Stalin’s economic policy – Economipedia

The economic policy of the dictator Iósif Stalin, carried out in times of the Soviet Union, supposed the organization of the economy in five-year plans, total control by the state, the collectivization of agriculture and the socialization of industry.

Stalinism had its own vision of the economy, for which the implementation of five-year plans was its great instrument. In this way, the State directed the economy in order to achieve greater economic growth.

It is true that the plans allowed the Soviet economy to grow. Thus, in 1926, a national income of 24,680 million rubles went to 96,300 million rubles in 1937. But, among the terribly negative effects of these policies, are the harsh social repression and the existence of economic sectors with high levels of inefficiency.

What was the system like during Stalin’s economic policy?

The main characteristics of the Russian economy with Stalin at the head of the Soviet Union were the following:

  • A planned economy, in which the Communist Party determined the levels of production to be achieved, established prices and wages, as well as imposed the investments that had to be made.
  • The Soviet Union lived practically in autarchy, remaining outside the international markets, so it was necessary for them to obtain their own surplus.
  • The surpluses provided by agriculture were to sustain the growth of the industrial sector.
  • Heavy industry becomes the predominant industry.
  • Any possibility for workers to manage the companies in which they worked was eliminated.

Collectivization of the countryside

After the 15th Congress of the Communist Party, held in 1927, the Soviet Union decided to eliminate the New Economic Policy. Thus, the first five-year plan was presented, which involved collectivizing farms. Any possible resistance to the implementation of the economic plans would be violently crushed.

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In this way, farms remained in the hands of the State. Thus, state farms were state farms, while collective farms were collective farms under the control of the Soviet state. The power of the State reached such an extent that it held the ownership of agricultural machinery.

As we noted earlier, resistance to collectivization policies was brutally put down, resulting in the deportation of peasants and the destruction of entire villages. This is how private property was totally eliminated from the Soviet Union.

With a Soviet Union focused on turning to heavy industry, the field suffered from a strong technological backwardness and its productivity was very low. Only the clearing of more land made it possible to increase the figures for cereal production.


Reforms in the industry and in the market

The measures implemented by the Stalin regime promoted heavy industry to the detriment of consumer industry. In fact, the scarcity of certain consumer goods led to the appearance of the black market, where the population could access these goods at extremely high prices.

The commitment to industrialization caused the disappearance of the crafts and the private sector, tiny and almost non-existent, only meant 0.5% of the growth of Russian industry in 1932, the year in which private trade was declared illegal.

With the elimination of all free market mechanisms between 1931 and 1935, practically the entire national income was due to state enterprises.

Results of Stalin’s economic policy

It should be noted that the Soviet Union experienced remarkable industrial growth, although the objectives set by the state plans were not so successful in the agricultural field. And it is that agricultural production did not come close to a quarter of what was established in the Soviet economic plans.

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In order for the State to be able to execute economic policy, it was necessary to endow the Soviet Union with an enormous bureaucratic apparatus, known as the «nomenklatura». Thus, the high Soviet officials became the new Russian elites.

The effects of Stalin’s economic policy gave rise to industrialized cities that alternated with vast expanses of sparsely populated land dedicated to unproductive and technologically backward agriculture.

Likewise, the strong industrialization promoted the development of cities and allowed an important participation of women in the labor world. However, this policy was marked by strong repression.

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