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The Command Economy

"Gorbachev Factor"

The Bolsheviks uncompromising and ruthless treatment of all opposition to their policies, such as the drive to expropriate the expropriators, had made a civil war in Russia almost inevitable. In the civil war of 191820 the regime routed the remaining merchants and capitalists. Only during the New Economic Policy (NEP) retreat (192128) was some capitalism allowed, with private retail trade and a land-owning peasantry selling grain on an open market. But the NEP was a brief interlude, during which the state still regulated the economy and ran large-scale industry.  

In the early 1930s the Soviet authorities liquidated the capitalists as a class, drove peasants forcibly onto large state and collective farms, eliminated rural kulaks (well-to-do peasants), and nationalized over 97 percent of all the means of production. By the late 1930s, in its essentials, the Soviet economy already operated on the same principles on which it would function until the collapse of the USSR in 1991. These included

  • virtually complete state ownership of the means of production

  • severe curtailment of money-commodity relations (but not their total eradication envisaged in the Communist doctrine: money retained its use as a measure of exchange, financial accounting, and remuneration of labor)

  • distortion of the law of value (prices were determined not on the basis of the market supply and demand but by bureaucrats at their office desks)

  • extremely rigid centralization of economic planning and management with minimal economic decision-making powers left for republics and regions

  • administrative distribution of resources and commodities

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The Economic Structure


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
Stalin's Legacy
Brezhnev's Stagnation
The Economy in Crisis
Political Reform
The USSR's Collapse

Models of Soviet Power

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