***** Russian Agrarian History and Soviet Debates on the Peasantry
...The period of NEP permitted a process of economic reconstruction, and it also gave the Bolsheviks a breathing space to build up a stronger state apparatus. Essentially, the policy permitted 'free enterprise' to reemerge, and allowed 'market incentives' to operate, though with some government intervention in controlling prices. Many of the problems involved in NEP have reappeared in subsequent attempts at socialist reconstruction, and arguably are inevitable in 'mixed' economic regimes, so all this is not just of historical interest. NEP could be judged a 'success' in the short term, and it is certainly difficult to see what else the Bolsheviks could have done in the circumstances, given what they had to work with and their initial political philosophy. But the policy stored up longer term contradictions, and was not without its moments of crisis even early on.
The first of these was the so-called 'scissors crisis' of 1923. After the catastrophe of the 1921 harvest failure, which resulted in widespread starvation, the 1922 and 1923 harvests were excellent. But this, in turn, created a problem. Bumper harvests made prices fall, and urban manufactures were already relatively expensive. Rural-urban terms of trade deteriorated, so peasant incomes, in terms of the goods they could buy from the cities, fell. The peasants, or, as we'll see, private grain merchants who bought peasant grain, reacted by withholding their grain from the market, to force the price up. Now the workers began to complain, or worse, because of food shortages. The 1924 harvest was poor, and the 'scissors' began to close again as prices rose by over 100%. Now, however, the state stepped in, pressured by the urban workers, to fix maximum prices. Again, the countryside hoarded its grain. The government then tried to force the peasants to sell their grain by demanding prompt payment of the agricultural tax in cash, a classic remedy which had been used by the Tsarist government. But this didn't work where peasants hoarding their grain were better-off and had cash reserves or could sell livestock to pay the tax. At this juncture, the other consequence of NEP became starkly apparent. Private merchants reappeared in the villages quite overtly buying up peasant grain at prices above the official maximum price: state price control collapsed. In the face of peasant hoarding and merchant speculation, urban food prices rose again, and the workers demanded higher wages, increasing industrial costs, making Russian manufactured goods even more expensive, offsetting some of the effects of the scarcity of grain on urban-rural terms of trade, etc. Worst hit of all were the poorest peasants with inadequate land resources, who had to buy grain to feed their families: they had produced less of their own grain than usual, and had to buy more grain on the market at higher prices. Their fate did not go unnoticed by the critics of NEP, as we'll see in a moment.
In retrospect, what happened in the following year, 1925, turns out to have been the turning point. The harvest was really excellent, and government thoughts turned back to the problem of avoiding a repetition of the scissors crisis. This time, it was argued, price controls should be used to avoid too big a fall in price - and the system proposed to manage this was the same one we have today in the EEC: the state would buy the surplus grain and take it off the market. But optimistic assessments for the benefits to flow from the 1925 harvest were not fulfilled. Despite the good state-guaranteed price, the peasants yet again refused to sell. In particular, they would not sell in regions like the Ukraine, where commercialised agriculture was most advanced, and kulaks were thought to be dominant. The flawed logic of NEP became painfully apparent. To encourage the peasants to produce more for the market and invest, the agricultural tax had been reduced. Now the state had shown the peasants that it would tolerate higher agricultural prices, and that they no longer had to resort to the 'black market' to get them. They appeared to be sitting on their grain to force still bigger concessions.
So, at any rate, the increasingly numerous critics of NEP in the Bolshevik party began to argue. They pointed out that by 1925, increasing indulgence of the kulaks had gone as far as letting this 'rural middle class' occupy local administrative posts: their confidence was high, and they had built up large cash reserves in the previous round of speculation. Many on the left of the Bolshevik Party saw the grain procurement problem as entirely the product of kulak speculation, though this interpretation of what was going on was challenged, as we'll see later. It was at least plausible to argue that hoarding offered the well-to-do peasants the chance to maximise money income and wring further concessions from the regime. There was, however, another problem: the weak Soviet industrial sector couldn't supply enough consumer goods to satisfy peasant demand. This fact reduced the effectiveness of market incentives as a means of stimulating peasant commercial production - what was the point of earning more if there was nothing to buy? It also presented a dilemma for Soviet industrialisation policy, as we'll see shortly.
The failure to capture the expected marketed surplus in 1925 had immediate repercussions. Agricultural export plans were cancelled, and this meant there could be no imports of foreign capital goods from those countries which were willing to trade with Bolshevik Russia to help build up Soviet industry. The workers were eventually fed, but at very high cost. There had now been a recovery from the chaos and destruction of the wars of intervention, but the peasants seemed to be blocking further progress. Within the party, arguments for a change of course were now being voiced more loudly, and Lenin was dead. What eventually happened was decided by a power struggle within the party, and it was the revolutionary regime's ultimate inability to effect social change by means other than coercive action from above which demonstrates the limitations of the revolutionary process in the Soviet Union....
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Yoshie