New Economic Policy

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New Economic Policy

The New Economic Policy (NEP) was an economic policy of the Soviet Union proposed by Vladimir Lenin in 1921 as a temporary measure to revive the economy after the devastation of the Russian Civil War. The NEP represented a strategic retreat from the previous policy of War Communism and allowed for a limited reintroduction of private ownership and market mechanisms.

Background

The NEP was introduced at the 10th Congress of the Russian Communist Party (Bolsheviks) in March 1921. The policy was a response to the economic collapse and widespread famine that had resulted from the Russian Civil War and the harsh requisitioning policies of War Communism. The NEP aimed to stabilize the economy and provide a breathing space for the Soviet state to consolidate its power.

Key Features

The New Economic Policy included several key features:

• **Agriculture**: Peasants were allowed to sell their surplus produce on the open market after paying a tax in kind to the state. This replaced the previous system of grain requisitioning.
• **Industry**: Small and medium-sized enterprises were permitted to operate under private ownership, while the state retained control of large industries, banks, and foreign trade.
• **Trade**: Private trade was legalized, and a new currency, the Soviet ruble, was introduced to stabilize the economy.
• **Labor**: The NEP allowed for the reintroduction of wage labor and the hiring of workers by private businesses.

Impact

The NEP led to a significant recovery in the Soviet economy. Agricultural production increased, and the availability of consumer goods improved. However, the policy also led to the emergence of a new class of wealthy peasants known as kulaks and private traders called Nepmen, which created social tensions.

End of the NEP

The New Economic Policy was eventually phased out by Joseph Stalin in the late 1920s. Stalin's First Five-Year Plan, introduced in 1928, marked a return to centralized planning and the collectivization of agriculture, effectively ending the NEP.

Legacy

The NEP remains a controversial period in Soviet history. Some historians view it as a pragmatic response to a dire economic situation, while others criticize it for deviating from socialist principles. The policy's mixed results continue to be a subject of debate among scholars.

Related Pages

• Vladimir Lenin
• Russian Civil War
• War Communism
• Joseph Stalin
• First Five-Year Plan
• Kulak
• Nepmen