When Vladimir Lenin’s Bolsheviks seized power over Russia in October 1917, they began almost immediately to nationalize the economy. This was part and parcel with their communist philosophy. Marx had laid out his expectations in the Communist Manifesto: “The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie [and] to centralize all instruments of production in the hands of the State.”
Indeed, beginning in 1917, the Bolsheviks quickly seized banks, syndicates, joint-stock companies, industry, and railways. Individuals with more than 5,000 rubles had to deposit their money in state banks with withdrawal caps. All Church land and property, down to individual ceremonial items, were also nationalized.
Summer 1918 saw even more sweeping edicts. The “War Communism” that started in that year was a maximalist communist program based on the nationalization of all industry down to the smallest enterprises, a ban on private manufacturing and trade, central control over the economy, and the violent requisition of food from the peasantry. 37,000 enterprises were nationalized by 1920. The state became the sole legal supplier of consumer goods. Militarized labor discipline—even conscription—was imposed. In a few short years, the Bolsheviks had imposed total dictatorship over the entire Russian economy.
But the initial attempt at complete nationalization nearly destroyed the economy. Lenin found himself forced to “retreat” in the direction of capitalism with his New Economic Policy. Outside of key industries, which remained nationalized, industry was partially decentralized, and private trade was re-legalized within a heavily state-directed economy. But this was just a lull in the storm.
A decade later, the communist regime took another stab at total nationalization. Stalin’s Five Year Plan of 1928 launched a “socialist offensive” of rapid industrialization, central planning, and state ownership, enforced under murderous totalitarian control. By 1937, the state once again owned 99.6% of all capital.
The other main prong of Stalin’s economic plan was agricultural collectivization. The Bolsheviks’ October 1917 Land Decree had formally handed over all gentry, Church, and crown lands to the peasants. Some Marxists—the German theorist Rosa Luxemburg, for instance—criticized this move as a simple transfer of private ownership, rather than a true nationalization. Indeed, it left the countryside as a patchwork of small plots. Stalin decided that all this would change—and quickly. Within a year and a half, agricultural land would be completely collectivized: all farmers would be forced to work on massive, centralized collective farms. The implementation was violent in the extreme. Kulaks, the “wealthy,” independent farmers who produced the majority of Russia’s grain, had their land, equipment, and livestock seized, and in many cases were deported; everyone else had to move to giant collective farms. Agricultural collectivization sparked some of the most horrific famines in Russian history, including the Holodomor in Ukraine. By 1940, state and collective farms were fully integrated into the centrally planned economy.
After WWII, the Soviets expanded their socialist system to the territories they now occupied. The countries they had so recently liberated from the Nazis were now subject to a new system of plunder. Land ownership and industry in the Eastern bloc states was collectivized and nationalized. Former owners, expropriated first by the Nazis, then by the Soviets, were powerless, unsure who to pursue for reparations. Private property, including art treasures and books, was seized and nationalized, especially if it belonged to refugee aristocrats and landowners.
From 1917 onwards, the communist regime in Russia pursued a socialist economy in which the state controlled all means of production. They were quite successful in achieving it. The state owned all land, all natural resources, and all capital, and centrally planned almost the entire national economy. Almost everyone in the country was a state employee, either in a state enterprise or the bureaucracy, with the exception of collective farmers, who worked indirectly for the state on land permanently leased from the government. Private employment was illegal outside of one-person side jobs and small-plot agriculture. Private property was limited to household items, cash, cars, and houses outside of cities. Everything else belonged to the state.
Such was socialism in the Soviet Union—a system in which a tiny group of powerful, unaccountable leaders owned everything of value and ran the entire country through a massive bureaucracy.