Rise and Fall of the NEP(and of Stalin’s Opponents)

The New Economic Policy• Introduced by Lenin in 1921, replacing

“War Communism” (which was failing)• Started as a concession to the peasants• Purpose was to increase grain production

– Feed population– Sell surplus overseas for currency

• Most peasants were subsistence farmers, but could sell extra grain for profit

• Rise of the kulaks--

Industry & Consolidation

• USSR inherited a narrow range of industries which were devastated by Civil War.

• Most industry had been nationalized under War Communism– <1% private.

• NEP’s first task was to return the economy to prewar level—succeeded in agriculture at first, but not in industry

• Lenin died in 1924

Path to Industrialization

• No clear blueprint for Lenin’s successors to follow.

• For self-defense & prosperity the USSR needed to industrialize.– How to do it? – How to pay for it?– Who should lead it?

Leftist View: Leon Trotsky(Socialist Accumulation Theory)

• Tax peasants heavily, keep goods prices high, reduce consumption of scarce resources.

• Buy peasant grain cheaply, sell it abroad for money to industrialize.

• Saw NEP as a threat that risked decay of the party and the decline of socialism.

• Favored by left-wing Bolsheviks led by Trotsky

• Lost out in power struggle in the ‘20s

Socialist Accumulation Theory

Rightist View: Nikolai Bukharin (New Economic Policy)

• Encouraged trade between peasants and towns.

• Gradually adjust prices to favor towns and accumulate surplus capital to industrialize.

• Communists should educate and win over the peasants, not exploit them.

• The immediate task was to restore consumer demand and ensure supply of goods

• ‘Moving towards Socialism at the speed of the peasant nag’

New Economic Policy

Problems with the NEP

• NEP ran into a crisis when grain prices fell and goods prices rose.

• In 1925 Bukharin cut grain taxes to help the peasants, which was attacked by the Leftists

• Productivity only rose slowly.

• Many in the Party did not get used to the NEP—resented the power given to kulaks & capitalists

• As General Secretary, Stalin exploited this resentment

Crisis in the NEP

• Government only received half of its expected grain procurement in 1926 even though the harvest was very successful.

• Peasants could not sell as much as before due to low prices (13% of production compared to 26% in 1925)

• Debate in party over how to deal with this—Rightists vs. Leftists

• Stalin shrewdly played both sides