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LENIN'S ECONOMY - Coggle Diagram
LENIN'S ECONOMY
State Capitalism
- based on nationalisation of industry. Nationalisation ended capitalism by taking industry away from middle-class owners
- all nationalised industries run by Supreme Soviet of National Economy [Vesenkha] designed to:
-> ensure factories were properly managed by placing them under the control of well-paid specialists
-> co-ordinate economic production to meet the needs of new society
- only large industries nationalised. Small factories & workshops either controlled by workers/handed back to capitalists
- State capitalism was extremely unpopular. Little difference between state capitalism and life before the revolution so many workers and radicals like Bukharin rejected state capittalism in favour of workers' control
- official policy of new gov March-June 1918
War Communism
Abolition of the market
- abolition of money: gov printed more money, led to hyperinflation. Money became worthless, workers paid through rations & public serves like tram services, provided freely
- abolition of trade: private trage illegal
- complete nationalisation: all businesses taken over by state
- conscription: workers assigned to work in factories/fight in army
created as a series of emergency economic measures to ensure communist victory in Civil War
- high levels of industrial production of war goods
- efficient allocation of workers
- food production to feed soldiers, workers, and civilian population
Food dictatorship
- GRAIN REQUISITIONING: Cheka authorised to seize grain and other food from peasants without payment
- RATIONING: The Supply Commissariat rationed the seized foods. The largest rations went to workers and soldiers. Smallest rations given to members of the bourgeoisie
Labour discipline
- 1918 working day extended to 11 hours
- In 1919 work made compulsory for all able-bodied people between 16 and 50 years of age
- Harsh punishments given to workers who were late/caught slacking
Consequences of WC
economic collapse
- grain requisitioning -> decreased rates of agricultural production, no incentive to work
- industrial production decreased, few incentives to work hard. Hungry workers left cities to seek work on farms. Industrial workforce decreased from 3 million workers in 1917 to 1.2 mill in 1922
increase black market, 60% food from
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mass poverty
1921 Russian economy near collapse. 1920 workshops in major cities closing due to lack of fuel. 1921 harvest only 46% of 1913 harvest, famine in rural areas -> 6 million died
political crisis
- Aug 1920 and June 1921 peasants in Tambov region rebelled against gov
- 1917 Kronstadt; mutiny 1921
NEP
Reasons
- to retain political power, stop political defeat
- revive economy, Lenin needed a policy that would stimulate grain production & end famine
- build socialism: 1921 clear that a European revolution would not happen so Lenin needed a policy that would allow Russia to build socialism without foreign aid
Measures
- agricultural production was left to the free market. Peasants could buy/sell/produce freely. Grain requisitioning ended and was replaced by a tax in kind
- small factories and workshops employing less than 20 people were denationalised. Small factories allowed to trade freely, many returned to former capitalist owners
- large factories & major industries remained nationalised
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NEP was major economic compromise. Lenin emphasised need for stable currency and for all factories and workshops to make a profit. Gov-run industries expected to pay for services, like transport, which had been available free of charge during civil war
Consequences of NEP
NEP stabilised economy, replaced unpopular policy so ended widespread rebellion. BUT -> slow industrial growth, unbalanced economy, inequality, growth in crime. NEP unpopular with party
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INDUSTRIAL GROWTH
- market stimulated production, and gov invested the money gained from taxing the peasants in reopening factories that had been closed during Civil War.
- by 1926 industrial production, with exception of pig iron and steal had recovered to 1913 levels
- while taxing peasants provided sufficient funds to reopen funds and modernise existing factories, it failed to provide the money necessary to build new large-scale factories. 1926-1928 industrial economy plateaued
SCISSORS CRISIS
- NEP -> uneven economic growth. Industry recovered slowly, unlike agriculture, so industrial prices, which had been low during famine, grew steadily. Gap opened between farmers' income and industrial prices. Trotsky nicknamed crisis the 'scissors crisis' as the lines on the graph illustrating the problem looked like blades of scissors
- 1923 gap between farmers' income and industrial prices had reached crisis part. Farmers couldn't afford to buy industrial goods and so no incentive for farmers to keep producing large quantities of grain
- gov subsided prices of industrial products, making them affordable to the peasants. However, this meant there was less money available to improve the economy showed Trotsky NEP was not capable of industrialising the economy.
INEQUALITY & CORRUPTION
- NEP lead to re-emergence & inequality and widespread corruption
- Nepmen emerged, Communist Gov regarded as parasites, because they produced nothing. Nepmen became rich
- Corruption grew. Gambling, prostitution & drug dealing took place under NEP. Prostitution was result of wider social & economic problems -> poverty among women 1920s
overview
- when Bolsheviks took over Russia Oct 1917, economy in chaos. It had been severely damaged by WW1 and devastated by civil war that followed
- AIMS: restore economy, modernise outdated and inefficient industrial and agricultural system
Land Reform
following Lenin's 1917 Decree on Land, large estates belonging to the Church or to aristocratic landowners were broken up and peasants were allowed to own the land they worked. Land reform was extremely popular with the peasants