Economics of the Soviet Union Essay

1868 WordsMar 26, 20098 Pages
Matthew McMillan Econ-412 Economic Dynamics in the Soviet Union The Soviet leaders detested the capitalism that was forming in Russia, however, it took over ten years following 1917 to make up a “socialist” economic model. During the three years of War Communism, the economic and political organization that existed in Russia during the Russian Civil War, they nationalized banks, railroads, and large factories, while prohibiting most private business. To promote postwar healing, Lenin embraced an agreement in 1921 called the New Economic Policy. This policy kept banks, transportation, important industry, and foreign trade in the hands of the national government, but permitted individuals and private businesses to implement trade, small scale industrialization, and agricultural. Stalin and his supporters got rid of the New Economic Policy at the close of the 1920s taking away private property and introducing the first Five-Year Plan. The newly designed economy was in full force by the middle of the 1930’s. Many discussions of reorganization did not create any real changes, so it continued until Mikhail Gorbachev opened it up for criticism over fifty years later. Almost all resources in the Soviet economic system were owned by the national government and ran by its own people. The government organization Gosplan, also known as the State Planning Committee, came up with the national plan for the economy. It defined the country’s investment goals and also specific physical quotas for every business’s productivity. The plan also decided the combination of raw materials and labor the business was supposed to utilize, and a thorough agenda for completion. In addition, a different government agency determined all wholesale prices and almost all retail prices. This planned economy perform convincingly well during the 1930’s, during World War II, and many years

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