RESULTS OF THE NEW ECONOMIC POLICY IN RUSSIA.
[COMMUNICATED.]
Tw°years will soon have passed since the Soviet Government introduced the so-called New Economic Policy. The distinguishing feature of the new policy is that at present the population is allowed a much greater freedom of economic activity than during the earlier period of Soviet rule, when economic functions were concentrated almost entirely in the hands of the Government.
The New Economic Policy has restored private trading —within certain limits—admitting in principle private industrial initiative and allowing the peasant to dispose freely of part of his products. During the first period the peasant was obliged to give up all the produce of his labour to the State, with the exception of a stated quantity necessary for his personal consumption. The New Economic Policy established a definite tax, after the payment of which the peasants are at liberty to dispose of the rest of their produce at their own discretion. These economic liberties were granted to the population with great limitations and reservations, which seriously hamper individual action. But the important thing is that what was at first regarded as criminal and dangerous-- namely, private trading—is now allowed in principle and approved of.
One of the chief results of the two years' working of the New Economic Policy is the change it has wrought in the economic relations between the Government and the population. On seizing power the Soviet Government expropriated all private wealth—money, goods, factories, lands, and, lastly, the right to all the products of agri- culture created by the labour of one hundred million peasants. In a certain sense, in the early days of its rule, the Soviet Government was the richest institution in the world. No other Government possessed, or at any rate asserted a claim to possess, such enormous wealth. There was no comparison, in that earlier period, between the economic resources of the Government and those of the population ; the population had not only been deprived of everything, it had been forbidden even to possess anything in the future above what it needed for its daily subsistence. During that period the Soviet Government exercised not merely a political, but an economic dictatorship. The political oppression and terror were felt by a comparatively limited number. But the economic pressure—the complete hourly dependence on the charity of the Government—was experienced by the majority of the population, and even to a certain extent by the peasantry. Every piece of bread obtained in any other way than from the hands of the Government was got through an infraction of the law. The population was bound to give up its entire labour to the State on the assumption that it would receive from the latter all that was necessary for its subsistence.
The results of that system are notorious. By 1921 not only had industrial production decreased by 95 per cent., but the yield of crops had diminished by nearly 50 per cent. The immense riches concentrated in the hands of the Government rapidly melted away. The current production was not sufficient to meet the most urgent requirements, and with every year it declined still further. The population was becoming pauperized and ruined with even greater rapidity. The inhabitants of the towns bartered their last belongings (furniture, crockery, clothes) for food. The peasants greatly reduced the area under cultivation and the number Of their live stock, preferring to restrict their production to what they needed for their own consumption and not to leave a surplus that would inevitably be requisitioned. The country was rapidly approaching destitution, and the concentration of Wealth in the hands of the governing few was keenly felt as the worst form of tyranny. .
Two years of the New Economic Policy have wrought a great change in the economic relations between the Soviet Government and the population. The Govern- ment is growing steadily poorer ; the stores of precious metals are dwindling in its hands ; notwithstanding the incredible rate at which paper money is being issued the currency is depreciating faster than the amount in circulation is increasing. Finally, the old reserves of goods and commodities are coming to an end. The figures showing the reduction during the past year of the stocks of oil, ore, pig iron, cotton, wool, &c., which still remain in the hands of the Soviet Government, are absolutely catastrophical. The actual production is insufficient even for the most modest scale of consumption. True, certain modifications in the organization of State industry (all branches of industry of any importance still remain in Government possession) have slightly raised production (by 20 per cent. on the average), but this has been attained by the investment of a considerable pro- portion of the dwindling gold reserve in the nationalized industry, which continues to be an item of heavy expenditure for the State.
The population now occupies a totally different position. In the beginning of the New Economic Policy the in- habitants of the towns hastened to take up their customary occupations, industry and trade. Their first experience of the new policy convinced them that the Government was placing such a number of obstacles in their way that it was impossible to look forward to any development of their industrial or commercial activity. The shops and workshops began to shut down as fast as they had opened up. The more timorous lost heart. But the conscious- ness of the possibility of earning bread independently, without waiting for the irregular Soviet doles, induced the more energetic to try again and yet again to recon- struct their ruined lives. It cannot be said that those who made the attempt have always been scrupulous in their choice of means.
For the peasants the New Economic Policy fixed the dimensions of a tax in kind. The tax was high, almost as high, indeed, as the amount that had been levied before by way of requisition, but the peasants were at any rate encouraged to hope that they might retain a margin and extend their husbandry. Here, too, as in the towns, the New Economic Policy raised many obstacles in the way of restoration, but it did at the same time provide a certain stimulus.
Thus, during the whole period since the introduction of the New Economic Policy, the population of Russia, having obtained a very limited right to engage in economic activity on its own account, has been ardently striving, under the most difficult conditions and in spite of the impediments put in its way by the Soviet Government, to save itself, to prevent complete ruin, the collapse of each separate homestead.
Is it succeeding ? It cannot be said that any very palpable results have been attained as yet. The Com- munist tendencies of the Government are very strong, and the members of the Government are well aware of the dangers that would accrue to them from any inde- pendent improvement in the condition of individual citizens. That is why such obstacles are placed in the way of private enterprise. It is difficult to speak as yet of any general improvement in the lot of the population, or even of a large number of individuals. Certain shrewd characters of an aggressive type have acquired consider- able wealth, but they are the exceptions.
It is a fact, however, that some groups of the population, and particularly peasants in certain parts of the country, have succeeded in checking the process of destruction. And now, at the end of the second year of the New Economic Policy, a curious contrast is emerging. On the one hand, the Soviet Government, the greatest employer and owner of industry, is rapidly approaching bankruptcy. On the other hand, the entire population, which during the first three years of the unrestricted activity of this Government had been almost ruined by it, is now, with tremendous efforts, at any rate resisting and delaying the process of further destruction and ruin. It is gradu- ally freeing itself from economic thraldom to the Soviet Government because the Government has now less and less material wealth at its disposal and therefore is growing weaker and weaker.
Under normal relations between Government and population any improvement in the condition of the population would naturally benefit the Government. But this is not true in Russia at this moment. The expenditure of the Government is still so heavy and the bulk of the people are still within such a short distance of destitution that the Government will not be able to save Itself financially by extracting from the very slight and gradual improvement the greatly increased revenue it requires. At the same time, any improvement in the lot of the population is politically dangerous for the Soviet Government, because one of the chief bases of its power has been the tremendous difference between its own economic resources and those of the people. This Government must be rich and have a destitute population at its mercy, or at any rate both must be equally poor, but it cannot admit that the condition of the people should continue to improve while its own economic resources dwindle away. Many prominent Communists are beginning to understand this, and they are beginning to feel anxious. The question is being discussed in party circles, and it will probably become acute in the near future. But how can it be solved ? To take away what has been granted by the Communist Government itself is a much more difficult task than to destroy the old
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