Lenin's New Economic Policy

The NEP of the 1920s Permitted a Soviet Version of a Market Economy

With the Soviet territory suffering from famine and deprivation, Lenin enacted a New Economic Policy that promoted trade, privatization, and enterprise.

Lenin's New Economic Policy, also known as the NEP, was a tacit acknowledgement of previous failures to socialize the Soviet economy. However, the New Economic Policy of the 1920s encouraged privatization and capitalism – the very thing the Bolsheviks rallied against. This caused confusion and resentment among some who had suffered from or believed in the Bolshevik's ideals.
Why Did Lenin Establish the New Economic Policy?

In 1921, lands and people under Soviet control were in desperate need of relief of the famine that was killing citizens in scores. Additionally, necessary goods, like cooking implements and clothing, were scarce. While Lenin had once admitted that he felt hungry people would spur on the Russian Revolution, now he knew that the country was collapsing under the weight of its residents' need.
What Did Lenin's New Economic Policy Do?

Lenin's New Economic Policy was, on a most basic level, a relaxation of strict socialism into a loose market society. Free trade was hesitantly encouraged. Lenin hoped that this injection of capitalism into the economy would drag Soviet Russia up by its bootstraps and pave the way for pure socialism after an adequate waiting period.

What Were the Results of Lenin's New Economic Policy?

Trade, manufacturing, and even agriculture began to boom. Eateries and shops were set up quickly and offered goods that had previously been absent from market stalls. Peasants who worked the land began to innovate with new technologies and procedures to offer market crops.

Enterprising individuals were everywhere; of course this meant that there were cutthroat businessmen who could buy and sell anything for profit, specifically for their own gain. These were the so-called Nepmen who flaunted their quick-won wealth and of whom the Bolsheviks were especially wary. The Nepmen were representative of everything the Revolution had meant to destroy – flagrant displays of wealth, extreme gaps between rich and poor, and the power that walked hand-in-hand with moneyed individuals.
The New Economic Policy's Affects on Foreign Trade and Finance

The NEP opened up Soviet Russia to limited international trade. Because citizens were making money both through domestic and international trade, there was greater need for banks, credit, and a stable form of currency. Lenin temporarily reversed his dismissal of the need for gold and used bullion to produce a new ruble currency.

Many hard-core Bolsheviks resented the NEP, but would-be businessmen reveled in the sudden market economy of the 1920s. While the New Economic Policy was not within keeping with the revolutionary ideals preached by politicians and intellectuals, for those who knew how to utilize the system, capitalism was a welcome change from severe deprivation.

References

Dziewanowski, M.K. A History of Soviet Russia. New Jersey: Prentice Hall, 1989.

Figes, Orlando. A People’s Tragedy: The Russian Revolution 1891-1924. New York: Penguin Books, 1996