Economics

This section talks about the Soviet's economic system.

After the rebellion and seizure of power by the Bolshevik Party in 1917, Lenin tried an economic system on the newly formed Soviet Union called War Communism. Through this system, the government seized control of banks, heavy industry, and transportation. The state also confiscated grain from the peasantry to feed the army and growing cities. However, this system did not last long, since the peasants were becoming increasingly disillusioned with the slogan of “Peace, Bread, and Land.” In the 1920’s, large strikes and rebellions eventually caused Lenin to retreat from his War Communism position, and in 1921 he outlined the New Economic Policy, or NEP. Under the new system, the Soviet government would permit small, private control of economic enterprises. Specifically, farmers could now farm for profit. Surplus materials could now be sold on the open market. After this policy became effective, the Soviet country did become more stable, and free industry flourished in light industry and retail organizations. However, the NEP was not completely successful, because although the Soviets now had extra money, there was no consumer goods available for consumption. It was not until later that even more serious economic problems began to arise. Throughout most of the Soviet Union’s history, the goods produced were directed under the command economy that the USSR implemented. Furthermore, instead of evaluating the economy by measuring profit of factories and industries, the Soviet leaders relied on examining the output of a factory, either in tons or in units produced. This flaw in the economic system resulted in low quality, unwanted products. At the time it was not in the best interests of the factories and industries to produce what was demanded, and since little, if any profit was generated, there was practically no incentive to work hard or produce quality goods. The result of this was often overcrowded warehouses filled with shoes that did not fit or incompatible parts. What the Soviet system could not produce, the government imported from other countries. Furthermore, the poor quality of products often had a ripple effect on the economy. Incorrectly assembled machines could cause entire factories to stop production until the problem was fixed, which could take months, even years. Additionally, the lack of incentive also caused starvation periodically. Poor handling of agricultural products while being transported between the fields and the stores resulted in an estimated forty percent of Russian produce being lost. However, despite these problems the individual rarely suffered from lack of finances. Since everything was provided for by the state, the average Soviet worker only paid approximately 5 percent of their income for rent. Everything that the workers required, such as housing, school, and medical care was either inexpensive or provided for by the state, eliminating the Soviet demand for high paychecks. Furthermore, since the government controlled all factories, farms, and plants, all prices were set very low, (often resulting in a loss of money) so even though there were often shortages of food, clothing, and other items, and selection was extremely limited when goods were available, there was rarely a problem affording what was available. Homelessness was uncommon, along with hunger issues; if there were any it was likely from a shortage affecting everyone, not just a single individual. Another problem facing the Soviet Union economically was the lack of motivation for workers. There was a common known joke among the Soviet working class that their employers “pretended to pay them, and they pretended to work.” However, the lack of work was a serious problem that was widely occurring throughout the USSR. Soviet workers were guaranteed employment, but this often caused long hours at uneventful jobs. Quitting was not a viable solution, since only a few workplaces employed the citizens of the USSR. Furthermore, this also meant that it was virtually impossible to be fired, and so the workers had little, if any incentive to work hard at their jobs. Additionally, the Soviet government attempted to employ all persons, so there was usually too many people and too little work. Consequently, Soviet workers were almost sure to spend much of their day not working at all. This system endured essentially until the breakup of the Soviet Union.



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