The period from 1917 to 1921 is a really difficult time for Russia. The revolution and civil war hit economic well-being. After the end of the disturbing events, the country needed to be reformed, as military innovations were helpless in peacetime.
Historical background of the proclamation
NEP, or the new economic policy, was a necessity of the time. The crisis "war communism" adopted during the civil war was unacceptable for the development of the country in a peaceful period. The surplus appraisal was an unbearable burden for ordinary people, and the nationalization of enterprises and the complete centralization of management did not allow development. The introduction of the NEP is a response to general dissatisfaction with "war communism."
The situation in the country before the introduction of the NEP
By the end of the civil war, the country was destroyed in every way. The former Russian Empire lost Poland, Latvia, Estonia, part of Ukraine and Belarus, Finland. Mineral development territories - Donbass, oil districts, Siberia were affected. Industrial production declined, and in agriculture there were signs of a serious crisis. In addition, the peasants, indignant at the surplus-intelligence service, refused to hand over bread, the situation was heating up. Uprising swept Donshchina, Ukraine, Kuban, Siberia. A wave of discontent passed to the army. In 1920, the question was raised of the abolition of the food surplus. These were the first attempts to introduce the NEP. Reasons: the crisis state of the economy, the destroyed industrial and agricultural sectors, the hardships of the surplus appraisal that fell on the shoulders of ordinary people, foreign policy failures, and the instability of the currency.
Proclamation of a new path in the economy
Transformations were begun in 1921, when the Tenth Congress of the RCP (B.) Adopted a resolution on the transition to a tax in kind. Initially, the NEP was planned as a temporary event. Reforms dragged on for several years. The essence of the NEP is the implementation of changes in industry, agriculture, and the financial sector, which will remove social tensions. The tasks set by the authors of the project of economic transformations concerned political, economic, social, and foreign policy spheres.
Freedom of trade is believed to have been the first innovation, but it is not. Initially, it was considered dangerous to the authorities. The Bolsheviks did not immediately come to the idea of entrepreneurship. The NEP period is a time of innovations that were an attempt to combine socialist power with elements of a market economy.
Industry reforms
The first innovation was the creation of trusts. They were associations of homogeneous enterprises that had a certain freedom of activity, financial independence. The introduction of the NEP is the beginning of a complete reform of the industry. New associations - trusts - could decide for themselves what to produce, from which and to whom it was sold. The scope of activity was wide: both the purchase of resources and production by state order. The trusts created reserve capital, which was supposed to cover losses.
NEP is a policy that called for the formation of syndicates. These associations consisted of several trusts. Syndicates were engaged in foreign trade, the provision of loans, the sale of finished products, and the supply of raw materials. Until the end of the NEP period, most trusts were in such associations.
For the organization of wholesale trade there were fairs, commodity exchanges. A full-fledged market began to function, where they purchased raw materials and finished products. A kind of ancestor of market relations in the USSR was the NEP, the reasons for which lay in the disorganization of the economy.
One of the main achievements of the period was the return of wages. NEP is the time of abolition of labor service, the unemployment rate has decreased. In the period of the new economic policy, the private sector in industry was actively developing. The process of denationalization of some enterprises is characteristic. Private individuals have the right to open industrial factories.
Concession has become popular - a form of lease when tenants are foreign individuals or legal entities. Part of foreign investment was especially high in metallurgy and textile industry.
Agricultural Innovations
NEP is a policy that has affected all sectors of the economy, including the agricultural sector. The overall impact assessment is positive. In 1922, the Land Code was approved. The new law prohibited private ownership of land; only use on a rental basis was allowed.
The NEP policy in agriculture has affected the social and property structure of rural residents. It was unprofitable for prosperous peasants to develop their economy, and besides, they paid a higher tax. The poor have the opportunity to improve their financial situation. Thus, the poor and the rich became fewer - "middle peasants" appeared.
Many peasants have increased land allotments, increased motivation to work. Moreover, it was precisely on the inhabitants of the village that tax burdens lay. And the state’s spending was huge - on the army, on industry, on the restoration of the economy after the civil war. Taxes from wealthy peasants did not help raise the level of development, so we had to use new ways to fill the treasury. So, there was a practice of buying grain from peasants at low prices - this led to the crisis and the emergence of the concept of “price scissors”. The culmination of economic depression - 1923. In 1924-25, the crisis repeated again - its essence was a significant drop in the indicators of the amount of harvested grain.
NEP is a time of change in agriculture. Not all of them led to positive results, but features of a market economy appeared. By the end of the NEP period, crisis phenomena were only growing.
Financial sphere
To carry out reforms, changes in the sphere of money circulation were necessary. The main objective of the NEP is to stabilize the financial sector and normalize foreign exchange relations with other countries.
The first step of the reformers was the denomination of the monetary unit. The currency was backed up by a gold reserve. The emerging issue was used to cover the budget deficit. The peasants and the proletariat suffered mainly from financial changes in the state. Widespread was the practice of government loans, raising the luxury tax and lowering the basic necessities.
At the beginning of the NEP, financial reforms were successful. This allowed the second stage of transformation in 1924. It was decided to introduce hard currency. Treasury bills were in circulation, and for international payments, chervonets were used. A loan became popular due to which the majority of sales transactions took place. On the territory of the USSR, several large banking structures were opened that worked with industrial enterprises. At the local level, utility banks provided financial support. Gradually, the financial system expanded. There were banks that worked with agricultural institutions, foreign economic structures.
Political development of the country since the New Economic Policy
Economic reforms were accompanied by political struggle within the state. Authoritarian tendencies were growing in the country. The reign of Vladimir Lenin can be called a "collective dictatorship." Power was concentrated in the hands of Lenin and Trotsky, but since the end of 1922 the situation has changed. Opponents of Trotsky created the cult of the personality of Lenin, and Leninism became the direction of philosophical thought.
The struggle in the Communist Party intensified. There was no uniformity within the organization. An opposition has emerged that advocated giving the trade unions full power. Associated with this is the appearance of a resolution that proclaimed the unity of the party and the mandatory implementation of decisions by the majority of all its members. Almost everywhere, party positions were held by the same persons as government officials. Belonging to the ruling circles became a prestigious goal. The party was constantly expanding, so over time they began to carry out "purges" aimed at the "lying" communists.
The crisis was after the death of Lenin. The conflict between old and young party members intensified. The organization gradually stratified - more and more privileges were received by the top, which received the name "nomenclature".
So, in the last years of Lenin’s life, his “heirs” began to share power. They tried to push back the leaders of the old model from management. First of all, Trotsky. They fought with him in different ways, but most often they simply accused him of various “sins”. Among them are deviation, Menshevism.
Completion of reforms
The positive features of the NEP, which appeared at the initial stage of the reforms, were gradually erased due to unsuccessful and inconsistent actions of the party leadership. The main problem is the conflict between the authoritarian communist system and attempts to introduce a market model of the economy. These were two poles that did not feed, but destroyed each other.
The new economic policy - the NEP - has gradually faded since 1924-1925. Market traits were supplanted by a centralized management system. In the end, planning and state leadership prevailed.
In fact, the NEP ended in 1928, when the first five-year plan and course for collectivization was proclaimed. Since then, the new economic policy has ceased to exist. Officially, the NEP was curtailed only after 3 years - in 1931. Then there was a ban on trade in private.
Summary
NEP is a policy that has helped rebuild a shattered economy. The problem was the lack of qualified specialists - this lack prevented the building of effective governance of the country.
In industry, it was possible to achieve high rates, but at the same time, problems remained in the agricultural sector. She was not given enough attention and finance. The system was ill-conceived, so a strong imbalance in the economy arose. A positive feature is the stabilization of the currency.