New Economic Policy, 1921-1928

What was the NEP?

The New Economic Policy (NEP) was the Soviet government's economic policy. It represented a temporary retreat from its previous policy of War Communism.

When was the NEP introduced?

The New Economic Policy was introduced in 1921 and lasted until 1928.

Why was the NEP introduced?

There were 4 key reasons why the NEP was introduced:

• ❖ The previous economic policy of War Communism had resulted in economic collapse and famine in some areas of the USSR.
• ❖ War Communism had also resulted in massive unrest among the workers and the number of strikes increased.
• ❖ The peasants had risen up in protest against War Communism with one of the most serious revolts in Tambov, requiring 50,000 Red Army soldiers to crush it.
• ❖ The Kronstadt Mutiny in March 1921, by the sailors in the Kronstadt Naval base made the Bolsheviks realise the dangers of continuing with the policy of War Communism.

How did the NEP work?

The NEP worked with 5 key features:

• ❖ Private ownership of businesses or banks that employed less than 20 people was allowed.
• ❖ Grain requisitioning from the peasants was stopped. Instead, they could sell it, keep the money and pay tax on anything they sold at a rate of 10%.
• ❖ The government kept control of heavy industry (coal, electricity, metal etc) and any large businesses.
• ❖ Money was reintroduced and so were some other aspects of the free market.
• ❖ People now had to pay taxes, first in goods and later in cash.

Who were the opponents of the NEP?

Some communists were disappointed with the NEP. They opposed it because they felt it betrayed their communist principles. Trotsky was one of those who opposed the NEP.

What were the positive effects of the NEP?

There were 5 key positive effects of the NEP:

• ❖ Grain production had increased by 50% by 1923.
• ❖ In 1922 the government introduced a new currency, called chervonets, which helped to stabilise the value of money.
• ❖ The prices of factory-made goods increased and there was greater demand for manufactured goods, especially from the countryside.
• ❖ There were fewer strikes and less discontent in the countryside.
• ❖ Trade with foreign countries increased, which helped the USSR financially.

What were the negative effects of the NEP?

There were 7 main negative effects of the NEP:

• ❖ Trade with other countries remained lower than that of 1913.
• ❖ Inequality also increased as some private business owners became richer. These were called NEPmen.
• ❖ Grain production increased, but it still wasn't enough to export large enough quantities abroad to get enough hard currency to fund industrialisation.
• ❖ Agriculture was still incredibly backwards.
• ❖ In 1923, there was the 'Scissors Crisis'. This was when food prices fell due to the supply of food increasing. However, the price of manufactured goods increased due to a shortage of manufactured goods. This made it difficult for peasants, who were earning less, and struggling to buy manufactured goods.
• ❖ Due to the Scissors Crisis the government forced the peasants to cut food prices. The peasants responded by feeding grain to their animals as meat was more expensive, meaning they made more money. By 1927, the amount of grain the government received decreased.
• ❖ Politically, Lenin came up against a lot of criticism as he was seen to have moved away from communist principles.

How did the NEP affect women?

In general, women's economic position worsened in 3 key ways as a result of the NEP.

• ❖ They were forced to give up their jobs for demobilised soldiers.
• ❖ The government did not see women's rights as a priority, and investment in the service industries was reduced.
• ❖ Following the revolution, gender equality only improved slightly.

Why was there opposition to the NEP?

There were 4 main reasons why different groups opposed the NEP:

• ❖ Some Bolsheviks saw the NEP as a return to capitalism because it allowed people and small, privately owned businesses to make a profit. This was not acceptable to them and they believed the policy of War Communism was more aligned to their beliefs.
• ❖ The workers still suffered because of the increase in food prices, while unemployment increased and real wages only passed the 1914 level by 1928. In reality, workers were struggling to afford basic necessities.
• ❖ Some peasants were getting richer and there was growing inequality between the richer peasants called 'Kulaks' and ordinary peasants.
• ❖ Women were hit particularly hard as many were forced out of their jobs when the Red Army demobilised after the civil war and they ended up on the streets.