New Policy

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The policies of war communism, which were necessary Io meet the emergency of the tivil war and imperialist interrention, posed in the longer run grave dangers for the The methods used to secure a Purplus of grain in conditions of general shortage produced political is well as economic distortions.

Lenin inveighed continually in this period against the twin evils of bureaucracy and profiteering which iccompanied war communism.

INFLATION

The rapid inflation the more away from money to distribute goods i lie economy.

Dal De: a its stage accelerated the use of labour and But money be replaced by Instead it came increasingly to be replaced by arbitrary criteria from which all calculations of value had disappeared. It was a long way from the careful accounting and husbanding of all economic resources which Lenin stressed as. so important.

DISTORTIONS

The effect of these distortions, along with the exigencies of the political emergency, was to cut back production even more.

In 1920 the amount of factory production was down to as little as 14% of what it had been in 1913. Coal production was less than 9 million tons compared with nearly 30 million before the war. The grain harvest in 1920 was 46 million tons, about two thirds of the average of pre-war years.

It was clearly the intention of Sutcli soon as the emergency would allow it.

Trotsky was the boldest in that direction. In spite of the fact that at the height of the civil war he had gone furthest of all in his advocacy of the militarisation of labour and other war communism measures, he proposed some months before the civil war ended that a grain tax be imposed and the market restored as a means of distribution.

His proposal was rejected then. But the measures introduced some months later under the title of the New Economic Policy (NEP), had a great deal in common with it.

WORKED OUT NEP, unlike war communism, was a cohesive set of policies which were worked out in advance more or less as a unity. They were introduced from the early months of 1071 onlu weeks after the victory imperialist troops.

The food problem was tackled by imposing a tax in kind (later in money) on the peasants, based on the size of their land holding. The tax amounted in total to much less than the surplus extracted in the previous year. Once the tax was paid, peasants were free to sell any extra produce on the open market.

This implied not only increasing differentiation among the peasantry but also the legalisation of internal traders who bought grain from the peasants, sold it to urban workers and were also the vehicle for the reverse trade in manufactured goods as well as a certain amount of trade between the private sector and nationalised enterprises. These merchants were known as Nepmen.

The large industries remained nationalised under NEP; but many small plants were leased to capitalists. Very few were returned to private ownership. In 1923, 89% of operate on the principles of profitability and had to pay for what they bought both from the private and state sector in money.

A labour market was restored along with local collective bargaining, though this was in theory sup, posed to conform to a national 17point wage scale. The state continied to guarantee a minimum wage and reforms such as the eight-hour day and two-weeks annual paid holiday.

CONSEQUENCES

The full consequences of NEP did not appear for some time. After a few weeks it became cleat that the 1921 harvest would fail. There began painful months of famine during which thousands of people died. Neither NEP nor any distribution system could solve this crisis. Some respite was obtained by grain imports, including famine relief supplies from the United States.

But in the following year the agricultural situation improved. Industrial production began to recover fast and the market started to operate. Supplies improved throughout the country and some of the more acute economic problems of the previous years were genuinely alleviated, By 1923, however, NEP was to show that it was no general solution to the economic problem. It reproduced earlier problems in a different form. One of these was the "scissors crisis" which came to a head in 1923.

"SCISSORS"

The "scissors" referred to the relative movements of the prices of industrial and agricultural goods. In order to induce the peasants to market a large amount of grain it was necessary to bring industrial prices down in i relation to grain prices - to bring the blades of the

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SOCIALIST FRESS Vel cadry 3 It June 1976