Stalin's Economic Policy: A Machine Driven by Terror

Written by Tina Kong

From the start of the 20th century, Russia had undergone various significant reforms; Vladimir Ilyich Ulyanov (Lenin) had led the Bolsheviks to victory in the Revolution of 1917, and in doing so, embarked the newly-found Soviet state on a new totalitarian journey. Under a more authoritative rule of his successor, Joseph Stalin, Socialism in One Country was emphasized.

Stalin himself said in 1931 that:

"[The USSR is] 50 or 100 years behind the advanced countries. We must make up this gap in ten years. Either we do it or they will crush us.”

Under his ideology, Stalin enacted the Five-Year Plans: a series of Socialist economic policies aimed at reforming his nation.

Outline of the Five-Year Plans:

Stalin had 3 main goals: to undergo rapid industrialization, increase domestic food production and become prepared for the imminent war.

The First Five-Year Plans laid a basis for further economic growth: heavily nationalized factories were built, strict production targets were implemented, and individual farms were transferred into state farms, Kolkhoz.

Although part of the First Five-Year Plan, this agrarian policy had its distinct name, Collectivization. The Second Five-Year Plan introduced new industries (like the chemical industry) and continued to force heavy industrial output and improved communications. The Third Five-Year Plan shifted focus to the production of defense materials as war broke out in 1939.

How Stalin carried out his policies:

To a large extent, Stalin relied on terror and oppression: he rode “Anti-Soviet Elements”, and a large proportion of them were indeed labor workers.

He used a “carrot and stick” approach to control the Soviet population during the Five-Year Plans in order to fulfill his unachievable production targets.

His general “stick” methods included imprisonment, death, and exaltation to labor camps (Gulags). In the centralized workspace, there was a policy of Absenteeism: delayed arrival or absence to work for 20 minutes led to the immediate sacking, and this did not only mean unemployment for the workers but also homelessness since housing was only provided to workers.

Perhaps more severely, coercion such as the Shakhty Trials, where 53 engineers and technicians were trialed for allegedly sabotaging the Soviet economy, were later sentenced to death. In a nutshell, Stalin’s stick methods can be best grouped into his Great Purge, a period of overwhelming repression to establish his authority.

Stalin’s “carrot” approach included the provision of housing for those who worked, usage of propaganda to encourage vigilance, and higher labor productivity.

One famous example was Alexei Stakhanov, who, according to Stalin and the state, was the “Hero of Socialist Labour”. Stakhanov allegedly cut 102 tons of coal in a shift, which was 14 times the average load, and after that, all laborers were encouraged to be “Stakhanovites”.


  • Most notably, the production of coal rose from 35 million tons in 1928 to 128 million tons in 1937.

  • Steel production quadrupled during the First Five-Year Plans, and this contributed to the 3.9-fold increase of military hardware during the Third Five-Year Plan.

  • Mechanized farming enabled the peasants to urbanize and contribute to rapid industrialization.

  • Exportation of grain increased from 0.003 million tons in 1928 to 1.69 million tons in 1933.

  • The USSR produced 20% of the world’s manufacturing output by 1940.

  • During the Great Depression, there was a 15% unemployment rate in the United States in comparison to 0% in the USSR. In addition to this, the USSR also maintained an annual compound growth rate of 6% at that time.

Key failings:

  • There were fluctuating results from collectivization and an overall declining grain harvest in the 1930s.

  • During the industrialization period, over 40 million deaths were recorded. One example was the Belomor Canal, which was built on the expense of 100,000 lives

  • The period of rapid industrialization acted as lead weights to people’s lives: wages fell, working conditions became undesirable, and there was a shortage of consumer goods.

  • Goods were of low quality, and there was often over-production, due to inefficient central planning.

  • From 1932-34, the USSR suffered from a famine in Ukraine; in The Harvest of Sorrow Conquest estimated that 7 million peasants lost their lives.

Stalin’s Five-Year Plans are seen by many as a very significant force for change in the USSR and the world. Not only did his economic policy fuel the USSR industrially, but it was also used as a political instrument, effective especially during the Great Depression when recession hit Capitalism; the USSR, running on Communist tracks, outran the West, proving for the first time that Communism was viable.

However, one must not forget its repressive and rigorous nature, as well as its lack of concern for human lives. In 1943, the USSR turned the tide of war by defending Stalingrad from the Nazis; “the Germans suffered ¾ of their wartime losses to the USSR”.

In 1945, the Allies emerged victorious, and in 1953, the USSR assisted China to carry its own Five-Year Plans.


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3) BEEVOR. A., Stalingrad: The Fateful Siege. London. Penguin Books. 1999.

4) DOBB, M., Rates of Growth under the Five-Year Plans. 1953.

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5) SOKOLOV, A., Forced Labor in Soviet Industry: The End of the 1930s to the Mid-1950s. 2003.

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6) S. L., Soviet Coal Production since the War. 1951.

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