The New Economic Policy of 1921 by

Bolshevik Rise to Power 1917-1918

5957mc978v — 2024-05-01 01:43:26 UTC

After the successful coup of October 1917, the Bolsheviks rose to power, electing themselves by unlawfully shutting down elections in March 1918. A majority 40.4% of the vote favored Socialist Revolutionaries, with only 24% of the vote favoring the Bolsheviks. Despite the clear verdict, delegating power to the Socialist Revolutionary Party, the Bolsheviks terminated the vote, and asserted themselves as the ruling party, being renamed the Russian Communist Party in March 1918.

War Communism in Post-Revolution Russia

5957mc978v — 2024-05-01 01:44:20 UTC

In the wake of the Bolshevik coup and rise to power throughout 1917 and 1918, they controlled their totalitarian regime under an economic policy known as "War Communism". Driven by Marxist ideas which had influenced Bolshevik leader Vladimir Lenin throughout his adult life, the Russian Communist Party created a nationalized economy that cut out private ownership over means of production in Russian industries. This consolidated the economic power within the Bolshevik government. War Communism took away many economic freedoms from citizens and is what the government believed would make Russia an economic world power.

Lenin’s ideas for temporary economic reform

5957mc978v — 2024-05-01 01:45:07 UTC

After the deterioration of the Russian economy between 1918 and the spring of early 1920, the Russian Communist Party formed a committee with a proposal to reform the suffering economy. The lack of incentives for workers to grow surplus agriculture products impacted the economy of Russia drastically during War Communism (1918-1920). Vladimir Lenin responded by proposing an economic model for Russia that injected a capitalistic aspect into Russian commerce. "In order to assure an efficient and stable economic life on the basis of a freer disposition by the farmer of the products of his labor and of his economic resources, in order to strengthen the peasant economy and raise its productivity..." (Kalinin, M., and Zalutskii. Memorandum, "The Tax in Kind") Lenin outlines the new freedoms that the economic reforms brought about in Russia in 1921.

The All Russian Central Executive Committee in Moscow, (March 21, 1921)

5957mc978v — 2024-05-01 01:45:45 UTC

In response to the economic issues at hand in Russia during early 1921, the Russian Communist Party (Bolshevik) organized the "All Russian Central Executive Committee" in Moscow. "All the reserves of food, raw material and fodder which remain with the peasants after the tax has been paid, are at their full disposition and may be used by them for, improving and strengthening their holdings, for increasing personal consumption and for exchange for products of factory and handicraft industry and of agriculture." (Kalinin, M., and Zalutskii. Memorandum, "The Tax in Kind") They outlined the rules on which the NEP would be instituted. How the surplus of products yielded would no longer be forfeited to the government, but could now be sold for personal profit for the peasants. The Russian Communist Party had let capitalism into their regime.

The NEP's Impact on Economic Problems That Stemmed from War Communism

5957mc978v — 2024-05-01 01:50:24 UTC

As capitalism was introduced into the communist Russian regime the economy rebounded. Peasants and workers benefited by selling their surplus of crops for profit, along with importantly boosting the Russian economy. By adding a sample size of capitalism into the Russian economy, the uprisings from suffering poor districts were quelled and the state rebounded. The NEP ended the massive famine that had ravaged Russia in 1920 and had killed 5.1 million Russians.

Peasants bring products to markets (1921)

5957mc978v — 2024-05-01 01:50:58 UTC

In this primary source image, a Russian market is depicted during the implication of the New Economic Policy. Peasants bring their surplus crops for personal profit.

Replacement Tax on Peasants

5957mc978v — 2024-05-01 01:53:58 UTC

The All Russian Central Executive Committee included a tax on the peasants in the description of Russia's New Economic Policy. "In order to calculate precisely the obligation to the state which falls on the peasants, requisitioning, as a means of state collection of food supplies, raw material and fodder, is to be replaced by a tax in kind. This tax must be less than what the peasant has given up to this time through requisitions. The sum of the tax must be calculated so as to cover the most essential needs of the Army, the city workers, the non-agricultural population." During War Communism, the surplus agricultural products were collected by the state. With the new policy, the surplus was no longer delegated to the Communist Party but now could be sold privately by the peasants. The replacement tax came from the profits made off the surplus sold privately by the peasants. In this way, Russia's economy received a boost, peasants won the right to private trade, and the government continued to profit.

Revival of the Russian Economy with the Introduction of Capitalism

5957mc978v — 2024-05-01 01:54:20 UTC

"In 1925, the government introduced measures that granted economic freedoms to village kulaks and Bukharin invoked war communism in his defense of these measures." (Lie, Lars T. "Bukharin's 'Illusion': War Communism and the Meaning of NEP.") As the economic policies in Russia were changed, the suffering masses were able to bounce back financially from the impacts of War Communism. With the option for private production and ownership in Russia, in 1921, kulaks (peasants) were able to build private financial capital and change the tide of poverty and famine that was very real for the Russian masses under War Communism.

Political Pivot of the Russian Communist Party for the NEP

5957mc978v — 2024-05-01 01:54:44 UTC

With the institution of the NEP the very political principle that the Bolsheviks initially were opposed to, Capitalism, saved the economic state of Russia. Under War Communism, without the incentive for private economic growth, the workers were not motivated to produce adequately. Vladimir Lenin realized that the addition of the capitalistic drive for the peasants was necessary for Russia's economy to thrive. The NEP remodeled communism in Russia so that the economic power remained within the clutches of the government, but peasants were free to trade privately. This proves that no purely communist economy can succeed, as there exists no incentive for people to work hard. However, an economy controlled by a totalitarian government, with the aspects of free capitalism that incentivized Russian workers, can succeed.

Understanding the New Economic Policy of 1921

5957mc978v — 2024-05-01 01:55:03 UTC

The New Economic Policy in Russia in 1921 is an example of how economics works concerning political regimes with centralized power. A totalitarian regime like that of the Russian Communist Party, which gave little freedom to its people for economic growth, will experience an economy with a lack of drive and success. Because people had no incentive to work, as the government inherently owned all that it produced, the economy failed and put people into positions of poverty and famine which killed millions. The aspect of capitalism that the All Russian Central Executive Committee implemented in March 1921 was the push that Russia's industries needed for their economy to thrive. Morally, Russia during the early 20th century shows the personal incentive that humans need in order for them to contribute to a successful industry, economy, or society.