Economic contradictions of the NEP (briefly)

In the early 20's. last century, Russia was in ruins. As a result of wars, epidemics, emigration, numerous territories were lost, the population decreased by 25 million, factories stopped, the people became impoverished and degraded. Under these conditions, it was urgent to move from a policy of military communism to a new stage of management, the aim of which was the country's economic recovery and the revival of social spheres. The article presents the contradictions of the NEP and the results of economic reforms.

The essence of the NEP

A new economic policy was announced at the 10th Congress of the Communist Party on March 1, 1921. It became a positive period of the Bolshevik rule, which consisted in the growth of the economy, liberalization and democratization of socio-political life. After several years of stagnation, the transition to a new form of management made it possible to increase production and remove the state from stagnation. As a result, its Bolsheviks were able to gain a foothold in power and received the support of the population. The components of a market economy smoothly poured into the state, but could not gain a foothold, since such a policy was a temporary solution, it was not planned to retreat from the main direction to socialization. In such circumstances, the formation of the private sector was limited to small business and speculation, which did not help the development of the economy. Such a policy postponed the decline of all spheres of life, it seemed to revive and extend the country's life for a couple of years. At the very beginning, the main economic contradictions of the NEP were laid. Briefly about the main ones are described below.

Background of the NEP

Reasons for the transition to the NEP :

• Social, financial and political problems in the country.
• Resentment in the countryside and cities, troops and the navy.
• The concept of building socialism and communism through the elimination of market relations has not been realized.

The government pursued such goals: damping the threat of civil war, saving the regime of power, modernizing the economic situation in the country.

New policy instruments in the agricultural sector

The New Economic Policy (NEP) is a vector of the internal direction of the Soviet state in the period from 1921 to 1928. This was a temporary retreat of the Bolsheviks from the party’s general line. The essence of the NEP was to use elements of market relations and various forms of ownership. The main measure of the NEP was the replacement in the village of the surplus appraisal by a tax deductible. If in the first case 70% of the grain from the harvest was taken from the peasants, then in the NEP period the tax was supposed to seize only 30% of the grain. Subsequently, the tax was reduced to 10% of the net agricultural product. The in-kind form of tax was replaced with cash. This relief revived the country's agricultural sector. On the other hand, rich peasants were imposed additional taxes, which seriously hindered the development of agriculture in the USSR. Such NEP contradictions were the result of economic illiteracy of the authorities and the desire for total centralization.

NEP in industry

The chapters were abolished, instead of which trusts were created. They combined all enterprises that were homogeneous in production or interconnected financially. They were given great freedom - after paying the state tax in the amount of 20% of the profit, they could independently manage their funds. Also abandoned the planned production. From now on, trusts independently decided which products and in what volume to produce, where to buy raw materials, as well as sales issues. This is how cost accounting came into being.

In addition to trust management, private production was allowed with the number of wage workers not more than 20 people. Later this figure was increased.

Contradictions of the New Economic Policy

When teachers offer students: “Describe the contradictions of the NEP,” it is necessary to answer that the differences were laid at the very beginning, when the reasons were formed and the goals were built. On the one hand, market relations were used in the new policy, on the other, the goal of the state remained unchanged - this is socialism. In the Soviet state there was an urgent need for industrialization and the creation of a military-industrial complex, but the program did not provide for investment in these sectors.

Briefly describe the contradictions as a mismatch between the political and economic structure of the state. All the other problems and crises followed from this. State control made it impossible to implement all the planned economic reforms, which led to the relatively short existence of the NEP and its achievements.

Economic Thaw Results

NEP quickly bore fruit: agriculture resumed its work by 70% compared to 1913, and industry - by 39%. Differences between the pace of development of industries contributed to overpricing of industrial prices and underestimation of agricultural products. As a result, the peasants gave their product almost for free, and it was almost impossible to buy manufactured goods because of the high cost. Agrarian ceased to produce for sale. Why give away? This has led to food shortages. The Bolsheviks solved the problem simply and grossly: the forced seizure of grain and other agricultural products began.

Inflation

Difficulties in the sale of manufactured goods caused a shortage of money and provoked an increase in the release of impaired money, which only exacerbated the crisis. The inability to purchase industrial goods has led to a decrease in the flow of funds into the industry. The circle is closed.

State intervention eventually led to an aggravation of the situation, since, on the one hand, there was a cancellation of the nationalization of industry and small enterprises along with medium-sized enterprises were transferred to private individuals, and on the other hand, the bulk of industry and all foreign trade remained in the hands of the state.

Social problems

The contradictions of the NEP, of course, were reflected in the social sphere. The program envisaged a course towards the creation of an equal and fair society, but as a result, social differentiation occurred. The bureaucracy increased due to state intervention in the production sphere, as well as due to the low qualifications of personnel who made serious miscalculations. Moreover, the elite continued to live better than the working class — all privileges, rations and surcharges were concentrated in them.

The peasants were angry because of the new "wealth" tax, which made the increase in agricultural production pointless.

All this shook society, tension grew.

NEP problems

Negative economic problems and contradictions led to the crisis of 1925. NEP has caused problems with grain procurement, the export of bread decreased.

In terms of credit, mistakes were made that initially led to unreasonable expansion and increase in production. The increase in the number of workers in factories has led to an increase in wages, which has somewhat improved the solvency of the population. There was a demand for products. The flow of money to agriculture also increased, but the growth rate of production lagged significantly behind the rate of increase in household incomes. A new problem has appeared - commodity hunger.

As a result, raising living standards was hindered by high prices and a shortage of essential goods.

New government attempts to rectify the situation

The government has applied a policy of “freezing” unfinished facilities, reducing imports, and increasing indirect taxes. In general, we managed to rectify the situation, but the main problem remained - this is a shortage of money for the development of the economy.
The problem of the contradiction was that small industry, rural areas, and retail trade quickly adapted to new conditions, which cannot be said about heavy industry. She hardly adapted to the new conditions, although she was in the priority of the party. An unfair exchange of goods between the city and the village took place, this was the main economic contradiction of the NEP, threatening with an acute social crisis.

Another serious contradiction, which was a brake on the stabilization of the situation, was the discrepancy between the political system and the economic structure that they were trying to build. It was the political structure that impeded all progress by establishing a monopoly on power.

Result

What are the main contradictions of the NEP? The table clearly shows the differences in economic and political course:

Thus, the contradictions of the NEP reduced the effectiveness of new economic decisions, which negatively affected all areas - economic, political and social.