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Russian Economic Policy, 1900-1939

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Russia's Economy Before the Revolution

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Russia increased their production from 1877-1897 very quickly. Their production of food, cotton, metals, ceramics, chemicals and many other things were being produced much more quickly during the span of 20 years. "Over the last five year period the growth in manufacturing industry has been 4 times faster than in the preceding five year period and six times faster than in the decade before that." 1 For Russia's production to be so successful in these early years was a remarkable thing. The manufacture and exchange of goods led to the creation and exchange of capital, which in turn resulted in a vast and independent economic network. The people were so confident that the growth of trade would never end and that it would make the country wealthy.

Social Life

In terms of the people, Russia's population was 85% rural, although many peasants tried to find work when they couldn't farm. Peasant life was generally hard, and they got little government assistance. The Russian Revolution of 1905 broke out because of the poor conditions of peasants. Reforms that the Russian government made in response to this such as the October Manifesto, led to somewhat better conditions. Agricultural productivity also increased. Politics within Russia greatly influenced the life of the workers.2

During the Revolutionary period, peasant life and culture had changed drastically. People began to migrate over into the urban cities, which made the cities overpopulated. Overcrowded housing led to poor sanitation and disease 3


A policy used by the Soviet government in Russia to collect grain from farmers for re-distribution. Kulaks, or independent farmers, were forced to join collective farms- farms that worked for the government. This policy was started by Joseph Stalin, and was used to help the man made famine that forced the Ukrainians into following collectivization.4 The policy was used throughout Russia to encourage communist ideas, as opposed to capitalist and socialist thought. It was also brought upon by the need for food throughout Russia. In 1932, Stalin realized that both the industrial and agricultural movements were so far unsuccessful, but still declared that the Five-Year Plan had reached its goals within four years. The agricultural movement was unsuccessful because many farmers refused the government's demands by escaping, killing animals, and revolting.5

War Communism

War communism was an economic system that existed in Russia from 1918 to 1921. It started when certain things were nationalized by the government such as land, banks, and the mail system. This system was instituted because Lenin did not think that the Bolsheviks were ready to take over the entire economic system. Soon, some people wanted the factory owners to be fired, and the workers to run the factories. In 1920, all factories with more than ten people were nationalized. The system of food was also taken over by the government, and soon communism engulfed the nation. Unfortunately, war communism was completely disastrous and helped to ruin Russia's economy. 6 Add more!

The War Communism had Six ideals, the first was that production should be run by the state. the second was that state control was granted over the labor of every citizen, once an army has served it would then become a labor army. The third principle was that the state is allowed to control the actions of peasants and it will produce everything in its own undertakings. The fourth principle was that the economic areas were controlled by the Bolsheviks was put into the hands of smaller organizations, the Commissariat of transport controlled the railways and the commmissariant of agriculture controlled the peasants. The fifth ideal was that the people were divided into four categories, 1) manual workers in harmful trades 2) workers who performed harm physical labor 3) housewives or workers who had light tasks and 4) and professional people. food was distributed very unevenly. Although the manual workers were the most favored they got little food, and the professional workers were starved. This lead the Bolsheviks to decide that all surplus food had to be surrendered to the state, by doing so there was an increase the the supply of grain to the state. The sixth ideal was the War communism planned to abolish money as means to exchange, with the governments revenue raising ability being so poor taxes were decreased and almost abolished. the only tax that was left was called the "Extraordinary Revolutionary Tax" that was targeted at the rich and never the workers.7

5 Year Plan

The five Year plan was introduced by Stalin. The main idea of the Five Year Plan was to increase the production of steel, iron, machine tools, electric power and transportation. After the Five Year Plan, the goals that were set for how many resources should be produced were achieved, and overreached. By February of 1930 the five year plan of collectivization was over fulfilled by more than 100%. Stalin made sure not to publicize the success of the five year Plan because he did not want the people of Russia to start to slack off, and progress to be lost.8

Before the initiation of the five year plan, Russia was behind other European countries in terms of industrialization, agriculture, and technology. Stalin used the five year plan to help increase the might of the Russian economy. In a speech he gave in 1928, Stalin believes that Russia's political system of Socialism is superior to that of capitalism, and that Russia's economy should be that way as well. Stalin says that some of Russia's economic difficulties can be attributed to "The capitalist encirclement" that other European nations have with each other. He says that improvements in agriculture and technology are essential for Russia to grow economically. To conclude, Stalin says that the industry must be improved for Russia to succeed, and that failure to do so might make Russia revert back to a capitalist structure.9

The Five year plan moved Russia towards a communist type government. This is shown by the plan that Stalin had for the farmers and the agricultural business. Stalin sought to collect farms into "industrial complexes under centralized Communist Party administration". Any differences in wealth between pheasants was erased, and communist ideals took over the agricultural business. 10

Famine in Ukraine

Ukraine, in 1932, experienced a serious lack of production in the grain department. Several farmers wanted to be independent and farm to make their own living. This is a somewhat capitalist thought, as opposed to farming to supply the government, who would disperse the goods evenly throughout the country. This is a communist thought. These people were considered counterrevolutionaries, and the chairman of the Council of the People's commissars of the Ukrainian Soviet Socialist Republic had some ideas of actions that should be taken in order to stop this. The Russian government sought to end this counterrevolutionary behavior, and so they created a famine named the Grain Problem.11

Stalin and Lenin

Joseph Stalin 12 was a huge supporter of Karl Marx. He was even expelled from school for trying to convert the students into Marxism. Stalin believed that the Russian people were not ready for a socialist revolution. When he moved to St. Petersburg he became the editor of Pavda. Pavda was a newspaper published by the Bolsheviks. During this time Lenin attacked the Bolsheviks for supporting the Provisional Government. For Stalin working for Pavda put him in a rough spot because he wasn't sure if he should challenge Lenin or remain loyal to him. Days later Stalin wrote an article in Pavda objecting the idea of a Provisional Government. Lenin showed his thanks by appointing Stalin as the Commissar of Nationalities.

Just like Stalin, Lenin's political development was influenced by Karl Marx. They were also both expelled from their Universities because of their beliefs. Lenin was against World War I, he believed that socialists who supported the war were betraying the proletariat. Lenin published propaganda for the Allied troops to turn their rifles onto their officers and start a socialist revolution. World War I had a huge impact on Russia's economy, causing a short supply of food, and prices being raised.


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