Economic background The
Russian Revolution of 1917 concluded in the fall with the
October Revolution, organized and achieved through the direction of
V. I. Lenin's radical
Bolshevik faction of the
Russian Social Democratic Labor Party. With the country already decimated and disorganized by three brutal years of the
First World War, the fledgling
socialist state struggled to hang on and survive
civil war, a multinational
foreign military intervention, and the collapse of the economy, including the broad depopulation of major cities and the onset of
hyperinflation. The revolutionary government faced the dual tasks of economic organization and the marshaling of material resources on behalf of its
Red Army. A new body known as the
Supreme Council of National Economy (Latin acronym of the Cyrillic: VSNKh, commonly sounded out as "Vesenkha") was established on December 15, 1917, as the first governmental entity for the coordination of state finance and economic production and distribution in the Russian Socialist Federative Soviet Republic (RSFSR). Vesenkha was attached to the de facto
cabinet of the RSFSR, the
Council of People's Commissars, and formally answered to that body. These organizations frequently corresponded to
economic syndicates established prior to the war and taken over by the pre-revolutionary
Tsarist government as part of its coordination of the economy for its own war effort. The personnel employed in these
glavki were often the same individuals who served in a similar capacity under the old regime. Although there were fewer than 500
nationalized companies prior to June 1918, by the end of that month the intensification of the Civil War and worsening economic situation led to adoption of a decree nationalizing all factories of the nation. Goods of all kinds vanished from the marketplace and
rationing was extended. The state's
prodrazverstka, involving the systemic use of force against the peasantry in order to requisition grain further deepened the crisis. This new centralized and coercive economy, brought about by economic collapse and the exigencies of civil war is remembered to economic historians as
Military Communism.
Establishment With the civil war drawing to a successful finish, in March 1920 the
Council of Workers' and Peasants' Defense was reformed into the
Sovet truda i oborony (STO), the Council of Labor and Defense. The organization was formally recognized as being of higher priority than its bureaucratic rival Vesenkha in obtaining allocations of scarce resources. Rather than limiting itself to the industrial production and allocation necessary for the Red Army in wartime, STO took a broader approach to planning than it had in its earlier iteration. The new name and function of STO was ratified in December 1920 by the
8th All-Russian Congress of Soviets, the formal legislative authority of Soviet Russia. STO was recognized as a commission of the Council of People's Commissars (Sovnarkom), to be headed by the leading People's Commissars themselves, a representative of the Russian trade unions, and the chief of the Central Statistical Agency. An effort was made in May 1922 to make STO the regulating agency for national trade when Sovnarkom created a new commission attached to STO with the power to issue economic decrees. This commission, which was given a free hand to interpret and modify existing trade regulations and to propose new laws for ratification by Sovnarkom, does not seem to have exerted itself in any substantial way, however, and market forces remained paramount under the NEP.
Relationship to Gosplan The State Committee for Planning (Gosudarstvennyi Komitet po Planirovaniiu, commonly called "Gosplan"), later all powerful in the Soviet economic firmament, was launched as a permanent advisory subcommittee of STO, assigned with the task of conducting detailed economic investigations and providing expert recommendations to the decision-making STO. The system was inefficient and sometimes forced contradictory objectives upon firm managers, forcing the firms to produce reams of documents to satisfy bureaucratic overseers. In the event of fundamental disagreement between agencies, the decision of STO was decisive during the years of the late 1920s. ==Periodicals==