The Economy of the USSR under Lenin 1917-27


1. State Capitalism, 1917-18

• Lenin argued that to move towards a functioning socialist state with a command economy a transition period would be needed, where a capitalist system could be allowed to continue, to strengthen the economy whilst increasing state control, then moving to a command economy. This was known as state capitalism.

• Command economy: Economy where all industries are collectively owned by the government. Lenin thought this was the best way to make the economy recover.

• Decree on Land, Oct 1917: Divided land amongst peasants on an equal basis. Fulfilled promise of Land made during revolution. Ensured support of many peasants for the Bolsheviks.

• Decree on Workers’ Control, Nov 1917: Gave elected factory committees the right to control production and finance in factories.  Ensure support for Bolsheviks amongst many workers.

• Vesenkha, Dec 1917: The Supreme Council for the National Economy.  Central planning and co-ordination of all major elements of the economy.

• Nationalisation: All banks and most industries were nationalised.

2. War Communism, 1918-21

• A series of emergency measures to make sure the Bolsheviks won the civil war by increasing government control over the economy. It ensured that the Red Army got the resources that it needed but left the economy in a state of collapse. By 1921, industrial production was only 1/5th of the 1913 levels.

• Nationalization: All industries with more than 10 employees and placed under control of Vesenkha.

• In factories the Workers’ Councils were replaced by management to impose discipline in the workers. The death penalty was introduced for all strikers. The unemployed were forced to join ‘Labor Armies’ to work on projects like road building. Workers expected to volunteer for unpaid work on ‘Communist Saturdays’.

• Private trading banned: Trade was to be controlled by the State, resulting in a huge black market.

• Bartering: Introduced as money lost its value due to massive inflation. Many workers were paid in goods rather than money.

Requisitioning of food: From the peasants without payment in order to feed the army and towns. Malnutrition and starvation soon set in, resulting in uprisings like the Tambov Rising.

• Rationing: To ensure that despite food shortages, people in the cities were fed. Preferential treatment to those whose work was crucial to the war effort (eg. Red Army).

3. Reasons


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