- Created by: k.owsar
- Created on: 29-04-18 18:16
Industrial and agricultural change, 1917-85.
The Nationalisation of industry.
The Nationalisation of industry
Problems facing Russia.
- Serious economic problems:
- Economy backwards and unsophisticated.
- Russia began to industrialise.
- Economy grew significantly from 1890-1914
- Economy still far behind the more developed nations.
Lenin’s early ideas.
- Believed that socialism was compatible with Russia in 1917
- Argued that as the revolution progressed, advanced countries would send aid to developing countries and therefore Russia would grow without capitalism.
- Argued that the revolution had destroyed capitalism
- But the economy was not strong enough for socialism.
Lenin’s vision of a socialist economy.
- Lenin believed that a socialist economy would be very efficient.
- Believed that it required modern technology, expert management and a well-educated and highly disciplined workforce.
- Workers would be free from the capitalists.
- Workers would be free from the capitalists.
- Workers would be better paid and treated better.
- Therefore would no longer resent the work that they did.
- Lenin’s vision of socialism dedicated no time for leisure.
- No sympathy for laziness.
- Assumed that following the revolution people would find their work fulfilling and therefore leisure would be unnecessary.
- Lenin’s economic policies reflected his faith in expertise, desire for efficiency and disciple
- Plus, disregard for leisure.
- Lenin’s state capitalist economy was based on nationalisation of industry.
- Which ended capitalism by taking industry away from middle-class owners.
- All industries nationalised, were run by Vesenkha.
- A group of economic experts:
- Designed to ensure factories were managed by placing them under the control of well-paid specialists.
- Co-ordinate economic production
- A group of economic experts:
- Only large industries were nationalised.
- Small factories controlled by workers or back to capitalists.
- Very unpopular.
- Little change from state capitalism and life before the revolution
- Many workers rejected state capitalism in favour for workers’ control.
- Lenin ignored opposition and state capitalism was the official policy of the new government.
- Changed when civil war broke out.
In order to win support and stimulate agriculture, Lenin pushed out land reform.
- Took land from the church and aristocrat owners. And gave them to the peasants.
- Therefore the land reforms were very popular with peasants.
- Nationalisation (state owned) of all industry without compensation. Only workplaces with fewer than 10 workers were exempt.
- All industry was placed under the control of the state through the Supreme Council of National Economy (Vsenka) set up in 1971.
- The reintroduction of hierarchial structures in industry, in factories the Worker's Councils were replaced by management in order to instil discipline into the workers.
- Harsh millitary style discipline was introduced introduced into factories; death penalty for all workers who went on strike. Unemployed forced to join 'labour armies' and set to work on projects e.g. road building and woodland clearance. All workers were expected to volunteer for unpaid work on 'Communist Saturdays'; days designated for serving the party.
- All private trading was banned. Trade was to be controlled by the state, but because it could not satisfy demand a large black market in goods developed.
- Transactions using money became limited due to massive inflation. Money was replaced by bartering using goods, and many workers received their wages in goods rather than money.
- The forcible requistioning of food from the peasants in order to feed the army and towns. Around 150,000 Bolshevik volunteers were used to seize grain. Gov attempted to use commitees of the village poor to spy on any peasants who might be hoarding food. The result was a rise in tension in the countryside and serious outbreaks of violence often directed at the requesting teams. Malnutrition and starvation were common.
- Rationing; despite shortages was introduced to ensure that workers in the cities were fed.
War communism brought out labour discipline:
- In 1918, working day extended to 11 hours.
- In 1918, work was made compulsory to all people who were able.
- Harsh punishments given to people who were late or caught slacking.
Abolition of the Market.
- Following measures introduced to try to abolish the market:
- Abolition of money:
- More money printed which led to hyperinflation
- Abolition of trade:
- Private trade made illegal.
- Complete nationalisation.
- All businesses taken over by state
- Conscription: Workers assigned to either work or fight in the army.
- Abolition of money:
- Lenin’s argument that abolition money was a big step away from capitalism and a move in the direction of a full-fledged socialist economy.
- Where economic production and distribution were centrally planned.
Consequences of abolition of the market.
- Kept Red Army supplied and won civil war.
- Led to economic collapse.
- Failed to abolish market.
- Grain requisitioning led to lower rates of agricultural production.
- Peasants not paid for their grain or labour
- Therefore the peasants had no incentive to work.
- Secondly, industrial production declined.
- Too few incentives to work.
- Hunger led to workers leaving the cities and seek work on farms where there was a greater chance being fed.
- Total workforce declined from 3 million workers in 1917- to 1.2 million in 1922.
Growth of a black market.
- Lenin’s economic controls failed to abolish the market.
- Historians estimate that only 40% of the food consumed in Russia’s cities came from rationing of food during the Civil War.
- Workers forced to steal government resources to make goods that could be bartered for food.
- Metal workers would steal scrap metal and fuel to make lighters.
- By 1921, Russian economy was collapsing.
- Shortages of all kinds of commodities.
- By 1920, workshops in the major cities were closing due to a lack of fuel.
- Fuel was in short supply, therefore government officials would order the destruction of wooden buildings in Petrograd in order to use the wood for fuel.
- Unemployment rose and harvests declined.
- Famine began as a result.
- Mass starvation deepened the economic crisis, led to a political crisis.
- Between August 1920-June 1921, peasants in the Tambov region rebelled against the Communist Government.
- In Kronstadt, soldiers who hard supported the communists without question, had turned against the government, demanding a return to free trade.
- In March 1921, the sailors mutinied with a response from the government of extreme force, defending itself and crushing the rebellions.
War Communism conclusion.
- Led to military victory.
- But economic ruin.
- Ideological victory.
- Abolition of of money and the capitalist market led to many Communists believing that War Communism was the new foundation for a socialist society.
- Bukharin favoured the economic crisis.
- Further rebellions led to a large risk to the end of the Communist Government.
- Rationing was disliked as the size of rations were dependent on social classification.
- Red Army and industrial proletariat received the most; members of the bourgeoise received little or none.
- Return of the hierarchical system was met with resentment.
- Workers felt that their opporunity for self regulation was being undermined by the increasing power of the state.
New Economic Policy
New Economic Policy.
- Introduced NEP for a number of reasons:
- Retain political power. Lenin described the NEP as an economic retreat.
- Designed to stop a political defeat.
- In that sense, Lenin made an economic compromise.
- Revive the economy:
- Lenin needed a policy to stimulate grain production and end famine.
- Build socialism:
- By 1921, it was clear that a European revolution would not happen.
- Therefore Lenin needed an economic policy that would build Russia for socialism without foreign aid.
- Retain political power. Lenin described the NEP as an economic retreat.
- As 1921, Lenin argued that the NEP, over War Communism was the correct economic foundation on which to build socialism.
- Argued that the Communist Party must learn to trade and use capitalism to build Communism.
- Also emphasised that the NEP would create peace with the peasants.
- NEP ended War Communism, creating a mixed economy, which had both socialist and capitalist elements:
- Agricultural production left to free market to end famine.
- Allowed peasants to buy, sell and produce freely.
- Grain requisitioning ended and replaced by a tax.
- Small factories and workshops employing fewer than 20 people were denationalised.
- Small factories allowed to trade freely.
- Large factories and major industries remained nationalised.
- Money reintroduced.
- Agricultural production left to free market to end famine.
- NEP was a major economic compromise.
- Lenin emphasised the need for a stable currency and for all factories and workshops to make a profit.
- Even government- run industries were expected to make money.
- People had to pay for services, even transport which was free during Civil War.
Political and economic stability.
- 1920-21 thousands of peasants in Tambov province rebelled in resistance to grain requistioning.
- Countryside there was resentment of war communism in relation to food rationing and wanted to get rid of the Mir (Village Commune). Risings in the important grain areas of the Volga basin.
- Peasants reacted violently to requistioning teams arriving in the area to seize grain. The revolt was put down after 50,000 Red Army troops were sent into the area led by Tukachevsky.
- Ending grain requisitioning was very popular amongst the peasants. Free trade encouraged peasants to grow more food.
- Therefore famine ended and food became more widely available. There was also growth in grain production.
- End in grain requisitioning led to a return of political and economic stability by ending famine. Led to the removal of a very unpopular policy.
- Revolt was by sailors and workers at the naval base outside Petrograd. Mutiny alarmed the Bolsheviks because it was a group that previously had a mainstay of the revolution and they could not be easily dismissed as 'counter-revolutionaries.' They demanded an immediate end to war communism and greater political freedoms.
- Mutiny was over the increasein the power of the party and it's officials at the expense of the workers. Their slogan was 'soviets without Bolsheviks.' Suppressed by the 50,000 elite Red Army headed by Trotsky and took 3 weeks to end the rebellion. Many were killed or sent to the gulags.
- NEP led to industrial growth
- Market stimulated production, government invested the money gained from tax in reopening factories closed during the civil war.
- By the end of 1921, Lenin argued that the NEP was not merely the right policy for creating economic growth.
- But the best way to industrialise the USSR and lay the foundations for socialism
- Whilst taxing the peasants provided sufficient funds to reopen and modernise existing factories, it did not provide the money necessary to build new large scale factories.
- Therefore industry plummeted from 1926-1928.
- NEP led to uneven economic growth.
- Agriculture recovered quickly, more supply of food led to a fall in prices of agriculture.
- Industry recovered much slowly.
- Therefore prices rose.
- A gap opened up between farmers’ incomes and industrial prices.
- Trotsky titled this crisis as the “Scissor Crisis”
- The gap between farmers’ incomes and industrial prices had reached crisis point.
- The rise in industrial prices meant that farmers could not afford to buy industrial goods and therefore there was no incentive for farmers to produce large quantities of grain.
- Government intervened and subsidized the prices of industrial products.
- Which led to them becoming more widely available to peasants.
- However, led to less money being available to improve the economy.
- Scissors crisis was a strong indicator that the NEP was failing to industrialise the economy.
- Government intervened and subsidized the prices of industrial products.
Inequality and corruption.
- NEP led to the re-emergence of inequality and corruption.
- NEP led to emergence of “Nepman” traders who made money by finding gaps in the market.
- Nepmen would travel to the country, transporting desirable goods from factories or farms to the markets.
- Communist government regarded the Nep as parasites.
- Produced nothing and made money from selling luxurys.
- Sometimes, Nepmen would be arrested by the Cheka for profiteering.
- Continued to operate all the way till the end of the NEP.
- Nepmen grew rich whilst ordinary peasants stayed poor despite hard work.
- Corruption grew, gambling and prostitution was large under the NEP.
- Led to lot of social and economic problems.
- Widespread poverty among women in the 1920’s.
- NEP stabilized economy and replaced a very unpopular and unstable policy.
- Ended rebellion.
- NEP achieved Lenin’s goal of maintaining political power.
- However, did lead to key issues like slow industrial growth, unbalanced economy, a return of inequality and growth of a black market.
- NEP still very unpopular with some members of the Communist party.
State control of industry and agriculture.
State control of industry and agriculture
State control of industry and agriculture.
- NEP led to debate within the Communist Party.
- All Communists agreed that the USSR must industrialise.
- However, they disputed the path to industrialisation.
- On the left: Trotsky and his followers wanted a radical socialist policy:
- Dictatorship of Industry.
- On the right: Bukharin and his supporters wanted a continuation of the NEP.
- Maintain social peace.
- Centre: Stalin and his followers were prepared to follow which ever policy worked.
- On the left: Trotsky and his followers wanted a radical socialist policy:
The Left: the Dictatorship of Industry.
- Trotsky, favoured a policy of force agricultural collectivisation.
- Merged farms.
- State control.
- Allow the state to take all profits generated by farms.
- Use the money to invest in industrialisation.
- Trotsky argued that this scheme would end private property, and end capitalist market and therefore end inequality.
- He knew that it would lead to massive discontent among the peasants.
The Right: building socialism with capitalist hand
- Right-wingers like Bukharin argued that the NEP would be the best way to industrialise.
- Argued that the NEP was slowly allowing the economy to grow and industrialisation would happen eventually.
- The left argued that the policy of “riding the peasants nag” to socialism, was dangerous.
- They argued it would lead to a re-emergence of capitalist class determined to overthrow Communism.
The Centre: Whatever works.
- Centrists or pragmatists like Stalin argued that the best policy was the one that actually worked.
- Stalin argued that economic policy wasn’t an ideological issue, but a practical issue.
- Until 1927, Stalin supported the NEP, as it was leading to economic growth.
- When growth rates declined, Stalin shifted.
War Communism Legacy.
- Left wanted a return to policies similar to War Communism.
- NEP was a period of time of compromise, whereas War Communism was a heroic period in which the government implemented true socialist policy.
- The right argued that War Communism had proved that extreme measures would lead to chaos + rebellion.
Economic debate and the leadership struggle.
- “Great Industrialisation Debate” was a central part of the leadership struggle.
- Contenders presented their rival economic plans to the Party Congress.
- During the 1920’s, the right wingers consistently won the debate.
- The leaders associated with the NEP held on to power.
- Most Communists were centrists.
- When the NEP failed, Stalin began advocating for a new more left-wing economic policy.
Conclusion of Lenin’s economy.
- Lenin’s economic policy went through a series of different changes.
- The changes in policy reflected the fact that Lenin didn’t even have a detailed plan to began with.
- Lenin took in War Communism due to the nature of the crisis of the Civil War.
- A crisis that requires state control of the whole economy.
- Saw War Communism’s potential of destroying Capitalism.
- By 1921, War Communism created a political and economic crisis.
- Clear that the European revolution would not happen and therefore Lenin was forced to build socialism without foreign aid.
- Therefore forced to go to NEP.
- An economic compromise.
- Therefore forced to go to NEP.
- NEP controversial within the party,
- The left wanted radical change, a return to War Communism
- The right wanted a continuation of peace through the NEP
- Most of the government were pragmatic.
Industry and agriculture in the Stalin Era.
The Five Year Plans and industrial change: 1928-41
Main economic objectives.
First Five Year Plan 1928-32
- Concentrated on rapid growth in heavy industry e.g. coal, steel, iron. Used the idea of 'Evgeny Preobrazhensky' although Stalin didn't acknowledge this. Consumer industries e.g. textiles and producers of househol goods were neglected; building up an industrial infrastructure of factories, communication networks and plant before other sectors could flourish.
- Results: Ambitious targets and were then constantly raised to unrealistic heights. Targets were not achieved but achievements were impressive and transformed the Soviet Union into a major industrial power with a modern if unbalanced economy. Industrial expansion was due to efficient use of existing factories and equipment. New plants built didn't have impact until 1934. Large industrial centres such as Magnitogorsk and Gorki built from scratch and became large cities in 192. 25 people living in Magnitogorsk but 3 years later this increased to 250,000. By 1933, only 13% of the workforce in Moscow was skilled. Gov relied on the use of 'shock bridges' made up of the best workers e.g. Alexei Stakhanov, coal miner from the Donbass region who could mine 15 x the average amount of coal. Rewards for model workers e.g. new flat and bigger rations. But slackers were held up to ridicule. Gov used slave labour to complete large building projects e.g. White Sea Canal project which employed 180,000 prisoners by 1932, 10,000 prisoners died. Quality was sacrificed e.g. Stalingrad tractor factory supposed to produce 500 factors in 1930 but in June produced 8 which broke down.
2nd and 3rd FYP.
Second Five Year Plan (1933-37)
- Focused on heavy industry, communications, electricity, new industries and consumer goods. Drew on lessons learnt from the chaotic planning of the first plan and made more use of technical expertise.
- Results= Impressive especially coal production rose substantially. Chemical industry made progress but the oil industry was dissapointing. Footwear production and food processing increased.By late 1930s, these developments started to have some impact on living standards. Many resources were wastrd. Removal many managers and technical experts through the purges in 1937, actions of the party led to a slowdown of the economy.
Third Five Year Plan (1938-41)
- Geared more directly towards arms production to meet the threat of Germany.
- Developed both traditional industrial centres e.g. Moscow and Leningrad and other new centres. Much of the new industry was located in the remoter areas of the USSR e.g. Kazakhastan. Acted as a form of regional development to promote a more even distribution of industrialisation. Plans saw successful completion of projects to provide power for the growth of the industry e.g. Dneiper dam project. Production of textiles decline and housing ignored. Shortage of consumer goods was worse
Successes under Stalin’s economic policies.
Production of iron, steel, coal and electricity increased greatly.
Industry 1927 1940 Electricity (million tons) 5.05 48.30 Oil (million tons) 11.7 31.1 Pig iron (million tons) 3.30 14.9 Steel (million tons) 4.00 18.30 Coal ( million tons) 35.40 165.90
Achieved by building new factories to exploit the USSR’s natural resources.
Major success of the Plans, Moscow Metro’s first lines opened in 1935, easy transport around Moscow, therefore transported goods more efficiently.
- Very low in the USSR, workers were less productive in the USSR than in Britain, the USA or Western Europe.
- Little to no incentive to work hard due to low pay and long hours. (1st FYP)
- Stakhanovite movement
The Stakhanovite movement began during the second FYP in 1935 as a new stage of socialist competition. The Stakhanovite movement took its name from Aleksei Grigorievich Stakhanov, who had mined 102 tons of coal in less than 6 hours
As a result, workers who wanted to be like him, wanted to beat his records and hence productivity rose on the UK.
Industry: Estimated productivity gains: Chemicals 34% Electricity 51% Coal mining 26% Oil production 25%
- FY plans very successful in terms of rearmament.
- Economic planner’s priorities arms production as war approached.
- By 1940, 1/3 of government spending priorities, were on arms production.
However, shortages of quality materials like steel, slowed down arms production.
Issues with the plans.
- Low production quality
- Plans set targets for production, not quality.
- Factory managers rewarded for producing large quantities, regardless of what was actually produced.
- Plans did not specify what materials should be used for, therefore little coordination between different factories.
- Materials produced were often stored at a factory and left to decay, rather than being used.
- 40% of what was produced was wasted.
- Stalin purged the economic planners and industrial managers, the ones who made the economy work.
- Stalin attacked members of the Gosplan, to an extent that the 3rd 5YP was never finished.
- Huge pressure on the Gosplan to meet the demands of the 5YP plans.
Constant shortages of consumer goods like food shoes and clothing. The shortages were the result of the following:
- Stalin’s priorities: Heavy industry and defence rather than consumer production.
- Poor planning, planners did not anticipate the needs of general consumers.
- Poor production techniques. By the mid 1930’s, the soviet economy was good at producing large quantities of raw materials such as iron and steel. But consumer goods required more complex techniques which the economy still didn’t have.
Housing and living conditions.
- Significant issue from 1928-41. The plans required a huge increase in the urban workforce. However necessary housing never built.
- Poor living conditions from 1928-1941
- A better living standard was not a priority for Stalin.
- Consumer goods rationing was a constant feature under Stalin’s economy.
- Working conditions were very harsh.
- Workers forced to work seven days a week.
Five Year Plans failed to end the free market and therefore the shortage of goods led to a growth of a black market where consumers could buy goods stolen by workers, who justified it by covering up falsifying paperwork.
Conclusion to Stalin’s industrial policies.
+Pre 1928, the USSR was a largely capitalist agricultural economy with a small working class.
+By 1941, the USSR was a powerful, urban, industrial economy that was able to produce the resources necessary to defeat the German Army.
–Arms production led to the expense of consumer goods.
– Wastage of resources was a strong reason why economic growth did not lead to higher standards of living.
Agricultural collectivisation and its impact.
Causes of collectivisation
- Private property was the foundation of capitalism.
- During the period of the NEP, peasants with large farms were able to grow rich, and therefore the communists wanted to abolish private property and replace private farming with state run farms. Therefore ending capitalism and inequality.
- Create an efficient economy, large farms were likely to be more efficient than small farms as expertise and equipment could be shared to increase production.
Failure of the NEP.
- Agricultural production fell because there was no market for additional farmed goods, there was a limit to how much food that consumers wanted.
- Farmers abused the price mechanism in 1926, by increasing production to make more profit which led to a fall in prices, and in 1927, farmer’s decreased production to keep grain prices high.
- Left wing communists described this as “Kulak Grain Strike”
- Communists claimed that farmers put profits ahead of the USSR’s needs.
- Stalin had political reasons for ending the NEP, Zinoviev, Kamenev and Trotsky had advocated a radical left- wing policy of collectivisation and rapid industrialisation. Stalin defeating them led to the left wing of the Party having no leader, Stalin shifted to the left and hoped to retain his supporters of the United Opposition and therefore gained more supporters than Bukharin.
- As Stalin shifted to the left, he gained the majority of the support of the central Committee and was therefore the leader of the Communist Party.
Emergency measures: 1928.
- In July 1928, Stalin ended the NEP in order to end the Kulak grain strike.
- Stalin reintroduced grain requisitioning from the peasants through the Cheka.
- Grain would be used to feed the workers and used to sell overseas to raise money for industrialisation
- Free trade=>Command economy
- Rationing and requisitioning did not mean collectivisation but did signal an end to the NEP
- “Return to War Communism”
- Peasants responded to requisitioning with violence.
- Requisitioning being one of the most hated aspects of War Communism
- Stalin initiated “Liquidation of Kulaks”
- Meaning to take farms and equipment from the richer peasants.
- However, in practice it meant that many peasants were killed or deported if they resisted government policies.
- 1.5 million Peasants sent to labour camps as a result of the dekulakisation campaigns.
- Introduced in 1929.
- Dec 1927; the 15th Party Congress decided on a programme of voluntary collectivisation but food shortages in 1928 led the gov to carry out forced requisitioning of grain as a temporary emergency measure known as 'Ural-Siberian Method.'
- Local party officials went into villages to announce collectivisation.
- Promise of increased mechanisation through the establishment of Machine and Tractor stations (MTS) given. MTS gov run centres that supplied farm machinery e.g. tractors to the collectives and adviceon farming techniques and political lectures to persuade peasants of the benefits of socialism/collectivisation.
- Some peasants signed up; collective seized animals, grain supplies, buildings as property of the collective.
- Term 'Kulak' used to describe peasants who refused to join and labelled as class enemies so deported to Siberia.
- 'Dekulakisation squads' sent to deal with opposition, many of which chose to burn their property rather than hand it over.
- 'Twenty-Five Thousanders' sent into villages to educate but were well trained in class warfare.
- OGPU rounded up class enemies and sent to concentration camps.
- In March 1930, Stalin issued the article 'Dizzy with Success' blaming overzealous local party officials for 'excesses.'
- By 1932, 62% of peasant households had been collectivised, rising to 93% in 1937.
Results of collectivisation.
- Supply of machinery to collectives were slow.
- Most productive farms- kulaks, their removal was damaging.
- Slaughtering of animals by kulaks had an effect on livestock.
- 1928-33, number of cattle halved, not fully restored until 1953.
- Grain production fell declining from 73.3 million tonnes in 1928 to 67.6 million in 1934.
- Rural population starved, gov seized food for export to gain foreign exchange. Widespread famine occured in 1932-33 affecting Ukraine, Kazakhstan and the Caucasus region.
- Peasants attempted to leave collectives in search of food but gov introduced passport system to prevent this. Some peasants were so hungry that they restorted to eating their own children.
- 4 million died in 1933 alone.
- 1933- good harvest followed by 1937 after good weather helped harvest.
- Stalin successful in eliminating kulaks, 15 million deaths in 1928.
- Stalin's famine in Ukraine was a genocide against its people called the holodomor.
Destruction of Soviet Farming.
- Peasants responded to requisitioning/Collectivisation by destroying their crops, animals and machinery.
- Many peasants would prefer to destroy over help the government.
- Stalin’s policies led to the destruction of:
- 17 Million horses
- 26 Million cattle
- 11 Million pigs
- 60 Million Sheep and goats.
Grain Harvest Million tons 1928- 73.3, 1930- 83.5, 1934- 67.6
Reduction of agricultural production was because of:
- Execution or deportation of kulaks who were often the most experienced farmers
- Absence of incentives as farmers were no longer able to make a profit.
- Collectivisation led to famine in the Ukraine
- Ukrainian farmers were often unable to meet government targets for farm production
- Resistance to collectivisation had been at it’s fiercest in the Ukraine.
- Stalin punished the farmers by seizing their grain and livestock.
- Used famine to end resistance in the Ukraine
- Although he was offered support internationally, declined.
- Collectivisation was accompanied by mechanisation,
- Government allowed farms to hire tractors from machine tractor stations, across the country.
- 75,000 tractors they provided had little impact on soviet agriculture.
- Collectivisation allowed the government to procure more grain than the NEP in 1928.
- In 1928, the government procured 10.8 million tons of grain from the peasants.
- Which rose to 22.6 million by 1933
- Grain export rose too from 1 million – 4.7 million from 1928-1930.
Long term issues of collectivisation.
- Collective farms a lot less productive than private farms.
- Led to a decrease in production.
- Decline in grain production.
- Private farming continued on small scale in 1941.
- Private farms very important for soviet agriculture.
Agriculture during WW2:
- Consistently unable to meet needs of the soviet people and the army during WW2.
- Soviet government relied on US imports to provide almost a fifth of the calories consumed by the Red Army.
- Harvests decline from a pre-war high of 95.5 million tonnes to 46.8 million tonnes by 1945.
- Bread rations fell by 40%
- Potato rations fell by 80%
Recovery from war after 1945.
Fourth Five Year Plan, 1945-1950:
- Led to extremely high levels of industrial growth.
- 88% of investment went into heavy industry.
- Industrial output increased by 80% from 1945-50
- Soviet post-war plans continued to focus on military spending, emergence of Cold War in 1946 led to the expansion of the Soviet military.
- Production increased.
- However FYP focused mainly on heavy industry
- Only 12% of investment went into consumer goods like food production.
- Although production of consumer goods doubled, they continued to be scarce.
- Reconstruction focused on factories rather than homes.
- Equally, reconstruction of historic cities were given priorities on historic cities over towns.
- Wages were kept low.
- Made money more available for reconstruction.
- Women were forced to go out to work because their families needed income.
- Stalin recognized that women were vital for the reconstruction of soviet industry.
- Again, the FYP was full of inefficiencies and issues, nonetheless the economy was the fastest growing economy in the world.
- Although there was still major shortages of consumer goods and housing.
Post War Agriculture:
- Soviet agriculture recovered slowly from the impact of the War..
- Stalin’s top economic priorities after the war was industrial reconstruction.
- As a result, Soviet agriculture suffered shortages pf resources and workers from 1946 to 1949.
- After war was over, Stalin re-imposed strict discipline over soviet farms.
- During the War, there had been a small increase in private farming which was ending following the end of WW2.
- Overall, production still grew from 1947-1953.
- Grain production reached its pre-war levels.
Stalin’s economy conclusion.
- Stalin’s great turn transformed the soviet economy and the USSR.
- Policies were harsh, inefficient, and wasteful.
- However, they transformed the USSR into an industrial giant.
- Equally, collectivisation placed farming under Stalin’s control.
- Issues like: Low productivity, unproductive agricultural sector, inefficient industry, scarce consumer goods and a massive military budget would continue to cause issues for the Soviet leaders until the fall of the USSR in 1991.
Changing Economic Priorities, 1953-1985.
Investment in agriculture: 1953-64
- In 1954, Khrushchev changed the relationship between the collective farms and the government in order to create incentive for higher production rates.
- Wanted to invest in farming by offering farmers pries for their produce.
- Under Stalin, each farm had to produce a quota of goods, which was bought off the government for a very low price.
- Khrushchev reduced the quotas and introduced higher prices for everything that was produced in addition to the quota.
- Led to a 250% rise in farm incomes between 1952-1956.
Investment in resource.
- Khrushchev also invested in farm equipment and fertilisers.
- In 1954, Khrushchev announced the construction of new fertiliser factories and an increase in the production of tractors.
- By 1955, this resulted in a 30% increase in the number of tractors available and a 40% increase in fertilisers created.
Virgin Lands Scheme.
- Khrushchev’s most ambitious agricultural policy.
- Hoped to increase Soviet agricultural production by turning un farmed lands in the Northern Caucasus, Kazakhstan, and Western Siberia into new farms.
- Launched in September 1953, it required significant investment, so agricultural investment grew from under 3% a year to 12.8% oft he Soviet budget between 1954-1959.
- Khrushchev introduced the Corn campaign:
- From September 1958, Khrushchev encouraged farmers in the Ukraine to grow maize.
- Plan to shift wheat production to the newly created Virgin Lands farms, while maize would be produced in the traditional farms of the Ukraine.
- Maize would be used to feed animals and would therefore increase the amount of meat available to people.
- Corn campaign was a failure.
- Initiative focused on the success of US farms.
- Whilst soviet farms were only able to produce 50% of the corn per hectare that the US farms managed due:
- To differences in climate.
- Lower labour productivity.
- And the inferiority of the Soviet tractors and fertilisers.
- The opportunity cost of producing more corn meant that Soviet farms produced less hay.
- As a result, the amount of animal feed produced by Soviet farms, reduced by 30%.
- Initially, the Virgin Land Scheme was very successful.
- Grain harvests, meat and milk production all rose significantly between 1953-1958.
- Overall, agriculture rose by 35.3%
- Virgin Land scheme led to a greater availability of food in Soviet shops.
- Better living standards for Soviet citizens.
- Greater production also led to a 400% increase in income of farm workers.
- Success of the scheme allowed Khrushchev to consolidate his position and led him to take on even more ambitious schemes.
- In 1956, Khrushchev introduced a new commitment o produce more food than the US by 1960. This required a 300% increase in production in four years.
Agricultural failures: 1954-1964.
- Even during successful periods of 1954-1958, Soviet agriculture remained very inefficient.
- Virgin Lands Scheme very expensive.
- Soviet agriculture was labour intensive.
- During the 1950’s and 1960’s, between 54% and 44% of the Soviet population worked on farms.
- By comparison, only 5% of the American population worked on farms, ans still produced double the food that the USSR produced.
- Clearly, issues in efficiency in the USSR.
- After initial success, the Virgin Lands Scheme failed to lead to further growth.
- Harvests began declining below 1958 levels,
- Between 1960-1964, production slowly increased, so that overall agricultural production was around 15% higher in 1964 than in 1958.
- Although this was good, it was no where near what Khrushchev was aiming for in his plans.
- Therefore, although being moderately successful, it didn’t meet his aims and therefore considered a failure.
Issues with Khrushchev’s policies.
- Machine and tractor machines abolish. Therefore farm workers were less able to obtain modern farming equipment.
- Centrally directed campaigns were ineffective as they didn’t reflect local initiative, for example, Khrushchev advocated maize production where some parts of soviet farms had poor climate and therefore led to a wastage of resources and labour.
- Farmers didn’t always deliver the correct fertiliser to the farms that needed it.
- Khrushchev repeatedly reformed the ministries dealing with agriculture, leading to confusion.
- Soviet farms often had inadequate storage, therefore some of the food produced was wasted.
- Pay for agricultural workers increase but remained poor.
- Khrushchev cut investment in agriculture from 12.8% a year from 1954 to 1959 to 2% a year in 1960.
- Investment failed to make soviet farms more efficient, therefore long term issues of inefficiency remained.
Summary of Khrushchev’s agricultural policies.
- Did not improve Soviet agriculture.
- However, further improvements were hampered by problems with the system.
- Like central direction of agriculture meant that local conditions were not taken into account.
- Therefore could never be truly effective.
- Khrushchev’s reforms did not address the issues of inefficiencies in the system.
- Soviet agriculture was too inefficient to meet his ambitious targets.
- 1957- Khrushchev set up 105 Regional Economic Councils (Sovnarkhozy) to supervise enterprises. Attempt to move some decision making from the centre to regional bases which it was hoped would be able to take more account of local circumstances.
- Harsh labour laws of the Stalin years were removed and working week reduced from 48 hours to 41 hours by 1960. Incentives replaced Stalin's policy of coercion so workers paid more.
- Managers of industrial enterprises given more influence in their factories. To encourage initiative they were allowed to keep 40% of the profits made by their factory to invest as they wished in their enterprise.
- Greater emphasis on vocational education to support industrial developments. Specialist technical schools set up and vocational education expanded to create engineers.
- Liberman Plan 1962 called for greater autonomy for local managers and the market to replace the state as the decider of prices. Ideas watered down by the conservatives in the Politburo who preferred to stick to Stalinist principles.
- Stalin deliberately kept living standards low for increased spending in military.
- Stalin’s heirs were dedicated into increasing living standards for the people.
- Khrushchev began cuts in military in 1955.
- Consequently, percentage of GDP spent on military decreased from 12.1% in 1955, to 9.1% in 1958.
- Returned in 1962.
- By 1964, military spending reached 11% of total GDP.
- Rise in military spending coincided with the fall in economic growth.
- Therefore increasing military spending leads to a fall in economic growth.
Seven Year plan: Light industry: January 1959.
- Plan designed to boost agricultural production and the production of consumer goods by investment
- Khrushchev hoped that more chemical production would lead to better production of fertilizers and consequently lead to a better production of crops.
- Khrushchev believed that chemical production would stimulate the two sectors of the economy that the USSR needed to increase living standards.
- Shift in focus also reflected that the USSR no longer needed to focus on heavy industry because it was mostly complete, therefore a focus in heavy industry was unnecessary.
- Khrushchev’s very optimistic plan, which he hoped would lay the foundations for the USSR to overtake the USA by 1970 and have Communism ready by 1980.
- Plan based a lot of optimism due to:
- Success of the Virgin Lands Scheme (1958)
- High rates of economic growth
- Success in the space race.
Achievements suggested to Khrushchev that the economy was capable of growth and technical sophistication.
Success of the 7YP.
- Production of chemical and consumer goods rose between 1959 – 1965
- Increase not as significant as economic planners had anticipated.
- 60% increase in the production of consumer goods, but still 5% less than Khrushchev’s goals.
- Fertilizer production increased by 19 million tons, 3.5 million less than Khrushchev’s targets.
- Synthetic fibers production increased by 241,000 tons, 200,000 less than the target.
Problems with the 7YP.
Khrushchev continually introduced economic re-organisation which was counterproductive, or so short lived that they don’t have time to take effect.
- February 1957 Sovnarkhozy reforms decentralized power from Gosplan to105 Sovnarkhozy. Reforms destroyed central co-ordination of the plan and therefore ruined economic growth. Decentralisation didn’t even solve any of the issues.
- From 1958-1964, Khrushchev introduced increased centralisation to solve the issues created by the Sovnarkhoz reforms. However, the responsibilities of the Sovnarkhoz and the new central bodies were not clear and therefore there was confusion in the system.
- February 1962, Khrushchev divided the party in two. One half for agriculture and one half for industry. VERY unpopular and took place half way through the Soviet 7YP.
- Khrushchev changed the targets of the plan in 1962 with more ambitious goals.
Khrushchev’s continued meddling led to a joke that Khrushchev had changed the 5YP with not a 7YP, but 3 plans a year.
- Soviet economy itself was not designed to produce consumer goods.
- Economy was not designed to meet targets.
- Production targets were set in weight.
- Therefore, factories produced thick sheet metal over thin steel as it met targets quicker.
- However, light industry needed thin sheet steel to turn into lamps and watches.
- Therefore factories produced light fittings that were too heavy for ceilings.
- Consumer industries were set targets for the value of goods that they produced.
- Therefore it made sense to produce less, but expensive goods to produce.
- Consequently, Soviet furniture factories produced large expensive sofas that consumers couldn’t afford in order to fulfil the plan.
- Fundamental issue with the command economy was the focus on production over consumption.
- Therefore, although the economy focused on consumer goods a lot more following Stalin’s death, the goods produced were often useless, undesirable and expensive.
Economic reform and decline after 1964.
- Khrushchev’s fall led to rejection of many of his reforms:
- Party reunited and the division between agriculture and industry was ended.
- 7YP: abolished. From 1966, return of 5YP’s.
- Brezhnev continued what Stalin had set up, however, like Khrushchev he also wanted an increase in consumer goods.
- However, Brezhnev, a lot less ambitious in terms of quality and quantity of consumer goods.
- Kosygin advocated for reforms that were designed to cut investment in the inefficient collective farms and divert the funding into light industry.
- Proposed giving power over production to factory managers and judging their success by the profit they made over the production levels.
- Designed to force factories to produce goods that consumers wanted.
- Introduced in January 1968- ended in August.
- Similar reforms in Czechoslovakia, led to a rebellion against the USSR.
- Rebellion discredited Kosygin reforms.
- Therefore reforms halted in August.
- Authority returned to central planners.
Increase in Military investment.
- Brezhnev increased military spending.
- Goal was to achieve parity with the USSR in terms of their nuclear power.
- During the Berlin Crisis of 1961 and Cuban missile crisis of 1962, Khrushchev had been forced to back down due to the scale of power held by USA.
- Brezhnev wanted to be equal to the USSR and therefore won’t be forced to back down by the USSR.
- Military spending increased from 11% to 13% from 1964-1970.
- Policy was successful and nuclear parity achieved by 1970.
- However, maintaining this parity drained the economy which led to more economic issues.
- Brezhnev dropped Khrushchev’s commitment of becoming a communist state by 1980.
- Slower economic growth and increased military spending led to no possibility of transforming the USSR into a land of plenty
- Although, Brezhnev still pushed for rising living standards in the USSR.
- Abandoned Khrushchev’s promise of communism by 1980, and replaced it with ‘Developed socialism’
- An economy with job security and low prices.
- Low food prices achieved by importing a lot of grain from the West, rather than expanding Khrushchev’s Virgin Land’s Scheme, or by reforming the economy.
- Brezhnev also accepted the black market, as a “necessary evil”
- Rather than try to get rid of it, Brezhnev allowed it to exist as it increased access to consumer goods and food and eventually raise living standards.
‘Andropov’s reforms’, 1982-84.
- Andropov, like Brezhnev, refused reform.
- Approach to economy was important, because unlike Brezhnev, he was willing to admit that there were economic problems in the USSR that should be fixed.
- To improve productivity, he introduced three campaigns:
- Anti-Corruption campaign:
- Investigated senior Party officials and managers who were using Soviet resources to become rich.
- Brezhnev’s Minister of the Interior was sacks and put on trial for corruption, and took his own life before the end of the trial.
- Anti-Alcohol campaign:
- Workers sacked for drunkenness and fined for damaging machinery or products if drunk at work.
- Operation Trawl:
- Anti-Drunkenness campaign: KGB officers visited parks and public places and arrested people who were drunk or absent from work.
- Andropov’s campaign did lead to a reduction in consumption of Vodka but consumption of Andropoka, a low quality cheap vodka, increased.
- Andropov’s campaigns were poorly enforced and so poor discipline continued in the USSR.
- Andropov’s reforms did not lead to fall of the USSR and still did not stop economic decline.
- In 1945, the Soviet Economy was the fasted growing economy in the world.
- From 1950-1958, the economy grew at an average rate of 7.1% a year.
- The US by contrast, grew at an average of 2.9% during the same period.
- Therefore, the Soviet economy seemed to outperform the US economy.
- However, Soviet growth rates declined to 5.3%
- Reached 2% in the 1970’s
- Shift reflected some of the key issues in the Soviet economy.
- Unable to create ‘intensive growth’
- Growth that is based on improving efficiency of existing factories.
- Central planning agencies, even at local levels, did not have the information to improve efficiency of individual factories.
- Problem with central planning meant that the Soviet System was never able to conquer the inefficiencies that had emerged in the system in the 1930’s.
The impact of oil price.
- One of the main features of the Soviet economy in the 1970’s was declining growth and rising standards of living.
- General rise in international prices of oil in the early 1970’s masked the issues of the Soviet economy.
- Rising prices ensured the USSR made more money from selling oil.
- Oil production increased from 243 Million tons in 1965 to 603 million tons in 1980 in order to supply international demand.
- Allowed soviet government to import grain from the west
- Soviet government was able to borrow from the West based on income from oil.
- As a result, Living standards continued to increase.
Soviet Economy 1964-85.
- Economic reforms following Khrushchev were very minor.
- Brezhnev accepted the economy as it was and rather than improve the economy, he lowered the expectations.
- Andropov’s reforms did try to address the problems of Soviet economic decline that had become evident in the 1970’s.
- Still remained committed to the essential features of the economy:
- Central planning of industry
- Collectivisation of agriculture.