Bolshevik policy during the Civil War enfeebled the Ukrainian economy. To impose socialism and to supply the Red Army and the starving Russian cities, Bolsheviks introduced the economic policy of military communism. It included nationalisation of all privately owned land and industrial plants, rationing of products and goods by the government, and the expropriation of grain from peasants. A peasant was allowed to keep only about 30 pounds (13 kilograms) of grain per month. An increase in the deficit of products together with a draught in Southern Russia and Ukraine caused a famine, which claimed hundreds of thousands of lives.
The unpopularity of military communism provoked a number of strikes, which eventually led to the Kronstadt rebellion: a mass protest of military men against the Bolsheviks. This forced Lenin to rethink his methods of regulating agriculture and to introduce the New Economic Policy (NEP), in March 1921.
As economist V. N. Bandera states, “NEP was a compromise”. Its main aim was to pacify the peasants and to motivate them to increase production. Instead of expropriations, moderate taxes were imposed. As long as the peasants paid their taxes, they could sell their leftover grain at market price. Moreover, poor peasants were exempt from the taxes. While governmental restrictions on internal trade were abolished, industry, banks, transportation and export remained under its control. NEP was not a complete return to the market economy: it was just ‘one step back to move two steps forward’, a temporary measure which had tactical, rather than real economic, ground. With Lenin’s death in 1924 and the position of new political elite becoming stronger, such compromise was no longer needed.
Even though in reality Ukraine was ruled from Moscow since the beginning of the 1920s, de-jure it had a separate Ukrainian Soviet government. Until 1923 Ukraine managed its own foreign affairs, foreign trade and started building up an autonomous Ukrainian Soviet army.
In 1922, a discussion started in Moscow about legitimisation of relations between Russia, Ukraine, Belarus and the Caucasian states. Lenin offered to create a “union of equals” with each republic having the hypothetical right to quit the union if the Communist Party agreed. In reality this meant that it was almost impossible to leave the union peacefully. Under Lenin Ukrainian Soviet government stayed responsible for agriculture, home affairs, justice, education, healthcare and social services. Food production, workforce, finances, auditing and economics remained within the jurisdiction of both the Ukrainian and the central Soviet government. Foreign affairs, army, fleet, foreign trade and transport and were administered by Moscow.
On 30 December 1922 the Union of Soviet Socialist Republics was created. Ukraine became the second largest republic of USSR with a territory of 450 thousand square kilometres, and a population of more than 26 million. At first it was not Kiev but Kharkov which became the capital of UkrSSR.
Soviet recruitment poster featuring the Ukrainisation theme. The text reads: "Son! Enroll in the school of Red commanders, and the defence of Soviet Ukraine will be ensured."
In 1923 the policy of “Ukrainisation”, which covered all spheres of life in Soviet Ukraine, was launched. First of all, the use of Ukrainian language in the party and in government was promoted. Furthermore, the policy fostered the teaching of Ukrainian in schools, leading to the elimination of illiteracy. As a result, the 1920s became a time of incredible development and growth of Ukrainian culture for which it was called the ‘Ukrainian renaissance’.
With the successful implementation of the Ukrainisation policy, ideas of national communism emerged, revolving around three main ideologues. Writer Mykola Khvylyovyi’s famous slogan “Away from Moscow” called for taking a separate path in building up a new Ukrainian culture. Oleksandr Shymskyy, a commissar of education in Ukraine, protested against centralism and stood for appointing Ukrainians to the ruling positions in Ukraine. Mykhailo Volobuev, an economist, claimed that Ukraine remained an ‘economic colony’ within the USSR and insisted upon the necessity to disengage the Ukrainian economy from that of the USSR. However, soon after the manifestation of these ideas, all the authors were censured by the government and forced to renounce their views. During the repressions of 1930s their views would be remembered and national-communists would be put to death.
 Ibid. 470.
 V.N. Bandera V.N, ‘The New Economic Policy (NEP) as an Economic System’ in Journal of Political Economy Vol. 71, No. 3 (1963), 265.
 Субтельний, Україна, 471.
 Ibid. 472.
 Ibid. 474.
 Ibid. 475.
 Ibid. 483.