Stalin's Economic Policies

In the 1920s, Stalin inherited Russia's frozen economy and immediately set out a series of ruthless economic reforms to catapult Russia into one of the world's strongest economic powers. But what were these reforms, how successful were they, and how did they impact the Russian people? Let's examine Stalin's economic policies!

Stalin's Economic Policies Stalin's Economic Policies

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Table of contents

    Stalin's Five Year Plan

    When he came into power in 1929, Stalin had a vision to improve the Russian economy radically. He wanted to transform it into a thoroughly modern economy that could compete with and out-produce the capitalist economies of the West.

    Even before the Russian Revolution of 1917, Russia's economy had failed to equal those of Western countries, particularly in heavy industry. Stalin felt it was particularly important to boost heavy industry during the 1930s and 40s with the advent of the Second World War and the beginning of the Cold War.

    Heavy Industry

    An economic sector that manufactures raw materials on a massive scale, using large machinery and facilities and vast areas of land. Examples include the manufacturing of iron and coal, as well as building vehicles such as ships.

    To achieve this, Stalin introduced the economic concept of "Five Year Plans". For the First Five-Year Plan, Stalin initiated two key policies - Rapid Industrialisation and the Collectivisation of Agriculture.

    Industrialisation and the Five-Year Plan

    To achieve the level of industrialisation that Stalin wanted, he needed to create a planned economy for the USSR. This meant that the state would decide production goals and the methods through which those goals would be achieved.

    The State Planning Committee (known as Gosplan) created the First Five-Year Plan in 1928, which set out an extremely ambitious plan for the Soviet economy from 1929 to 1933. The Plan set out the following agenda:

    • Targets were set for every industry, divided between regions, towns and individual factories. The targets established were incredibly ambitious.
    • Workers were strictly regulated - absenteeism and lateness were punished, and wages could be deducted if workers didn't meet their targets.
    • The plan focused on heavy industry - building new hydroelectric dams and power stations and improving the production of coal, oil, steel, and gas.
    • Agriculture was collectivised to increase and control agricultural output to feed workers and to export more grain. This would provide income to support industrialisation plans.

    In 1932, Stalin declared that the First Five-Year Plan had been a success and achieved all its goals a year earlier than planned - but how accurate was that statement? Well, the First Five-Year Plan certainly had its successes - production in electricity trebled, while coal and iron output doubled. Soviet engineering developed in line with industry demands, and thousands of people moved into cities to join the industrial workforce.

    Stalin's Economic Policies First Five Year Plan stamp propaganda StudySmarterFig. 1. - A commemorative stamp for the First Five Year Plan, depicting a man and woman working together in industry

    A reputable source?

    It must be noted that the Soviet government very likely inflated the output figures to make the USSR seem more impressive and superior to the capitalist West.

    The reality was that the quotas set at the beginning of the plan were not fully achieved, and the immense pressure and restriction on workers made life very difficult for most of the population. Furthermore, the focus on heavy industry meant other sectors, like consumer industries, were neglected.

    The USSR would continue with these economic plans until the collapse of the Soviet Union in 1991, as the First-Five Year plan had proved so successful. Throughout Stalin's tenure as leader, the focus of these plans remained broadly the same, with industrialisation and collectivisation as the main policies.

    Stalin's Economic and Social Policies

    Of course, the restructuring of the economy to improve industrialisation also had a big impact on how people lived their lives. Education changed significantly as hundreds of new schools were built to improve literacy rates and encourage a more skilled labour force. These schools' lessons mainly focused on engineering and mechanical skills, in line with the desire for industrialisation under the First Five-Year Plan.

    Stalin's Economic Policies Propaganda for Collectivisation StudySmarterFig. 2 - This propaganda poster advocates how literacy rates increase through collectivisation, with the quote "join the ranks of fighters for literacy"

    Did you know? In 1928, 55% of the Soviet population was literate. This was already a significant improvement since 1914 when literacy rates were at 38%. After the First Five-Year Plan, Soviet literacy had increased to 68%, and by 1939 literacy rates were at a staggering 94% of the entire Soviet population.

    Due to the push for industrialisation, towns and cities expanded, with some springing up around the newly built factories. Transportation also became a key focus for industrialisation to ensure that materials, food, and workers could be transported easily.

    Stalin and Collectivisation Policy

    The other central policy of the First Five-Year Plan was the collectivisation of agriculture. This involved stopping the individual farms that had created the Kulak class and making peasants work in large collective farms, known as kolkhoz. This policy was implemented firstly to reduce the economic power of the Kulaks. Soviet officials also thought it would increase grain yields, a goal of the Five-Year Plan.


    A class of wealthier, land-owning peasants which emerged after the Emancipation of the Serfs in 1861 and had particularly benefitted from selling their extra produce under Lenin's New Economic Policy in 1921. This was Lenin's compromise by allowing a form of capitalism to enter the socialist USSR. Stalin wanted to enforce socialism and eliminate this class which he regarded as greedy and a problem to the USSR.

    Stalin's Economic Policies Kolkhoz collectivisation StudySmarterFig. 3 - A photo of an old Kolkhoz

    However, collectivisation had significant drawbacks. The peasants had no choice and were forced to join these collective farms. In particular, many Kulaks objected to it, even going as far as slaughtering their livestock and destroying their machinery, so the government could not seize them. The systems of collectivisation also meant that the government could requisition as much grain as they wanted to support industrial workers in the cities, often not leaving enough for the rural working peasants themselves.

    Holodomor (1932-3)

    Stalin used collectivisation policies to punish Ukrainians who wanted their own identity separate from the USSR. He increased the Ukrainian grain quotas to unachievably high rates and requisitioned nearly all the grain to feed other parts of the Soviet Union. As a result, Stalin created a man-made famine known as Holodomor between 1932-3. An estimated 3.9 million people died in the famine, demonstrating how Stalin was prepared to push collectivisation to the extreme to punish deference from the USSR.

    Impact of Collectivisation

    While it did have some successes, Collectivisation had a severe negative impact on the people in the Soviet Union. Here is an overview of how the Collectivisation policy was detrimental:

    • Many peasants resisted the change through passive resistance. They slaughtered animals and destroyed machinery so the state could not use it, leading to shortages even before the kolkhozy were set up.
    • Those who worked in collective farms were managed very carefully. Eventually, it became impossible for workers to leave their region without a government permit.
    • The Kulaks, a whole class of people, were targeted and attacked by the state as Stalin wanted them eradicated. They lost their livelihoods and, in some cases, their lives.
    • Priority for food was given to those working in the cities. Combined with the reluctance of peasants to work efficiently in the kolkhoz, the Soviet Union experienced a famine from 1931-34, in which an estimated 6-9 million people died of hunger.
    • The lack of food was used to enact a genocide via starvation in USSR-controlled Ukraine, known as Holodomor. Of the 6-9 million who died in the famine, an estimated 3.9 million were Ukrainian.

    Impact of Stalin's Economic Policies

    Stalin's Economic Policies had both big successes and terrible failures. Let's look at how the Soviet economy and people were helped or hindered by Stalin's policies.

    Success of Stalin's Economic Policies

    Early successes were seen with Stalin's First Five-Year Plan.

    • The First Five-Year Plan certainly helped to put Russia on the path to becoming a fully industrialised nation on par with the West.
    • Under the First Five-Year Plan, steel output increased by one-third, iron and coal output doubled, and electricity production tripled.
    • Rapid industrialisation was crucial for the USSR to defend itself during World War Two. It is unlikely that the Soviet Union would have been able to resist the German invasion in 1941 without the industrialisation from Stalin's economic policies that helped build up the Soviet military.

    Failure of Stalin's Economic Policies

    Despite the initial successes, Stalin's economic policies had some significant failures.

    • While the First Five-Year Plan was successful, the government most likely manipulated the figures to make output increases seem more than they were. Therefore, it is hard to gauge exactly how successful the First Five-year plan actually was.
    • Collectivisation was very detrimental to the lives of the working people in the Soviet Union. The Kulaks were harshly treated, and those who worked on the farms had their freedoms restricted significantly.
    • Government requisitioning of grain from the collective farms often meant insufficient food was left for those in rural areas. The lack of food combined with a growing population resulted in a famine from 1931-1934, which killed around 5 million people - including 3.9 million Ukrainians.

    Stalin's Economic Policy - Key takeaways

    • Stalin's economic policy focused on rapid industrialisation and the collectivisation of agriculture, aiming to transform the USSR into a modern industrial power that could compete with Western nations.
    • Stalin introduced the Five-Year Plans, which set out goals to be achieved in the next five years, and the methods for achieving those goals.
    • To increase industrialisation, workers were heavily regulated and targeted with propaganda to encourage hard work. Outputs of industrials goods rose significantly - although it is uncertain how much the government inflated the figures to seem more impressive than they actually were.
    • The collectivisation of agriculture got rid of independent farms. It established larger, collective farms to produce enough grain to fuel industrialisation. It was not a popular policy and resulted in the loss of freedoms for many people. Over-requisitioning resulted in food shortages and famine for most of the USSR in the 1930s.
    • Stalin continued with the Five-Year plans throughout his time as leader, and the USSR carried on with them after Stalin's death in 1953.


    1. Fig. 2 Old Kolkhoz ( by Moreau.henri ( Licensed under CC BY SA 3.0 (
    Frequently Asked Questions about Stalin's Economic Policies

    What were Stalin's economic policies?

    Stalin's key economic policies focused on rapid industrialisation and the collectivisation of agriculture. He enacted these through the Five Year Plans.

    How did Stalin transform the economy in the Soviet Union?

    Stalin significantly increased the Soviet economy through his policies, elevating the USSR to the world stage able to compete with capitalist giants such as the US. According to Soviet sources, electricity production trebled and coal and iron output doubled in the First Five Year Plan. However, as these are USSR figures, they are most likely inflated to further support for the economic policies.

    How successful were Stalin's economic policies?

    The USSR published the results of the first Five Year Plan, claiming that production in electricity trebled, while coal and iron output doubled. However, as these come directly from USSR sources, it is likely these statistics were inflated.

    What were the effects of Stalin's economic policies?

    Although economically the USSR appeared to soar with rapid industrialisation benefitting from the requisition of grain under collectivised agriculture, the lives of citizens were not always a happy story. Literacy rates increased massively from 38% in 1914 to 94% by the end of 1939. However, forceful requisition of grain by the Soviet Union meant that rural, grain-producing regions such as Ukraine suffered greatly. A significant event is the man-made genocide of Holodomor, whereby Ukrainian farmers were given unachievable grain quotas and had nearly all of their grain requisitioned. This facilitated the deaths of around 3.9 million people between 1932-3 in Ukraine alone. Other regions suffered too, with a USSR-wide famine killing around 6-9 million people from 1930-3.

    What was Stalin's five year plan? 

    Stalin wanted the Soviet Union to improve its economy quickly. In order to enact his policies of rapid industrialisation and collectivisation, he created Gosplan (the State Planning Committee) which set quotas and goals for all industries in order to maximise output. These goals were set every 5 years with different agendas for each - as such they were known as the Five Year Plans.

    Test your knowledge with multiple choice flashcards

    The main focus of the First Five Year plan was ______.

    The new farms created under Collectivisation were called...

    How many people were killed during the famine from 1931-34?


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