Russia 1917-85- economy


The nationalisation of industry

  • Marx never mentioned anything about the economy so it had to be achieved through trial and error
  • State capitalism- the transitional phase of working with working with the bourgeoisie who had knowledge of these matters
  • Land Decree 1917- abolished private ownership of land
  • Decree on worker's Control 1917- placed control of factories into the hands of industrial workers
  • In December 1917 all private banks were nationalised
  • These measures had a detrimental effect on the economy because workers gave themselves huge pay rises resulting in inflation and managers were dismissed
  • Vesenkha set up in December 1917 to provide economic supervision
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War Communism

  • to ensure that the Red Army had enough food and resources, involving greater government intervention
  • went with long-term Bolshevik intention of abolishing private enterprise
  • Bolsheviks had inherited an economy near collapse
  • Key features of war communism:
    • Nationalisation of all industry
    • reintroduction of heirachal structures in industry
    • military style discipline in factories
    • private trading banned
    • money replaced by bartering goods
    • forcible requistioning of food and introduction of rationing
  • ensured that Red Army got the resources they needed to win the Civil War, but left the economy near collapse
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  • War Communism abandoned at near economic collapse and NEP introduced as short-term solution
  • 20 million died from disease in 1920s
  • Peasants reacted violently to grain requistioning in the Tambov Rising 
  • Sailors near Petrograd mutinied in the Kronstad mutiny 
  • Features of NEP
    • end to requistioning
    • no forced collectivisation
    • small-scale industry went to private hands
    • reintroduction of currency
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How successful was the NEP?

  • industrial output rose in the first three years but largely due to private trading of Nepmen
  • corruption through balck market flourished 
  • low grain prices discourage peasants from growing grain (scissors crisis)
  • By 1924, industrial production was at 24% of its 1913 figure
  • fear of British invasion caused peasants to hoard food
  • trade with the rest of the world was severly reduced
  • NEP did kickstart the economy, but at the expense of Communist ideals
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The Five-Year Plans and industrial change

  • had the aim to make the USSR self-sufficient using the most advanced technology
  • Industrialisation placed in the hands of Gosplan
  • First Five Year Plan (1928-1932)- concentrated on heavy industry
    • quality sacrificed for amount
  • Second Five Year Plan (1933-37)- rise of Hitler directed focus onto heavy defence
  • Third Five Year Plan (1938-42)- arms production to meet the threat of Germany
  • Plans contained unrealistic targets
  • Workers had to rely on revolutionary attitudes for motivation
  • While they made huge economic progress, there were huge declines in some sectors
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Agricultural collectivisation and its impact

  • fear of invasion added urgency to the need to industrialise
  • agriculture was innefficient compared with the rest of Europe
  • would help extend socialism to the countryside
  • In December 1927, the Fifteenth Party Congress decided that collectivisation would be optional, but it was forced in 1928 as an emergency measure
  • once peasants had signed up, the collective could seize animals, grain supplies and buildings as collective property
  • people who refused to join were labelled 'kulaks'
  • many kulaks set fire to their property and killed their animals to not hand it over to the state
  • the 'twenty-five thousanders' were sent from the cities to forcibly organise collectives
  • by 1932, 67% of households were collectivised, and it was 93% in 1937
  • grain production fell and so did the amount of animals due to protest slaughterings 
  • the aim of producing enough food for the Red Army was achieved, but only due to taking needed supplies from the countryside
  • there was widespread famine in 1932-1933 causing peasants to move to the towns until a passport system was introduced, but the government denied any existence of famine
  • humans had to pull ploughs themselves in the absence of horses or tractors
  • some peasants cheered the invasion of German forces in 1941
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Recovery from the war after 1945

  • German invasion put huge strain on resources- in Moscow, a children's bike factory was converted to making flame-throwers
  • Factories were evacuated further east, away from the Germans
  • Between 1943-45, over 73,000 tanks and 94,000 aircraft were produced
  • virtually non existent production of consumer goods
  • effect on food production was devastating due to able bodied men being drafted into the armed forces
  • By the end of the war 25 million people were homeless and 1700 towns and 70,000 villages were destroyed
  • Fourth Five-Year Plan (1946-50)- focused on economic reconstruction
    • machinery taken from East Germany as reperations
    • industrial production recovered quickly due to slave labour
    • consumer industries still neglected
  • Fifth Five-Year Plan (1951-1955)- continued growth at a more realistic rate
    • increased arms expenditure due to Cold War
  • peasants were allowed to sell surplus food for profit
  • agricultural production remained low
  • By 1952 there were over 10,000 larger collectives
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Promotion of light industry

  • Khrushchev wanted to move towards light industry, chemicals and consumer goods
  • In 1957 he set up 105 Sovnarkhozy to supervise enterprises
  • the working week was descreased from 48 hours to 41 by 1960
  • Managers of industrial enterprises were given more influence in their factories
  • greater emphasis on vocational education
  • The Liberman Plan 1962 called for greater autonomy for local managers and for the market to replace the state as the decider of prices
  • The Seven Year Plan (1959-65)- emphasis on oil and gas, the chemical industry and consumer goods and regional development
  • In 1961, Yuri Gagarin was the first man in space
  • quality of goods was often poor
  • annual growth of the Soviet economy in the 1950s was 7.1% but it still lagged behind because of its smaller economic base
  • there was still poor labour productivity, inefficiency and waste
  • economic growth had slowed by 1964
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Investment in agriculture and the Virgin Lands Sch

  • Khrushchev recognised that slow agricultural growth was delaying industrial growth
  • In 1955, collectives were given greater power to make local level decisions
  • collectives increased in size until they became agro-industrial villages
  • the Virgin Lands Scheme (1954) opened up new areas to agricultural production
  • six million acres of land were brought under cultivation and 120,000 tractors were provided
  • the incomes of farmers doubled between 1952 and 1958 but still remained far below industrial workers
  • the land used in the Virgin Lands Scheme was dry and only suitable for grazing
  • the USSR had to import grain from North America and Australia
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Attempts at reform after 1964

  • Kosygin reforms
    • gave incentives to enterprise managers to use resources more productively
    • take more notice of cost and profit
    • little was actually achieved because they were so watered down that they were ineffective
  • Reforms under Brezhnen
    • the system of targets was further centralised in 1974
  • Ninth Five-Year Plan (1971-75)- greater push for consumer goods
  • By 1980, 85% of people had televisions and 70% had washing machines
  • Andropov took the approach of tougher and more discipline with the removal of corruption
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Economic decline

  • quality was sacrificed for quantity which also hid poor levels of productivity 
  • there were large numbers of waste and enviromental damage
  • move towards efficiency and quality was hard under Stalin's highly centralised system
  • lack of investment in agriculture
  • the USSR only had access to outdated technology
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