Use of government to make economic decisions with respect to the use of resources. In communist countries with a state planning apparatus, detailed and rigid planning results in a command economy; land, capital, and the means of production are publicly owned and centrally allocated, and the government makes both micro- and macroeconomic decisions. Microeconomic decisions include what goods and services to produce, the quantities to produce, the prices to charge, and the wages to pay. Macroeconomic decisions include the rate of investment and the extent of foreign trade. In most industrialized countries, governments influence their economies indirectly through monetary and fiscal policies. A few key economic sectors may be publicly owned, but the trend has been toward the privatization of industries that were socialized in the aftermath of the Great Depression and World War II. Japan is the most notable example of economic planning in a capitalist framework; government and industry cooperate closely in planning patterns of capital investment, research and development, and export strategies. Seealso capitalism, communism, socialism, zaibatsu.
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Economic policy of the Soviet Union (1921–28). A temporary retreat from the failed War Communism policy of extreme centralization and doctrinaire socialism, the new measures included the return of most agriculture, retail trade, and light industry to private ownership (though the state retained control of heavy industry, banking, transport, and foreign trade) and the reintroduction of money into the economy. The policy allowed the economy to recover from years of war. In 1928 chronic grain shortages prompted Joseph Stalin to begin to eliminate private ownership of farmland and to collectivize agriculture under state control, effectively ending the NEP. By 1931 state control was reimposed over all industry and commerce.
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The NEP succeeded in creating an economic recovery after the devastating effects of the First World War, the Russian Revolution and the Russian civil war. By 1928, agricultural and industrial production had been restored to the 1913 (pre-WWI) level.
The NEP was generally believed to be intended as an interim measure, and proved highly unpopular with the Left Opposition in the Bolshevik party because of its compromise with some capitalistic elements and the relinquishment of State control. They saw the NEP as a betrayal of communist principles, and they believed it would have a negative long-term economic effect, so they wanted a fully planned economy instead. In particular, the NEP created a class of traders ("NEP men") whom the Communists considered to be "class enemies" of the working class. On the other hand, Lenin is quoted to have said "The NEP is in earnest and long-term" (НЭП - это всерьез и надолго), which has been used to surmise that if Lenin were to stay alive longer, NEP would have continued beyond 1929, and the controversial collectivization would have never happened, or it would have been carried out differently. Lenin had also been known to say about NEP: "We are taking one step backward to later take two steps forward", suggesting that the NEP would slowly morph into something else as soon as the economy was prepared.
Lenin's successor, Stalin, eventually introduced full central planning (although a variant of public planning had been the idea of the Left Opposition, which Stalin purged from the Party), re-nationalized the whole economy, and from the late 1920s onwards introduced a policy of rapid industrialization. Stalin's collectivization of agriculture has been his most notable, and most destructive departure from the NEP approach. It is often argued that industrialization could have been achieved without any collectivization just by taxing the peasants more, much like what happened in Meiji Japan, Bismarck's Germany, and in post-WWII South Korea and Taiwan.
Fitzpatrick, Sheila, et al (ed.) (1991). Russia in the Era of NEP. Bloomington, IN: Indiana University Press. ISBN 025320657X.
Golitsyn, Anatoliy (1984). New Lies for Old - The Communist Strategy of Deception and Disinformation. New York, Dodd, Mead & Company
Golitsyn, Anatoliy (1995). Perestroika Deception - Memoranda to the Central Intelligence Agency - The World's Slide Towards the Second October Revolution (Weltoktober). London, New York, Edward Harle Ltd.
NEP Era Journal: http://www.d.umn.edu/cla/NEPera/main/index.php