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Vulnerability of the NEP


The NEP had many achievements to its credit. To begin with, it was successful in bringing the economy back to its prewar condition. By 1923Ė24 the hyperinflation of the civil war had been reigned in and financial stability restored. By 1926Ė27 the prewar levels of agricultural and industrial production had been achieved. The revival of market relations in the countryside allowed the peasant economy to grow, making the twenty-four million peasant households the main beneficiaries of the NEP. The peasantry gained three things: security of land tenure, freedom from requisitioning, and a free hand in selling agricultural surpluses. By making these concessions, Lenin admitted that the Soviet regime could ill afford to disregard the interests of some 80 percent of the population. But the Communistsí retreat also gave them a much-needed six-year breathing spell after which they would resume their onslaught on the countryside.


The truth is that the NEPís reliance on market and money-commodity relations was alien to the interests of the new bureaucratic Communist hierarchy. The NEP system encouraged the growth of the class of small and medium-size entrepreneurs, including shopkeepers, owners of service shops, cafes, and restaurants. Communists were to coexist competitively with these small capitalist Nepmen, learn from them how to be efficient and productive, and eventually demonstrate the superiority of the socialist system. In everyday practice, however, the capitalists proved their superior efficiency and flexibility. 

The state-controlled industries, by contrast, were lagging behind both in volume of production and in quality. The fact that the private initiative represented by the Nepmen was doing better than the nationalized sector was unendurable in the long run, because it disproved the doctrines on which the Bolsheviks based their claim to power. It was obvious that either the market-based forces of the NEP would corrode the Soviet system or the system would have to destroy them in order to survive.

The Communist administratorsí disapproval of the NEP was shared by broad sections of the impoverished urban and rural masses. As a result of hardships and privation imposed by war, famine, and economic adversity, their numbers had swelled considerably. The idea of a centrally administered economy that envisaged a primitive egalitarian distribution of wealth appealed to these population groups. Socialism to them meant nothing more than total equality at a subsistence level, whereas economic relations that promoted talented and enterprising people were frowned upon. These population groups eagerly supported the negative view of the NEP, articulated by some of the Communist leaders. They saw the return to capitalist patterns as a retreat from their vision of socialism.

The main reason for the vulnerability of the NEP was that it was based on an unstable balance of two sectors, private and public. It represented a shaky compromise between communism and capitalism, between collectivism and individualism. The expansion of private initiative and market relations was unacceptable to the Communist authorities as it meant the curtailment of state control over the economy. By the late 1920s the NEP supporters within the Soviet leadership were politically isolated and the NEP itself curtailed. The economic methods of running the economy were supplanted by the total domination of administrative, coercive, and extraordinary measures. The vestiges of the NEP were completely eradicated by the early 1930s, and by the mid-1930s it was completely displaced by a strictly hierarchical command-bureaucratic system.

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The Socialist Experiment


Soviet Russia

Understanding the Soviet Period
Russian Political Culture
Soviet Ideology
The Soviet System
Soviet Nationalities
The Economic Structure
The Socialist Experiment
"Great Leap" to Socialism
The USSR in World War II
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