State Control of the Economy (Edexcel A Level History): Revision Note

Timeline & Summary

• This note will examine why state control of the economy was fundamental in the Soviet state

• The Bolsheviks established Vesenkha to centralise and direct the economy after the Revolution

• Party debates in the 1920s revealed deep divisions over the pace and method of industrialisation

  • This is known as the Great Industrialisation Debate

• The eventual adoption of a command economy was shaped by:

  • Political necessity

  • Ideological arguments

  • Economic crisis

• Historians debate whether the command economy was inevitable or a product of Stalin’s leadership

The Vesenkha

• The government established Vesenkha in December 1917

  • Its full name is the Supreme Council of the National Economy

  • It was tasked with managing industry and finance

• Its roles included:

  • Reorganising industry to improve efficiency

  • Nationalising banks, transport, and large-scale industry

  • Setting production targets and directing resources to key sectors

• Vesenkha became the most important institution of economic management

• By the 1920s, its role expanded to:

  • Supervising state-run businesses

  • Coordinating long-term economic planning

Party opinions on the economy

• The Communist Party was deeply divided in the 1920s over how to rebuild the economy after War Communism and the NEP

The Left: “Dictatorship of Industry”

Key ideas

• Rapid industrialisation led by the state

• Prioritise heavy industry to build socialism quickly

• Forced collectivisation in agriculture

  • The state could take all of the profits from farms and fund industrialisation

  • They acknowledged that the policy would anger peasants

Supporters of the Left

• Trotsky

• Zinoviev

• Kamenev

The Right: “Building Socialism with Capitalist Hands”

Key ideas

• A continuation of the NEP

• Allowing private trade and small-scale capitalism to help the economy recover before socialism could be achieved

• Saw peasants as essential allies who should not be alienated

Supporters of the Right

• Bukharin

• Rykov

• Tomsky

The Centre: Pragmatism

Key ideas

• Adopted a flexible approach

  • They believed that 'whatever works' at the time was the right policy

• Economic policy should be decided on the nation's demands, not ideology

• Initially supported the NEP until 1927, when economic growth slowed

Supporters of the Centre

• Stalin

The Great Industrialisation Debate (1920s)

• This debate dominated Party politics in the 1920s

  • It was the basis of the leadership struggle after Lenin's death

• During the 1920s, the Right won countless debates in Congress

  • This made it impossible for supporters of the Left to take power

    • Economic policy was one of the reasons why the Party turned against Trotsky

• As economic problems worsened. the Centre, led by Stalin, eventually shifted towards the Left position

  • This won a lot of support from most members of the Party

• The debate laid the groundwork for:

  • The First Five-Year Plan (1928)

  • The beginning of agricultural collectivisation

Why did the USSR adopt a command economy?

• By the late 1920s, the NEP was seen as inadequate to deal with the USSR’s economic challenges

Economic pressures

Agriculture

• Peasants were reluctant to sell grain at the low, fixed state prices

  • In 1927–28, this led to the grain procurement crisis

    • Peasants hoarded grain instead of selling it, creating shortages in the towns

• The crisis revealed that the NEP had not solved the 'grain problem'

  • The state could not guarantee enough food supplies for the growing urban workforce

Industry

• Industrial recovery under the NEP was much slower than agricultural recovery

• The gap between agriculture and industry meant peasants had little incentive to trade grain for overpriced manufactured goods

  • This convinced many Bolsheviks that the NEP could not deliver the rapid industrialisation needed to strengthen socialism

Political pressures

• Stalin used the failures of the NEP to:

  • Discredit the Right

  • Win the support of the Left and the Centre of the Party

  • Consolidate his own authority

Ideological goals

• Many Bolsheviks saw rapid industrialisation as essential to:

  • Building socialism

  • Defending the USSR from capitalist powers

International context

• Fear of war with the West made self-sufficiency through industrialisation seem urgent