New Economic Policy

Economic policy of the USSR 1921–29 devised by the Soviet leader Vladimir Ilyich Lenin. Rather than requisitioning all agricultural produce above a stated subsistence allowance, the state requisitioned only a fixed proportion of the surplus; the rest could be traded freely by the peasant. The NEP thus reinstated a limited form of free-market trading, although the state retained complete control of major industries.

The NEP was introduced in March 1921 after a series of peasant revolts and the Kronstadt uprising. Aimed at re-establishing an alliance with the peasantry, it began as an agricultural measure to act as an incentive for peasants to produce more food. The policy was ended in 1928 by Stalin's first five-year plan, which began the collectivization of agriculture.

Stalin had two main reasons for dropping the NEP in 1928. The first was that the NEP was not delivering the rapid economic growth that the USSR needed. Stalin believed that a total takeover of the control and planning of the economy was needed to increase the growth of industrial and agricultural production. The second reason was political. The NEP was not a communist policy, and had only been introduced in 1921 due to fears of counter-revolution. Communism required that the state must control the economy and all industries, so the limited private economy allowed by the NEP clashed with this basic principle.