Understanding the Key Features of Soviet Union’s New Economic Policy (NEP)

NEP – New Economic Policy

Eliminate harsh aspects of War communism; some capitalist measures allowed (gov’t would not seize surplus grain, small manufacturers allowed to run) Gov’t still in control of heavy industry. Russian economy improved.

The New Economic Policy (NEP) refers to a series of economic reforms introduced by the Soviet Union government in 1921 to combat the economic crisis that occurred after the Russian Revolution of 1917. The NEP marked a major shift in Soviet economic policy towards a more market-oriented approach, where private enterprise was allowed to operate alongside state-owned enterprises.

The key features of the NEP were:

1. Decentralization: Soviet economic policy was centralized after the revolution, and the NEP introduced greater autonomy for local communities and businesses.

2. Private Enterprise: Private businesses were permitted to operate alongside state-owned enterprises, thus creating a mixed economy.

3. Currency reform: The NEP introduced a new currency, the chervonets, which replaced the previous ruble.

4. Tax reform: Taxes were reduced and simplified in a bid to encourage business growth and investment.

5. Agricultural reforms: The NEP allowed farmers to sell their produce on the open market, a radical departure from the state-controlled agricultural policies of the past.

The NEP lasted until 1928 when it was phased out in favor of a more centralized and planned economy under Joseph Stalin’s leadership. However, the NEP laid the foundation for the modern Russian economy and its market-oriented approach to economic development.

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