NEW ECONOMIC POLICY

Let me remind you that in the years of Civil war the Soviet Government conducted a policy of military communism. Essentially, it boiled down to a mobilization of all forces and resources of the country for the defense needs. This entailed a nationalization of all large, medium and a major part of the smaller industrial enterprises. There was a need for maximum centralization of management of the industrial production. All private trade was totally banned. Food products and industrial goods were rationed. A compulsory labour duty was introduced... People’s wages were all evened out.

A special system of procurement of farm produce was introduced, called ‘prodpazviorstka’. In actual fact this was a system of forcibly repossessing the peasants’ food produce.

In the final count the policy of military communism led to catastrophic economic results and a growing unrest not only among the peasants…

So what did the Soviet Government undertook under the circumstances? 

Historian Leonid Katzva writes: “The more broadminded bolshevist leaders, like Trotsky, already back in 1920 realized that the economic policy ought to be changed. They suggested shifting from ‘prodpazviorstka’ to ‘prodnalog’: in other words, what was suggested was a policy of claiming only a part of the peasants’ food produce, leaving the rest for them to freely dispose of at the market. However, these suggestions were rejected by the higher leadership of the country, as potentially dangerous since they resurrected a market economy – something totally unacceptable for the Bolsheviks.

It was only the alarming growth of the popular resistance on the border of 1920-1921 that forced the leader of the Soviet State Vladimir Lenin to agree to concessions in the name of preserving the power of the party of Bolsheviks.

The need for altering the economic policy was made particularly evident to the country’s leadership after the revolt of sailors and workers in Kronstadt – a fortress situated on the approaches to Petrograd (now St.Petersburg).

On February 28th 1921 the sailors of battleships “Petropavlovsk” and “Sebastopol” adopted an antibolshevist resolution, which was supported by a general assembly of residents of Kronstadt. This is how Doctor of Political Science Andrei Saveliev narrates the event:

“On March 1st there was a meeting on Kronstadt’s Yakornaya Square, attended by the head of the executive soviet power Mikhail Kalinin. He arrived without a guard, for some reason accompanied by his wife. For this blatant courage he was met with a rousing applause. However, soon the general mood of the sailors and workers altered: the speaker was accosted with shouts of “Enough of that prater! Give us bread!” One of the reasons for the revolt was a deficit of food products.”

In the years of Civil war the power structures – the Soviets – had in fact turned into bolshevist headquarters and were not popularly elected. So participants of the meeting in Kronstadt demanded elections to the Soviets. They called for secret balloting and preliminary free canvassing, providing for freedom of speech, assembly, trade unions and peasants’ associations. They thought they were participating in a popular revolution, yet the result came out right in line with Karl Marx: the pronounced proletariat rule was manifested in the rule of the Bolshevist party.

The residents of Kronstadt likewise demanded that special communist units among the military and in the industry be dissolved, since they were carrying out punitive functions. Those gathered didn’t overlook the peasants, either, they demanded for them a right to freely work their land.

As participants of the Civil war on the side of the Bolsheviks, the sailors demanded the release of political prisoners from among the Socialist parties and workers’ and peasants’ movements.

In the words of politologist Andrei Saveliev, “the voice of the Kronstadt residents was the voice of the people – tired of war and emergency measures, of ideological pressure and indignity. They had been summoned to the army from workers’ and peasants’ families, where they had first-hand knowledge of ‘prodpazviorstka’ and military communism. However, they never did realize that the bolshevist revolution had strictly adhered to the Marxist dogma, and the latter’s theoretical monstrosity was accepted by the Bolsheviks as a plan of action. 

At the Kronstadt meeting the executive power head Mikhail Kalinin exclaimed in despair: “Your sons will feel ashamed of you! They will never forgive you for today, this hour when you betrayed the working class at will!” The sailors and workers whistled shrilly, chasing Kalinin off the rostrum. If he hadn’t speedily left, that very night he would have been arrested by leaders of the Kronstadt Soviet together with Baltic Fleet Commissar Nikolai Kuzmin and the communists.”

On March 2nd a temporary Revolutionary Committee was set up in Kronstadt, which called for a new revolution.

The Kronstadt resolution didn’t contain the slogan “For Soviets without Communists!”, nonetheless, Bolshevist propaganda attributed it to them. Among the ‘Kronstadts’ there were neither socialists-revolutionaries, nor Mensheviks, yet, the Bolsheviks believed the Kronstadt revolt to be their doing. Thus, the paper “Petrograd Pravda” dated March 4th 1921 wrote: 

“From behind the backs of the Esers and the Mensheviks we can discern the bared teeth of the snarling former Czarist generals.”

The country’s leadership tried to convince the rioters that Soviet power was unshakeable throughout the country. They threatened them with the Petrograd defense Committee, saying: 

“You are surrounded on all sides. Just a few more hours, and you will be forced to give up. Kronstadt hasn’t got any bread or fuel. If you persist, you will all be shot like partridges.”

On March 5th the Chairman of the Revolutionary Military Council of the Soviet Republic Trotsky issued Kronstadt an ultimatum, which was broadcast on the radio. The following day the forts, situated near Kronstadt, received reinforcements: frontline divisions, cadet regiments, Extraordinary Committee units… Future Marshal Mikhail Tukhachevsky was appointed to command the assault.

March 7th started with a series of artillery assaults on Kronstadt augmented by bombing raids… Kronstadt retaliated by firing all of its guns… All attempts to seize it were repulsed. The icy expanse around Kronstadt was littered with corpses…

The Kronstadt revolt occurred on the eve of the 10th Congress of the Russian Communist Party of Bolsheviks. Almost 300 delegates of the Congress were mobilized for the assault on Kronstadt. These people were mercilessly thrown under a barrage of gun salvos and machinegun fire.

Politologist Andrei Saveliev noted in this connection:

“This clearly demonstrated the status of the delegates: they were no more than cannon fodder of the Civil war. On the other hand, the participation of Congress delegates in the assault on the fortress clearly demonstrates just how dangerous the Bolsheviks deemed this revolt to be. After all, there was always the possibility that other military garrisons and troops support the rioters. This is why taking part in the assault on the fortress were either just recently conscripted young sailors or soldiers, who could barely shoot straight, or zealous Bolsheviks – delegates to the 10th Party Congress.

One of the recruit battalions almost produced a riot of its own, refusing to take part in the assault. It was finally disarmed, and 120 people were arrested. Canned food was used as an incentive for those who obeyed orders. Insubmission was fraught with a pot shot from a Party delegate, a commissar or Commander. 

The last attempt to seize the fortress was undertaken on March 17th. On more than one occasion the advancing lines were obliged to retreat or hit the ground. And that despite the fact the ice was quite solid and the artillery fire from the rebellious fortress and the two rioting battleships practically caused no harm to the advancing forces.

However, the defense of Kronstadt was poorly organized. One of the batteries of the rioters, left without cover, was quickly seized before they managed to make more than 10 shots. The battleship crews didn’t display any particular activity. With nightfall, they practically ceased all fire.”

As a result, the advancing forces were able to seize Kronstadt.

The arrested communists were released and they immediately made short shrift of the mutineers. Those who put up any resistance, at Trotsky’s order, were not taken prisoner…

The crews of the battleships surrendered, while the surviving units of rioters escaped to Finland.

Ironically, those who masterminded the assault on the Kronstadt rioters, later, under Stalin’s regime, were pronounced ‘enemies of the people’ and executed. The revolution, as was its custom, was devouring its offspring.

The Kronstadt revolt clearly demonstrated that Soviet power was in profound crisis. Drastic changes in the policy were called for. 

At the height of the Kronstadt revolt, on March 8th, the head of the soviet state Vladimir Lenin made a report at the 10th Congress of the Bolshevist Party on the “switch from ‘prodpazviorstka’ to payment in kind”. He suggested introducing a tax in the form of a part of the harvest gathered by the peasant. The rest of the food produce would remain with the peasant, enabling him to freely exchange it for industrial goods at state exchange points. 

The exchange of commodities was to be conducted individually with every peasant. Thus, a partial liberalization of commodities exchange was introduced – something that signified a resurrection of bourgeois relations in the village.

Lenin’s idea was put into practice. Speaking about the results of the new economic policy of the Bolsheviks, historian Leonid Katzva noted: 

“The abolition of prodpazviorstka first and foremost had a political effect. In the course of several months all peasants’ revolts ceased…

In 1922 Soviet power made more concessions to the peasants, allowing (though, with a few limitations) hired labor and leasing of land.”

The policy of transition to trade-monetary relations with the use of all forms of property for rejuvenating the national economy received the name of New Economic Policy – “NEP” for short. 

Professor of History Olshtynsky stresses: 

“In actual fact this was not a new policy, but a return to the policy that was conducted from the spring of 1918, but cut short by the events of the Civil war. The basic courses of this policy were outlined in Lenin’s article “Immediate Tasks of Soviet Power.”

The victory of the Bolsheviks in the Civil war and the relative balance of forces on the world arena enabled the Soviet leaders to return to the methods of a successive peaceful transition to socialist relations in society.

The essence of NEP lies in transition from ‘civil war to civil peace’, from revolutionary methods of transforming society to evolutionary.”

The immediate tasks of NEP lay in resurrecting the trade ties between town and village, strengthening the union of workers and peasants on the basis of developing trade-monetary, market relations. Private initiative was given broader scope. Conditions were forged for tuning up economic ties with developed capitalist countries.”

In May 1921 there began the process of denationalization of part of the industry; the green light was given to private trade and entrepreneurship, as well as hired labor in agriculture. State enterprises were transferred to self-financing. The economy began to revive, while the population’s living standards – to grow. The renovation of the transport system likewise facilitated the growth of industry.

However, the drought of 1921, particularly in the Volga region, brought on a famine in a number of areas, since there were no reserves of food in the country. The famine claimed 5 million lives…”

“The new economic policy quite imperceptibly shifted to the background the Marxist postulate regarding the world revolution of the proletariat as an imperative condition of socialism,” wrote the well-known Russian politologist and philosopher Sergei Kara-Murza. “All attention was now drawn to Russia’s internal affairs – something that later spawned the concept of ‘building socialism in one individual country’. The principal issue of NEP was the issue concerning the relationship between the state and the peasants, with the latter making up an overwhelming majority of the population of the country.

In this connection, an authoritative member of the Central Committee of the Russian Communist Party of Bolsheviks of the 1920-ies Balashov recalls:

“I was greatly affronted by the fact that I, a party member, could not be an elected candidate for the sole reason that I was by origin a middle-peasant. When I asked an influential Party Central Committee member Lazar Kaganovich why only workers were would-be candidates for elective posts, he replied: “Such is our party line, our directive.” This was when Lenin was still alive. 

It was only later, under Stalin that they began to nominate peasants to elective posts of authority. I recall how one peasants’ leader, who formerly headed one of the partisan detachments in Siberia, was nominated for the post of People’s Commissar for Agriculture.”

It should be noted that the distaste (if not aversion) of a major part of the educated Bolsheviks towards the peasants was quite enduring. It manifested itself most visually even in our day, during the so-called ‘perestroika’. Thus, contemporary Russian philosopher, Professor Furman in his book “It Cannot Be Otherwise” released in 1988, wrote about soviet conservatism:

“The basic proponents of these tendencies, quite obviously, are a part of the newly-emerging from among the lower classes bureaucracy which, firstly, has inherited many elements of traditional peasants’ outlook, and, secondly, seeks not so much revolutionary tempests, but rather their own stable well-being.”

Incidentally, the issue regarding the attitude towards the peasants cropped up in the NEP years in the sphere of culture, too. Thus, the founder of soviet literature Maxim Gorky in his letter to statesman Nikolai Buharin dated July 13th 1925 wrote this, in part:

“It is really imperative, dear comrade, that either you or Trotsky draw the attention of working-class writers to the fact that looming close to their work is that of the peasants-writers, and this augurs a possible conflict of two ‘trends’. Any manifestation of ‘censure’ at this point could only exacerbate the situation, serving to whet the ideology of the peasant-lovers and advocates of the village. However, a criticism of that ideology – and quite merciless at that – should be launched here and now. The talented, touching lamentations of Sergei Yesenin about the ‘village paradise’ are certainly not the kind of lyrics that the present time and its outstanding issues call for… The town and the village must clash head-on, and the workers’ writer needs to perceive this clearly.”

The hatred shown towards the peasants – comprising an overwhelming majority of the population of Russia at that time – is quite astonishing! The revolutionaries were disgusted by the peasants’ in-born conservatism, their distaste for any revolutions, and a striving to achieve stability. Still, they were forced to somehow patch up their differences with the peasants and work together, otherwise the country could not have survived.

As we have already mentioned, the first year of the New Economic Policy was accompanied by a disastrous drought. Sergei Kara-Murza writes: “Part of the residents of areas affected by the drought were evacuated to Siberia. Over a million moved to Ukraine and Siberia on their own. The official number of those who suffered in the famine was 22 million people. Food aid came in from abroad, chiefly from the USA. The shock from the crop failure resulted in that all agricultural affairs of 1922 were pronounced a matter of state urgency and a party issue. By 1925 the situation in agriculture – the principal branch of the economy of the time – more or less stabilized…

However, while the amount of those involved in agriculture grew, the employment levels in industry and trade were dropping. What was taking place was a return to subsistence farming and general agrarianization of the economy’. In other words, there was a process that ran counter to the originally proclaimed by the soviet leadership industrialization plans.”

Industrialization presupposed the setting up and development of large-scale industry, first of all heavy industry, and a transformation of the entire economy on its basis.

Back on December 22nd 1920 when Russia was still in a profound political and economic crisis, the 8th Congress of Soviets adopted the historic decision on implementing the state plan for electrification of Russia (GOELRO, as it was referred to). This plan was given 10 to 15 years for implementation. However, running ahead, let us just say it was put into action long ahead of time. You have to hand it to them: the workers of the energy industry displayed true talent and top-notch organizational skills. They were more than able to cope with the tasks facing them, putting into effect the plan that laid the cornerstone of the country’s industrialization.

The decision regarding the beginning of the country’s industrialization was adopted at the 14th Congress of the party of Bolsheviks in December 1925. Actually, industrialization was spoken of in general terms only. It was the principal task of the industrialization that was formulated here: to ensure the economic independence of the USSR, turning it from a country importing machinery and industrial goods into one producing them. Such issues as the pace of the process, the sources and methods of industrialization were not taken up at the Congress. 

Already after the Congress, though, heated debates sparked regarding these particular issues. Two points of view were outlined: the leftists headed by Trotsky demanded that a ‘superindustrialization’ be launched at the expense of the peasants. While the rightists, led by Nikolai Buharin, spoke out for more moderate methods of transformation and a development of a market economy. The rightists triumphed. Trotsky and his supporters were subjected to sharp party criticism. 

At the 1926 April Plenary Session of the Bolsheviks the main sources of industrialization were summed up as the following: revenue from state enterprises, a domestic loan policy, strict economy measures in industry and a socialist competition.

A solution of such outstanding tasks was impossible without a transition to long-term planning. So in December 1927 the 15th Bolshevik Party Congress adopted directives pertaining to the elaboration of the first 5-year plan for the development of the national economy. The Congress decisions stressed the need for a balanced development of all branches of the national economy, with a strict proportionality between accumulation and consumption. Evaluating the first 5-year plan historians unanimously note the scrupulously deliberated tasks, which, despite their grand-scale were nonetheless quite realistic. In the span of those five years they succeeded in building 1500 industrial enterprises, chiefly in the heavy industry sphere. Among these were such giants as Dneproges - the hydroelectric power station on the Dniepr river in the Ukraine; Magnitogorsk and Kuznetsk metallurgical plants in the Urals; Stalingrad and Chelyabinsk tractor plants; the Turkistan-Siberian railway, and others... 

In this situation the party leaders made ample use of the ideas mapped out by talented engineers and economists, who were coming out with their own concepts of the country's future. All this priceless information was generalized by the GOSPLAN staff. (GOSPLAN was an abbreviation for 'state plan'). This department was established back in 1921 for the purpose of resurrecting the economy, devastated by Civil war. Sergey Kara-Murza writes about it: 

"The GOSPLAN deserves special mention. A majority of Soviet people had a very simplified notion of what the main functions of GOSPLAN were. They believed it boiled down to an elaboration of state plans of developing the national economy. But these blueprints were just a tool. The problem is that the economy is an arena witnessing the conflict of interests of diverse social groups, different branches of the economy and of various regions. These interests impact corresponding state bodies of power, giving rise to contradictions and even conflicts. This occurs in any economic system. The difference is that in the conditions of a minor percentage of state control in the national economy, a major pat of the conflicts and contradictions are solved by the spontaneous market mechanisms. In the soviet state, with its increased degree of control over the economy, the need arose for a authoritative department, the main function of which would be a study and coordination of economic interests. GOSPLAN became jus? such a department.” 

The first Chairman of GOSPLAN was a seasoned Bolshevik, energy expert and brilliant scientist 49-year-old Gleb Krzhizhanovsky. He laid down the guidelines for setting up energy-industrial complexes, methods of combined use of fuel, the introduction of secondary energy resources into the fuel balance. He laid particular emphasis on the construction of electric-heating plants, as a foundation for providing centralized energy to large towns and industrial units. 

There is yet another important aspect we would like to single out: the abolition of the corvee (labor duty). The authorities adopted the course of attracting a voluntary work force into the economy. Thus, there emerged an excess work force and a labor market. A Labor Exchange took upon itself the duty of finding work for the unemployed. 

At state-run enterprises they cast off the old leveling system, and introduced a differentiation of pay. The new tariff policy was based on a consideration for qualification of workers and employees, the quality and quantity of their output. The 'tommy system' of paying wages in ration cards was substituted by a monetary form of compensation. By the end of 1921 the entire ration card system, in force since the time of military communism, was done away with. 

Politologist and philosopher Sergei Kara-Murza singled out the following imperceptible, yet in his opinion very important feature of the new economic policy: a liberalization of production of alcoholic beverages. 

“By 1923 the state production of spirits had dropped to almost nil. It was permitted to privately produce and sell ratafia and nalivka and nastoyka brandies of up to 30 percent alcohol. All fight against moonshine production in the villages had been curtailed. 

According to polls dated 1923, 10 percent of the peasants' households made their own moonshine. The latter became the surrogate of money in the rural areas: it was used as pay for labor, for transport... And there was a marked increase in 'ritual drinking': that's at weddings, funerals, holidays. 

After the introduction of a state monopoly on vodka production in the country in 1925 there began a slow ousting of moonshine and other home-made spirits. The state monopoly on vodka brought in weighty economic benefits - channeling a steady inflow to the budget. In 1928-1929 the latter comprised 12 percent of the overall state budget revenue. 

But most importantly, a control over the turnover of alcohol produce laid the ground for the beginning of a planned anti-alcohol campaign, which was launched in the mid-1920-ies. From autumn of 1926 obligatory anti-alcohol studies were introduced at schools. In March 1927 restrictions were introduced on the sale of spirits to the underage, as well as people in a state of intoxication. There were limitations on the sale of alcoholic beverages on holidays and weekends, including cafeterias of cultural establishments.” 

Taking a very eager and active part in this campaign were prominent scientists, such as famous Russian neuropathologist, psychiatrist and psychologist Vladimir Bekhterev. In 1927 he published a book entitled “Alcoholism and the Fight Against It”. In it he wrote, in part: 

“A sobering of the workers is the business of the workers themselves... It is possible only in conditions of a sufficiently high cultural level of the broad masses of the population.”

It was this raising of the overall cultural level that resulted in a dramatic drop in insobriety in the USSR already by the end of the 1920-ies.