War Communism and the New Economic Policy (NEP) ยป The New Economic Policy and Its Critics

What you'll learn this session

Study time: 30 minutes

Edexcel spec: Paper 2 Section A, Investigation A2, Key topic 5

  • Why Lenin changed course in 1921
  • What the New Economic Policy (NEP) was: the grain tax, private trade and NEPmen
  • How far Russia recovered under the NEP
  • Why many Communists opposed the NEP

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Why a new policy in 1921?

By early 1921 the Bolsheviks had won the Civil War, but their economic policy, War Communism, had left farming and industry in ruins. Peasants were hiding grain from the squads that seized it, workers were striking in Petrograd, and the sailors at Kronstadt had risen in revolt. The question was simple: what would Lenin do about the crisis?

At the Tenth Party Congress in March 1921 Lenin persuaded the Communist Party to drop grain requisitioning. His reasons were practical. The peasants made up most of the population, and without their food the towns, the army and the government could not survive. The Bolsheviks had to win back the peasants, so they had to give them a reason to grow more grain.

Key terms:

  • New Economic Policy (NEP): the economic policy begun in 1921 that allowed some private farming and trade while the state kept control of the biggest industries.
  • Tax in kind: a fixed share of a peasant's harvest, handed over to the state as a tax, instead of everything beyond the family's needs being seized.
  • NEPmen: private traders and small manufacturers who made money from the freedoms of the NEP.
  • Commanding heights: the biggest and most important parts of the economy, such as large industry, banks and foreign trade, which the state kept in its own hands.
  • Workers' Opposition: a group inside the Communist Party in 1920-21 that wanted workers and trade unions to have more say in running industry.

What was the NEP?

🌾 The grain tax

In 1921 requisitioning was replaced by a tax in kind. The tax was a fixed share of the harvest and it was lower than the amount that had been seized before. Once the tax was paid, the peasant could keep or sell what was left. This gave peasants a reason to sow more.

🏪 Private trade

Shops, markets and small businesses were allowed again, and many small workshops were returned to private owners. Money came back into use, and a new, steadier currency, the chervonets, was introduced from 1922. Workers' wages were paid in money once more.

The state did not give up control of everything. It kept the commanding heights: large factories, mines, railways, banks and foreign trade. Lenin described the NEP as a step back for a while, not the end of communism. Many Communists felt uneasy about it, because it brought back some capitalism after years of fighting against it.

The effects of the NEP

  • Recovery on the land. Peasants sowed more and sold more. After the terrible famine of 1921-22, harvests improved from 1922 and food became easier to find.
  • Recovery in the towns. Shops and markets reopened and small workshops started producing again. By about 1926-27 industry was back to roughly its 1913 level.
  • The rise of the NEPmen. Traders and small manufacturers made money and often lived well, while many workers were poor and unemployment was high in the towns.
  • Rich and poor peasants. Some peasants prospered by selling to the towns, while others stayed poor. This worried Communists who wanted a society of equals.
  • The 'Scissors Crisis', 1923. Factory goods were expensive while farm prices were low, so peasants could not afford to buy what the towns made. The government had to act to bring industrial prices down.

So the NEP worked well as a recovery plan. It fed the country and rebuilt the economy after years of war, revolution and famine. It also created new problems of inequality and doubt inside the party.

Opposition to the NEP

Opposition to the NEP came mostly from inside the Communist Party. Many members had risked their lives to destroy capitalism. They saw traders and rich peasants getting richer, and they asked what the revolution had been for. Some thought the NEP was a betrayal of communist ideas, and many were shocked that Lenin himself called it a 'retreat'.

📢 Why they objected

They believed that private trade and profit were the opposite of communism. They feared that NEPmen and richer peasants would grow powerful and that the revolution would be lost step by step.

🔒 How Lenin dealt with it

At the same Tenth Congress in 1921 the party banned factions, which stopped groups inside it from campaigning against the leadership. In 1922 Lenin told the party that the retreat must now stop, and he criticised members of the Workers' Opposition for their attacks.

The NEP did not end the argument. Later in the 1920s some leaders, such as Bukharin, defended the NEP and wanted it to continue, while others wanted a faster move to industry.

Common mistakes

  • Saying the NEP ended communism. The state kept the commanding heights and the Communist Party kept all political power.
  • Mixing up the NEP and War Communism. The NEP gave back private trade and replaced seizure with a tax.
  • Saying everyone supported the NEP because it worked. Many Communists disliked it, even though it brought recovery.
  • Writing 'it helped the economy' with no detail. Name the tax in kind, the NEPmen or the 1923 crisis.

Exam-style question

This is a Paper 2 Section A (b) question. Compare the two sources and explain how far they agree.

Source A

From a pamphlet by Lenin, The Tax in Kind, 21 April 1921 (translated).

'One such change was the replacement of the surplus appropriation system by the tax in kind, which implies a free market, at least in local economic exchange, after the tax has been paid. ... It is the revival of the petty bourgeoisie and of capitalism on the basis of some freedom of trade (if only local).'

Source B

From Lenin's political report to the Eleventh Party Congress, 27 March 1922 (translated).

'For a year we have been retreating. On behalf of the Party we must now call a halt. The purpose pursued by the retreat has been achieved. This period is drawing, or has drawn, to a close. We now have a different objective, that of regrouping our forces. ... Retreat is a difficult matter, especially for revolutionaries who are accustomed to advance; ...'

Study Sources A and B. How far does Source A support the evidence of Source B about the New Economic Policy? Explain your answer. [8 marks]

Model answer

Source A supports Source B because both treat the NEP as a step back from communism. Source A says the policy means 'the revival of the petty bourgeoisie and of capitalism' with 'some freedom of trade', and Source B calls it a 'retreat', one that is 'a difficult matter, especially for revolutionaries who are accustomed to advance'. Both also show that the leadership chose it with a purpose: A says the tax in kind 'implies a free market' once the tax is paid, so the change was deliberate, and B says the 'purpose pursued by the retreat has been achieved'.

However, the sources differ in what they say about the policy's direction. Source A explains the start of the NEP and what it allows, such as a 'free market' in 'local economic exchange'. Source B is about stopping it, saying 'we must now call a halt' and that the party has 'a different objective, that of regrouping our forces'. A looks at what is being allowed, while B says no more concessions will be made. Their tone also differs, as A is matter-of-fact and B admits the policy has been painful.

Overall, Source A supports Source B strongly on the nature of the NEP as a retreat towards limited capitalism, but only partly on its future, because B says the retreat is over while A describes the freedoms just beginning.

What lifts this to the top level: it quotes both sources in each paragraph, it gives both agreement and difference, and it ends with a judgement on how far A supports B.

Exam tip

Write about agreement and difference, and put a short quotation from each source in both. An answer with only agreement or only difference cannot reach the top marks, and a final line judging 'how far' is needed.

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