Lease System

Also called “leasing system”. It is a form of state capitalism designed by in the period of Soviet Russia’s new economic policy. The state leases some small and medium-sized state-owned enterprises that are temporarily unable to operate to their own capitalists, and the lessees pay a certain rent in order to use their technology and management experience to resume and develop production as soon as possible, so that the state can master more industrial products for exchange with farmers and consolidate the alliance of workers and peasants. In July 1921, the Soviet government promulgated a decree entitled “On the Procedures for Leasing Enterprises Subordinated to the Supreme Council of the National Economy”.

The decree stipulated to lease some state-owned small and medium-sized enterprises or forests that are temporarily unable or inconvenient to operate to domestic capitalists, cooperatives or individual workers. It aimed to lighten the burden of the national economic committees at all levels, accelerate the recovery of the production of daily necessities, and rehabilitate the financial burden of the state. At first, the leasing enterprises paid the rent in kind, i.e., with the products it produced. Later, most of them paid the leasing installments by currency. This policy has played a positive role in making full use of the domestic economic and technological strength and management experience so as to recover the war-torn stagnant economy and develop production as soon as possible. However, as the leased enterprises were small and medium-sized, the proportion of their output value in the whole national economy was quite small. With the development of large-scale socialist state-owned industries, the number of such leased enterprises had decreased and this system was gradually abandoned since after 1927.