Eco Development


Problems facing the USSR in 1929

• Russia needed to import capital equipment (machinery) from overseas, to facilitate industrialisation. Since the Western nations were unwilling to lend Russia money, the foreign exchange would have to be earned, via exports. Russia had only one exportable product – agriculture.
• However, agricultural production was inadequate to feed Russia’s growing urban population, let alone provide a surplus for export. There were food shortages in the towns and cities.
• NEP was benefiting the wealthy peasants (kulaks), who were never likely to support the socialist ideology of the Bolsheviks. Many party members were uncomfortable with NEP, because it was really just rural capitalism.
• Stalin also feared that Russia was very vulnerable to external attack. If it did not industrial quickly, the Revolution could be swept aside by foreign invaders – particular Germany, which was lurching to the right as the Depression hit.
• In addition, Stalin felt the country needed to industrialise to strengthen the party’s support base, by creating a large working class. Once this was achieved, the regime’s remaining enemies (such as the kulaks) could be eliminated.

Stalin’s plan for economic development

• Stalin concentrated most of the nation's resources on heavy industry. This meant very few consumer goods were produced, giving peasants little incentive to increase production (since there was nothing to buy with the income they received).
• To prevent the peasants from reducing production (in response to the lack of goods to buy), Stalin collectivised the land, forcing the newly formed collectives to meet strict production targets.
• To ensure that resources were directed to the areas of need, NEP was replaced by command socialism, with all industry nationalised and market mechanisms replaced by a series of five year plans. Imports were reduced to a bare minimum – mainly capital equipment.