Stalin, in his struggle with the Joint Opposition in 1926–27, relied on the support of the ‘Rightists’ – Bukharin, Rykov and Tomsky. This alliance came under mounting stress; the grain crisis of 1927 posed the question of the viability of the NEP as a policy that could deliver rapid industrial growth; the defeat of the British General Strike and the suppression of the Chinese Communist Party represented two major setbacks in foreign policy in 1926. The Politburo leadership was taken unawares by these developments. It was vigorously attacked by the Joint Opposition for its lack of foresight. Stalin responded with the ‘left turn’ on domestic and foreign policy, returning to the class warfare rhetoric of the early Soviet period. This abrupt policy change surprised his allies and caused deep division within the Politburo. Trotsky's prediction that the defeat of the Joint Opposition would precipitate a new split between Stalin and Bukharin proved prescient. On this basis, the Stalin group was constituted. The struggle between the Stalinist group and the Rightists was a battle not only to control key institutions, but also to control the economy and to construct a new developmental strategy that went beyond the confines of NEP.

Kaganovich's role in this period casts light on the formation of the Stalin group, its policies and tactics. Its strategy accorded priority to the expansion of heavy industry, which involved turning the terms of trade against the peasantry and procuring grain at low prices, by compulsion where necessary.