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Posted: April 26, 2025
NOTE: This series covers USSR economic history. Please check out the Proles Pod Stalin Eras series for an excellent recounting and analysis of the political history of this period.
By the mid-1920s, it was clear to USSR leadership that the October Revolution had not been a precursor to world revolution. After intense internal political struggle, the CPSU majority which supported ‘building socialism in one country’ had prevailed. This marked the transition from the NEP market policies, to the state command economy of Five Year Plans. The Five Year Plans, created and enacted by the State Planning Committee (Gosplan), are crucial historical resources, blending political and economic goals, for understanding the USSR economy.
At the heart of the First Five Year Plan (1928 - 1932) were the primary aims of agricultural collectivization and industrialization of the economy. Having consolidated control over the USSR, the CPSU began developing and deploying the necessary means of production for a socialist economy.
Collectivization was an acceleration of the ongoing dismantling of feudal Russian land tenure. It was also a key component of the USSR's delicate balancing act of retaining the support of the peasantry, while also removing them from the capitalistic impulses of individual cultivation. The shift to large collective farms meant modern agricultural techniques could be more easily applied, and agricultural planning more effectively conducted. Collectivization was encouraged by the provision of tractors and advanced machinery to the collective farms. In many areas, collectivization was marked by a bottom-up (rather than top-down as is often asserted) overzealousness from the peasantry. This ‘dizziness with success,’ as Stalin put it, was due to the policy’s popularity among the most oppressed and impoverished. These peasant masses led the spirited but chaotic rural class struggle against the Kulaks, relatively rich, powerful, and anti-communist landowners.
Situations like this remind us that, despite the state’s proclamation of command, state control of implementation was actually quite feeble during the 1920s. Horse or bicycle was often the fastest means of communications in more remote parts of the massive country, making directing and correcting plans in real time a monumental challenge. However, by the end of February 1930, 60% of farms had been collectivized, and from 1928-1933, private agricultural output fell from an NEP peak of 97% to just 20%.
The second primary aim was industrialization. Industrialization in the USSR actually took inspiration from Germany’s rapid state-driven industrialization of the 1870s onwards. Behind this was an enormous state-backed financial effort. Planned bank financing replaced commercial credit, and by 1933, the state bank (Gosbank) held 97% of all short-term loans, pumping billions of rubles into circulation. State industrial conglomerates fulfilled state plans, and delivered products to the state at fixed prices.
To paraphrase Stalin, before the First Five Year Plan, the USSR didn’t have industries for: iron and steel, tractors, automobiles, machine tools, modern chemical production, modern agricultural machinery, or aircraft. By 1932, they did, creating new industries on a scale eclipsing European industry. All the more impressive was achieving this without the imperialism and slavery on which Europe industrialized, in years rather than decades, while the Great Depression devastated the capitalist world. The USSR fulfilled its planned industrial output in just four years, raising production volume to more than 3x pre-war output, and more than double the level of 1928, with heavy industry output reaching 108% of the plan’s production goals.
The First Five Year Plan was a proof of concept for a socialist command economy, laying the foundations for socialism in one country. Yet, while the USSR became an overnight industrial power, there was a contradiction between securing national economic capacity and sovereignty, and raising living standards for the population. Using so much of the agricultural surplus for industrialization, along with grain hoarding by remaining Kulaks, led to a terrible famine in 1932-1933. 1933 also marked the ascension of the Nazis in Germany. Hitler was open about his desire to destroy communism, colonize Eastern Europe/the USSR, and enslave Slavic peoples. So the USSR began planning for war, on the basis of ‘when’ rather than ‘if.’
The chief economic task of the Second Five Year Plan (1933 - 1937) was to complete reconstruction and provide a new technical base for the entire national economy. An emphasis was placed on machine building (the production of new means of production), and continuing to shape agriculture around modern tools and techniques. All of this required energy, with electricity out planned to jump from 17B kilowatt hours in 1932 to over 100B in 1937.
Enormous production increases were planned for key commodities like pig iron, steel, machine tools, copper, lead, zinc, aluminum, precious metals, automobiles, and fertilizers. Transportation and communications planning included 30,000 km of new railways, bridges, an expanded river and sea fleet, roads and highways, air communication for distant areas and industrial centers, and the new technology of radio.
This goal of reconstruction on a new technical basis drove the consolidation of collective farms, and socialist training of collective farmers. The USSR wanted to treble food production/consumption, to avoid another famine, a goal at which they succeeded. Mass consumer goods were also prioritized, to enable workers and peasants to buy more and better goods for their families. Soviet trade development, with the eventual goal of abolishing the consumer rationing and centralized distribution systems, also flourished.
At a time when the capitalist world was plagued by unemployment for millions of workers and impoverishment for millions of farmers, the USSR had wiped out unemployment, with skyrocketing living standards across the union. Let’s examine the results of the Second Five Year plan as a bookend to the 25 year period (1913 - 1938) from the eve of World War I to that of World War 2, to show the immensity of the USSR’s economic progress.
Total crop area had increased by 30.4%, including an 18.6% rise in grain, 2.5x more industrial crop and vegetables, 3.6x more cotton, and 6.7x more fodder for livestock (including 64% more cattle and 2.5x more pigs). The number of tractors used by peasants went from basically zero at the end of the Czarist period, to 500,000 and growing, including a 2.5x increase from the First to Second Five Year Plan.
Industrial capacity went up ~9x, with industry surpassing agriculture in annual output (a ~70-30 split), officially making the USSR an industrial economy. The USSR had liberated its people from the economic shackles of feudalism, capitalism, and imperialism, while fascism and war were the last resorts of the imperialist capitalist West, in the crisis of the Great Depression.
In our next post, we will be putting the Economic History of the USSR on pause for a bit, with the Nazis and Imperial Japan menacing the USSR on the eve of World War II. Instead, we will be kicking off a new series called Working Class Economists, where we will learn economics concepts, and how to analyze economic theories. The first post will be about microeconomics.
If you're interested in these ideas, don't hesitate to reach out. This project is a conversation, not a lecture, so all good faith feedback is encouraged, especially from trained economists.
Recommended Further Reading
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