Presentation is loading. Please wait.

Presentation is loading. Please wait.

Lenin and the currency competition Reflections on the NEP experience (1922-1924) Nikolay Nenovsky Université d'Economie Nationale et Mondiale, Sofia, Bulgarie,

Similar presentations


Presentation on theme: "Lenin and the currency competition Reflections on the NEP experience (1922-1924) Nikolay Nenovsky Université d'Economie Nationale et Mondiale, Sofia, Bulgarie,"— Presentation transcript:

1 Lenin and the currency competition Reflections on the NEP experience (1922-1924) Nikolay Nenovsky Université d'Economie Nationale et Mondiale, Sofia, Bulgarie, Banque Nationale de Bulgarie, Chercheur associé au LEO, Université d'Orléans, France.

2 What is the purpose of this study? 1. To provide a new theoretical model for the institutional change. Complex approach – fight and conflict of interests Complex approach – fight and conflict of interests The monetary regime and the money itself are the key element of the social institutional change (usually omitted) The monetary regime and the money itself are the key element of the social institutional change (usually omitted) Monetary economics hardly involves institutions and sociology of money Monetary economics hardly involves institutions and sociology of money

3 2. To draw conclusions about transition The abandonment of the communism is connected with its establishment (a forgotten transition period, Buharin, 1921) The abandonment of the communism is connected with its establishment (a forgotten transition period, Buharin, 1921) Transition from War Communism (WC) to NEP – why does Lenin change? Transition from War Communism (WC) to NEP – why does Lenin change? Why he changes from and extreme enemy of money to a supporter of the gold standard? Why he changes from and extreme enemy of money to a supporter of the gold standard? Comparison of the NEP with the stabilization in Europe after WWI (Genoa) Comparison of the NEP with the stabilization in Europe after WWI (Genoa)

4 The theoretical model of monetary regime change Monetary regime change is a crucial institutional change Monetary regime change is a crucial institutional change The monetary regime is a reflection of asymmetric relations between different groups of creditors and debtors The monetary regime is a reflection of asymmetric relations between different groups of creditors and debtors The monetary space is closely intertwined with the power space The monetary space is closely intertwined with the power space Monetary regimes and institutional changes are a result of different combinations of the positions of players in the two spaces Monetary regimes and institutional changes are a result of different combinations of the positions of players in the two spaces The institutional change can be viewed as a point of intersection of two theoretical effects – Cantillon effect and Olson effect The institutional change can be viewed as a point of intersection of two theoretical effects – Cantillon effect and Olson effect

5 Olson effect – the new redistribution of incomes is a stimulus of the players to build such (monetary) institutions which will serve their interests best Cantillon effect – the monetary regime and movement of money results in distribution of income among players

6 Methodological steps in the analysis of the institutional change of the monetary regime Identification of major players and groups of interests Identification of major players and groups of interests Defining their interests in the power and monetary space and their positions Defining their interests in the power and monetary space and their positions Distribution of incomes under different monetary regimes Distribution of incomes under different monetary regimes Strategies of groups of interests with respect to monetary regime change Strategies of groups of interests with respect to monetary regime change Comparison of their positions before and after the change Comparison of their positions before and after the change

7 Different combinations of power and money spaces

8 Russia – brief history (1) Military Communism (MC) and destruction of money Military Communism (MC) and destruction of money MC – centralization of the economy MC – centralization of the economy Payments in kind (barter) and deliberate extra-emission of the tsarist royal money Payments in kind (barter) and deliberate extra-emission of the tsarist royal money

9 Different emissions

10 Money supply growth and inflation (1914-1924)

11 Russia- brief history (2) NEP – 1921, X Congress – Lenin proposes elements of market economy NEP – 1921, X Congress – Lenin proposes elements of market economy The tax in kind (podrazverska) should be changed by monetary tax The tax in kind (podrazverska) should be changed by monetary tax Private property allowed (up to 20 workers) Private property allowed (up to 20 workers) Market price –setting Market price –setting Concessions, foreign capital is allowed Concessions, foreign capital is allowed Stabilization of money and of the public finances Stabilization of money and of the public finances 1922- Sov-Certificates, Sovznak (MF), 1923- Chervonets (CB) 1922- Sov-Certificates, Sovznak (MF), 1923- Chervonets (CB) Parallel monetary circulation and institutional competition Parallel monetary circulation and institutional competition Independent emission CB has been restored Independent emission CB has been restored

12 What is Chervonets? Russian national banknotes covered by gold and other liquid assets (convertible gold currencies) Russian national banknotes covered by gold and other liquid assets (convertible gold currencies) CB was functioning like a Currency Board – Issue and Banking departments CB was functioning like a Currency Board – Issue and Banking departments Frequent CB balance sheets publication Frequent CB balance sheets publication Accumulation of foreign reserves Accumulation of foreign reserves The Chervonest quickly takes over the Sov- certificates (due a deliberate extra emission) The Chervonest quickly takes over the Sov- certificates (due a deliberate extra emission) 1924 – the Chervonets became the single and international convertible Russia currency 1924 – the Chervonets became the single and international convertible Russia currency 1927 – Stalin put and end of the NEP due to poor harvest years after Lenins death in 1924 1927 – Stalin put and end of the NEP due to poor harvest years after Lenins death in 1924

13 Dynamics of money supply, inflation and the real money supply (1914-1924), log scale

14 Dynamics money supply, inflation and seniorage (194-1922) log scale

15 War communism – total dominance of the debtors (poor peasants, workers and Bolshevists –communist intellectuals) Richer and middle sized peasants are getting poorer; dictatorship of the poor peasants Richer and middle sized peasants are getting poorer; dictatorship of the poor peasants Price margins, price scissors in favour of the urban population Price margins, price scissors in favour of the urban population Inflation, economic destruction, misery, famine, riots Inflation, economic destruction, misery, famine, riots Capitalists, army, foreigners loose from the WC Capitalists, army, foreigners loose from the WC Workers, poor peasants, bureaucracy and Bolshevists start to loose marginally from the WC Workers, poor peasants, bureaucracy and Bolshevists start to loose marginally from the WC (during the period Bureaucracy has growth extremely ) (during the period Bureaucracy has growth extremely )

16 The transition to NEP (to the Chervonets) Who wins? – all groups of players Who wins? – all groups of players Who losses? – some levels of bureaucracy and political party loose in the economic space but preserve their power positions Who losses? – some levels of bureaucracy and political party loose in the economic space but preserve their power positions Overall convergence of interests in favour of the new monetary regime Overall convergence of interests in favour of the new monetary regime

17 Monetary regimes in Russia in the beginning of the XX century

18 Some conclusions Monetary regimes can be viewed as a struggle for redistribution of power and resources Monetary regimes can be viewed as a struggle for redistribution of power and resources The monetary space is interlinked with the power space The monetary space is interlinked with the power space The chain money-power-money is crucial (it can be observed also in the post-communist period) The chain money-power-money is crucial (it can be observed also in the post-communist period) Lenin proposes or accepts the NEP in order to preserve the power position of the Bolshevists Lenin proposes or accepts the NEP in order to preserve the power position of the Bolshevists There is a huge unexplored field of integrating institutions, sociology and other disciplines in the monetary economics analysis and theory There is a huge unexplored field of integrating institutions, sociology and other disciplines in the monetary economics analysis and theory This way monetary economics will get closer to reality This way monetary economics will get closer to reality


Download ppt "Lenin and the currency competition Reflections on the NEP experience (1922-1924) Nikolay Nenovsky Université d'Economie Nationale et Mondiale, Sofia, Bulgarie,"

Similar presentations


Ads by Google