmen were arrested by the Cheka for profiteering but they continued to operate until the end of the NEP

- Gambling, prostitution and drug dealing all took place under the NEP. Prostitution was the result of wider social and economic problems which led to widespread poverty among women in the 1920’s

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Inequality and corruption:

- The NEP led to the re-emergence of inequality and widespread corruption

- First the NEP led to the emergence of the nepman traders who made money by spotting gaps in the market

- Nepmen would trade all over the country, transporting highly desirable goods from factories and farms to the market

- The government regarded nepmen as parasites as they produced nothing of the own and made money through selling luxury goods

- From time to time nepmen were arrested by the Cheka for profiteering but they continued to operate until the end of the NEP

- Gambling, prostitution and drug dealing all took place under the NEP. Prostitution was the result of wider social and economic problems which led to widespread poverty among women in the 1920’s

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State of control of industry and agriculture

- The NEP led to a great debate within the communist party with all agreeing that the Soviet Union must industrialise but disputing over the correct policy

- The three main stances within the party was:

- On the left Trotsky and his followers wanted to adopt a radical socialist policy: the dictatorship of industry

- On the right Bukharin and his supporters advocated for continuing with NEP in order to ensure social peace

- In the centre Stalin and his followers were prepared to back whichever policy worked

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