With the Kronshtadt base rebelling against war communism, the Tenth Party Congress of the Russian Communist Party (Bolshevik) met in March 1921 to hear Lenin argue for a new course in Soviet policy. Lenin realized that the radical approach to communism (see Glossary) was unsuited to existing conditions and jeopardized the survival of his regime. Now the Soviet leader proposed a tactical retreat, convincing the congress to adopt a temporary compromise with capitalism under the NEP program. Under the NEP, market forces and the monetary system regained their importance. The state scrapped its policy of grain requisitioning in favor of taxation, permitting peasants to dispose of their produce as they pleased. The NEP also denationalized service enterprises and much small-scale industry, leaving the "commanding heights" of the economy--large-scale industry, transportation, and foreign trade--under state control. Under the mixed economy called for under the NEP, agriculture and industry staged recoveries, with most branches of the economy attaining prewar levels of production by the late 1920s. In general, standards of living improved during this time, and the "NEP man"--the independent private trader--became a symbol of the era.
About the time that the party sanctioned partial decentralization of the economy, it also approved a quasi-federal structure for the state. During the Civil War, the non-Russian Soviet republics on the periphery of Russia were theoretically independent, but in fact they were controlled by the central government through the party and the Red Army. Some communists favored a centralized Soviet state, while nationalists wanted autonomy for the borderlands. A compromise between the two positions was reached in December 1922 with the formation of the USSR. The constituent republics of this "Soviet Union" (the Russian, Belorussian, Ukrainian, and Transcaucasian republics--the last combining Armenia, Azerbaijan, and Georgia) exercised a degree of cultural and linguistic autonomy, while the communist, predominantly Russian, leadership in Moscow retained political authority over the entire country. The giant Central Asian territory was given republic status piecemeal, beginning with the inclusion of the Turkmen and Uzbek republics in 1924 and concluding with the separation of Kazakstan and Kyrgyzstan in 1936. By that year, the Soviet Union included eleven republics, all with government structures and ruling communist parties identical to the one in the Russian Republic.
The party consolidated its authority throughout the country, becoming a monolithic presence in state and society. Potential rivals outside the party, including prominent members of the abolished Menshevik faction and the Socialist Revolutionary Party, were exiled. Within the party, Lenin denounced the formation of factions, particularly by radical-left party members. Central party organs subordinated local soviets to their authority. Party members perceived as less committed periodically were purged from the rosters. The Politburo (Political Bureau), which became the elite policy-making agency of the nation, created the new post of general secretary for the supervision of personnel matters and assigned Stalin to this office in April 1922. A minor member of the party's Central Committee at the time of the Bolshevik Revolution, Stalin was thought to be a rather lackluster personality and therefore well suited to the routine work required of the general secretary.
From the time of the Bolshevik Revolution and into the early NEP years, the actual leader of the Soviet state was Lenin. Although a collective of prominent communists nominally guided the party and the Soviet Union, Lenin commanded such prestige and authority that even such brilliant theoreticians as Trotsky and Nikolay Bukharin generally yielded to his will. But when Lenin became temporarily incapacitated after a stroke in May 1922, the unity of the Politburo fractured, and a troika (triumvirate) formed by Stalin, Lev Kamenev, and Grigoriy Zinov'yev assumed leadership in opposition to Trotsky. Lenin recovered late in 1922 and found fault with the troika, and particularly with Stalin. In Lenin's view, Stalin had used coercion to force non-Russian republics to join the Soviet Union, he was uncouth, and he was accumulating too much power through his office of general secretary. Although Lenin recommended that Stalin be removed from that position, the Politburo decided not to take action, and Stalin still was in office when Lenin died in January 1924.
As important as Lenin's activities were to the establishment of the Soviet Union, his legacy to the Soviet future was perhaps even more significant. By willingly changing his policies to suit new situations, Lenin had developed a pragmatic interpretation of Marxism (later called Marxism-Leninism--see Glossary) that implied that the party should follow any course that would ultimately lead to communism. His party, while still permitting intraorganizational debate, insisted that its members adhere to the organization's decisions once they were adopted, in accordance with the principle of democratic centralism. Finally, because the party embodied the dictatorship of the proletariat, organized opposition could not be tolerated, and adversaries would be prosecuted. Thus, although the Soviet regime was not totalitarian when he died, Lenin had nonetheless laid the foundation upon which such a tyranny would later arise.