The Prison Camps
Victims of arrest who were not immediately executed were transported to prison camps. It is now generally acknowledged that repression in the Soviet Union utilized prison camps for political prisoners and others from Lenin's days. One of the first camps was the Solovetsky Special Purpose Camp (SLON), known as Solovki. It was probably here that the idea of expanding the prison system into a huge network caught on. It was found that prisoners could be used for labor at practically no cost to the state: they required no wages and only minimal expense for housing and food. They could simply be forced to work until they dropped from exhaustion or dropped dead.
This may explain why the prison network, known as the GUlag (the State Administration of Camps) spread across the Soviet Union in the 30s. Administered by the NKVD, the GUlag became a state within a state, with its own laws, its own government, its own economy which may have been larger than that of the official state. Camps were usually in isolated areas, many in the vast expanses of Siberia, where the climate and the land were inhospitable.
Bulgakov himself had no direct experience of life in the camps, but his friend the poet Osip Mandelstam was arrested and vanished into the camps.
The Library of Congress Soviet Archive Exhibit has more on the Gulag, including a letter from prisoners returning from the Solovetsky Camps!