Commanding Heights of the Economy

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As a result of peasant and military revolts in 1920 and early 1921, Vladimir I. Lenin was forced to reverse the extreme policies of War Communism in favor of a temporary expedient, the mixed economy of the New Economic Plan (NEP). The Bolshevik Tenth Party Congress (March 1921) adopted a tax in kind on the peasantry to replace confiscations. The Congress also permitted leasing smaller nationalized workshops back to private individuals, provided they hired no more than ten or twenty workers. But the Bolsheviks retained in state hands most large-scale industry in the fuel and metallurgical sectors, mines, and military plans, along with all banking, railroads, and foreign trade. These were to constitute the "commanding heights," which were supposed to control and guide the rest of the economy under Soviet power. They were provided subsidies from the budget to pay for wages and supplies. Many of the industrial enterprises were soon organized into trusts or syndicates under the Supreme Council of the National Economy (VSNKh) for operational supervision, though many rehired former managers and experts ("bourgeois specialists") deemed to be loyal to the new regime. By 1922 more than 90 percent of industrial output still came from these nationalized plants, mines, and transportation facilities. By 1928 industrial output had recovered the levels achieved in 1913, but further expansion would depend on new net investments, for which the state budget would be the only significant source, for the "commanding heights" did not generate sufficient profits.

See also: new economic policy; war communism


Nove, Alec. (1969). Economic History of the USSR. London: Allen Lane.

Martin C. Spechler