The Soviet's government's policy of War Communism during the Civil War created social distress and led to riots, strikes and demonstrations. The Kronstadt Uprising reinforced the idea that the government was unpopular and accepted and had made a mistake "of deciding upon an immediate transition to communist production and distribution."
Vladimir Lenin came to the conclusion that "only by coming to an agreement with the peasants can we save the socialist revolution". In March, 1921, Vladimir Lenin announced details of his New Economic Policy (NEP). Farmers were now allowed to sell food on the open market and could employ people to work for them. Those farmers who expanded the size of their farms became known as kulaks.
The NEP also allowed some freedom of internal trade, permitted some private commerce and re-established state banks. Factories employing less than twenty people were denationalized and could be claimed back by former owners.
The NEP did improve the efficiency of food distribution and especially benefited the peasants. However, many urban workers resented the profits made by private traders. Joseph Stalin announced the abolition of the NEP in January, 1929 and replaced it with the first of his Five Year Plans.
(1) Victor Serge, Memoirs of a Revolutionary (1945)
The New Economic Policy was, in the space of a few months, already giving marvellous results. From one week to the next, the famine and the speculation were diminishing perceptibly. Restaurants were opening again and, wonder of wonders, pastries which were actually edible were on sale as a rouble apiece. The public was beginning to recover its breath, and people were apt to talk about the return of capitalism, which was synonymous with prosperity. On the other hand, the confusion among the party rank-and-file was staggering. For what did we fight, spill so much blood, agree to so many sacrifices? asked the Civil war veterans bitterly.
