The building of the windmill is the event which parallels the introduction and eventual collapse of Trotsky's Five Year Plan (later claimed by Stalin to be his own idea!).
Snowball (Trotsky) and Napoleon (Stalin) argue about the possibility of building a windmill and industrialising the farm (the Five Year Plan): Snowball argues that the windmill will increase productivity when constructed, but Napoleon doesn't think there is enough food to sustain its construction.
The windmill (the Five Year Plan) is at the centre of the split between the two factions (representing Trotskyist and Stalinist Communism). Then Napoleon exiles Snowball and his Animalism is adopted generally, Napoleon convincing everyone that the windmill was always his idea, just as Stalin did with Trotsky's theories.
The destruction of the windmill represents the collapse of the plan.
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