The New Economic Policy (NEP)


After the civil war, the Soviet working-class had nearly disappeared. It was even under the best of times a small minority of the population, never constituting more than 3 million in large-scale industry. In 1921, less than half that number were employed. The nominally employed were often without work because the plants were idle. Most of these workers were paupers who eked out a living doing odd jobs or trading on the black market. All this added up to relative economic and political weakness for parties based on the working-class such as the Bolsheviks.


Even if civil war had not decimated the working-class, there were still special problems that confronted socialist revolution in backward countries like Russia. Nikolai Bukharin was very clear about the differences between the bourgeois revolution and proletarian revolutions. Marxists traditionally had believed that just as capitalism emerged out of the old feudal order, so would socialism emerge out of bourgeois society.

However, as Bukharin pointed out, the bourgeoisie was not an exploited class and therefore was able to rule society long before its political revolution was effected. The workers are in a completely different position, however. They lack an independent economic base and suffer economic and cultural exploitation. Prior to its revolution, the working-class remains backward and therefore, unlike the bourgeoisie, is unable to prepare itself in advance for ruling all of society. It was only through the seizure of power and rule through a vanguard party that the workers could build socialism.


Confronted by the decline of the working-class and the collapse of the Soviet economy during the wane of War Communism, Bukharin as well as the overwhelming majority of the Bolsheviks embraced the NEP. The NEP was unavoidable. The only way goods could begin to be circulated once again was through the marketplace. Bukharin, who had a realistic understanding of the relative weakness of the proletariat, surveyed Soviet society in this period and started to speculate about other social and economic forces that could propel socialism forward.

He came to the conclusion that the peasants would be such a force. Bukharin theorized that growth in private agriculture would eventually fuel industrial growth in the state sector. The peasant would first have a need for consumer goods and simple agricultural implements. As accumulation in the peasant economy progressed, he would begin to demand more capital-intensive goods such as tractors, fertilizer and machinery. Demand for such products would cause the state-owned heavy industries to grow as well.

The NEP, which was originally a tactic to lift the USSR out of the doldrums of War Communism, was now seen by Bukharin as a central component to the development of socialism.

Therefore, according to Bukharin, it was a mistake to attack the peasants, especially the wealthier peasants who could supply produce to the workers in the cities. The poorer farmers relied on subsistence farming and lacked the capacity to fill the breadbaskets in the urban marketplace. So Bukharin thought it made sense for the wealthy peasants to "enrich" themselves in order to ultimately build the socialist economy. Opposition to the wealthy peasants--the kulaks-- was an ultraleft and dangerous mistake.

Bukharin's major ally in the ruling party was Joseph Stalin.


Evgeny Preobrazhensky was a close political ally of Bukharin. They were left-Bolsheviks during the period of War Communism. They co- authored "The ABC's of Communism" and were leading theorists in the party. Preobrazhensky, who despite lacking a college education, was an accomplished economist. In his "New Economics", he attempted to apply the method of "Capital" to the Soviet economy. He was an organizer in the Urals who was constantly on the run from the Tsarist police and was one of the early supporters of Lenin's April Theses.

Preobrazhensky challenged Bukharin's pro-kulak policy. He saw a basic flaw in its logic: as long as heavy industry remained undercapitalized, it could not produce consumer goods to satisfy the peasants. The longer the Soviet Union waited to carry out modernization of its plants and equipment, the worse the shortage of industrial products would be. Preobrazhensky saw heavy taxation of the kulaks as the way to accomplish such an upgrade. In an article, Preobrazhensky used the term "exploitation" to describe this relationship of the socialist state to the peasants. This term caused a scandal among Bukharin and Stalin's supporters in the same manner as Bukharin's use of the term "enrich yourselves" caused a scandal in the left opposition.


From the very beginning, the so-called "scissors" phenomenon characterized the NEP. Trotsky first drew attention to this phenomenon of rising industrial prices and declining agricultural prices, which appeared graphically as an opened scissors, in the first few years of the NEP. It was attributable to the discrepancy between a shattered state-owned industrial infrastructure and a relatively thriving capitalist agricultural economy. The effect of the "scissors" was to cause the kulak to hoard farm products in an attempt to blackmail the state into cutting the prices of consumer goods. When the kulak hoarded crops, the workers went hungry and misery increased in the towns. This, in brief, was the pattern that would repeat itself until Stalin declared war on the kulaks.

The peasants had discovered that holding grain was more prudent than holding money. The state authorities could not make the peasants budge. At Rostov in the Ukraine the authorities issued an order to have the peasants deliver 25% of all flour delivered to state mills at a fixed price in 1924. The state was able to collect only 1/3 of the grain. The peasants withheld the rest.

In addition to the growing tensions between private growers and public authorities, tensions also arose in the countryside between the wealthy peasant and the overwhelming majority of poor peasants. The 1917 revolution distributed millions of small lots to the tiller, but their prospects were uncertain. In these mini-farms, horses were often nonexistent let alone tractors. Peasants used their own muscles to plow the land. Many of these mini-farms failed and the peasants became wage laborers on the kulak's farms.

A table in a Soviet academic journal from the period documents the trend. It shows the percentage of peasants in the Ukraine who lacked draft horses and machinery:

year % without draft horses % without machinery
1921 19 24
1922 34 30
1923 45 34
1924 46 42

The conditions noted above began to prevail throughout the USSR. The peasantry began subdividing into 2 groups: those who had animals and machinery loaned them to those who did not; and those, who while not landless, lacked the means to improve their lot. It was to the first group that Bukharin and Stalin made their appeal.

Some 20 to 30% of the poorer peasants ate nothing but potatoes in the Ukraine in 1924. Those peasants who lost their land and descended into wage labor were superexploited. Typically, the farmworker worked unlimited hours, and child-labor was not unusual. In the Ukraine, 80% of the farmworkers were illiterate and their bosses often beat them. These workers probably did not share Bukharin's beliefs in the wonders of the NEP.

Bukharin, like Jim Lawler, was fond of citing Lenin's "On Cooperation" in support of the NEP. For Bukharin, this speech of the dead leader had implicitly endorsed his vision of the unhampered development of a wealthy peasantry.

The "actually existing" cooperatives as opposed to Bukharin's theory soon became part of the controversy with the left opposition. If the cooperatives were to have any merit as incipient socialist institutions, they would have to serve the interests of the middle and lower peasantry. In reality, the coop's consisted mainly of well-off peasants who used them as marketing instruments. Peasants engaged in subsistence farming had no role. When coop's allowed joint ownership of farm machinery, the poor peasant could usually not afford to hire them. A party investigator reported in 1925 that "capitalist principles have secured most favorable conditions for themselves under the cooperative flag". He added that the Bukharin-Stalin party leadership had taken as "an example of a movement towards socialism" what was really a movement towards capitalism.

While social differentiation in the countryside continued apace, the conflict with the socialist state authorities showed no signs of amelioration. There was little the state could do to placate the peasant. Soviet industry had not improved and therefore there were little or no consumer goods at an affordable price. The scissors remained open.

The state increasingly relied on grain exports to raise capital, but the kulaks stood in the way. In 1925, there was a goal to export 200 million bushels of grain but grain collection for the year 1925-26 fell short of a 780 million goal by exactly 200 million because of hoarding. The politburo suspended grain exports. Bukharin's vision of industrial expansion financed by the proceeds of grain surpluses began to fade. The kulak was the master of the situation, not the working-class. Mao's dictum that political power grew out of the gun barrel should read in this case that political power grows out of the grain barrel.


By the late 1920's, fissures began to appear between Bukharin and Stalin over the NEP. Stalin began to sound the alarm against the kulak in terms reminiscent of Trotsky, Preobrazhensky and the left opposition, whose members were mostly jailed or exiled by then. Stalin's militancy disoriented many in the left opposition who questioned their role now that Stalin appeared to shift to the left. Trotsky had even given critical support to Stalin, a "centrist" in his view, against the "rightist" Bukharin who backed the kulaks.

The problem with this type of analysis is that lacked sufficient historical perspective to see how far Stalin had distanced himself from the working-class roots of Bolshevism. Stalin had emerged as an advocate for powerful elements of the Soviet bureaucracy, police and army who derived their privileges from collectivized property relations.

Bukharin gave political expression to the class interests of the wealthy peasantry while retaining some roots in the Bolshevik intelligentsia.

The left opposition had ties to the working-class of traditional urban centers such as St. Petersburg, but with the decline of the working- class the opposition's political power ebbed. Furthermore, many of the workers who had taken up residence in the cities in the mid-20's were basically transplanted peasants. These workers had little of the Marxist consciousness typical of the Russian working-class at the turn of the century. The workers who had entered the Communist Party during the "Lenin levy" came from this stratum.

When Stalin began to attack the kulaks, he borrowed much from Preobrazhensky's theoretical arsenal. Stalin, above all interested in maintaining his political supremacy, had no qualms about shifting from Bukharin's neo-SR peasant ideology to Preobrazhensky's industrializing model albeit in a heavily distorted form.

When Stalin unleashed the full power of the Soviet state against the peasant in order to collectivize agriculture, he did so in a manner that served neither the working-class nor the peasantry in the long run. He attacked in a manner that was typical of his administrative approach to political problems. This was no accident. It would be virtually impossible for the consummate bureaucrat to act in any other fashion.

Trotsky and his followers put up a gallant fight but they were basically generals without an army. They lacked the social weight to assemble a counterforce to Stalin. The left opposition was an alternative to Bukharin's pro-kulak policy and Stalin's anti-kulak extremism. Soundness of ideas, however, is no guarantee of their acceptance in society as we all know. Perhaps a timely application of some of Trotsky and Preobrazhensky's economic ideas could have forestalled the debacle of the 1930's, but history followed another path.


Bukharin remained a supporter of NEP-styled socialism to the very end. His break with Stalin was primarily over Stalin's cruelty and misleadership rather than his economic ultraleft turn. He eventually made peace with Stalin as did Preobrazhensky. This did not prevent Stalin from having the 2 old Bolsheviks tried and executed as "enemies of the state".

Stephen F. Cohen, the left-liberal historian from Princeton University, has authored an important political biography of Bukharin called "Bukharin and the Bolshevik Revolution".

Cohen views the NEP period as something of a golden age in Soviet history. He emphasizes, as Lawler does, the positive aspects of this period, but fails to truly come to grips with its passing. He tends to view the NEP as an experiment in social policy rather than a product of class relations at a given moment in history.

Cohen sees Bukharin's failure as something of a tragedy rather than as the inevitable byproduct of a clash between the interests of a peasant bourgeoisie and a bureaucratic caste.

Cohen's incomplete understanding of the NEP's role in Soviet history is reminiscent of his failure to comprehend Gorbachev's downfall. Cohen appeared on TV frequently to defend the moderate, NEP-like mixed-economy model of Perestroika. He never seemed to grasp that the demands of global capitalism were uppermost in US policy- maker's minds rather than the welfare of the Russian people.


I do not believe the NEP should serve as model for developing countries attempting to build socialism.

Since the fall of the Berlin wall, many on the left seem to have fallen in love with market socialism and the mixed economy. Some accommodation with capitalism might be unavoidable, but it appears to me that there is a difference between accommodation under duress and a theoretical model based on a dissolution of the class-struggle.

Basically, I regard recent infatuations with the mixed economy, market socialism or any other recycled versions of the NEP as abandonment of the class-struggle. I also think the left has to redefine and reclaim the notion of the dictatorship of the proletariat. The planned economy did not fail in the Soviet Union. What failed was an economy based on fiat.

The left has to come to grips with these issues in order to prepare for the 21st century. The only possible use we can make of the disasters of the 20th century is to strengthen our theoretical understanding of what is necessary for the next century.

I will have more to say on these matters in the weeks to come.

Sources Cited:

E.H. Carr, "Socialism in One Country" S. Cohen, "Bukharin and the Bolshevik Revolution" I. Deutscher, "The Prophet Outcast" E.A. Preobrazhensky, "The Crisis of Soviet Industrialization"