New Economic Policy

On November 7th, 1917, Vladimir Lenin led the Bolshevik party takeover in Russia, thus starting the creation of the socialist state. Vladimir Lenin aimed at creating a Marxist communist utopia. Lenin promised liberation of oppressed workers and peasants, equality, advancement, peace and social justice. Even though Lenin was trying to create a communist state, he implemented an economic policy that sought a return to capitalist ideals, which created a mixed economy, with some private individuals allowed to own small enterprise. His economic policy matched the New Economic Policy, created in 1921, which was a set of pragmatic policies designed to restore stability and growth. It only lasted a short period of time under Lenin. The move away from the New Economic policy and towards the nationalization of the economy begins with the nationalization of industries and foreign trade.

Lenin foresaw that destroying the large economy right away was not practical. He came up with the  transational stage where he “advocated features of a large-scale capitalist economy such as individual managerial control, wage and piecework incentives, even the employment of bourgeois technical experts and managers.” (Siegelbaum) that led to the creation of the New Economic Policy in 1921. The New Economic Policy was a “gradualist plan of socialist development” (Freeze, 301). The focus on market forces during this transitional period “led to the denationalization of small-scale industry and services; the establishment of trusts for supplying, financing, and marketing the products of large-scale industry; the stabilization of the currency; and other measures.” (Siegelbaum). The photo above shows a local market place where private trading took place, which represents the denationalization and brief privatization of the economy in Soviet Russia. The capitalist ideals helped strengthen the new Soviet states economy but led to economic uncertainity and anxiety among some citizens.

The transitional period of capitalism was short lived. In a draft of his economic policy written in December 1917, he decrees the nationalization of stock companies, he places restrictions on the wealthy class, he forces everyone to keep their money in the State Bank, and he focuses on the creation of trade unions to enforce his decrees. During the following year Lenin’s comrades pushed towards a nationalized state by taking private citizens capitalism by “nationalizing foreign trade and abolishing private inheritance” (Siegelbaum). The next steps in transitioning away from the market forces towards a socialist economy included abolishing private real estate and trade and nationalizing industry.The transitional period of capitalism sheds light on the pragmatic side of Lenin. Additionally, while the New Economic Policy only lasted a short period of time under Lenin, it created an ideological basis for reform that would resurface during the Gorbachev era and laid the foundations for the Soviet state.




Bunyan, Jame and H.H. Fisher, ed., Bolshevik Revolution, 1917-1918; Documents and Materials (Stanford: Stanford University Press; H. Milford, Oxford University Press, 1934), pp. 316-317.

Freeze, Gregory L. Russia: A History. 3rd ed. Oxford: Oxford UP, 2009. Print.

Ostrow, Joel M. Politics in Russia: A Reader. Los Angeles: SAGE Publications, 2013. Print.

Proekt dekreta o sotsializatsii narodnogo khoziaistva, Narodnoe khoziaistvo, No. 11 (1918), p. 15.

Remington, Thomas F. Politics in Russia. 7th ed. New York [u.a.: Pearson Longman, 2011. Print.

Siegelbaum, Lewis. “1917: Economic Apparatus.” Seventeen Moments in Soviet History. Macalester College, n.d. Web. 14 Sept. 2014. <>.

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