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Russ and the NEP

Russ and the NEP - NEP More capitalistic than socialistic...

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NEP- More capitalistic than socialistic? Differences between the agricultural sector and the heavy industries, banks, and financial institutions. Wikipedia entry on the NEP The NEP was proposed by Lenin to prevent the Russian economy from collapsing Allowed some capitalist ventures Replaced “War Communism” Lenin- “We are not civilized enough for socialism”- Russia was still a primarily agrarian nation with a week industrial base and small urban population- did not meet criteria necessary for socialism Put into effect March 21, 1921 o “on the replacement of foodstuffs requisitions by fixed foodstuffs tax abolished January, 1929 and replaced by the first of his 5 Year Plans. policies o private ownership restored to small parts of the economy, especially farming. Allowed small businesses to reopen for private profit while the state (continued to) controlled banks, foreign trade, and large industries o required farmers to give the govt a specified amount of raw agricultural product as a tax in kind o “commanding heights” of industry (large factories (coal, iron, electricity, etc)) would still be under state control. o Loosened trade restrictions- caused nation to regain alliances with foreign countries o Improved efficiency of food distribution and it especially benefited the peasants o Many urban workers resented the profits made by private traders o Allowed peasants to lease and hire labor- more capitalistic than socialistic o Peasants were allowed to keep a surplus after paying a certain proportion of their tax to the government o The Fundamental Law of the Exploitation of Land by the Workers - ensured that the peasants have a choice of land tenure Results o Agricultural production increased greatly- brought to pre-Revolution levels o Instead of govt taking all agricultural surpluses with no compensation, farmers had the option to sell their surplus yields Had incentive to produce more grain o break up of the quasi-feudal landed estates o While the agricultural sector became increasingly reliant on small family farms, the heavy industries, banks and financial institutions remained owned and run by the state. o To keep their income high, the factories began to sell their products at higher prices….because manufacturing goods were so pricey, the peasants then had to produce much more wheat to purchase consumer goods. o Scissor crisis - the (above mentioned) fall in P or agricultural goods and rise in P of industrial products o Peasants began withholding their surpluses to wait for higher prices, or sold them to “NEP men” (traders and middle-men) who then sold them on at high prices, which was opposed by many members of the Communist Party who considered it an exploitation of urban consumers.
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