Does Central Planning Work?

[MaoandMummar]

I have heard criticism and defense of Central Planning however no one has ever explained to me why it does/or doesn't work but simply stated figures associated with the model(I.E. Stalin and Kim Jong Il). So I pose these questions to all knowledgeable users:
1.Does Central Planning work?
2.Who made it work and where?
3.Is Central Planning the best model for Socialism/Communism?
Thank you so much for the consideration.

[Skyhilist]

It typically fails because it concentrates power in the hands of a few individuals (who in reality tend to look out only for their own individual interests when wielding absolute power) instead of in the hands of the proletariat as a whole. As for the specific people you mentioned, I don't think anyone here is going to support Kim Jong Ill, and most (but not all) on here will oppose Stalin.

[Yet_Another_Boring_Marxist]

There is so much to be said about this topic that I can not answer it in any meaningful sense. So I'll give it my best shot.

Under Stalin, the USSR consistently grew it's economy as soon as it began the industrialization process. The USSR's main focus was on heavy industry with a highly efficient, centralized planning system directly accountable to recallable elected factory managers. After Stalin died a massive wave of liberalization occurred and planning was decentralized and market mechanisms were introduced. This led to a massive growth in bureaucracy, economic inefficency, and a gradual economic decline that began in 1974 that undid the Soviet Union. Here is a good article about it:

http://clogic.eserver.org/2010/Ball.pdf

In China on the other hand, there were experiments with free access Communism, and distribution according to the need. The early experiments didn't work out well but eventually these methods were perfected and led to a massive growth in the Chinese economy, where the life expectancy went from 38 in 1948 to 69 in 1976 (Mobo Gao, The Battle for China's Past). Additionally there were experiments with decentralization but unlike the Soviet experiments, managers and local planners were directly accountable to the local population. The amount of centrally managed industries went from 10,000 before the cultural revolution to only 168 after the cultural revolution ended (The Passion of Mao) this decentralization is generally credited with the economic boom of China. While on the otherhand Deng's early attempts at liberalization were meet with drastic failure, as inflation skyrocketed to 25% annually and universities had a drop out rate of 80% in the mid 80's due to an increasing expensive, crumbling education system.

So in short, I would say that central planning done correctly can work, but that next time we should try to move beyond the Stalin and Kruschev model and maybe learn something from China and incorporate genuine communization into the socialist construction process. But personally I think calculation in kind is probably the best way fowards


It typically fails because it concentrates power in the hands of a few individuals (who in reality tend to look out only for their own individual interests when wielding absolute power) instead of in the hands of the proletariat as a whole. As for the specific people you mentioned, I don't think anyone here is going to support Kim Jong Ill, and most (but not all) on here will oppose Stalin.

The planning process in North Korea is particularly interesting. First of all, despite their whole jargon about self sufficiency, North Korea was to a large extent the Venice of the eastern bloc, fixing prices favorably to attract business from the Soviets and trading on both sides of the Sino-Soviet split. The general philosophy of North Korean economists at the time was to build up productive capacities as much as possible and to put a major emphasis on industry. Which sounds good in theory, but what you need to keep in mind is that there is a limited amount of resources that can be harvested at once, and the high expectations put on producers along with incentives to produce as much as possible meant that many people fudged the numbers and reported exceeding their quotas when they had barely made them. This meant that an economy strained already by the fact that there was a massive demand for coal, iron, and other important goods, could never keep an accurate account of just how much capital they had at one time. To make up for this fault, Korean planners would often re-adjust the length of their plans to meet goals, to give miners more time to meet the requirement of iron needed for industrialization and to allow for planners to adjust for deficiencies, occasionally to absurd extensions where five year plans would become seven or ten year plans. Although this system ensured one of the fastest rates of economic growth in the eastern bloc, it was also very inefficient and one could never know when the power would stop functioning. Despite people pointing at the North as one of the most hardline planned economies, despite the obvious centralization, there were few other places in the eastern bloc were the anarchy of the market reigned more supreme

[Ismail]

2.Who made it work and where?There's a 1970's Soviet encyclopedia article which puts forward the basic purposes of planning and a short history of it in the USSR: http://encyclopedia2.thefreedictionary.com/National+Economic+Planning

[tuwix]

I have heard criticism and defense of Central Planning however no one has ever explained to me why it does/or doesn't work but simply stated figures associated with the model(I.E. Stalin and Kim Jong Il). So I pose these questions to all knowledgeable users:
1.Does Central Planning work?
2.Who made it work and where?
3.Is Central Planning the best model for Socialism/Communism?
Thank you so much for the consideration.


Central Planning works but the question is how effectively. And in the most cases is less effective than classic capitalism. Economic growth of so-called East-Block was lesser than its European capitalist rivals. And, in my opinion, the central planning was guilty of that. Free cooperatives would be as effective as private enterprises if not better.

Central planning is to be usefel only on levels that concern very big investments. But it is detrimental to local issues which are solved locally in the best way.

[RedMaterialist]

Of course it works. Giant corporations like Wal-Mart and Microsoft could not function without five-ten year planning. They plan every thing down to the last paperclip. They centrally plan every aspect of production, distribution, and marketing, all with the use of massive supercomputers. Socialism is simply the next step in the process. Instead of a few mega-corporations planning for profit, society will centrally plan for rational production for use instead of for sale and irrational exchange.

[Tim Cornelis]

They work insofar they do not collapse immediately after their establishment. As the overview of Soviet-expert Alec Nove's criticism explains, the central planning of the economy has intrinsic flaws reducing it to inefficient operations:


Nove argues that a completely centrally-planned command economy can no more ascertain social and consumer needs ex-ante than can capitalist markets. And for basically similar reasons. The individual capitalist firm can plan and decide what it is going to produce in the coming year, based on market research and projection from past trends and its existing share of the market. But its ex-ante predictions are often wrong because it has imperfect knowledge. It knows what it plans to do, but is completely unaware of the plans of its competitors which will drastically affect the accuracy of its forecasts. Even governments with all the means at their disposal are unable to forecast economic trends in an economic system dependent on the millions of decisions of multitudes of independent producers. But the market does provide an ex-post verification of the firm’s estimates of the demand for its products.

Nove argues that the command economy has the worst of both worlds. It is not only unable to predict needs ex-ante because of the defects of central planning already mentioned, but is also unable to have ex-post checks on its plans due to the absence of market constraints. Since bonuses are based on the achievement of production targets and savings, the managers of individual enterprises are not interested in whether their products are actually used or purchased. Thus quality is sacrificed. Once the production target for tractors or lorries or machine tools has been met, the manager of the producing enterprise could not care less if his products break down repeatedly and are eventually dumped to lie rusting in some yard. Similarly, for consumer goods the absence of market constraints, that is, the need to produce items actually wanted and therefore purchased by the public results in a combination of waste and shortages. Add to this the fact that while some products such as electricity or coal are homogeneous and can be measured and planned in aggregates – megawatts, tonnes, etc – other products such as clothes, spectacles, instruments, machine-tools etc, come in hundreds or thousands of variants. Nove contends:

"It is the beginning of wisdom to realise that the centre cannot plan these ‘quantitatively’, in any meaningful microeconomic sense. Plans in tonnes or square metres are plainly far too crude to encompass the literally millions of varieties and versions of products with use-values that exist. Trotsky wrote: ‘Cast-iron can be measured in tonnes, electricity in kilowatt-hours. But it is impossible to create a universal plan without reducing all branches to a common value denominator.’ Here at least he saw the clear limitations of physical planning even of metals and fuels. He was referring to the USSR in the 1930s, but why should it be different in ‘real socialism’?" (p.43, The Economics of Feasible Socialism).

Then there is also this:


The two most important systemic problems inherent in command economies related to information and motivation. Adequate information and motivation require decentralisation. The balance between centralisation and decentralisation must depend on the nature of the activity in question. Both Devine and Nove relate the problems of information to the top-down chain of command and the lack of participatory democracy. At each subordinate level of the industrial hierarchy, the people concerned will "doctor" the information supplied to the higher levels to suit their own interests. For example, since bonuses for enterprise managers depend on achieving or surpassing the set targets for production, there is a built-in incentive to understate existing capacity and inflate requirements of inputs (since "planned" deliveries from suppliers of raw materials, fuel, etc, are notoriously unreliable). Similarly, projected costs and delivery times are deliberately inflated so as to make it easier to show "savings" in costs and times – all of which attract bonuses. Since the bureaucrats at the centre must necessarily depend on information from below in order to set the plan targets, this system ensures that the plan. is inevitably flawed. Devine also points out that the absence of democracy promotes alienation and therefore causes poor innovation (p.65 Democracy and Economic Planning).

Thus there is a need for decentralised decision-making in economic planning.


Of course it works. Giant corporations like Wal-Mart and Microsoft could not function without five-ten year planning. They plan every thing down to the last paperclip. They centrally plan every aspect of production, distribution, and marketing, all with the use of massive supercomputers. Socialism is simply the next step in the process. Instead of a few mega-corporations planning for profit, society will centrally plan for rational production for use instead of for sale and irrational exchange.

They plan using market prices so this tired game of semantics fails in that regard. Additionally, large corporations suffer from immense diseconomies of scale so they're inefficient as well.


But personally I think calculation in kind is probably the best way fowards

How would that work though? Without common denominator you would end up with unfixable equations:

We invest 14,000 megawatt of electricity and 40,000 litres of oil, or
We invest 39,400 kilo of cements and 50 yards of linen.
You can't compare the two. In markets, at least, you can assigned flawed prices that convey some information to them to compare outcomes. In socialism we need to use the, also flawed, means of calculating the socially average necessary labour-time.

[Sasha]

If in a truely socialist society, you know, communism, it should be workable, not sure whether the best option but certainly an option, the two people you mention, as all other nations that tried it had nothing to do though with socialism, it where state-capitalist projects. The dictatorship of the buraucracy.... Or maybe socialism of the peter principle..

[Anglo-Saxon Philistine]

Soviet growth rates are, I think, evidence enough that central planning works, particularly considering their stagnation during periods of decentralisation and limited market reforms, and their abysmal drop during the capitalist reforms. Furthermore, as redshift points out, corporations and trusts, which dominate in the era of imperial capital, are essentially pocket planned economies.

Those who claim that the Soviet economy was inefficient usually make, I think, one of three errors. First, some of them ignore the material basis of the Soviet economy, particularly the effect of two protracted wars, and compare the Soviet GDP to that of the, for example, United States. Second, they focus on areas of the economy that were simply not important to the economic bodies, consumer goods for example. Third, they consider every failed plan a serious failure, even though the difference between the target production and the actual production could be minuscule, and the actual production could grow significantly during the "failed" plan.

Edit: Tim Cornelis citing liberals, how unexpected. But the quote his sources attribute to Trotsky seems to be spurious (the alleged source are "the Trotsky archives", right), and mangled in any case. Allegedly, the rest of the quote goes: "If the denominator is itself fictitious..." If it is fictitious. Trotsky would really have had to hit his head in order to forget that there exists a nonfictitious denominator, the average expenditure of labour power.

[Crabbensmasher]

Of course it works. Giant corporations like Wal-Mart and Microsoft could not function without five-ten year planning. They plan every thing down to the last paperclip. They centrally plan every aspect of production, distribution, and marketing, all with the use of massive supercomputers. Socialism is simply the next step in the process. Instead of a few mega-corporations planning for profit, society will centrally plan for rational production for use instead of for sale and irrational exchange.

This is a good example.

I've heard people compare planned economies to the engine of a car. The delivery of fuel to power the combustion engine is all planned through a highly efficient system. Similarly, the use of a car battery to operate lights, gauges and automatic windows is a pre-planned process. The battery does not go to the dashboard light and sell its labour in exchange for the basic sustenance of life. The dashboard light does not distribute its finished product while retaining maximum profit, most of which will go to corporate CEOs. The pistons will not engage in a hostile corporate takeover of the exhaust valves.

The fact is, central planning doesn't have to be some dystopian notion of obscure technocrats worshipping a computer god in some Orwellian laboratory in Siberia. Really, it's quite common, and more plausible than commonly believed.

*sigh* I hope that helps

[Tim Cornelis]

Soviet growth rates are, I think, evidence enough that central planning works, particularly considering their stagnation during periods of decentralisation and limited market reforms, and their abysmal drop during the capitalist reforms. Furthermore, as redshift points out, corporations and trusts, which dominate in the era of imperial capital, are essentially pocket planned economies.

Soviet growth rates are superior to Mexico, but compared to Western Europe it's not. I can't see before 1950, but it seems to move out of stagnation, contrary to your claims. Corporations are not planned economies as they use market prices. The abysmal drop after (private) capitalist reforms does not prove the superiority of a planned ecomomy as today's economic growth in Eastern Europe is superior to that of the state-capitalist/"socialist" economic growth. It's comparable to quitting cold turkey, you may get ill shortly after, but once cleared you are doing better than before:

http://upload.wikimedia.org/wikipedia/commons/1/11/Eastern_bloc_economies_GDP_1990.jpg


Those who claim that the Soviet economy was inefficient usually make, I think, one of three errors. First, some of them ignore the material basis of the Soviet economy, particularly the effect of two protracted wars,

The first two do not pertain to what is meant by efficiency at all. The material conditions do not determine efficiency as it necessarily takes into account available means.


and compare the Soviet GDP to that of the, for example, United States.

I don't think many do that at all. It also does not tell us anything about efficiency.


Edit: Tim Cornelis citing liberals, how unexpected. But the quote his sources attribute to Trotsky seems to be spurious (the alleged source are "the Trotsky archives", right), and mangled in any case. Allegedly, the rest of the quote goes: "If the denominator is itself fictitious..." If it is fictitious. Trotsky would really have had to hit his head in order to forget that there exists a nonfictitious denominator, the average expenditure of labour power.

http://en.wikipedia.org/wiki/List_of_fallacies

How incredibly childish. The arguments stand on their own merits. Respond to them or admit your failure. Are the arguments flawed or not? If so, how. These are valid means of arguing, not your spouting off fallacies. The Trotsky-quote does not change the arguments, ignore it. I'm really baffled by how often this is deemed a good argument. "Oh the person saying that particular thing has a different political view, so the fact-based analysis must be wrong". How does it even enter one's mind to type this into a field and enter it thinking it's going to be a valid argument.

If I had type that myself you would have no ammo to shoot with surely.

[Anglo-Saxon Philistine]

Soviet growth rates are superior to Mexico, but compared to Western Europe it's not.

The war caused relatively minor disruption in Western Europe, particularly compared with the genocidal campaign in the Soviet Union. After the war, Western Europe was generously sponsored by the United States; in addition to this, Britain, France and Portugal continued their imperialist plunder.


I can't see before 1950, but it seems to move out of stagnation, contrary to your claims.

Almost as if there had been some sort of major economic disruption, no?


Corporations are not planned economies as they use market prices.

Not internally. And in many if not most branches of industry, the cartels and the regulatory bodies associated with cartels can set prices as they please. Cartels are not as prominent as they once were, perhaps, but this is the result of petit-bourgeois politicking by certain governments. Obviously the cartel is the economic form that most closely corresponds to the needs of the economy from the era of finance capital onwards.


The abysmal drop after (private) capitalist reforms does not prove the superiority of a planned ecomomy as today's economic growth in Eastern Europe is superior to that of the state-capitalist/"socialist" economic growth. It's comparable to quitting cold turkey, you may get ill shortly after, but once cleared you are doing better than before:

http://upload.wikimedia.org/wikipedia/commons/1/11/Eastern_bloc_economies_GDP_1990.jpg

The axes aren't labeled, for one thing. Second, many former degenerated workers' states receive massive subsidies from the imperialist powers, particularly the bureaucratic and kulak strata.


The first two do not pertain to what is meant by efficiency at all. The material conditions do not determine efficiency as it necessarily takes into account available means.

That might be the case for the raw materials required (and even then the relationship between raw material and efficiency isn't quite nonexistent), but not for capital or the labour force. More capital means greater efficiency. During both wars in Russia, the capital capacities of the Soviet state were decimated. Likewise with labour.


How incredibly childish. The arguments stand on their own merits. Respond to them or admit your failure. Are the arguments flawed or not? If so, how. These are valid means of arguing, not your spouting off fallacies.

I am simply pointing out how amusing it is that an alleged socialist constantly parrots liberal rhetoric, from the analysis of fascism to economics.


The Trotsky-quote does not change the arguments, ignore it.

Why should I? If the quote is spurious, it indicates the quality of the scholarship.


I'm really baffled by how often this is deemed a good argument. "Oh the person saying that particular thing has a different political view, so the fact-based analysis must be wrong". How does it even enter one's mind to type this into a field and enter it thinking it's going to be a valid argument.

As surprising as this might seem, some members recognise the political nature of the topic, and we will not be intimidated by waving around empty liberal rhetoric and shouting "facts!".

[Ismail]

James S. O'Donnell notes that in the 1980's the lack of new technology in Albania was a major impediment to continued high rates of economic growth. Related to this were various other materials unavailable to the Albanians. Thus: "nearly thirty years of experience with the Stalinist development strategy, during which time the Albanian economy had achieved rates of economic growth unsurpassed elsewhere in Europe, did not guarantee its continued pursuit in the face of a reduction in the level of foreign aid." (Schnytzer, Stalinist Economic Strategy in Practice: The Case of Albania, 1982, p. 88.) Albania's economic problems stemmed from it being surrounded by a world of hostile states, not anything inherent in the economy which, as Schnytzer and other authors have noted, was the only one to base its activities on Stalin's Economic Problems of Socialism in the U.S.S.R. as opposed to the market methods of the Soviet revisionists.


The abysmal drop after (private) capitalist reforms does not prove the superiority of a planned ecomomy as today's economic growth in Eastern Europe is superior to that of the state-capitalist/"socialist" economic growth.What constitutes that "growth" though? What is the impact of fictitious capital on it? How secure is that "growth" when capitalism itself is subjected to periodical crises?

Case in point: Albania from 1993-1995 had the highest "growth" rate in Europe after the disastrous years of 1990-1992. Two years later the economy collapsed after it was found that much of said "growth" relied on pyramid schemes. Meanwhile a lot of the industry built during the socialist period is in disuse, and the educational advances of the socialist period, obviously necessary for an industrial economy, were wrecked; the state of Albanian education is significantly worse than it was 20 years ago.

[Fourth Internationalist]

I have a really newbie question that i'd like to ask and this seems like a relevant place to ask, how exactly do central planning and noncentral (decentral) planning differ?

[Ismail]

I have a really newbie question that i'd like to ask and this seems like a relevant place to ask, how exactly do central planning and noncentral (decentral) planning differ?The thing is, there's "central planning" in all sorts of countries. Gaddafi-era Libya had "central planning," modern-day China has "central planning," Yugoslavia likewise had "central planning." In content though all of these states varied widely in how this planning actually worked.

When a contrast is made between "centralized" and "decentralized" planning, that usually means how much power the enterprise has vis-à-vis the state, as well as the competences of the enterprise like how much of its own investments can it make, what can it do with surplus funds, what sort of deals it can enter into with other enterprises, if it can engage in joint-venture projects with foreign enterprises, if an enterprise is fully "self-financing" (i.e. doesn't rely on funding and/or subsidies given by state), etc.

[subcp]

Facets of capitalism in its normal development are the prerequisites for communism. The transplanting of artisan workshop production with mass manufacture then mass manufacture to serial manufacture (the use of detail labor- where each worker in value producing industry is responsible for just 1 component of the commodity production rather than responsible for the entire production of a commodity, beginning to end)- the socialization of labor.

In backward or underdeveloped nations (outside of the '8 equally powerful and developed advanced capitalist nations' circa 1900), Russia was relatively unique. An imperialist power with pockets of well developed, advanced industry in a sea of feudal remnants and holdovers- a small militant proletariat experienced in modern capitalism and exponentially more peasants, artisans, nobles, etc.

The Soviet development of the planned economy was (imho) the most important development in capitalism of that era. With the other capitalist powers exercising global hegemony, keeping other nations and regions from developing the productive forces along a path that, say, England, France, Germany and the US had taken to reach modernity, via imperialism, the model developed in Russia-USSR cleared the path for other equally or more underdeveloped nations to follow to develop their national economies and compete on the global level. Lenin wrote that despite expropriating the Russian bourgeoisie and the property of foreign bourgeoisie, and crushing the white reaction, socializing labor (a prerequisite of communism) could not be decreed. It's something that had to happen organically in the real movement of capital. And it would- over time via rapid industrialization and the proletarianization of the large peasant population and innovations in industry.

But when you talk about a planned economy, usually people (here) are talking about the Soviet model- the command economy, the dominance of state property-state monopoly. But the development of the command economy in the USSR was predated by approximately 3 decades of a growing state sector in the advanced capitalist nations. Lenin and especially Bukharin wrote at length on the development of state capitalism in the West- Bukharin, in his texts on Imperialism, documented the growing size of the public sector in the central capitalist nations (USA, Germany, etc.)- including state owned and operated industries.

From the late 19th to the middle 20th century, the state sector across all nation states was progressively growing; especially apparent after WWII in the Western, central capitalist nations (nationalizations of large swathes of 'the commanding heights of industry' in Britain, France, Italy, etc.).

But with the return of crisis to capitalism after the post-WWII economic boom, 1968-1973, a reflux occurred and we are still living through it. The state sector began to shrink as a result. Cutting public sector workforces, selling off formerly state owned industries, companies and sectors. Austerity- motivated by the same needs as the growing state sectors internationally: hold off/ease crisis.

This was even apparent in nations with command economies (or on their way to command economies on the Soviet model): the most important development since '73 in international capitalism (imho, again) is the SEZ: Special Economic Zone, developed in the People's Republic of China in the 1970's (codified by the politburo in 1978)- areas of extreme economic liberalization, lax labor legislation and thus absurdly high growth. SEZ's are now in most of the remaining one-party regimes that oversaw a command economy or attempted command economy: even the DPRK has SEZ's.

Just like the tendency toward the equalization of the value of labor-power across nations (Marx- 'Wage Labor and Capital'), there's been tendencies toward equalization of state intervention (including nationalization, quasi-nationalization, regulation, etc.) across the globe. First the tendency was toward a growing state sector in line with the development of capital (centralization of capital, need to act against the periodic crises of capitalism and offset the fall in the rate of profit caused by high organic composition of capital)- now, a tendency toward decreasing the scale of state intervention, even in those nations that originally had (or worked to build) a Soviet model command economy (completely state owned and run economy).

The end result of the command economies is the same as the state capitalist, advanced capitalist nations in Western Europe, the US and Japan; increasing centralization and concentration of capital, socialization of labor. For the purpose of communism, the prerequisites have been met on an international level. The command economies were not socialist, or even a half-way or transitory stage on the way to socialism. It was just a different way of accomplishing industrialization along capitalist lines- something that they were effective at:

but when it comes to the organization of society, they were completely ineffective. The scale of state violence needed to accomplish primitive accumulation (forcible proletarianization of the peasantry to accomplish industrialization), the human cost, was enormous. The rapid acceleration of capitalist development in the borders of these nation-states resulted in vast internal contradictions; some which were insurmountable (Yugoslav Federation's inability to carry out primitive accumulation via collectivization along Soviet lines; vast numbers of riots, strikes and rural insurrections in mainland China from then to today) and some which led to the complete destruction of the one-party state:command economy apparatus and organization of the nation (East Germany, Poland, etc. and the ethnic and religious nationalism's of USSR and Yugoslavia).

That entire organization of society had a specific purpose: to accelerate the development of industrialization and force what took centuries to accomplish in the original advanced capitalist nations (England, France, Germany, USA, etc.) into 5, 10 or 20 years. This allowed second rate or regional powers and completely ineffective (on the international arena) regions and nations to carve a path of development to become powers in international capitalism (USSR-Russian Federation, PR China) or regional economic powers (Vietnam, etc.).

If the original purpose for Marxists to support the command economy was to accelerate the development of the productive forces, and today the productive forces have developed to a point where chronic overproduction (and thus a perpetual structural crisis in the rate of profit) as a result of a high organic composition of capital throws capitalism into spasms of unpredictable crisis (1968, 1971, 1973. . . 2008-today), it should be clear that the productive forces have been developed, sufficiently, on the international level, to support communism (global classless, stateless human society without the law of value). Socialization of labor has reached a point where one of the main contradictions of capitalism (the need for new waged laborers for expanded reproduction with the need to cut the cost of variable capital while increasing the rate of exploitation on remaining workers and thus expel workers from the productive process) is leaving ever increasing numbers of proletarians as superfluous and exiled from value producing industry. The 'optimum' or 'normal' rate of unemployment has steadily risen since 1945- there was a time when anything over 4% was considered abnormally high unemployment. Today, that number is now 7.5%+; in many central capitalist nations it is even higher (Western Europe).

There is no need for a command economy/planned economy/nationalized economy. It has nothing to do with socialism/communism (or even the prerequisites for socialism/communism).

[Soman]

Of course it does. When you have a single, central authority it causes a "wave" of command so-to-speak. Which can enhance production IMO more than polycentrism.

[Tim Cornelis]

The war caused relatively minor disruption in Western Europe, particularly compared with the genocidal campaign in the Soviet Union. After the war, Western Europe was generously sponsored by the United States; in addition to this, Britain, France and Portugal continued their imperialist plunder.

Most colonies had become unprofitable due to increasingly more investment required for them to stay competitive. In addition to expensive war costs, I doubt this had a big net positive on economic growth. Additionally, countries with colonies also performed better in terms of economic growth (West-Germany, Ireland, Iceland, etc.).
As for the effects of the war, I don't know how much negative effect it had on growth. Maybe you have a source.


Almost as if there had been some sort of major economic disruption, no?

How long should a recovery take?


Not internally.

Internally they have major diseconomies of scale.


And in many if not most branches of industry, the cartels and the regulatory bodies associated with cartels can set prices as they please. Cartels are not as prominent as they once were, perhaps, but this is the result of petit-bourgeois politicking by certain governments. Obviously the cartel is the economic form that most closely corresponds to the needs of the economy from the era of finance capital onwards.

Cartels still function in a market economy.


The axes aren't labeled, for one thing.

It would be the same in whatever currency, obviously.


Second, many former degenerated workers' states receive massive subsidies from the imperialist powers, particularly the bureaucratic and kulak strata.

Which imperialist powers and what effects did this have, because this isn't clear to me.


That might be the case for the raw materials required (and even then the relationship between raw material and efficiency isn't quite nonexistent), but not for capital or the labour force. More capital means greater efficiency. During both wars in Russia, the capital capacities of the Soviet state were decimated. Likewise with labour.

The Soviet bureaucracy was inefficient because the resources it had at its disposal were far from optimally used. This is the meaning of efficiency, not generic growth rates. The amount of labour and capital is absolutely useless in a discussion of efficiency:

"Achieving maximum productivity with minimum wasted effort or expense." This would be absolute efficiency. In the Soviet Union resources were often mismanaged, and goods were not optimally utilised. With tractors standing idle without oil, and many more such cases of economic waste.


I am simply pointing out how amusing it is that an alleged socialist constantly parrots liberal rhetoric, from the analysis of fascism to economics.

Well here's what I'm reading: "I cannot find any flaw in the argument someone wrote, so I'm going to throw buzzwords around in an effort to deflect from having to use actual arguments."

Also define "liberal." If Pat Devine, advocating economic planning from below, is a liberal, then surely Trotsky is as well. And Alec Nove would actually as leftist in many ways, economically and politically, to the state-capitalist bureaucracies


Why should I? If the quote is spurious, it indicates the quality of the scholarship.

Again, look at the list of fallacies. A false quote does not change the content and truthfulness of a different argument. The quote was not fundamental to the argument.


As surprising as this might seem, some members recognise the political nature of the topic, and we will not be intimidated by waving around empty liberal rhetoric and shouting "facts!".

How is a well articulated argument about the inefficiency of the Soviet bureaucracy based on the factual workings of that bureaucracy "liberal rhetoric". Especially given that both authors are as left-wing as that Soviet bureaucracy (or more) this to me is mere shouting: "I, Semendyaev, admit defeat!".
Use actual arguments. Where is the flaw in the argument as posed by these two authors, which you can then use to show how the liberal paradigm influences this flaw. Not the other way around, which again, is a fallacy.
I seek to enforce my arguments through factual statements, asking clarifications by my opponents, and am willing to have a mature discussion. I hope you do as well, though preceding comments do not speak in your favour.



What constitutes that "growth" though? What is the impact of fictitious capital on it? How secure is that "growth" when capitalism itself is subjected to periodical crises?

Case in point: Albania from 1993-1995 had the highest "growth" rate in Europe after the disastrous years of 1990-1992. Two years later the economy collapsed after it was found that much of said "growth" relied on pyramid schemes. Meanwhile a lot of the industry built during the socialist period is in disuse, and the educational advances of the socialist period, obviously necessary for an industrial economy, were wrecked; the state of Albanian education is significantly worse than it was 20 years ago.

I don't think economic growth is a good standard of judging economic performance at all. But when people use it in favour of central planning, I deem it inaccurate. Also your comments on Albania are not entirely accurate:

http://upload.wikimedia.org/wikipedia/commons/1/11/Eastern_bloc_economies_GDP_1990.jpg


I have a really newbie question that i'd like to ask and this seems like a relevant place to ask, how exactly do central planning and noncentral (decentral) planning differ?

Central planning and decentralised planning depends on where decision-making power is concentrated. In central planning, decisions regarding investment and production are taken at a high organ and involves unaccountable state planners. Decentralised planning would utilise direct consumer input regarding their needs and wants with decision-making be at lower, or lowest levels, which, of course, does not preclude central coordination--it does centralised coordination.

[Anglo-Saxon Philistine]

But with the return of crisis to capitalism after the post-WWII economic boom, 1968-1973, a reflux occurred and we are still living through it. The state sector began to shrink as a result. Cutting public sector workforces, selling off formerly state owned industries, companies and sectors. Austerity- motivated by the same needs as the growing state sectors internationally: hold off/ease crisis.

I am not sure if austerity is incompatible with a large public sector; the SR Romania seems to have implemented an austerity programme concurrently with an expansion of the public sector through various ultraleft schemes.

In fact, I am not sure the public sector, in toto, decreased during the period of crisis. Certainly social programs suffered, but the military bureaucracy seems to have increased massively (under Reagan, in the US, at least).


This was even apparent in nations with command economies (or on their way to command economies on the Soviet model): the most important development since '73 in international capitalism (imho, again) is the SEZ: Special Economic Zone, developed in the People's Republic of China in the 1970's (codified by the politburo in 1978)- areas of extreme economic liberalization, lax labor legislation and thus absurdly high growth. SEZ's are now in most of the remaining one-party regimes that oversaw a command economy or attempted command economy: even the DPRK has SEZ's.

Alright, but is this the result of the demands of the planned economy or a transmission of imperialist pressure? I think it is the latter; the Soviet economy preformed fine without SEZs, for example.


but when it comes to the organization of society, they were completely ineffective. The scale of state violence needed to accomplish primitive accumulation (forcible proletarianization of the peasantry to accomplish industrialization), the human cost, was enormous.

But is that really relevant? From an economic standpoint, the collectivisation obviously worked.


The rapid acceleration of capitalist development in the borders of these nation-states resulted in vast internal contradictions; some which were insurmountable (Yugoslav Federation's inability to carry out primitive accumulation via collectivization along Soviet lines; vast numbers of riots, strikes and rural insurrections in mainland China from then to today) and some which led to the complete destruction of the one-party state:command economy apparatus and organization of the nation (East Germany, Poland, etc. and the ethnic and religious nationalism's of USSR and Yugoslavia).

The Yugoslav experiment in collectivisation seems to have failed chiefly due to a lack of political will, particularly after the so-called Informbureau affair, when the left wing of the party was purged. Likewise, the ethnic nationalism of late Yugoslav era was partially caused by the austerity measures, and partially by the unsolved national issue in Yugoslavia (Kosmet, a primarily Albanian territory, was supervised by Serbia, there were significant Serb elements in Croatia etc. etc.).


There is no need for a command economy/planned economy/nationalized economy. It has nothing to do with socialism/communism (or even the prerequisites for socialism/communism).

I am not sure that there exists any viable alternative. How can the proletariat, as a class, own the means of production if that ownership is atomised into competing workers' councils or whatnot? How can market mechanisms be avoided? Nationalisation of the economy seems to be the highest form of social ownership.

Yet Another Boring Marxist mentions immediate production for use. I am not sure if that is feasible even with consumer goods, and especially not heavy industry. In fact, I am not sure what production for use would imply when dealing with metric tonnes of steel, uranium rods, products such as that.


Most colonies had become unprofitable due to increasingly more investment required for them to stay competitive.

Only in the case of official colonies. But former colonial powers continued to exploit the former colonies long after their official withdrawal.


As for the effects of the war, I don't know how much negative effect it had on growth. Maybe you have a source.

I'll try to dig something up.


How long should a recovery take?

Given that most of the fighting in World War 2 took place on the Eastern Front, that the German authorities had clear genocidal intentions toward most of the citizens of the Soviet Union and sufficient time to carry them out, given the destruction of a good part of the Soviet industry and given that the Soviet Union neither received American help nor industrial reparations after the war (except some minor German reparation), it's surprising that the recovery was so short.


Cartels still function in a market economy.

How is that relevant?


It would be the same in whatever currency, obviously.

No, I mean it isn't clear what the values on the y axis are. The GDP? State debt? Average price of vodka?


Which imperialist powers and what effects did this have, because this isn't clear to me.

The European Union; the effect is that grossly inefficient economies are kept afloat, particularly an inefficient private agricultural sector.


The Soviet bureaucracy was inefficient because the resources it had at its disposal were far from optimally used. This is the meaning of efficiency, not generic growth rates. The amount of labour and capital is absolutely useless in a discussion of efficiency:

"Achieving maximum productivity with minimum wasted effort or expense." This would be absolute efficiency. In the Soviet Union resources were often mismanaged, and goods were not optimally utilised. With tractors standing idle without oil, and many more such cases of economic waste.

Are you seriously going to claim that capital does not effect productivity, or wasted expenditure of labour power? I mean, more advanced production processes, which require capital, and lots of it, increase productivity, and more reliable ones reduce waste, for one thing.


Also define "liberal." If Pat Devine, advocating economic planning from below, is a liberal, then surely Trotsky is as well.

Except that Trotsky argued for a nationalised economy, a monopoly on foreign trade, rapid industrialisation, and collectivisation. In fact the chief Trotskyist criticism of the Soviet five-year plans is that they did not happen sooner!


Again, look at the list of fallacies. A false quote does not change the content and truthfulness of a different argument. The quote was not fundamental to the argument.

It still demonstrates, at best, slapdash scholarship, and a malicious disregard for the truth at worst.

[Tim Cornelis]

Only in the case of official colonies. But former colonial powers continued to exploit the former colonies long after their official withdrawal.

True, but the Soviet Union also had a reverse marshal plan.



Given that most of the fighting in World War 2 took place on the Eastern Front, that the German authorities had clear genocidal intentions toward most of the citizens of the Soviet Union and sufficient time to carry them out, given the destruction of a good part of the Soviet industry and given that the Soviet Union neither received American help nor industrial reparations after the war (except some minor German reparation), it's surprising that the recovery was so short.

There's two comparable countries in Europe, then. West-Germany and East-Germany, and Greece and Eastern Europe. Germany had suffered from World War II and West-Germany outperformed East-Germany. Greece:


Greece suffered comparatively much more than most Western European countries during the Second World War due to a number of factors. Heavy resistance led to immense German reprisals against civilians. Greece was also dependent on food imports, and a British naval blockade coupled with transfers of agricultural produce to Germany led to famine. It is estimated that the Greek population declined by 7% during the Second World War. Greece experienced hyperinflation during the war. In 1943, prices were 34,864% higher compared to those of 1940; in 1944, prices were 163,910,000,000% higher compared to the 1940 prices. The Greek hyperinflation is the fifth worst in economic history, after Hungary’s following World War II, Zimbabwe’s in the late 2000s, Yugoslavia’s in the middle 1990s, and Germany’s following World War I. This was compounded by the country's disastrous civil war from 1944-1950.[16]

Greek economy was in an extremely poor state in 1950 (after the end of the Civil War), with its relative position dramatically affected. In that year Greece had a per capita GDP of $1,951, which was well below that of countries like Portugal ($2,132), Poland ($2,480), and even Mexico ($2,085). Greece’s per capita GDP was comparable to that of countries like Bulgaria ($1,651), Japan ($1,873), or Morocco ($1,611).[18] Over the past 50 years Greece has grown much faster than most of the countries that had comparable per capita GDP’s in 1950, reaching a per capita GDP of $30,603 today. This can be compared to the previously stated countries, $17,900 in Portugal, $12,000 in Poland, $9,600 in Mexico, $8,200 in Bulgaria and $4,200 in Morocco.[19] Greece’s growth averaged 7% between 1950 and 1973, a rate second only to Japan's during the same period. In 1950 Greece was ranked 28th in the world for per capita GDP, while in 1970 it was ranked 20th.

https://en.wikipedia.org/wiki/Greek_economic_miracle


How is that relevant?

Because they operate outside of a planned economy.


No, I mean it isn't clear what the values on the y axis are. The GDP? State debt? Average price of vodka?

" GDP per capita (in 1990 Geary-Khamis dollars) of Eastern bloc economies (1950-2003)"


The European Union; the effect is that grossly inefficient economies are kept afloat, particularly an inefficient private agricultural sector.

Doesn't that defeat your argument? It's so inefficient it needs capitalist loans to survive?


Are you seriously going to claim that capital does not effect productivity, or wasted expenditure of labour power? I mean, more advanced production processes, which require capital, and lots of it, increase productivity, and more reliable ones reduce waste, for one thing.

Productivity =/= efficiency.
The economic waste resulted from aforementioned "doctoring" of information and the centralised nature which made the plan unresponsive to consumer demand.


Except that Trotsky argued for a nationalised economy, a monopoly on foreign trade, rapid industrialisation, and collectivisation. In fact the chief Trotskyist criticism of the Soviet five-year plans is that they did not happen sooner!

I don't see how that relates to the charge that Trotsky was as "liberal" or "bourgeois". Advocating monopoly on foreign trade or industrialisation is not contrary to being liberal or bourgeois by definition. It does not relate Pat Devine and Alec Nove at all since they are from a time where all these issues are wholly irrelevant.
Alec Nove and Pat Devine also support collectivisation. Alec Nove supported macro-level economic planning, and micro-level markets for consumer goods. Other advocated policies put him slightly to the left of Tito. Pat Devine advocates workers' control over production, economic planning from below, which makes him as liberal as most Trotskyists.
And you still haven't refuted their arguments.


It still demonstrates, at best, slapdash scholarship, and a malicious disregard for the truth at worst.

I'm not the scholar and it does not change the force of the argument, so it's not relevant to me. Saying it's a "malicious disregard for the truth" is also highly exaggerated as if this quote has that much significance.

[Anglo-Saxon Philistine]

True, but the Soviet Union also had a reverse marshal plan.

Meaning what, exactly? Minor industrial reparations from Germany? Sov-Rom agreements? All of this is minuscule compared to the damage the fascist powers inflicted on the Soviet economy.


There's two comparable countries in Europe, then. West-Germany and East-Germany, and Greece and Eastern Europe. Germany had suffered from World War II and West-Germany outperformed East-Germany. Greece:

[...]

You conveniently forget to mention that both states received massive American and later European assistance.


Because they operate outside of a planned economy.

They still operate as planned economies. The Soviet Union also operated in the context of a global capitalist market, and was often under severe imperialist pressure.


Doesn't that defeat your argument? It's so inefficient it needs capitalist loans to survive?

Subsidies, not loans. And how does that defeat my argument? The agricultural sector is not planned, in any state of the former Eastern Bloc. The point was that these economic sectors were, at least, able to function during the era of the planned economy; after the transition to glorious private enterprise, they need to be kept afloat by regular injections from imperialist powers.

And this accounts for a good part of the supposed GDP growth, too. If these subsidies were to be withdrawn, I imagine your graph would look somewhat different.


Productivity =/= efficiency.

It's an important factor when assessing efficiency, though. Your own definition mentions "maximum productivity".


The economic waste resulted from aforementioned "doctoring" of information and the centralised nature which made the plan unresponsive to consumer demand.

You might as well criticise a dolphin for being horribly unaerodynamic. The Soviet economic organs never placed much importance on consumer demand.


I don't see how that relates to the charge that Trotsky was as "liberal" or "bourgeois". Advocating monopoly on foreign trade or industrialisation is not contrary to being liberal or bourgeois by definition. It does not relate Pat Devine and Alec Nove at all since they are from a time where all these issues are wholly irrelevant.

How are they irrelevant? Anyway, the economic programme of the Left Opposition, and of the subsequent Trotskyist movement, demonstrates that Trotsky did not support the liberal economic theories you ascribe to him - de facto syndicalism, atomisation, market mechanisms etc. etc.


Alec Nove and Pat Devine also support collectivisation. Alec Nove supported macro-level economic planning, and micro-level markets for consumer goods. Other advocated policies put him slightly to the left of Tito. Pat Devine advocates workers' control over production, economic planning from below, which makes him as liberal as most Trotskyists.

What Trotskyists support market mechanisms?


And you still haven't refuted their arguments.

What argument? The boring rehash of Hayek's boring argument which is refuted by the facts on the ground? Or the bizarre contention that there is no real basis for quantitative planning, which I've already addressed?


I'm not the scholar and it does not change the force of the argument, so it's not relevant to me. Saying it's a "malicious disregard for the truth" is also highly exaggerated as if this quote has that much significance.

It demonstrates how objective these people are when it comes to the Soviet Union, just like every conservative, liberal, petit-bourgeois democrat and "socialist" anti-communist.

[piet11111]

Well the USSR went from a largely illiterate peasant country into a super power in 40 years and achieved that after going through a civil war with a bunch of foreign army's intervening and the second world war against the nazi's that before that where able to defeat all the advanced european nations almost without effort.
(the only reason the brits managed to hang on was because the german tanks could not cross water)


Another thing to consider is that the capitalist economy's also went into a war economy that at least in my eyes amounts to a temporary planned economy.
clearly market forces could not be allowed to get in the way of the war machine.

[Rusakov]

In a sense, you could say so. When one considers the the base from which the USSR started from and the effects of both the civil war and the great patriotic war, its achievements were spectacular. Yet it can also be considered responsible for tendancies that lead to the collapse of the Soviet Union and, from a democratic perspective, it can be considered in practise a great move away from the socialist ideal.

[RedMaterialist]

This is a good example.

I've heard people compare planned economies to the engine of a car. The delivery of fuel to power the combustion engine is all planned through a highly efficient system. Similarly, the use of a car battery to operate lights, gauges and automatic windows is a pre-planned process. The battery does not go to the dashboard light and sell its labour in exchange for the basic sustenance of life. The dashboard light does not distribute its finished product while retaining maximum profit, most of which will go to corporate CEOs. The pistons will not engage in a hostile corporate takeover of the exhaust valves.

The fact is, central planning doesn't have to be some dystopian notion of obscure technocrats worshipping a computer god in some Orwellian laboratory in Siberia. Really, it's quite common, and more plausible than commonly believed.

*sigh* I hope that helps

I agree. I think the automobile example is a good illustration of what Marx meant by the means of production determining the social structure (or mode of production.) Producing an automobile, space shuttle, a thousand gigwatt hydro electric dam, global internet system, demands an extremely complex division of labor and highly centralized planning. All of this produces a highly alienated, bureaucratized society if it is based on irrational market forces.

I think the question of central planning depends on who is doing the planning and for whose benefit. In socialism, society itself controls the planning for its own benefit. The question is not whether to use giant computers to plan an economy, but whether to plan for better schools, hospitals, care for the elderly, etc., or for the planning of gigantic nuclear aircraft carriers or superior anti-personnel bombs, or a world-wide banking system designed to extract maximum profit from society.

[RedMaterialist]

1.Does Central Planning work?
2.Who made it work and where?
3.Is Central Planning the best model for Socialism/Communism?
Thank you so much for the consideration.

1. Yes.
2. Monopoly capitalists; U.S. and Western Europe; Ford, GM, GE, General Dynamics, J.P. Morgan, Bill Gates, Wal-Mart, Rockefeller, etc.
3. Only if the planning is owned, managed and controlled by the working class and society.

The real question, I think, is whether society can take control of and tame these wild "free-market" beasts, or whether the working class and socialists will first have to destroy the modern state.

[RedMaterialist]

[QUOTE=Tim Cornelis;2623446 Corporations are not planned economies as they use market prices. [/QUOTE]

On the contrary, monopoly capitalism uses highly complex planning to control prices. Walmart sets the prices it pays to its suppliers and sets the prices it charges customers. Price setting is even used to control the demand and supply forces of the market: a market-clearing price will clear the shelves, but reduce profit; higher prices will increase supply relative to demand and raise profits temporarily, until demand slacks off (see Alfred Marshall.) The problem the monopoly capitalist faces is determining where the most efficient margin for profit is, thus the theory of "marginal utility." The capitalist uses central planning to achieve the best margin: inventory on demand, a highly developed transportation system, complex communication and computer systems, a gigantic reserve of the unemployed to insure immediate access to cheap labor, and the use of government money, food stamps and unemployment compensation to keep the unemployed alive and entertained while they wait for their marginal jobs.

Some of the biggest capitalists use a price-guaranteed, cost-plus system to guarantee a profit when selling nuclear aircraft carriers to the government.

However, this system is still based on the maximization of profit, which means low wages relative to prices; which demands high unemployment, which means nobody can buy the capitalists' products, which leads to a crisis. Then unemployment drops, more people begin working, which means higher wages and lower profits. Even though the capitalist can use central planning to maintain a stable "margin" for a longer time, sooner or later the system becomes unbalanced. The whole circular, crisis-prone, catastrophe-ridden process starts all over again.

I think central planning is a fact of life. The socialists must take control of it.

[Ismail]

I don't think economic growth is a good standard of judging economic performance at all. But when people use it in favour of central planning, I deem it inaccurate. Also your comments on Albania are not entirely accurate:Again, it depends where this economic growth actually comes from. As Stalin said to some right-wing Soviet economists claiming that the law of value regulated production in the USSR: "Obviously, if we were to follow the lead of these comrades, we should have to cease giving primacy to the production of means of production in favour of the production of articles of consumption. And what would be the effect of ceasing to give primacy to the production of the means of production? The effect would be to destroy the possibility of the continuous expansion of our national economy, because the national economy cannot be continuously expanded with-out giving primacy to the production of means of production."

You then proceed to give me some random chart rather than a scholarly work on the subject (Schnytzer's work was published by Oxford University Press.)

[MaoandMummar]

So it seems like even wuithin the revolutionary left their is disagreement over it, but it was fun to read all of it. Ismail and Redshifted as well as Justanotherboring Marxist I thank all three of you for your replies as you have won me over. I thank of the others for submitting their opinions:grin:

[Tim Cornelis]

Meaning what, exactly? Minor industrial reparations from Germany? Sov-Rom agreements? All of this is minuscule compared to the damage the fascist powers inflicted on the Soviet economy.

An equivalent amount of value that the US put into Western Europe was withdrawn from Eastern countries to the Soviet Union.


You conveniently forget to mention that both states received massive American and later European assistance.

Greece received 376,000,000$. And much of that money for Greece was used for military purposes. I doubt it had a big influence on economic growth. It only joined the EU in the 1970s, when the "economic miracle" was over.


They still operate as planned economies. The Soviet Union also operated in the context of a global capitalist market, and was often under severe imperialist pressure.

Their production ('external' relations in a sense) is determined by market prices, whereas for the Soviet Union this was far more limited. Their corporate internal structure is planned, true, but these are still marked by immense diseconomies of scale though.


Subsidies, not loans. And how does that defeat my argument? The agricultural sector is not planned, in any state of the former Eastern Bloc. The point was that these economic sectors were, at least, able to function during the era of the planned economy; after the transition to glorious private enterprise, they need to be kept afloat by regular injections from imperialist powers.

I thought you meant during the "socialist"/state-capitalist period they required injections. Many Eastern European countries like Poland, Hungary, and Yugoslavia received such Western 'aid'. And, to my knowledge, it was only in Poland that agriculture was predominantly private sector, with both input and output being determined by the state up until the 1970s. In that sense it was still "planned".


It's an important factor when assessing efficiency, though. Your own definition mentions "maximum productivity".

Maximum productivity with the available resources is different than sheer productivity in terms of output. If I produce 10 cars in an hour, and you produce 10 cars in an hour, but you use twice as much resources we are both as productive, but I'm twice as efficient.


You might as well criticise a dolphin for being horribly unaerodynamic. The Soviet economic organs never placed much importance on consumer demand.

Which would show another deficiency in centrally planning economies, the control accorded to a small caste to make such decisions to disregard something so important to the population.


How are they irrelevant? Anyway, the economic programme of the Left Opposition, and of the subsequent Trotskyist movement, demonstrates that Trotsky did not support the liberal economic theories you ascribe to him - de facto syndicalism, atomisation, market mechanisms etc. etc.

They are relevant because you called them liberals. So I'm showing that Alec Nove was to the left of Tito, and Pat Devine as liberal as Trotsky.


What Trotskyists support market mechanisms?

I compared Alec Nove to Tito, and Pat Devine to Trotsky. Pat Devine advocates a planned economy (without 'market forces'), he believes in 'markets' only insofar they involve the exchange of goods and services.


What argument? The boring rehash of Hayek's boring argument which is refuted by the facts on the ground? Or the bizarre contention that there is no real basis for quantitative planning, which I've already addressed?

The argument about doctoring information and the inability of centralised planners to make sense of supply and demands. You know that argument you have failed to refute for the third time, and I presume you're never going to even attempt to refute since you can't. This argument has absolutely nothing to do with Hayek, by which I presume you mean Von Mises. All this suggests:
1) You don't know what the economic calculation problem is, or
2) You did not bother to read the argument I posted and assumed it to be incorrect.
3) Or both.


It demonstrates how objective these people are when it comes to the Soviet Union, just like every conservative, liberal, petit-bourgeois democrat and "socialist" anti-communist.

Again, I read "I cannot refute this argument so I'm going to throw buzzwords around. Hopefully he doesn't notice how irrelevant this is." A little thing called a red-herring.

http://en.wikipedia.org/wiki/List_of_fallacies




On the contrary, monopoly capitalism uses highly complex planning to control prices. Walmart sets the prices it pays to its suppliers and sets the prices it charges customers. Price setting is even used to control the demand and supply forces of the market: a market-clearing price will clear the shelves, but reduce profit; higher prices will increase supply relative to demand and raise profits temporarily, until demand slacks off (see Alfred Marshall.) The problem the monopoly capitalist faces is determining where the most efficient margin for profit is, thus the theory of "marginal utility." The capitalist uses central planning to achieve the best margin: inventory on demand, a highly developed transportation system, complex communication and computer systems, a gigantic reserve of the unemployed to insure immediate access to cheap labor, and the use of government money, food stamps and unemployment compensation to keep the unemployed alive and entertained while they wait for their marginal jobs.

Some of the biggest capitalists use a price-guaranteed, cost-plus system to guarantee a profit when selling nuclear aircraft carriers to the government.

However, this system is still based on the maximization of profit, which means low wages relative to prices; which demands high unemployment, which means nobody can buy the capitalists' products, which leads to a crisis. Then unemployment drops, more people begin working, which means higher wages and lower profits. Even though the capitalist can use central planning to maintain a stable "margin" for a longer time, sooner or later the system becomes unbalanced. The whole circular, crisis-prone, catastrophe-ridden process starts all over again.

I think central planning is a fact of life. The socialists must take control of it.

Of course Walmarts sets prices, market prices do not appear in nature. This is not what is meant by economic planning though. But again, the Soviet Union demonstrates how inefficient central planning is. See the spoiler tags below.
. And you assume corporations to be efficient, while they suffer from immense diseconomies of scale. I advice reading a bit of Organizational Theory by Kevin Carson, specifically chapters 5, 6 7, and 8. These reveal how inefficient large-scale corporations really are. Here are the titles (to give you an idea of their content):
5. Knowledge and Information Problems in the Large Organization
6. Agency and Incentive Problems within the Large Organization
7. Economic Calculation in the Corporate Commonwealth (the Corporation as Planned Economy)
8. Managerialism, Irrationality and Authoritarianism in the Large Organization


Nove argues that a completely centrally-planned command economy can no more ascertain social and consumer needs ex-ante than can capitalist markets. And for basically similar reasons. The individual capitalist firm can plan and decide what it is going to produce in the coming year, based on market research and projection from past trends and its existing share of the market. But its ex-ante predictions are often wrong because it has imperfect knowledge. It knows what it plans to do, but is completely unaware of the plans of its competitors which will drastically affect the accuracy of its forecasts. Even governments with all the means at their disposal are unable to forecast economic trends in an economic system dependent on the millions of decisions of multitudes of independent producers. But the market does provide an ex-post verification of the firm’s estimates of the demand for its products.

Nove argues that the command economy has the worst of both worlds. It is not only unable to predict needs ex-ante because of the defects of central planning already mentioned, but is also unable to have ex-post checks on its plans due to the absence of market constraints. Since bonuses are based on the achievement of production targets and savings, the managers of individual enterprises are not interested in whether their products are actually used or purchased. Thus quality is sacrificed. Once the production target for tractors or lorries or machine tools has been met, the manager of the producing enterprise could not care less if his products break down repeatedly and are eventually dumped to lie rusting in some yard. Similarly, for consumer goods the absence of market constraints, that is, the need to produce items actually wanted and therefore purchased by the public results in a combination of waste and shortages. Add to this the fact that while some products such as electricity or coal are homogeneous and can be measured and planned in aggregates – megawatts, tonnes, etc – other products such as clothes, spectacles, instruments, machine-tools etc, come in hundreds or thousands of variants. Nove contends:

"It is the beginning of wisdom to realise that the centre cannot plan these ‘quantitatively’, in any meaningful microeconomic sense. Plans in tonnes or square metres are plainly far too crude to encompass the literally millions of varieties and versions of products with use-values that exist. Trotsky wrote: ‘Cast-iron can be measured in tonnes, electricity in kilowatt-hours. But it is impossible to create a universal plan without reducing all branches to a common value denominator.’ Here at least he saw the clear limitations of physical planning even of metals and fuels. He was referring to the USSR in the 1930s, but why should it be different in ‘real socialism’?" (p.43, The Economics of Feasible Socialism).

Then there is also this:


The two most important systemic problems inherent in command economies related to information and motivation. Adequate information and motivation require decentralisation. The balance between centralisation and decentralisation must depend on the nature of the activity in question. Both Devine and Nove relate the problems of information to the top-down chain of command and the lack of participatory democracy. At each subordinate level of the industrial hierarchy, the people concerned will "doctor" the information supplied to the higher levels to suit their own interests. For example, since bonuses for enterprise managers depend on achieving or surpassing the set targets for production, there is a built-in incentive to understate existing capacity and inflate requirements of inputs (since "planned" deliveries from suppliers of raw materials, fuel, etc, are notoriously unreliable). Similarly, projected costs and delivery times are deliberately inflated so as to make it easier to show "savings" in costs and times – all of which attract bonuses. Since the bureaucrats at the centre must necessarily depend on information from below in order to set the plan targets, this system ensures that the plan. is inevitably flawed. Devine also points out that the absence of democracy promotes alienation and therefore causes poor innovation (p.65 Democracy and Economic Planning).

[Anglo-Saxon Philistine]

An equivalent amount of value that the US put into Western Europe was withdrawn from Eastern countries to the Soviet Union.

Even if this is the case, the Soviet economy sustained massive damage from the war, whereas the damage to most Western economies was negligible. Again, you're trying to compare two very unequal situations.


Greece received 376,000,000$. And much of that money for Greece was used for military purposes. I doubt it had a big influence on economic growth. It only joined the EU in the 1970s, when the "economic miracle" was over.

Mhm, so why did similar military regimes not experience the same growth pattern?


Their production ('external' relations in a sense) is determined by market prices, whereas for the Soviet Union this was far more limited. Their corporate internal structure is planned, true, but these are still marked by immense diseconomies of scale though.

You repeat that sentence as if it were the bloody gospel, but the present economy is demonstrably dominated by such entities. Obviously, then, they correspond to a large extent to the current demands of the economy, no matter what "immense diseconomies of scale" are found in them,


I thought you meant during the "socialist"/state-capitalist period they required injections. Many Eastern European countries like Poland, Hungary, and Yugoslavia received such Western 'aid'. And, to my knowledge, it was only in Poland that agriculture was predominantly private sector, with both input and output being determined by the state up until the 1970s. In that sense it was still "planned".

That wasn't what I was talking about, though.


Maximum productivity with the available resources is different than sheer productivity in terms of output. If I produce 10 cars in an hour, and you produce 10 cars in an hour, but you use twice as much resources we are both as productive, but I'm twice as efficient.

And if two economic entities use the same resources, but one produces twice as many products, it is twice as efficient.


Which would show another deficiency in centrally planning economies, the control accorded to a small caste to make such decisions to disregard something so important to the population.

At most, this applies to centrally planned economies overseen by bureaucratic castes. Even so, it's fairly unsubstantial. Increases in the quality of life are more important than "consumer choice" to most strata of the population.


They are relevant because you called them liberals. So I'm showing that Alec Nove was to the left of Tito, and Pat Devine as liberal as Trotsky.

I compared Alec Nove to Tito, and Pat Devine to Trotsky. Pat Devine advocates a planned economy (without 'market forces'), he believes in 'markets' only insofar they involve the exchange of goods and services.

Trotsky never advocated markets in the context of a planned economy. The economic programme of the Left Opposition was consistently to the left of that of Stalin and other centrists.


The argument about doctoring information and the inability of centralised planners to make sense of supply and demands. You know that argument you have failed to refute for the third time, and I presume you're never going to even attempt to refute since you can't. This argument has absolutely nothing to do with Hayek, by which I presume you mean Von Mises. All this suggests:
1) You don't know what the economic calculation problem is, or
2) You did not bother to read the argument I posted and assumed it to be incorrect.
3) Or both.

Right, Mises instead of Hayek. I always get the two fascists mixed up. It doesn't matter. The argument, if it can be called that, relies on the absurd notion that outputs and inputs can't be quantified using a common unit, which I have already addressed.


Again, I read "I cannot refute this argument so I'm going to throw buzzwords around. Hopefully he doesn't notice how irrelevant this is." A little thing called a red-herring.

http://en.wikipedia.org/wiki/List_of_fallacies

Again, I read "someone doesn't care about my subjectivist liberal arguments that are contradicted by the facts on the ground, so I'm going to cry and link to Wikipedia". You know what? 'Ave fun. That your argument is completely idealist and bankrupt is obvious to anyone, and I frankly can't stand you liberals. Au revoir.

[Tim Cornelis]

I cannot honestly understand why anyone would outright reject a fact-based argument without even trying to refute in any way possible. What would be the harm in trying to integrate the lessons of the 20th century into our current theoretical understandings. Surely we want to be as well prepared for the future as possible. Then why erect this wall of denial and self-delusion? I honestly cannot understand this. Who benefits from completely and utterly ignoring the factual criticism of a Soviet-economic expert and socialist of sorts whose criticism has lead many to abandon central planning as a feasible system? Seriously, who benefits from this? If I'm not mistaken it even motivated Paul Cockshott to articulate a new economic planning model for socialism. Attack the premise, attack the conclusion, but don't say "oh he's a liberal, so we can just ignore his criticism."


Even if this is the case, the Soviet economy sustained massive damage from the war, whereas the damage to most Western economies was negligible. Again, you're trying to compare two very unequal situations.

I don't remember how we came to this particular aspect of the argument, but:
West-Germany and East-Germany are comparable, and Greece and Eastern Europe are comparable.


Mhm, so why did similar military regimes not experience the same growth pattern?

Which regimes and which pattern?


You repeat that sentence as if it were the bloody gospel, but the present economy is demonstrably dominated by such entities. Obviously, then, they correspond to a large extent to the current demands of the economy, no matter what "immense diseconomies of scale" are found in them,

A high concentration and centralisation of capital is necessary, that doesn't mean it's efficient.


And if two economic entities use the same resources, but one produces twice as many products, it is twice as efficient.

Yes...


At most, this applies to centrally planned economies overseen by bureaucratic castes. Even so, it's fairly unsubstantial. Increases in the quality of life are more important than "consumer choice" to most strata of the population.

Increases in the quality of life could be more substantil if the economy was efficiently organised.


Trotsky never advocated markets in the context of a planned economy.

I never said he did. Again, Alec Nove, Tito; Pat Devine, Trotsky.


Right, Mises instead of Hayek. I always get the two fascists mixed up. It doesn't matter. The argument, if it can be called that, relies on the absurd notion that outputs and inputs can't be quantified using a common unit, which I have already addressed.

I've nowhere mentioned that argument, in fact I addressed the common unit prior to you in this thread:


In socialism we need to use the, also flawed, means of calculating the socially average necessary labour-time.
You in reply to me:


Trotsky would really have had to hit his head in order to forget that there exists a nonfictitious denominator, the average expenditure of labour power.



Again, I read "someone doesn't care about my subjectivist liberal arguments that are contradicted by the facts on the ground, so I'm going to cry and link to Wikipedia". You know what? 'Ave fun. That your argument is completely idealist and bankrupt is obvious to anyone, and I frankly can't stand you liberals. Au revoir.

How childish. First of all, you haven't read my argument as you think I was referring to the economic calculation debate, which I wasn't. Second, there is absolutely nothing subjective, idealist, or liberal about pointing out the real fashion in which the central planning bureaucracies worked -- this suggests you haven't even read the argument yet you get your knicks in a twist over it. Thirdly, you have nowhere even attempted to show which facts disprove it, presumably because you can't. Fourthly, the argument you're refusing to even attempt to disprove has nothing to do with wikipedia. I haven't linked to in that particular context. Fifthly, you're now walking away from it for the fourth time, which, again, suggests you cannot disprove it and your bias stands in the way of admitting this. I've put the rest of the argument we're having in spoiler tags. Discussions are about exchanging opinions, not fallacies. You merely throw around buzzwords (idealist, liberal, etc.) without substantiating anything in regards to that argument, while I've repeadedly asked you to explain how. Whereas other questions I've asked you to explain in this thread you had no problems coming up with answer, here, in this particular argument, you do, and substitute them with ad hominem and red-herring attacks. Which suggests you cannot refute them.
I have absolutely nothing to lose here, as I'm biased in favour of central planning and Leninism. Why? It would be much easier to support a system that has existed in real life as opposed to one that hasn't existed. Moreover, Leninism (particularly Marxism-Leninism) is still the largest far-left force in the world so me coming to believe it's a feasible and revolutionary one is within my bias.
The other discussion we're having is going in circles so we might as well quit it (hence the spoiler tags). So please only respond to the one argument you refuse to respond to from now on, this one:


Nove argues that a completely centrally-planned command economy can no more ascertain social and consumer needs ex-ante than can capitalist markets. And for basically similar reasons. The individual capitalist firm can plan and decide what it is going to produce in the coming year, based on market research and projection from past trends and its existing share of the market. But its ex-ante predictions are often wrong because it has imperfect knowledge. It knows what it plans to do, but is completely unaware of the plans of its competitors which will drastically affect the accuracy of its forecasts. Even governments with all the means at their disposal are unable to forecast economic trends in an economic system dependent on the millions of decisions of multitudes of independent producers. But the market does provide an ex-post verification of the firm’s estimates of the demand for its products.

Nove argues that the command economy has the worst of both worlds. It is not only unable to predict needs ex-ante because of the defects of central planning already mentioned, but is also unable to have ex-post checks on its plans due to the absence of market constraints. Since bonuses are based on the achievement of production targets and savings, the managers of individual enterprises are not interested in whether their products are actually used or purchased. Thus quality is sacrificed. Once the production target for tractors or lorries or machine tools has been met, the manager of the producing enterprise could not care less if his products break down repeatedly and are eventually dumped to lie rusting in some yard. Similarly, for consumer goods the absence of market constraints, that is, the need to produce items actually wanted and therefore purchased by the public results in a combination of waste and shortages. Add to this the fact that while some products such as electricity or coal are homogeneous and can be measured and planned in aggregates – megawatts, tonnes, etc – other products such as clothes, spectacles, instruments, machine-tools etc, come in hundreds or thousands of variants. Nove contends:

"It is the beginning of wisdom to realise that the centre cannot plan these ‘quantitatively’, in any meaningful microeconomic sense. Plans in tonnes or square metres are plainly far too crude to encompass the literally millions of varieties and versions of products with use-values that exist. Trotsky wrote: ‘Cast-iron can be measured in tonnes, electricity in kilowatt-hours. But it is impossible to create a universal plan without reducing all branches to a common value denominator.’ Here at least he saw the clear limitations of physical planning even of metals and fuels. He was referring to the USSR in the 1930s, but why should it be different in ‘real socialism’?" (p.43, The Economics of Feasible Socialism).

Then there is also this:


The two most important systemic problems inherent in command economies related to information and motivation. Adequate information and motivation require decentralisation. The balance between centralisation and decentralisation must depend on the nature of the activity in question. Both Devine and Nove relate the problems of information to the top-down chain of command and the lack of participatory democracy. At each subordinate level of the industrial hierarchy, the people concerned will "doctor" the information supplied to the higher levels to suit their own interests. For example, since bonuses for enterprise managers depend on achieving or surpassing the set targets for production, there is a built-in incentive to understate existing capacity and inflate requirements of inputs (since "planned" deliveries from suppliers of raw materials, fuel, etc, are notoriously unreliable). Similarly, projected costs and delivery times are deliberately inflated so as to make it easier to show "savings" in costs and times – all of which attract bonuses. Since the bureaucrats at the centre must necessarily depend on information from below in order to set the plan targets, this system ensures that the plan. is inevitably flawed. Devine also points out that the absence of democracy promotes alienation and therefore causes poor innovation (p.65 Democracy and Economic Planning).

Again, I cannot spot subjectivist, idealist, or any liberalism criticism whatsoever. It's not a criticism based on the factual workings of the Soviet Union's planned economy, and a factual analysis of its flaws.

Then explain to me:
1) How the facts on the ground refuse this argument (how it is bankrupt)
2) How it is liberal (or idealist or subjectivist).

It's obvious to anyone but me because you have no shown:

1) The facts
2) Used non-fallacious arguments

But my guess is you wont because if you could've you would've by now. So grow up, either admit you're full of it, or learn how to have mature discussions without relying on red-herrings and ad hominem attacks.

[subcp]

I am not sure that there exists any viable alternative. How can the proletariat, as a class, own the means of production if that ownership is atomised into competing workers' councils or whatnot? How can market mechanisms be avoided? Nationalisation of the economy seems to be the highest form of social ownership.

Yet Another Boring Marxist mentions immediate production for use. I am not sure if that is feasible even with consumer goods, and especially not heavy industry. In fact, I am not sure what production for use would imply when dealing with metric tonnes of steel, uranium rods, products such as that.That sounds like a rejection of communism/Marx and Engels' 'scientific socialism'. It's true that policies undertaken by states with a nominal worker's party at the helm have developed the productive forces to compete with the capitalist centre even in the epoch of imperialism. But, outside of the early years of the Soviet power and October Revolution, there was a recognition that this is what they were doing: accumulating capital via extraction of surplus-value to reenter the productive process via enlarged reproduction with the state as the sole property-owning entity.


Consequently, the construction of our budget, the State credit policy, the measures taken with a view to the military protection of the State, in fact all State activity in general, must bestow its first and greatest care upon the planned development of State industry.

. . .

An expanded reproduction of State industry, which is unthinkable without the accumulation of surplus value by the State, forms in its turn the condition for the development of our agriculture in a socialist and not in a capitalist direction.-Trotsky, 'Theses on Industry', 1923

Trotsky is one of the few notable revolutionaries from October that I know of who conflated capital accumulation on the basis of generalized commodity production and usage of waged labor as 'socialism'; present in the debates on militarization of labor, one-man management, and during the trade union debates Lenin chastised him for believing that what existed in the Soviet Republic was the same theoretical "workers state" promoted by Marxists pre-October.

It just seems far short of what Marxists/communists should be doing and believe are the material needs of society. Whether an abstract form of 'central planning' is necessary in communism I don't know- but the type of planned economy promoted by various left groups (nationalization of all means of production, power in the hands of the worker's party, etc.) seems to get lost in the contingencies and on-the-fly policies following 1917 or the statesmanship of self-described 'Communists' in their development of industry and modern agricultural for the sake of capital accumulation.

Nationalizing industry, state planning, a nominal worker's party in charge of the state, etc. are not radically different from what exists today, and far short of 'storming heaven'.

[Sotionov]

Work for what? The question is too broad to be answered.

There's a bunch of things one could want- industrialization of society, healthcare and education available to all, a classless/ non-hierarchical society, a society where right to life is well preserved, a society with freedoms of assebly, opinion and speech, equality of wealth, high standard of living for all, etc etc. It is in relation to such concrete question that we can talk whether a state that employs central planning (and in what form) is good or bad for achieving such goals.

[RedMaterialist]

. And you assume corporations to be efficient,
[/spoil]

Corporations are extremely efficient at making profits, especially the biggest ones. All, or most, of their inefficiencies are "externalized," as the economists say. However, I will take a look at the book. It sounds good.

[ComradeOm]

Even if this is the case, the Soviet economy sustained massive damage from the war, whereas the damage to most Western economies was negligibleUm, what?

[Paul Cockshott]

I have heard criticism and defense of Central Planning however no one has ever explained to me why it does/or doesn't work but simply stated figures associated with the model(I.E. Stalin and Kim Jong Il). So I pose these questions to all knowledgeable users:
1.Does Central Planning work? yes it does.


2.Who made it work and where?

It was made to work in the USSR and produced a rate of economic development which was near the maximum possible until the late 70s,


3.Is Central Planning the best model for Socialism/Communism?
Thank you so much for the consideration.
Not the only model for socialism, but the best one.