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The "New Economic Policy" was instituted by Vladimir Lenin and the Communist Party in order to increase food production.

Agricultural produce was being confiscated from the peasant farmers by the Communist government under Lenin's program of "war communism." This led to peasants either hoarding crops or not bothering to produce them. Lenin had promised an end to shortages of both food and manufactured products, but both areas were underproducing. Soon after the revolution Lenin realized that the Communist government faced the same prospect of revolution over economic shortages that had brought down the Tsar in 1917. The NEP reintroduced aspects of capitalism in the agricultural sector permitting farmers to work their lands for themselves subject only to a reasonable tax. Farmers' markets were reopened so that farmers could sell their produce at market prices rather than at artificially low prices fixed by the government.

It was ironic that Lenin saw that only capitalist principles inherent in human nature could save the communist economic system which abhorred capitalism.

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