Report on the New Economic Policy at the Seventh Moscow Gubernia Conference of the Russian Communist Party

Lenin summarized the experience of the New Economic Policy and expounded on the lessons learned from this experience and put forward new realistic measures to further deepen the NEP and the state capitalism policy. It was written on October 29,1921 and published in Pravda issue No. 248 and 249 on November 3 and 4 of the same year. The Chinese translation is included in Vol. 42 of the second revised edition of Complete Works of Lenin.

In the initial stage of the New Economic Policy, state capitalism policy of the Party was not directly linked with the role of commerce. In the initial stage, Lenin had not yet clearly put forward that the “exchange” between industrial and agricultural products was a commodity exchange (trade), instead he had expected that the exchange of industrial and agricultural products could be arranged—as a more or less socialist exchange—in such a way that trading, marketization and utilization of currency would not be needed, which meant that his ideas had not yet gone beyond the paradigm of “direct transition to socialism”.

However, economic development does not depend on people’s will and their expectations. Half a year after the implementation of the New Economic Policy, the questions of marketization and commerce, trade were highlighted in theory and practice. In order to adjust the New Economic Policy that is more practical, and unify the party’s understanding and consciousness to adapt to the New Economic Policy, and learn to use new methods to solve the task of economic construction, Lenin made this report at the Seventh Moscow Gubernia Conference, expounding on the three questions as below:

(1) The general question—in what respect must we admit that our Party’s economic line in the period preceding the New Economic Policy was wrong? Lenin explained this question by reviewing the tortuous historical process of the newborn Soviet regime’s exploration of the path of socialist construction and the transformation of NEP after recent experiences. During 1917-1918, the people seized power through revolution and established the Soviet state system, intending to take a gradual transition to the new system. But the bourgeoisie responded by launching a military rebellion in the summer of 1918: We don’t want your transition; we don’t want your new system. The original idea of transition to socialism through state capitalism could not be carried out, and the Party was forced to launch the “War Communism Policy”. This policy was in line with wartime needs and enabled the Soviet Republic to defeat foreign armed interference and armed rebellion by domestic white bandits. In fact, the Party decided to follow a path of “direct transition” into socialism and organize state production and state distribution of products on communist lines. Lenin admitted that although in general, the past assault tactics used were not completely wrong, but there were still unprecedented contradictions; the serious economic and political crisis that erupted in the spring of 1921 showed that the attempt to adopt “assault tactics” and attempting to implement a more or less socialist exchange of industrial and agricultural products and the assumption that we could proceed straight to socialism without a preliminary period in which the old economy would be adapted to socialist economy has failed.

(2) In the spring of 1921, it was a correct decision to pass to the New Economic Policy according to the actual situation of Russia. At that time, Russia’s main and urgent task was still the economic recovery, and due to the serious economic destruction and poverty, and due to the extremely backward culture and economy, Russia couldn’t directly transit into to socialism. The Bolshevik party learned from its failure and decided to proceed towards socialism with a new path, that is, through NEP, the Party shifted itself to a retreat to the position of state capitalism, the substitution of “siege” tactics for “direct assault", had become inevitable.

Analyzing the production and economic facts of Donets Basin, one of the principal industrial centers of Russia, as an example, Lenin explained that the economic operation according to the policy of state capitalism had achieved some positive practical results in the economic life and led to the improvement of productive forces. But there also appeared new contradictions, “which had proved that we have not retreated far enough, that we must make a further retreat, a further retreat from state capitalism to the creation of state-regulated buying and selling, to the money system. Nothing came out of our previous policy of commodity exchange; the private market created and promoted spontaneous forces of ordinary buying and selling, trade and use of currency in circulation”.

(3) Since after the Party was forced to retreat from socialist construction to state capitalism in the spring of 1921, the facts had proved that still further retreat became necessary, in order, eventually, to go over to the offensive in future when the conditions would be ripe. Further retreat meant, not only to retreat to state capitalism, but to the state regulation of trade and the money system.

Based on the analysis of the objective situation and the specific circumstances, Lenin first discussed the issue of the relationship between the Soviet economy and the market and the trade, stressed that no matter how remote may seem the field of trade from communism, it is obvious that the present concrete conditions call for the state regulation of trade and the money system, and it is precisely in this field that we must show what we are capable of. Only by solving this problem can we get down to the problem of meeting economic needs that are extremely urgent ; and only in that way shall we be able to restore large-scale industry—by a longer and surer way to build socialism, the only way now open to us.

He added: “Only through this path can the normal system of economic relations be restored, the small peasant economy be restored, and the productive forces be raised, and it will be possible to restore and revitalize large-scale industry, which is the only basis of socialist society. This is an important and urgent task facing the Soviet regime”.

In this report, Lenin explained the necessity and correctness of the retreating from state capitalism to state’s regulation of the trade and money system, with this judgement Lenin’s theory on New Economic Policy was finally fully presented, which not only further developed Marxist theory of economic construction in the transitional period, it also helped the members of the Bolshevik Party members and its cadres to fully grasp the mistakes of the previous economic policy and the necessity of and the key points of passing to a new stage in the New Economic Policy, as well as clearly understand the new basic development path of economic construction, which was of great significance to unify Party’s thinking and its ranks so as to implement the construction task of the new economic policy with one heart and one mind.