New Economic Policy: 1921-28
NEP brought with it a major reversal of the original tenets of
Bolshevism, including the utopian idea of doing away with money. The
government was compelled to reverse to a market economy, or money
economy, and to the economic patterns that were acceptable and
familiar to the masses. In 1925 the old, worthless rouble was
withdrawn and exchanged for a new rouble, based partially on gold.
The growth of a money economy increased the demand for credit. From
1922 on, a network of state banks for financing commercial and
industrial enterprises was set up.
the countryside, the food appropriation detachments were disbanded,
and the surplus-appropriation system was replaced by a tax in kind.
The introduction of a tax in kind meant that the peasants were now
free to sell surplus produce on the market. The reestablishment of
freedom of trade resulted in a rapid revival of small traders and of
thousands of marketplaces and traditional fairs. The middlemen, who
under war communism had a precarious existence as “speculators” and
“profiteers” or “enemies of the people,” could now openly apply
their entrepreneurial skills.
new economic system affected property relations both in agriculture
and in industry. If the peasants were to produce more food, they had
to be granted a measure of security in the form of reasonably long
land tenure. This was done by a series of concessions to the
peasants embodied in the Land Code of 1922. Although the principle
of land nationalization was reaffirmed, peasants were declared
long-term tenants. Leasing of the land was allowed; later, even the
hiring of additional labor (previously condemned as an evil
capitalistic practice) was permitted under certain conditions. These
measures led to the rapid increase in the food supply that permitted
the abolition of food rationing.
the liberalization of agriculture began to have beneficial effects
on industry. To induce peasants to sell their surpluses to the
cities, industries had to have something to offer in return.
Development of consumer industry, commercial enterprises, and
service shops was soon tolerated and even encouraged. Licenses were
granted for private enterprise; many small industrial enterprises,
previously nationalized, were now returned to their previous owners
or leased on certain strictly defined conditions to private
entrepreneurs, who became known as Nepmen. As a result, the
industries rapidly revived.
the whole, the NEP remained a mixed economy of a dual
market-administrative character. Although the money-commodity
relations were allowed to revive, the so-called commanding
heights—political power, the financial system, large-scale industry,
transport, and foreign trade—remained in the hands of the Soviet
state. The ultimate goal of creating a nonmarket socialist economy
was not abandoned. The NEP envisaged a relatively long-term
coexistence of socialist patterns alongside nonsocialist ones (i.e.,
capitalist and peasant economies), with the gradual displacement of
nonsocialist structures from the national economy.