V. I. Lenin

October 29-31 , 1921 [1]

1
Report On The New Economic Policy
October 29

Comrades, in reporting on the New Economic Policy, I must start
with the reservation that I understand this subject differently
from what many of you here, perhaps, expect; or rather, that I
can deal with only one small part of this subject. Naturally, on
this question interest centres mainly on the explanation and
assessment of the recent laws and decisions of the Soviet
government on the New Economic Policy. The larger the number of
these decisions and the more urgent the need for their formulation, regulation and summation, the more legitimate the
interest in such a subject, and as far as I can judge from my
observations in the Council of People’s Commissars, this
need is now felt very, very acutely. No less legitimate is the
desire to learn the facts and figures already available on the
results of the New Economic Policy. The number of confirmed and
tested facts is still very small, of course, but nonetheless
such facts are available. Undoubtedly, to become familiar with
the New Economic Policy it is absolutely necessary to keep up to
date on those facts and to try to summarise them. But I cannot
undertake to deal with either of these subjects, and if you are
interested in them I am sure you will be able to find reporters
on them. What interests me is another subject, namely, the
tactics, or, if one may so express it, the revolutionary
strategy we have adopted in connection with our change of
policy; the extent, on the one hand, to which that policy
corresponds to our general conception of our tasks, and, on the
other hand, the extent to which the Party knows and appreciates
the necessity for the New Economic Policy. This is the special
question to which I should like to devote my talk exclusively.

What interests me first of all is this. In appraising our New
Economic Policy, in what sense can we regard our former economic
policy as a mistake? Would it be correct to say that it was a
mistake? And lastly, if it was a mistake, is it useful and
necessary to admit it?

I think this question is important for an assessment of the
extent to which agreement prevails in our Party on the most
fundamental issues of our present economic policy.

Should the Party’s attention be now concentrated exclusively on certain definite aspects of this economic policy,
or should it be devoted, from time to time, at least, to
appraising the general conditions of this policy, and to the
question of whether Party political consciousness, Party
interest and Party attention conform to these general conditions? I think the position today is that our New Economic
Policy is not yet sufficiently clear to large numbers of our
Party members; and unless the mistake of the previous economic
policy is clearly understood we cannot successfully accomplish
our task of laying the foundations and of finally determining
the direction of our New Economic Policy.

To explain my views and to indicate in what sense we can, and in
my opinion should, say that our previous economic policy was
mistaken, I would like to take for the purpose of analogy an
episode from the Russo-Japanese War, which, I think, will enable
us to obtain a clearer picture of the relationship between the
various systems and political methods adopted in a revolution of
the kind that is taking place in our country. The episode I have
in mind is the capture of Port Arthur by the Japanese General
Nogi. The main thing that interests me in this episode is that
the capture of Port Arthur was accomplished in two entirely
different stages. The first stage was that of furious assaults;
which ended in failure and cost the celebrated Japanese
commander extraordinarily heavy losses. The second stage was the
extremely arduous, extremely difficult and slow method of siege,
according to all the rules of the art. Eventually, it was by
this method that the problem of capturing the fortress was
solved. When we examine these facts we naturally ask in what way
was the Japanese general’s first mode of operation against
the fortress of Port Arthur mistaken? Were the direct assaults
on the fortress a mistake? And if they were, under what
circumstances should the Japanese army have admitted that it was
mistaken so as to achieve its object; and to what extent should
it have admitted that the assaults were mistaken?

At first sight, of course, the answer to this question would
seem to be a simple one. If a series of assaults on Port Arthur
proved to be ineffective—and that was the case—if the losses sustained by the assailants were extremely
heavy—and that, too, was undeniably the case—it is evident that the tactics of immediate and direct assault upon
the fortress of Port Arthur were mistaken, and this requires no
further proof. On the other hand, however, it is easy to
understand that in solving a problem in which there are very
many unknown factors, it is difficult without the necessary
practical experience to determine with absolute certainty the
mode of operation to be adopted against the enemy fortress, or
even to make a fair approximation of it. It was impossible to
determine this without ascertaining in practice the strength of
the fortress, the strength of its fortifications, the state of
its garrison, etc. Without this it was impossible for even the
best of commanders, such as General Nogi undoubtedly was, to
decide what tactics to adopt to capture the fortress. On the
other hand, the successful conclusion of the war called for the
speediest possible solution of the problem. Furthermore, it was
highly probable that even very heavy losses, if they were
inevitable in the process of capturing the fortress by direct
assault, would have been more than compensated for by the
result; for it would have released the Japanese army for
operations in other theatres of war, and would have achieved one
of the major objects of the war before the enemy (the Russian
army) could have dispatched large forces to this distant theatre
of war, improved their training and perhaps gained immense
superiority.

If we examine the course of the military operations as a whole
and the conditions under which the Japanese army operated, we
must come to the conclusion that these assaults on Port Arthur
were not only a display of supreme heroism on the part of the
army which proved capable of enduring such huge losses, but that
they were the only possible tactics that could have been adopted
under the conditions then prevailing, i. e., at the opening of
hostilities. Hence, these tactics were necessary and useful; for
without a test of strength by the practical attempt to carry the
fortress by assault, without testing the enemy’s power of
resistance, there would have been no grounds for adopting the
more prolonged and arduous method of struggle, which, by the
very fact that it was prolonged, harboured a number of other
dangers. Taking the operations as a whole, we cannot but regard
the first stage, consisting of direct assaults and attacks, as
having been a necessary and useful stage, because, I repeat,
without this experience the Japanese army could not have learnt
sufficiently the concrete conditions of the struggle. What was
the position of this army when the period of fighting against
the enemy fortress by means of direct assault had drawn to a
close? Thousands upon thousands of men had fallen, and thousands
more would fall, but the fortress would not be taken in this
way—such was the position when some, or the majority, began to realise that the tactics of direct assault had to be
abandoned and siege tactics adopted. Since the previous tactics
had proved mistaken, they had to be abandoned, and all that was
connected with them had to be regarded as a hindrance to the
operations and dropped. Direct assaults had to cease; siege
tactics had to be adopted; the disposition of the troops had to
be changed, stores and munitions redistributed, and, of course,
certain methods and operations had to be changed. What had been
done before had to be resolutely, definitely and clearly
regarded as a mistake in order to remove all obstacles to the
development of the new strategy and tactics, to the development
of operations which were now to be conducted on entirely new
lines. As we know, the new strategy and tactics ended in
complete victory, although it took much longer to achieve than
was anticipated.

I think this analogy can serve to illustrate the position in
which our revolution finds itself in solving its socialist
problems of economic development. Two periods stand out very
distinctly in this connection. The first, the period from
approximately the beginning of 1918 to the spring of 1921; and
the other, the period from the spring of 1921 to the present.

If you recall the declarations, official and unofficial, which
our Party made in late 1917 and early 1918, you will see that
even at that time we were aware that the revolution, the
struggle, might proceed either by a relatively short road, or by
a very long and difficult road. But in estimating the prospects
of development we in most cases—I can scarcely recall an
exception—started out with the assumption—perhaps not always openly expressed but always tacitly taken for
granted—that we would be able to proceed straight away with socialist construction. I have purposely read over again
all that was written, for example, in March and April 1918 about
the tasks of our revolution in the sphere of socialist construction, [2] and I am convinced that that was
really the assumption we made.

This was the period when we accomplished the essential, and from
the political point of view necessarily the preliminary, task of
seizing power, setting up the Soviet state system in place of
the former bourgeois parliamentary system, and then the task of
getting out of the imperialist war. And this withdrawal from the
war was, as you know, accompanied by extremely heavy losses, by
the signing of the unbelievably humiliating Treaty of Brest,
which imposed almost impossible terms upon us. After the
conclusion of that peace we had a period—from March to the
summer of 1918—in which war problems appeared to have been
solved. Subsequent events showed that this was not the case. In
March 1918, after the problem of the imperialist war was solved,
we were just approaching the beginning of the Civil War, which
in the summer of 1918 was brought closer and closer by the
Czechoslovak mutiny. At that time—March or April
1918—in discussing our tasks, we began to consider the prospect of passing from methods of gradual transition to such
modes of operation as a struggle mainly for the expropriation of
the expropriators, and this, in the main, characterised the
first months of the revolution—the end of 1917 and the beginning of 1918. Even at that time we were obliged to say that
our organisation of accounting and control lagged considerably behind our work and activities in connection with the expropriation of the expropriators. That meant we had expropriated more than we could take account of, control, manage, etc., and thus the question was raised of transferring our activities from the task of expropriating, of smashing the power of the exploiters and expropriators, to that of organising accounting and control, to the, so to speak, prosaic tasks of actual economic development. Even at that time we had to retreat on a number of points. For example, in March and April 1918, the question was raised of remunerating specialists at rates that conformed, not to socialist, but to bourgeois relationships, i. e., at rates that corresponded, not to the difficulty or arduousness of the work performed, but to bourgeois customs and to the conditions of bourgeois society. Such exceptionally high—in the bourgeois manner—remuneration for specialists did not originally enter into the plans of the Soviet government, and even ran counter to a number of decrees issued at the end of 1917. But at the beginning of 1918 our Party gave direct instructions to the effect that we must step back a bit on this point and agree to a “compromise” (I employ the term then in use). On April 29, 1918, the All-Russia Central Executive Committee adopted a decision to the effect that it was necessary to make this change in the general system of payment. [3]

We regarded the organisational, economic work, which we put in
the forefront at that time, from a single angle. We assumed that
we could proceed straight to socialism without a preliminary
period in which the old economy would be adapted to socialist
economy. We assumed that by introducing state production and
state distribution we had established an economic system of
production and distribution that differed from the previous
one. We assumed that the two systems—state production and
distribution and private commodity production and distribution—would compete with each other, and meanwhile
we would build up state production and distribution, and step by
step win them away from the hostile system. We said that our
task now was not so much to expropriate the expropriators as to
introduce accounting and control, increase the productivity of
labour and tighten up discipline. We said this in March and
April 1918; but we did not ask ourselves in what relation our
economy would stand to the market, to trade. When in the spring
of 1918, for example, in our polemics with a number of comrades,
who were opposed to concluding the Brest peace, we raised the
question of state capitalism, we did not argue that we were
going back to state capitalism, but that our position would be
alleviated and the solution of our socialist problems facilitated if state capitalism became the predominant economic
system in Russia. I want to draw your particular attention to
this, because I think it is necessary to bear it in mind in
order to understand the present change in our economic policy
and how this change should be interpreted.

I shall give you an example which may illustrate more concretely
and vividly the conditions under which our struggle has
evolved. In Moscow recently I saw a copy of the privately owned
publication Listok Obyavleni. [4] After three years of our old economic policy this Listok Obyavleni seemed to
me to be something very unusual, very new and strange. Looking
at it from the point of view of the general methods of our
economic policy, however, there was nothing queer about
it. Taking this slight but rather typical example you must
remember how the struggle was developing, and what were its aims
and methods in our revolution in general. One of the first
decrees at the end of 1917 was that which established a state
monopoly of advertising. What did that decree imply? It implied
that the proletariat, which had won political power, assumed
that there would be a more gradual transition to the new social
and economic relations—not the abolition of the private
press, but the establishment of a certain amount of state
control that would direct it into the channels of state
capitalism. The decree which established a state monopoly of
advertising thereby assumed that privately owned newspapers
would continue to exist as a general rule, that an economic
policy requiring private advertisements would continue, and that
private property would remain—that a number of private establishments which needed advertising and advertisements would
continue to exist. That is what the decree on the state monopoly
of private advertising meant, and it could have meant nothing
else. There was something analogous to this in the decrees on
banking, but I shall not go into that, for it would only
complicate my example.

What was the fate of the decree establishing a state monopoly of
private advertising issued in the first weeks of the Soviet
government? It was soon swept away. When we now recall the
course of the struggle and the conditions under which it has
proceeded since then, it is amusing to think how naïve we
were to talk then, at the close of 1917, about introducing a
state monopoly of private advertising. What sort of private
advertising could there have been in a period of desperate
struggle? The enemy, i. e., the capitalist world, retaliated to
that Soviet government decree by continuing the struggle and by
stepping it up to the limit. The decree assumed that the Soviet
government, the proletarian dictatorship, was so firmly
established that no other system of economy was possible; that
the necessity to submit to it would be so obvious to the mass of
private entrepreneurs and individual owners that they would
accept battle where we, as the state power, chose. We said in
effect: “We will allow your private publications to continue; private enterprises will remain; the freedom to
advertise, which is necessary for the service of these private
enterprises, will remain, except that the state will impose a
tax on advertisements; advertising will be concentrated in the
hands of the state. The private advertising system, as such,
will not be abolished; on the contrary, you will enjoy those
benefits which always accrue from the proper concentration of
publicity.” What actually happened, however, was that we
had to wage the struggle on totally different terrain. The
enemy, i. e., the capitalist class, retaliated to this decree of
the state power by completely repudiating that state power. Advertising ceased to be the issue, for all the remnants
of what was bourgeois and capitalist in our system had already
concentrated their forces on the struggle against the very
foundations of state power. We, who had said to the capitalists,
“Submit to state regulation, submit to state power, and
instead of the complete abolition of the conditions that
correspond to the old interests, habits and views of the
population, changes will be gradually made by state regulation”—we found our very existence in
jeopardy. The capitalist class had adopted the tactics of
forcing us into a desperate and relentless struggle, and that
compelled us to destroy the old relations to a far larger extent
than we had at first intended.

Nothing came of the decree establishing state monopoly of
private advertising; it remained a dead letter, while actual
events, i.e.. the resistance of the capitalist class, compelled
our state to shift the struggle to an altogether different
plane; not to the petty, ridiculously petty, issues we were
naïve enough to dabble in at the end of 1917, but to the
issue of “To be or not to be?”—to smash the sabotage of the former salaried class; to repel the white guard
army, which was receiving assistance from the bourgeoisie of the
whole world.

I think that this episode with the decree on advertising
provides useful guidance on the fundamental question of whether
the old tactics were right or wrong. Of course, when we appraise
events in the light of subsequent historical development, we
cannot but regard our decree as naïve and, to a certain
extent, mistaken. Nevertheless, it did contain something that
was right, in that the state power—the proletariat—made an attempt to pass, as gradually as
possible, breaking up as little of the old as possible, to the
new social relations while adapting itself, as much as possible,
one may say, to the conditions then prevailing. But the enemy,
i. e., the bourgeois class, went to all ends to provoke us into
an extremely desperate struggle. Was this strategically correct
from the enemy’s point of view? Of course it was; for how
could the bourgeoisie be expected to submit to an absolutely
new, hitherto unprecedented proletarian power without first
testing its strength by means of a direct assault? The bourgeoisie said to us, in effect, “Excuse us, gentlemen,
we shall not talk to you about advertisements, but about whether
we can find in our midst another Wrangel, Kolchak or Denikin,
and whether they will obtain the aid of the international
bourgeoisie in deciding, not whether you are going to have a
State Bank or not, but an entirely different issue.” Quite
a lot was written about the State Bank at the end of 1917 but as
in the case with advertisements it all remained largely a dead
letter.

At that time the bourgeoisie retaliated with a strategy that was
quite correct from its point of view. What it said was,
“First of all we shall fight over the fundamental issue of
whether you are really the state power or only think you are;
and this question will not be decided by decrees, of course, but
by war, by force; and in all probability this war will be waged
not only by us, the capitalists who have been expelled from
Russia, but by all those who want the capitalist system. And if
it turns out that the rest of the world is sufficiently
interested, we Russian capitalists will receive the assistance
of the international bourgeoisie.” From the standpoint of
its own interests, the bourgeoisie acted quite rightly. If it
had had oven a crumb of hope of settling the fundamental issue
by the most effective means—war—it could not and should not have agreed to the partial concessions the Soviet
government offered it while contemplating a more gradual
transition to the new system. “We don’t want your transition, we don’t want your new system,” was the
reply of the bourgeoisie.

That is why events developed in the way they did. On the one
hand, we had the victory of the proletarian state accompanied by
a struggle of extraordinary magnitude amidst unprecedented
popular enthusiasm, which characterised the whole period of 1917
and 1918. On the other hand, the Soviet government attempted to
introduce an economic policy that was originally calculated to
bring about a number of gradual changes, to bring about a more
cautious transition to the new system. This policy was expressed, among other things, by the little example I have just
given you. In retaliation, the enemy camp proclaimed its
determination to wage a relentless struggle to decide whether
Soviet power could, as a state, maintain its position in the
international system of economic relations. That issue could be
decided only by war, which, being civil war, was very fierce. The sterner the struggle became, the less chance there
was of a cautious transition. As I have said, in the logic of
the struggle the bourgeoisie was right from its own point of
view. But what could we say? We said to the capitalists,
“You will not frighten us, gentlemen. In addition to the
thrashing we gave you and your Constituent Assembly in the
political field, we shall give you a thrashing in this field
too.”

We could not act otherwise. Any other way would have meant the
complete surrender of our positions.

If you recall the conditions under which our struggle developed
you will understand what this seemingly wrong and fortuitous
change meant; why—relying upon the general enthusiasm and
on ensured political power—we were so easily able to disperse the Constituent Assembly; why we at the same time had
to try a number of measures that meant the gradual and cautious
introduction of economic reforms; and why, finally, the logic of
the struggle and the resistance of the bourgeoisie compelled us
to resort to the most extreme, most desperate and relentless
civil war, which devastated Russia for three years.

By the spring of 1921 it became evident that we had suffered
defeat in our attempt to introduce the socialist principles of
production and distribution by “direct assault", i. e., in
the shortest, quickest and most direct way. The political
situation in the spring of 1921 revealed to us that on a number
of economic issues a retreat to the position of state capitalism, the substitution of “siege” tactics for
“direct assault", was inevitable.

If this transition calls forth complaints, lamentations,
despondency and indignation among some people, we must say that
defeat is not as dangerous as the fear to admit it, fear to draw
all the logical conclusions from it. A military struggle is much
simpler than the struggle between socialism and capitalism; and
we defeated Kolchak and Co. because we were not afraid to admit
our defeats, we were not afraid to learn the lessons that these
defeats taught us and to do over and over again what had been
left unfinished or done badly.

We must act in the same way in the much more complicated and
difficult field of struggle between socialist and capitalist
economy. Don’t be afraid to admit defeat. Learn from defeat. Do over again more thoroughly, more carefully, and more
systematically what you have done badly. If any of us were to
say that admission of defeat—like the surrender of positions—must cause despondency and relaxation of effort
in the struggle, we would reply that such revolutionaries are
not worth a damn.

I hope that, except in isolated cases, nobody will be able to
say that about the Bolsheviks, who have been steeled by the experience of three years of civil war. Our strength lay
and will lie in our ability to evaluate the severest defeats in
the most dispassionate manner and to learn from them what must
be changed in our activities. That is why we must speak
plainly. This is interesting and important not only from the
point of view of correct theory, but also from the practical
point of view. We cannot learn to solve our problems by new
methods today if yesterday’s experience has not opened our
eyes to the incorrectness of the old methods.

The New Economic Policy was adopted because, in the spring of
1921, after our experience of direct socialist construction
carried on under unprecedentedly difficult conditions, under the
conditions of civil war, in which the bourgeoisie compelled us
to resort to extremely hard forms of struggle, it became
perfectly clear that we could not proceed with our direct
socialist construction and that in a number of economic spheres
we must retreat to state capitalism. We could not continue with
the tactics of direct assault, but had to undertake the very
difficult, arduous and unpleasant task of a long siege accompanied by a number of retreats. This is necessary to pave
the way for the solution of the economic problem, i. e., that of
the economic transition to socialist principles.

I cannot today quote figures, data, or facts to show the results
of this policy of reverting to state capitalism. I shall give
only one small example. You know that one of our principal
industrial centres is the Donets Basin. You know that there we
have some of the largest of the former capitalist enterprises,
which are in no way inferior to the capitalist enterprises in
Western Europe. You know also that our first task then was to
restore the big industrial enterprises; it was easier for us to
start the restoration of the Donets industry because we had a
relatively small number of workers there. But what do we see
there now, after the change of policy last spring? We see the
very opposite, viz., that the development of production is
particularly successful in the small mines which we have leased
to peasants. We see the development of state capitalist
relations. The peasant mines are working well and are delivering
to the state, by way of rent, about thirty per cent of their
coal output. The development of production in the Donets Basin
shows a considerable general improvement over last summer’s catastrophic position; and this is largely due to
the improvement of production in small mines, to their being
exploited along the lines of state capitalism. I cannot here go
into all the data on the question, but this example should
clearly illustrate to you some of the practical results that
have been achieved by the change of policy. A revival of
economic life—and that is what we must have at all costs—and increased productivity—which we must also
have at all costs—are what we are beginning to obtain as a
result of the partial reversion to the system of state capitalism. Our ability, the extent to which we shall be able to
apply this policy correctly in the future, will determine to
what extent we shall continue to get good results.

I shall now go back and develop my main idea. Is our transition
to the New Economic Policy in the spring, our retreat to the
ways, means and methods of state capitalism, sufficient to
enable us to stop the retreat and prepare for the offensive? No,
it is not yet sufficient. And for this reason. To go back to the
analogy I gave at the beginning (of direct assault and siege in
war), we have not yet completed the redeployment of our forces,
the redistribution of our stores and munitions, etc.; in short,
we are not yet fully prepared for the new operations, which must
be conducted on different lines in conformity with the new
strategy and tactics. Since we are now passing to state
capitalism, the question arises of whether we should try to
prevent the methods which were suitable for the previous
economic policy from hindering us now. It goes without saying,
and our experience has proved it, that that is what we must
secure. In the spring we said that we would not be afraid to
revert to state capitalism, and that our task was to organise
commodity exchange. A number of decrees and decisions, a vast
number of newspaper articles, all our propaganda and all the
laws passed since the spring of 1921 have been directed to the
purpose of stimulating commodity exchange. What was implied by
that term? What plan of development, if one may so express it,
did it imply? It implied a more or less socialist exchange
throughout the country of the products of industry for the
products of agriculture, and by means of that commodity exchange
the restoration of large-scale industry as the sole basis of
socialist organisation. But what happened? You are all now well
aware of it from your own practical experience, and it is also
evident from our press, that this system of commodity exchange
has broken down; it has broken down in the sense that it has
assumed the form of buying and selling. And we must now admit
this if we do not want to bury our heads in the sand, if we do
not want to be like those who do not know when they are beaten,
if we are not afraid of looking danger straight in the face. We
must admit that we have not retreated far enough, that we must
make a further retreat, a further retreat from state capitalism
to the creation of state-regulated buying and selling, to the
money system. Nothing came of commodity exchange; the private
market proved too strong for us; and instead of the exchange of
commodities we got ordinary buying and selling, trade.

Take the trouble to adapt yourselves to this; otherwise, you
will be overwhelmed by the wave of spontaneous buying and
selling, by the money system!

That is why we find ourselves in the position of having to
retreat still further, in order, eventually, to go over to the
offensive. That is why we must all admit now that the methods of
our previous economic policy were wrong. We must admit this in
order to be able to understand the nature of the present
position, the specific features of the transition that now lies
ahead of us. We are not now confronted with urgent problems of
foreign affairs; nor are we confronted with urgent war problems. We are now confronted mainly with economic problems,
and we must bear in mind that the next stage cannot be a
transition straight to socialist construction.

We have not been able to set our (economic) affairs in order in
the course of three years. The devastation, impoverishment and
cultural backwardness of our country were so great that it
proved impossible to solve the problem in so short a time. But,
taken as a whole, the assault left its mark and was useful.

Now we find ourselves in the position of having to retreat even
a little further, not only to state capitalism, but to the state
regulation of trade and the money system. Only in this way, a
longer way than we expected, can we restore economic life. Unless we re-establish a regular system of economic
relations, restore small-peasant farming, and restore and
further expand large-scale industry by our own efforts, we shall
fail to extricate ourselves from the crisis. We have no other
way out; and yet there are many in our ranks who still do not
understand clearly enough that this economic policy is necessary. When we say, for example, that the task that
confronts us is to make the state a wholesale merchant, or that
it must learn to carry on wholesale trade, that our task is
commercial, some people think it is very queer and even very
terrible. They say: “If Communists have gone to the length
of saying that the immediate task is to engage in trade, in
ordinary, common, vulgar, paltry trade, what can remain of
communism? Is this not enough to make anyone throw up his hands
in despair and say, ’All is lost’?” If we look round, I think we shall find people who express sentiments of
this kind, and such sentiments are very dangerous, because if
they become widespread they would give many people a distorted
view of things and prevent them from appraising our immediate
tasks soberly. If we concealed from ourselves, from the working
class, from the masses the fact that we retreated in the
economic field in the spring of 1921, and that we are continuing
the retreat now, in the autumn and winter of 1921-22, we would
be certifying to our own lack of political consciousness; it
would prove that we lacked the courage to face the present
situation. It would be impossible to work and fight under such
conditions.

If an army which found that it was unable to capture a fortress
by direct assault declared that it refused to leave the old
positions and occupy new ones, refused to adopt new methods of
achieving its object, one would say that that army had learnt to
attack, but had not learnt to retreat when certain severe
conditions made it necessary, and would, therefore, never win
the war. There has never been a war in history that was an
uninterrupted victorious advance from beginning to end—at
any rate, such wars are very rare exceptions. This applies to
ordinary wars but what about wars which decide the fate of a
whole class, which decide the issue of socialism or capitalism? Are there reasonable
grounds for assuming that a nation which is attempting to solve
this problem for the first time can immediately find the only
correct and infallible method? What grounds are there for
assuming that? None whatever! Experience teaches the very
opposite. Of the problems we tackled, not one was solved at the
first attempt; every one of them had to be taken up a second
time. After suffering defeat we tried again, we did everything
all over again; if we could not find an absolutely correct
solution to a problem we tried to find one that was at least
satisfactory. That is how we acted in the past, and that is how
we must continue to act in the future. If, in view of the
prospects before us, there were no unanimity in our ranks it
would be a very sad sign that an extremely dangerous spirit of
despondency had lodged itself in the Party. If, however, we are
not afraid to speak the sad and bitter truth straight out, we
shall learn, we shall unfailingly and certainly learn to
overcome all our difficulties.

We must take our stand on the basis of existing capitalist
relations. Will this task scare us? Shall we say that it is not
communist? If so, then we have failed to understand the
revolutionary struggle, we have failed to understand that the
struggle is very intense and is accompanied by extremely abrupt
changes, which we cannot brush aside under any circumstances.

I shall now sum up.

I shall touch upon the question that occupies many people’s minds. If today, in the autumn and winter of
1921, we are making another retreat, when will the retreat stop?
We often hear this question put directly, or not quite directly. This question recalls to my mind a similar question
that was asked in the period of the Brest peace. When we
concluded the Brest peace we were asked, “If you concede
this, that and the other to German imperialism, when will the
concessions stop? And what guarantee is there that they will
stop? And in making these concessions, are you not making the
position more dangerous?” Of course, we are making our position more dangerous; but you must not forget the fundamental
laws of every war. War itself is always dangerous. There is not
a moment in time of war when you are not surrounded by danger. And what is the dictatorship of the proletariat? It is
war, much more cruel, much more prolonged and much more stubborn
than any other war has ever been. Here danger threatens us at
every step.

The position which our New Economic Policy has created—the
development of small commercial enterprises, the leasing of
state enterprises, etc.—entails the development of capitalist relations; and anybody who fails to see this shows
that he has lost his head entirely. It goes without saying that
the consolidation of capitalist relations in itself increases
the danger. But can you point to a single path in revolution, to
any stage and method that would not have its dangers? The
disappearance of danger would mean that the war had come to an
end, and that the dictatorship of the proletariat had ceased. Of
course, not a single one among us thinks that anything like that
is possible at the present moment. Every step in this New
Economic Policy entails a series of dangers. When we said in the
spring that we would substitute the tax in kind for requisitioning, that we would pass a decree granting freedom to
trade in the surplus grain left over after the tax in kind had
been paid, we thereby gave capitalism freedom to develop. Failure to understand this means losing sight of the
fundamental economic relations; and it means that you are
depriving yourself of the opportunity to look round and act as
the situation demands. Of course, the methods of struggle have
changed; the dangers spring from other sources. When the
question of establishing the power of the Soviets, of dissolving
the Constituent Assembly was being decided, political danger
threatened us. That danger proved to be insignificant. When the
period of civil war set in—civil war backed by the capitalists of the whole world—the military danger, a far
more formidable danger, arose. And when we changed our economic
policy, the danger became still greater, because, consisting as
it does of a vast number of economic, workaday trifles, which
one usually becomes accustomed to and fails to notice, economics
calls for special attention and effort and more peremptorily
demands that we learn the proper methods of overcoming this
danger. The restoration of capitalism, the development of the
bourgeoisie, the development of bourgeois relations in the
sphere of trade, etc.—this constitutes the danger that is
peculiar to our present period of economic development, to our
present gradual approach to the solution of problems that are
far more difficult than previous problems have been. There must
not be the slightest misunderstanding about this.

We must understand that the present concrete conditions call for
the state regulation of trade and the money system, and it is
precisely in this field that we must show what we are capable
of. There are more contradictions in our economic situation now
than there were before the New Economic Policy was adopted;
there is a partial, slight improvement in the economic position
of some sections of the population, of the few; there is an
extreme disproportion between economic resources and the
essential needs of other sections, of the majority. Contradictions have increased. And it goes without
saying that in making this very sharp change we cannot escape
from these contradictions at one bound.

In conclusion, I should like to emphasise the three main points
of my report. First, the general question—in what respect
must we admit that our Party’s economic line in the period
preceding the New Economic Policy was wrong? By quoting the
example of what had occurred during a certain war I tried to
explain the necessity of passing from assault to siege tactics,
the inevitability of assault tactics at first, and the need to
realise the importance of new fighting methods after the assault
tactics have failed.

Next, the first lesson, the first stage which we had reached by
the spring of 1921—the development of state capitalism on
new lines. Here certain successes can be recorded; but there are
still unprecedented contradictions We have not yet mastered this
sphere of activity.

And third, after the retreat from socialist construction to
state capitalism, which we were obliged to make in the spring of
1921, we see that the regulation of trade and the money system
are on the order of the day. Remote from communism as the sphere
of trade may seem to be, it is here that a specific problem
confronts us. Only by solving that problem can we get down to
the problem of meeting economic needs that are extremely urgent;
and only in that way shall we be able to restore large-scale
industry—by a longer and surer way, the only way now open
to us.

These are the main factors in the New Economic Policy that we
must always bear in mind. In solving the problems of this policy
we must clearly see the fundamental lines of development so as
to be able to keep our bearings in the seeming chaos in economic
relations we now observe, when, simultaneously with the break up
of the old, we see the still feeble shoots of the new, and often
employ methods that do not conform to the new conditions. Having
set ourselves the task of increasing the productive forces and
of restoring large-scale industry as the only basis for
socialist society, we must operate in a way that will enable us
to approach this task properly, and to solve it at all costs.

2

Closing Speech October 29

Comrades! Before replying to the observations submitted in
writing I should like to say a few words in reply to the
comrades who have spoken here. I should like to point to what I
think is a misunderstanding in Comrade Larin’s speech. Either I did not express myself clearly, or else he did
not understand me properly; but he linked the question of
regulation, which I dealt with in my speech, with the question
of regulating industry. That is obviously wrong. I spoke about
regulating trade and the money system and compared it with
commodity exchange. To this I must add that if we want our
policy, our decisions and our propaganda and agitation to be
effective, and if we want to secure an improvement in our
propaganda, agitation and decrees, we must not turn our backs on
recent experience. Is it not true that we spoke about commodity
exchange in the spring of 1921? Of course, it is; you all know
it. Is it not true that commodity exchange, as a system, proved
to be unsuited to the prevailing conditions, which have given
rise to the money system, to buying and selling for money,
instead of commodity exchange? There can be no doubt about this;
the facts prove it. This answers both Comrade Stukov and Comrade
Sorin, who spoke here about people imagining mistakes. Here is a
striking example not of an imaginary, but of a real mistake.

The experience of our economic policy during the recent period,
that commenced with the spring, has shown that in the spring of
1921 nobody challenged the New Economic Policy and that the
whole Party, at congresses and conferences and in the press, had
accepted it absolutely unanimously. The controversies that had
raged previously did not affect the new, unanimous decision in
the least. This decision was based on the assumption that by
means of commodity exchange we could achieve a more direct
transition to socialist construction. But at present it is clear
that we must go by a roundabout way—through trade.

Comrades Stukov and Sorin complained that there was a lot of
talk about mistakes and begged us to refrain from inventing
them. Of course, it is a very bad thing to invent mistakes; but
it is utterly wrong to brush practical problems aside, as
Comrade Gonikman does. He delivered quite an oration on the
theme that “historical phenomena could not assume any other shape than they have done”. That is absolutely
incontrovertible, and, of course, we have all learnt this from
the ABC of communism, the ABC of historical materialism, and the
ABC of Marxism. Here is an argument based on these lines. Was
Comrade Semkov’s speech a historical phenomenon, or not? I
maintain that it was. The very fact that this historical
phenomenon could not assume any other shape than it did proves
that nobody has invented mistakes and that nobody maliciously
wanted members of the Party to give way—or maliciously wanted to permit them to give way—to despondency, dismay
and dejection. Comrades Stukov and Sorin were very much afraid
that the admission of mistakes would be harmful in one way or
another, wholly or partly, directly or indirectly, because it
would spread despondency and dejection. The purpose I had in
mind in giving these examples was to show that the crux of the
matter is this—has the admission of mistakes any practical
significance at the moment? Should anything be changed after
what has happened, and had to happen? First we launched an
assault; and only after that did we commence a siege. Everybody
knows that; and now the application of our economic policy is
being hindered by the erroneous adoption of methods that would,
perhaps, be excellent under other conditions, but which are
harmful today. Nearly all the comrades who spoke here entirely
avoided this subject although this, and this alone, is the point
at issue. My best ally here proved to be Comrade Semkov, because
his speech was a vivid example of this mistake. Had Comrade
Semkov not been here, or had he not spoken here today, the
impression might have remained that Lenin was inventing
mistakes. But Comrade Semkov very definitely said:
“What’s the use of talking to us about state trade!
They didn’t teach us to trade in prison.” Comrade
Semkov, it is quite true that we were not taught to trade in
prison! But were we taught to fight in prison? Were we taught
how to administer a state in prison? Were we ever taught the
very unpleasant business of reconciling the different
People’s Commissariats and of co-ordinating their activities? We were not taught that anywhere. We were not taught
anything in prison. At best, we studied ourselves. We studied
Marxism, the history of the revolutionary movement, and so
forth. In that respect, for many of us the time we spent in
prison was not lost. When we are told: “They did not teach
us to trade in prison", it clearly shows that those who say it
have a mistaken idea of the practical objects of the
Party’s struggle and activities today. And this is the mistake of employing methods suitable for an
“assault” when we are in the period of “siege”. Comrade Semkov revealed the mistake that is
being made in the ranks of the Party. This mistake must be
admitted and rectified.

If we could rely on military and political enthusiasm—which undoubtedly has been a gigantic
historical force and has played a great role that will affect
the international working-class movement as well for many years
to come; if this enthusiasm—with a certain degree of culture, and with our factories in a better
condition—could help us to pass straight on to socialist
construction, we would not now engage in anything so unpleasant
as business calculation and the art of commerce. It would not be
necessary. As things are, however, we must engage in these
matters. Why? Because we are directing, and must direct,
economic development. Economic development has brought us to the
position where we must resort not only to such unpleasant things
as leasing, but also to this unpleasant business of trading. It
was to be expected that this unpleasant situation would give
rise to despondency and dejection. But who is to blame for that?
Is it not those who have given way to dejection and despondency?
If the economic situation in which we find ourselves as a result
of the sum total of conditions, economic and political,
international and Russian, is such that the money system and not
commodity exchange has become a fact, if it has become necessary
to regulate the trade and defective money system that exist
today, shall we Communists say that it has nothing to do with
us? That would indeed be the most pernicious despondency, would
express a mood of utter despair, and would make all further work
impossible.

The situation in which we are carrying on our work has not been
created by ourselves alone; it is bound up with the economic
struggle and our relations with other countries. Things so
turned out that last spring we had to discuss the question of
leasing, and today we have to discuss the question of trade and
the money system. To shirk this question by arguing “that
they did not teach us to trade in prison” means to give
way to inexcusable despondency, means shirking our economic
task. It would be much more pleasant to capture capitalist trade
by assault, and under certain circumstances (if our factories
were not ruined and if we had a developed economy and culture)
it would not be a mistake to launch an “assault", i. e.,
to pass straight on to commodity exchange. In the present
circumstances, however, the mistake we make is that we refuse to
understand that another method of approach is necessary and
inevitable. Nobody is inventing this mistake; it is not a
mistake taken from history—it is a lesson that will help
us to understand what can and must be done at the present
time. Can the Party successfully accomplish the task that
confronts it if it approaches it on the principle that “they did not teach us to trade in prison” and that
we don’t want any commercial calculations? There are lots
of things that we did not learn in prison, but which we had to
learn after the revolution; and we learnt them very well.

I think it is our duty to learn to understand commercial
relations and trade; and we shall begin to learn this, and
finally master it, when we begin to talk about it without
beating about the bush. We have had to retreat so far that the
question of trade has become a practical question for the Party,
a question of economic development. What dictates our transition
to a commercial basis? Our environment, our present conditions. This transition is essential to enable us speedily
to restore large-scale industry, link it up speedily with
agriculture and organise a correct exchange of products. In a
country with a better developed industry all this would take
place much quicker; in our country this follows a longer,
circuitous road, but in the end we shall attain our goal. And
today we must be guided by the tasks that the present and
immediate future pose before us, before our Party, which has to
direct the whole state economy. We can no longer speak of
commodity exchange today because we have lost it as a sphere of
struggle. That is an incontrovertible fact, no matter how
unpleasant it may be to us. Does that mean we must say there is
nothing else for us to do? Nothing of the sort. We must
learn. We must acquire the knowledge needed for the state to
regulate commercial relations—it is a difficult task but
not an impossible one. And we shall carry it out because we have
carried out tasks that were just as new, necessary and difficult. The co-operative trade is something difficult but not
impossible; we have to understand this thoroughly and get down
to serious work. That is what our new policy boils down to. To
date we have already put a small number of enterprises on a
commercial footing; at these enterprises wages are paid
according to the prices on the open market, and they have gone
over to gold in their settlements. But the number of such
economic units is insignificant; in most of the others there is
chaos, a serious discrepancy between wages and living conditions; state supplies for some have ceased and for others
have been reduced. What is the way out? The only way is to
learn, adapt ourselves and resolve these problems properly,
i. e., in conformity with the conditions obtaining.

That is my reply to the comrades who have spoken about today’s talk, and now I shall reply briefly to some of the
notes submitted.

One of them reads: “You refer to Port Arthur. But don’t you see the possibility of our being Port Arthur
besieged by the international bourgeoisie?”

Yes, comrades. I have already said that war itself is always
dangerous; that we must never embark on war without bearing in
mind the possibility of defeat. If we are defeated, then, of
course, we shall find ourselves in the deplorable position of
Port Arthur. But in my speech I had in mind the Port Arthur of
international capitalism, which is being besieged, and other
armies besides our own are taking part in this siege. In every
capitalist country there is a steadily growing army that is
besieging this Port Arthur of international capitalism.

A comrade asks: “What will be our tactics on the morrow of
the social revolution if it breaks out next year, or the year
after?” If it were possible to answer such questions it
would be quite easy to make revolutions, and we would make any
number of them all over the place. But such questions cannot be
answered, because we cannot say what will happen in six
months’ time, let alone next year, or the year after. It
is as useless to put such questions as to attempt to decide
which of the belligerents will find itself in the deplorable
position of the fortress of Port Arthur. The only thing we know
is that in the long run the fortress of the international Port
Arthur must inevitably be captured, because the forces that will
capture it are growing in all countries. The main problem that
confronts us today is how to retain the possibility of restoring
large-scale industry under the extremely difficult conditions in
which we now find ourselves. We must not shun commercial
accounting, but must understand that only on this basis can we
create tolerable conditions that will satisfy the workers as
regards wages, employment, etc. Only on this commercial basis
will it be possible for us to build up our economy. This is
being hindered by prejudice and by reminiscences of yesterday. Unless we take this into account we shall fail to
carry out the New Economic Policy properly.

Questions like the following are also asked, “Where is the
last line of retreat?” I have other questions of the same
type, “How far can we retreat?” I anticipated this question and said a few words about it in my report. This
question reflects a mood of despondency and dejection, and is
absolutely groundless. We heard the same sort of question at the
time we concluded the Brest-Litovsk peace. It is wrong to put
such a question, because only when we have pursued our new
policy for some time shall we have material on which to base our
reply to it. We shall go on retreating until we have completed
our education; until we have made our preparations for a
definite offensive. I cannot say more than that. It is very
unpleasant to retreat. But when heavy blows are being struck,
nobody stops to ask whether it is pleasant or unpleasant: the
troops retreat, and nobody is surprised. Nothing useful will
come of asking how long we shall go on retreating. Why anticipate hopeless situations? Instead of doing that, we must
get down to definite work. We must closely examine the concrete
conditions, the concrete situation, decide what position we can
hold—a river, a hill, a bog, a railway station. Because
only when we are able to hold our ground shall we be able to
pass to the offensive. We must not give way to despondency; we
must not shirk the problem by shouting propaganda slogans, which
are all very well in their proper place, but which in the
present case can do nothing but harm.

Endnotes

[1] This Conference
was held on October 29-31, 1921, and was attended by 637
delegates.

It debated 1) the international and domestic situation, 2) the
report of the gubernia economic conference, 3) the report on the
work of the Moscow Committee of the R C P.(B.), 4) the report of
the Auditing Commission, and 5) the report of the Control
Commission. Moreover, it heard a report on the purging of the
Party in Moscow and Moscow Gubernia, and on other questions.

Lenin delivered his report on the New Economic Policy at the
first sitting on October 29.

[2] Lenin has in mind
his articles: The Chief Task of Our Day , The Immediate Tasks of the Soviet Government , Left-Wing Childishness and the Petty-Bourgeois Mentality and others.

[3] See Lenin,