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Description

The New Economic Policy (NEP) was introduced to replace the failed policy of War Communism. The NEP advanced with almost a capitalist approach to economic growth. Wages were paid in cash not kind and surplus staff were dismissed. Under War Communism, Lenin employed the communist belief that everybody had the right to a job and people were employed regardless of whether they were actually needed or not. The NEP brought some form of economic sense back to Russia’s economy. Trade was to operate on an economic and commercial accounting basis. Industry was divided into ‘trusts’, which controlled various ‘enterprises’. In the first stages of NEP, theoretical restrictions were placed on a firm’s freedom to buy and sell but by 1922, these limits were dropped and profit-making became the main aim of those in industry. No industry was obligated to supply the state and, as Lenin had commented, the Communists had to learn how to trade.