Power and business in the first years of NEP: The paraffin case

In: Voprosy ėkonomiki: ežemesjačnyj žurnal, Heft 8, S. 128-145

Abstract

The article discusses the relationship between authorities and business in 19211922 using the example of the litigation at the end of March 1922 at the Supreme Tribunal of All-Russian Central Executive Committee (VTsIK) accusing a group of employees of the People's Commissariat of Foreign Trade, Supreme Economic Council and private intermediaries in the sale and resale of imported paraffin at speculative prices. The uniqueness of this case was that the harsh sentence was quashed by the Presidium of VTsIK, and the case was dismissed. The deal lasted two weeks and was investigated by the Cheka and the Supreme Tribunal by denunciation of one of the customers who was dissatisfied with the growth in paraffin prices during this time. The process went in accordance with Lenin's directive to combat the abuse of NEP, although the defendants did not break the laws. Investigations and the court attributed normal trading practice to those abuses. It is shown that Lenin's instruction contradicted the principle of raising the productive forces at all costs previously put forward by himself. The article shows controversy between the leaders of economic departments, who spoke out in defense of the accused and for the development of NEP, and law enforcement officials who tried to limit NEP. The reasons for the cancellation of a severe conviction are analyzed. It is proposed how to use the lessons of the paraffin case to improve present relationships between business and authorities.