Private Entrepreneurship in the Russian Economy in the 1920-s: a View a Century Later

Abstract

The new economic policy could be a typical example of a mixed economic system (“mnogoukladnost’”) if it were not implemented in the state of the “dictatorship of the proletariat”, whose leaders declared the primacy of ‘plan over market’ and set themselves the goal of destroying private property. The private sector of the economy was legalised; however, it was placed in unequal conditions, the limits of what was allowed were constantly changing and business entities were discriminated against. Being a model of the transition period, the NEP served as a “gateway” providing a limited opportunity to adapt existing economic orders (“uklad”) to the realities of centralised planned management. Economic actors, being in different positions in the political and economic spectrum of society, determined the degree of permissible and possible violations of economic laws that allowed the emerging economic and political systems to be kept in relative equilibrium (or protected from collapse). A special role in these processes was played by the private entrepreneurship system, which covered a wide range of population and was an indicator of the degree of market relations acceptance. As a result of displacement of the private sector at the end of the NEP, this way of life received its most complete expression in the form of a “closed circle of the private sector of the economy”. The economic, political and propaganda struggle against the “circle” that unfolded in the late 1920s resulted in a series of public trials. The desire of the state to gain control over all types of resources, to concentrate them in its own hands and to direct them to priority areas of development became obvious. The “informal order (“uklad”)” of the Soviet period, fed by a chronic commodity shortage, was an inevitable consequence of this policy. The social construction of the new society was aimed at formation of a “socialised” person, deprived of economic and political subjectivity (autonomy of the individual). These processes form the attributive properties of the mobilisation economy model. Its formation, which began during the Civil War and passed through the “gateway” of the NEP, received its logical conclusion during the first five-year plans. Thus, the economic order (“uklad”) approach allows us to analyse the laws of existence of the NEP mixed economic system and its role in the formation of the mobilisation economy of the USSR.