The Council, a commission of the Council of People's Commissars, included among its executive body such top-ranking Bolshevik leaders as V. I. Lenin, Leon Trotsky, and Joseph Stalin, who oversaw a burgeoning professional apparatus. Following the end of the Civil War the council was renamed and its economic planning and regulatory roles expanded to encompass the entire country. As the first central economic planning authority in Soviet Russia, the Council of Labor and Defense served as the institutional precursor to the better-known Soviet planning authority of later years, Gosplan, launched in August 1923 as a subcommittee of STO.
The Russian Revolution of 1917 concluded in the fall with the October Revolution, organized and achieved through the direction of V.I. Lenin's radical Bolshevik faction of the Russian Social Democratic Labor Party. With the country already decimated and disorganized by three brutal years of the First World War, the fledgling socialist state struggled to hang on and survive civil war, a multinational foreign military intervention, and the collapse of the economy, including the broad depopulation of major cities and the onset of hyperinflation.
The revolutionary government faced the dual tasks of economic organization and the marshaling of material resources on behalf of its Red Army. A new body known as the Supreme Council of National Economy (Latin acronym of the Cyrillic: VSNKh, commonly sounded out as "Vesenkha") was established on December 15, 1917 as the first governmental entity for the coordination of state finance and economic production and distribution in the Russian Socialist Federative Soviet Republic (RSFSR). Vesenkha was attached to the de facto cabinet of the RSFSR, the Council of People's Commissars, and formally answered to that body.
As the Vesenkha bureaucracy developed, it began to generate specialized departments from itself, entities known as glavki, each responsible for the operation of a specific economic sector. These subordinate entities were known by descriptive syllabic abbreviations, such as for example, Tsentrotextil' for the central department in charge of textile production, and Glavneft and Glavles for the central departments in charge of oil and timber, respectively. These organizations frequently corresponded to economic syndicates established prior to the war and taken over by the pre-revolutionary Tsarist government as part of its coordination of the economy for its own war effort. The personnel employed in these glavki were often the same individuals who served in a similar capacity under the old regime.
Although there were fewer than 500 nationalized companies prior to June 1918, by the end of that month the intensification of the Civil War and worsening economic situation led to adoption of a decree nationalizing all factories of the nation. Goods of all kinds vanished from the marketplace and rationing was extended. Unable to receive fair value for their surplus grain from the state grain-purchasing monopoly, peasants withheld their production from the official market, causing a parallel black market to emerge. The state's prodrazverstka, involving the systemic use of force against the peasantry in order to requisition grain further deepened the crisis. This new centralized and coercive economy, brought about by economic collapse and the exigencies of civil war is remembered to economic historians as Military Communism.