New Economic Policy

Quick Facts: Who was New Economic Policy?

Subject:

New Economic Policy

Known for:

Soviet economic policy introducing market elements to revive the post-war Soviet economy.

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2Day Chrono-Wiki & Primary Historical Archives

Origins & Early Life

The New Economic Policy (NEP) (Russian: новая экономическая политика (НЭП), romanized: novaya ekonomicheskaya politika) was an economic policy of the Soviet Union proposed by Vladimir Lenin in 1921 as a temporary expedient. Lenin characterized the NEP in 1922 as an economic system that would include "a free market and capitalism, both subject to state control", while socialized state enterprises would operate on "a profit basis". Nouveau riche people who took an advantage of the NEP were called NEPmen (нэпманы). The NEP represented an early form of market socialism to foster economic growth for the country, which had suffered severely since World War I and the Russian Civil War. The Soviet authorities partially revoked the complete nationalization of industry (established during the period of war communism of 1918 to 1921) and introduced a mixed economy which allowed private individuals to own small and medium-sized enterprises, while the state continued to control large industries, banks and foreign trade.

Pivotal Works & Achievements

The Bolshevik government adopted the NEP in the course of the 10th Congress of the All-Russian Communist Party (March 1921). The decree on 21 March 1921: "On the Replacement of Prodrazvyorstka by Prodnalog" abolished forced grain-requisition (prodrazvyorstka) and introduced a tax on farmers, payable in the form of raw agricultural product (prodnalog). Further decrees refined the policy. Other policies included monetary reform (1922–1924) and the attraction of foreign capital. NEP was abandoned in 1928 with Joseph Stalin's "Great Break" and gradually phased out during 1928–1931.

Enduring Legacy & Impact

In November 1917, the Bolsheviks seized control of key centres in Russia. This led to the Russian Civil War of 1917–1922, which pitted the Bolsheviks and their allies against the Whites and other counter-revolutionary forces. During this period the Bolsheviks attempted to administer Russia's economy purely by decree, a policy of the War Communism. Farmers and factory workers were ordered to produce, and food and goods were seized and issued by decree. While this policy enabled the Bolshevik regime to overcome some initial difficulties, it soon caused economic disruptions and hardships.

Chronological Milestones & Life Events

1. 1917: 1917 Milestone — In November 1917, the Bolsheviks seized control of key centres in Russia.
2. 1918: 1918 Milestone — The Soviet authorities partially revoked the complete nationalization of industry (established during the period of war communism of 1918 to 1921) and introduced a mixed economy which allowed private individuals to own small and medium-sized enterprises, while the state continued to control large industries, banks and foreign trade.
3. 1921: 1921 Milestone — The New Economic Policy (NEP) (Russian: новая экономическая политика (НЭП), romanized: novaya ekonomicheskaya politika) was an economic policy of the Soviet Union proposed by Vladimir Lenin in 1921 as a temporary expedient.
4. 1922: 1922 Milestone — Lenin characterized the NEP in 1922 as an economic system that would include "a free market and capitalism, both subject to state control", while socialized state enterprises would operate on "a profit basis".
5. 1928: 1928 Milestone — NEP was abandoned in 1928 with Joseph Stalin's "Great Break" and gradually phased out during 1928–1931.

Historical Fact-Check Quiz: New Economic Policy

True or False: “The New Economic Policy immediately restored full private ownership of all large-scale industries in the Soviet Union.”

Answer (FALSE ❌): While it allowed small and medium enterprises to operate commercially, the state retained control over large industries, banks, and foreign trade.

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Frequently Asked Questions about New Economic Policy