This New Economic Policy (usually referred to as NEP), viewed in its true perspective, amounted to a return to the policy which the Soviet Government had pursued during the first eight months. All belligerent countries during the war adopted certain measures of centralisation and semi-military regulation, to which the name of "war socialism" has sometimes been given. Similarly in Russia "war communism" represented a war-time improvisa tion, which in many respects went aside from the "normal" course which in more peaceful circumstances would probably have been pursued. The economic system which Lenin had envisaged in 1918 and to which the New Economic Policy was a return was termed by him "State Capitalism." It was called by this term since it was a "mixed system," under which over 90 per cent of factory indlis try, including all the larger enterprises, was owned and operated by the State; but at the same time these socialist elements existed alongside a certain amount of small-scale private industry and pri vate trade, and faced the mass of primitive small peasant farms, which covered over 95 per cent of agricultural production.
This State Capitalism, however, differed essentially, according to Lenin, from anything to be found in Western countries even in war-time, in that in Russia a death-blow had been dealt to the existence of a privileged class, and the workers occupied the "key positions" which enabled them to shape the development of society along a new course. The ultimate goal to be attained was a class less society. As long, however, as private production and trade continued, the possibility existed of the rise of a new propertied class, amassing wealth and the differential privileges which go with it. In the village, for instance, the peasant who had more
cattle and instruments than his neighbours might perhaps after a few years of astute business graduate from village trader and usurer to become a merchant or factory owner in the town.
To extend the influence of the socialist elements, accordingly, in this transitional "mixed system" Lenin relied on two things. First, he looked to industrialisation, and in particular to the de velopment of electrification, to accomplish the industrial revolu tion which was still incomplete in pre-war Russia. As this process advanced, the "specific weight" of the large-scale socialist ele ments would increase, and small-scale private economy would be subordinated or transformed. Secondly, he looked to the co operative system as the link between the state and the peasantry, lending special aid to the poorer villagers so as to prevent them from being proletarianised as of yore, and drawing the peasant into collective activity, first in matters of sale and purchase, later in credit and the supply of instruments and the use of agricultural machinery, and finally in the actual cultivation of his land in com mon. In the interim nothing must be done to break the smytchka between the village and the town. Politically the urban workers must keep the peasants as partners, even if only junior while economically State industry must develop, not at the ex pense of peasant agriculture, but along with it, the growth of the one facilitating the growth of the other. Under "war corn monism," which was• under that system, this essential smytchka was broken.