Is a Planned Economy a Failure?

[orihara]

I was reading that the economy of the USSR had a steady downfall from the 50s to the 80s, that it (once a gross exporter of grain) now had become one if the largest importers of grains, and that the collective farming was a failure, and that it's planned economy is overall inefficient.

Is all of this true? Did the system work or not work? What is your opinion?

[Sperm-Doll Setsuna]

It was not a failure, if that is what you are referring to. It had systemic failures owing to the fact that it was essentially a state-managed capitalist economy, so had many of the same challenges as any other capitalist nation.

Soviet agriculture expanded, but its growth was simply not sufficient to meet the increased demand and consumption. The failure of the Soviet agriculture, in particular, is exaggerated by Western sources (it's worth noting that current Russian agricultural output (for the RSFSR territory) is just barely at the same level as before the fall, and this is only after a very low increase following the dramatic drop.

The economy overall was not in a downfall. It merely stopped growing rapidly in what is known as the Brezhnev stagnation. By 1961, growth rate had slowed to about 5.5%, which was still regarded then as very high. This slowing sped up, until by the late 60's it hovered around a one or two per cent. The only year of decline, I think, was during the oil crisis and one year in the 1980's (forget which, too lazy to check; it was detailed in some 1990 IMF report on the state of the SSSR's economy, which aside from its obvious bias in favour actions to be taken in the direction of rapacious destruction, did contain many interesting statistics and information on the operation of the late Soviet economy). The "planned economy" was in reality rather disorganised. Gosplan price index covered only 200,000 generic goods out of 24 million types of product produced. Most plans were not based in reality, because there were insufficient data input on requirements, needs and production capacity. Though it was troubled with severe systemic issues, it was no more dysfunctional than your typical capitalism (which is what it was, after all!). It's only a failure as regards failing to realise a socialist economy is.

[Tim Cornelis]

There was a constant downward trend in the growth rates of the USSR from 1937 onwards. The growth rate and reproduction of the Soviet economy was sustained by the “massive quantitative mobilization of productive resources” (p. 68, The Marxian Concept of Capital and the Soviet Experience) as well as the large volume of available labour-power. The rate of growth for constant capital was many fold that of the growth of living labour, “there was no corresponding growth in the productivity of social labour.” (p. 77, The Marxian Concept of Capital and the Soviet Experience). There was spurt of growth of the labour productivity through revolutionising the methods of production. That the methods of production, fixed capital, were notoriously and comparatively outdated and old can be seen as an affirmation or indication of the crisis of absolute over-accumulation. Invention, innovation, diffusion, and incremental improvements were falling or consistently low (p. 73, The Marxian Concept of Capital and the Soviet Experience). Gorbachev noted that “the structure of our production remained unchanged and no longer corresponded to the exigencies of scientific and technological progress.” (p.74, The Marxian Concept of Capital and the Soviet Experience). The reason for this was that the implementation of new innovative technology in production disrupted the production process temporarily and managers obstructed this, as it threatened reaching their production quotas, with no additional future rewards as prospect.

The economic stagnation and eventual economic decline can thus be seen as the crisis of absolute over-accumulation. In an effort to correct this, the management of capital had to re-invent itself. The various reforms implemented under the rule of subsequent Soviet dictators, particularly the Liberman reforms and the reforms of the Gorbachev era, (market-oriented reforms) were intended to make capital's management more efficient.

Other flaws were that of doctoring information, meaning managers did not provide accurate data to state planners, and underreported their production capacity as this increased chances of exceeding their production quotas and receiving a bonus.

The command economies are inherently flawed, with low quality consumer goods, shortages of consumer goods, loads of waste, not skewed toward consumer wants sufficiently, and prone to economic stagnation after all resources have been mobilised. Soviet capitalism was certainly more dysfunctional than liberal capitalism (the collapse of Soviet capitalism but not of liberal capitalism is proof enough for this) -- in terms of capital accumulation and consumer goods certainly, the USSR was outperformed by liberal capitalism.

[Sperm-Doll Setsuna]

The command economies are inherently flawed, with low quality consumer goods, shortages of consumer goods, loads of waste, not skewed toward consumer wants sufficiently, and prone to economic stagnation after all resources have been mobilised. Soviet capitalism was certainly more dysfunctional than liberal capitalism (the collapse of Soviet capitalism but not of liberal capitalism is proof enough for this) -- in terms of capital accumulation and consumer goods certainly, the USSR was outperformed by liberal capitalism.

I think that it was not simply that, however. The stagnation, and the inability (and often lack of desire) to address the social ills (often denied to be existing at all), compounded with incompetent political leadership into a crisis that could not be mitigated without a transformation of the state apparatus. The Soviet ruling classes realised this well (with the exception of a few hangers on who clung to idealist notions of their own role, various obstinate Stalinists and Leninist oriented folk of no real political consequence), and it is they, not the populous, that came to instigate the collapse and the restructuring that followed, and it was they that benefited from it.

"Democracy", is of course much better at quelling and controlling dissent and automating a political machine than overt insincere repression. Now, that corruption that was so long codified no longer clashes with the stated ideology, no longer looks silly, is no longer technically illegal; now it's all working as it should.

[Rafiq]

Speaking in terms of "planned" economies or market economies disassociates a single aspect of overall complicated modes of production, and ignores various factors like class relations (the nature of production itself), the countries geopolitical context, among numerous other things like historical circumstances that would make a hypothesis about planned economies in general rather ridiculous.

To add, these are terms which we can clearly categorize as inherently neoliberal, by which we measure the desirability of different "types" of economies based on their overall efficiency. That is, their efficiency with regard to adequately reproducing the dictatorship of the bourgeoisie, or even worse, the hegemony of this new technocratic political caste and the hegemony of capital. The postmodern bourgeois economists recognize the triumphant end of history by which capitalist relations become natural, and all economic questions merely become utilitarian ones, all areas of the economy are now de-politicized and handled by "experts" and technocrats. The task of Marxists today is to thoroughly refuse to adhere to such false dichotomy, to reject utilitarianism and once again bring about the revival of real politics, or class struggle.

The Soviet Union and it's offspring were monstrous failures formed as a result of a defeated proletarian dictatorship, they became economies destined to collapse and all actions taken by the state were done so in the spirit of self-preservation. We can clearly see this simply by absolute failure of a state-ideological apparatus to develop, the social relationships in those various countries were insufficient in ideological reproducing themselves, as characterized by mass cynicism and so forth. This was a clear reflection of their overall systemic failures. The greatest mistake a Communist can make today is to disassociate oneself from these failures, no, these were our failures and Stalinism was our bastard child. But we must not fall into this trap of making this a utilitarian game of how we can maximize efficiency. No, this is a class war, and we do ourselves no favor by speaking of how much better we would all be if we adopted different creative economic models. Even if it means the total ruin of society, even if it means famine, war and hell on Earth, the revolutionary proletariat must strive to pursue their interests and the conquest of the state. And let me be quite precise, contrary to what bourgeois economists might espouse, "efficiency" is a relatively trivial matter and with competent administration or what have you, it can be achieved in almost every mode of production. We are concerned with proletarian dictatorship, Antiquity offered many planned economies like Egypt, Sparta and so on. Historical progress is not a result of efficient economic models, I am quite certain there were efficient feudal economies, it is a result of historical change or change in social relations, the triumph of one class over another. To partake in the question of efficiency with these vile economists, those mouthpieces of oppression and reaction masquerading under the veil of "objective science" and rationalism, as though history has truly ended, is to disavow your loyalty to Communism as a movement.

[Geiseric]

I disagree with the above posters. The fSU had problems with corruption (stalinism et al) however the planned economy which could not possibly be considered capitalist to anybody who understands basic economics was the best thing they had going for them, not only in Russia but in the eastern bloc. Its dismantlement is the biggest blow to the working class to date. If NATO didn't outspend the fSU militarily and fund the Taliban in Afghanistan, I believe the fSU would still be around and the economy would be publicly owned in most of Europe.

[Rafiq]

So refreshing to see Marxists prattle of "basic economics".

[Rafiq]

It clearly was not the "best thing that was going for them", because they no longer exist.

[Tim Cornelis]

I disagree with the above posters. The fSU had problems with corruption (stalinism et al) however the planned economy which could not possibly be considered capitalist to anybody who understands basic economics was the best thing they had going for them, not only in Russia but in the eastern bloc. Its dismantlement is the biggest blow to the working class to date. If NATO didn't outspend the fSU militarily and fund the Taliban in Afghanistan, I believe the fSU would still be around and the economy would be publicly owned in most of Europe.

Well I'm not going to rehash this old debate as to whether the USSR was capitalist or not, it clearly was to anyone with a basic understanding of Marxism, so I'm going to direct you here:

http://www.marxisthumanistinitiative.org/alternatives-to-capital/video-the-incoherence-of-transitional-society.html
and here:
http://www.revleft.com/vb/cuban-national-assembly-t187896/index4.html

If the entire Soviet empire was brought down by the US giving arms to the Taliban, that's a pretty big indication the system was not durable. It would have collapsed anyway with anyone familiar with the economic data of the USSR: the decline in the growth rates from 1937 onward to stagnation in the 1950s, to decline in the late 1980s as a result of the symptoms I described in the other post. These are empirically verifiable, whilst you are speculating.

[adipocere12]

They were spending 20% of their GDP on defence after a point. For an already comparatively poor county this was too much and it eventually collapsed.

There was an economic war with the US and they lost. I don't think this marks planned economies as a failure. Indeed, considering how decimated the country was after World War Two and their relative starting point to the west, I think they did surprisingly well to hang on so long.


Sent from my iPhone using Tapatalk

[Rafiq]

It's important to recognize that growth models among other abstract statistics are not directly indicative of circumstances, most especially those present in the Soviet Union. Even more ridiculous, though, is to suggest that the phenomena of Stalinism was destroyed because of some trivial geopolitical dance with the U.S. in Afghanistan.

[Prometeo liberado]

If, and we're talking econ 101 here, you break "economism" down to simple corporate structures as say Hyundai, which one could argue is as large in economic scope as some nation-states, would you not find CFO's, CEO' and VP's pouring over profit and loss statements as a guide in "planning" economic strategy?

*Credit Prof. Andrew Collier with partial quote.

[Sinister Cultural Marxist]

Surely the dedication of resources to the military did hold back the economy. With X amount of steel and Y amount of man hours you can build ten tractors or one tank, but you can't build both. That did not start with Afghanistan though. The war in Afghanistan drew a comparatively small amount of the Soviet budget and its role in the Soviet collapse is overplayed.

Another issue which hurt the Soviet economy was the drop of oil prices after the 70s embargo. Their economy was still very much dependent on trading commodities with Western Capitalist countries, and when that became less profitable for the Soviet state it naturally hurt growth, their ability to pay back debt and their ability to buy goods from other countries.

[Sperm-Doll Setsuna]

Another issue which hurt the Soviet economy was the drop of oil prices after the 70s embargo. Their economy was still very much dependent on trading commodities with Western Capitalist countries, and when that became less profitable for the Soviet state it naturally hurt growth, their ability to pay back debt and their ability to buy goods from other countries.

Exactly, and this problem of the trade inequities grew increasingly dire due to the growing reliance on imports (of grain in particular, but many other things), which could not be kept up due to the declining export incomes. This played a significant role in the destabilising shortages that were soon thereafter even further exacerbated by the Gorbachev-era market reforms, and these were very important to how the Soviet ruling class perceived its best course of action to be. Institutional stability was worse than it was in China (where such reforms had been done much earlier), so the transformation was more desirable that preserving a direct organisational continuity.

[Ahab Strange]

Id recommend a book called "Red Plenty" by Francis Spufford. It's fiction, but its interspersed with some factual commentary from the author.

It basically uses a chronological series of short stories so illustrate economic life in the USSR from different viewpoints. It's actually a darn entertaining read and brings to life a lot of the systemic problems the soviet planning system had, as well as some of the opposition encountered by those proposing new methods of planning.

There are a few articles that refute the wests claims about how "inefficent" the SUs agriculture was, but I think its beside the point.

The bottom line is the fact that the previous planned economies had systematic problems, but explainable, surmountable ones. We can learn a huge amounts from the attempts made by the SU et al and indeed we should, as ultimately I believe a planned economy is still the way forward.

[Invader Zim]

It also didn't help that, rather investing wisely, the Soviet Union poured huge amounts of resources into military expendature.

[Vladimir Innit Lenin]

I disagree with the above posters. The fSU had problems with corruption (stalinism et al) however the planned economy which could not possibly be considered capitalist to anybody who understands basic economics was the best thing they had going for them, not only in Russia but in the eastern bloc. Its dismantlement is the biggest blow to the working class to date. If NATO didn't outspend the fSU militarily and fund the Taliban in Afghanistan, I believe the fSU would still be around and the economy would be publicly owned in most of Europe.

Yeah, who doesn't love a centrally planned dictatorship whose only downfall was not spending enough on war? :rolleyes:

Do enlighten about this 'basic economics'. Is this bourgeois supply and demand we are talking about?

[Kill all the fetuses!]

The Asian Tigers (South Korea, Thailand, Vietnam) were planned economies to a significant degree and because of that grew enormously throughout the previous decades.

Like other members said, the success of planned economies depend on various factors, such as historical circumstances in which these economies find themselves.

[Rafiq]

It also didn't help that, rather investing wisely, the Soviet Union poured huge amounts of resources into military expendature.

The United State's military expenditure was quite similiar if I am correct (which I may not be). I think there were clear systemic problems which went beyond a simple mismanagement of the allocation of resources into different sectors.

[RedMaterialist]

The Asian Tigers (South Korea, Thailand, Vietnam) were planned economies to a significant degree and because of that grew enormously throughout the previous decades.

Like other members said, the success of planned economies depend on various factors, such as historical circumstances in which these economies find themselves.

Another example of a fantastically successful planned economy is the central planning of gigantic, multi-national corporations.

Also, in the few yrs before the fall of the Soviet Union, most western economists (including those at the CIA), and most notably, Paul Samuelson, were describing the Soviet economy as generally successful, growing at about 2-4% per yr through the 1980s. All of that, of course, changed in December, 1989, when the Soviet Union collapsed.

Recently an economist named Ivan Kushnir has used UN data to produce historical statistics on world economies including the FSU. Here is one of his graphs on GDP growth in the Soviet Union from 1970-1989:

http://kushnirs.org/macroeconomics/image/ussr_gdp_growth.png

http://kushnirs.org/macroeconomics/image/ussr_gdp_growth.png

[Geiseric]

Yeah, who doesn't love a centrally planned dictatorship whose only downfall was not spending enough on war? :rolleyes:

Do enlighten about this 'basic economics'. Is this bourgeois supply and demand we are talking about?

How about you read what I said, otherwise I'm going to stop replying. I didn't say they "didn't spend enough." If a workers state has to spend any money on the military they are at a disadvantage. This is why Socialism in one country was a terrible idea. You used to be a mod, why are we going over this?

[Broviet Union]

Reduction of overall output through a planned economy is more than likely the fate of humanity in order to reduce environmental destruction and conserve resources. We better learn to like it.

[Rafiq]

How about you read what I said, otherwise I'm going to stop replying. I didn't say they "didn't spend enough." If a workers state has to spend any money on the military they are at a disadvantage. This is why Socialism in one country was a terrible idea. You used to be a mod, why are we going over this?

Socialism in one country wasn't an idea, but the result of the failure of the October revolution.

[Broviet Union]

How about you read what I said, otherwise I'm going to stop replying. I didn't say they "didn't spend enough." If a workers state has to spend any money on the military they are at a disadvantage. This is why Socialism in one country was a terrible idea. You used to be a mod, why are we going over this?

Even in a situation of world communism, you really think there will be zero spending on arms and weapons systems?

[FSL]

I was reading that the economy of the USSR had a steady downfall from the 50s to the 80s, that it (once a gross exporter of grain) now had become one if the largest importers of grains, and that the collective farming was a failure, and that it's planned economy is overall inefficient.

Is all of this true? Did the system work or not work? What is your opinion?
You're better off searching these things by yourself since most of the people here are too invested in the crap they believe (all revolutions created state-capitalist economies, central planning is awful etc) to offer anything important. If there are any crazy right wing pundits in your countries, I'm sure they'd nod in agreement with most of what is said here. "Reasonable" right wing pundits would find most of it excessive.


The Soviet Union was planned before the 50s as well. In fact it was more planned before the 50s. During the 50s there was a reform according to which each state in the Soviet Union (which was a federation) had its own plan, something leading to less synergies. Also in the 1960s enterprises were given increased autonomy in decision making with the Kosygin reforms. Gorbachev's reforms in the 1980s didn't happen out of the blue in an economy that has remained "frozen" for decades. There was no stakhanovism in 1980. The reforms were gradual but they were there so if someone talks about the soviet economy post-50s he needs to take them into account.


You probably know that the Soviet Union became an industrialized economy in a decade, that it covered much of the ground that seperated it from the developed capitalist economies of the west (which after all had a headstart of more than a century in some cases).
What you probably don't know is the extent to which the US and other capitalist countries had shit their pants.
They monitored the soviet economy, waged wars against people that rebelled, there was a whole covert cia operation in Europe, ready to pull of coups if needed.
http://www.foia.cia.gov/sites/default/files/document_conversions/89801/DOC_0000493918.pdf
http://www.foia.cia.gov/sites/default/files/document_conversions/89801/DOC_0000474401.pdf

When Nixon and Khrushchev had their kitchen debate and Khrushchev was joking that the soviet union would wave to the US as it passed it by, he really believed that. And at that time probably Nixon believed that as well.
http://www.youtube.com/watch?v=-CvQOuNecy4


And later on, the economy's results were poorer (which I think has to do with the reforms already put in place) but still they were comparable or better to everyone else's.
http://www.foia.cia.gov/sites/default/files/document_conversions/89801/DOC_0000308018.pdf

The economy was in an upward trend when compared to the american economy all the way until the late 70s, early 80s.
http://www.foia.cia.gov/sites/default/files/document_conversions/89801/DOC_0000498181.pdf


60% of the us economy in today's numbers would mean a gdp around 9-10 trillion dollars. That's China's gdp but of course the Soviet Union only had a fraction of China's population.

There were of course inefficiencies until the 1950s and after that there was a clear mismanagement (at best) and a disregard of socialism's economic laws, the equivalent of having a capitalist country print money to the point of hyper-inflation. But the only thing that could improve that performance was a better organized planned economy. Not markets and capitalism. The results of those things became apparent in the disruptions of the late 80s and the rampant poverty in modern capitalist Russia.


If you're looking for inefficiency in an economy, you don't need to look any further. I'm sure there are unemployed people in your country along with a load of unproductive jobs or jobs that cater only to the needs of the few.
That kind of inefficiency is phenomenal but seems to go unnoticed for some reason, I guess because it's better for the rich if it does.

[ComradeOm]

The Soviet Union was planned before the 50s as well. In fact it was more planned before the 50s. During the 50s there was a reform according to which each state in the Soviet Union (which was a federation) had its own plan, something leading to less synergies. Also in the 1960s enterprises were given increased autonomy in decision making with the Kosygin reforms.Ironically it was the other way around: the plan assumed increased importance in the post-war period. It's something of that myth that there was any real planning during the 1930s. The Plan was never more than an aspirational target and, at best, a gauge for prioritising investment decisions. Not that there were many of the latter to begin with, as the state ignored cost accounting and let managers spend what they wanted. (Oddly enough that led to disaster.) There was no science behind its formulation and truly fantasy figures were called for. By Spring 1932 the figures called for by the Politburo were so huge that Gosplan didn't even bother recompiling the Plan - it was a propaganda document and little else.

For example, in August 1929 the plan for crude oil production was increased from 22m to 26m tons by 1932. In October of 1929 the target was increased again to 40m tons. This is despite the fact that existing (ie known) oilfields only had a capacity of 25m tons. Actual production in 1929 was 12m tons. By 1933 it had increased to 21m tons - that is, short of the initial FFYP target, never mind the fantasy increases.

Yet there were industries waiting for this oil (plus coal, which was a similar story). Well into the mid-1930s you had factories, which had been assembled at massive expense and effort, lying effectively idle because their construction had outpaced the energy or raw materials sectors that were needed to supply them. This is the antithesis of effective planning; it reveals the industrialisation drive to merely be a free for all in which the centre handed out funds and targets willy-nilly and told the regions to get on with it.

In his infamous address to business leaders in June 1931, Stalin made his contempt for planning clear (and veered very close to 'triumph of the will'): "Drive away all these 'wise men' who talk to you about realistic plans and so on. We know what these 'realistic' plans are. Reality - that's you and us! If we want to work in a new way, we shall achieve everything."

It wasn't until after the war, and particularly the 1950s, that real planning techniques (such as those pioneered by Kantorovich) were applied to the national economy. That was what made the latter a planned economy, rather than simply a command one.


-----

As for the 1950s reforms, ironically the economic policy that saved the USSR during the war was that of Khrushchev almost two decades later - devolution of responsibility to the regions. In 1938 the central authority of the commissariats was downgraded (to the benefit of the regions) and in 1941 pretty much all operational economic decisions were devolved to the regions (who reported directly into the GKO). This was changed post-war but was pretty much the essence of the regional structures put in place in 1957. Which is how the later 1950s reforms were positioned. As one Abramov put it in a CC meeting over economic reform:

"Many of those present here worked in the Urals and Siberia during the war. They know how the economy was structured in wartime. Regional party resolved many issues and we produced excellent equipment, with which we defeated the fascists. We didn't even have any contact with the ministries but the experiment was successful!"


-----
Edit:


60% of the us economy in today's numbers would mean a gdp around 9-10 trillion dollarsI'm picking this up purely because bad stats annoys me. If we use the 60% figure (as an assumption) then that is 60% of US GDP in the mid-1980s. Since then US GDP has effectively tripled (from about 5 trillion in 1988 to 16 trillion today, Google doesn't say in what prices). For your assertion to hold true then the USSR would have had to have matched this US growth, for approximately 3.5% annual growth. That is, pretty much twice the rate of growth of the stagnation period. I'll not do the full analysis but we all know that that, given the USSR's structural problems, this rate of growth was never going to happen.

[Dodo]

I think I'd like to settle somewhere between Tim's, Rafiq's and Takayuki's arguments.
I haven't read much economic history on Soviet Union or the economic development of 2nd word for that matter.
What I know however is that, with centralized planning in a totalitarian society, much of these countries managed to industrialize very fast by covering reaches of capital relatively fast. In the Fordist-capitalist times, as far as I know they fared well though I know little of living standards.
The problems started in post-50s, is a time when capitalism was fast-restructring itself. 50s to 70s is a time of rapid growth in whole world until the crises in 70s.
In this post-fordist capitalism, I've always felt like despite extensivization of capital, due to rigidity of the system, Soviets could not intensify. I mean, if I look at N.Korea as an example of Stalinist economy, I feel like they are still in 1950s. I am guessing the same happened to CP countries since their adaptation to "modern" techniques of production was very slow due to rigid system which they did not want to distrub. And as Tim says, local managers were a bit of an issue when it came to flexibility.
The problem I guess, therefore is with adaptation of production to new goods in quality ways with modern techniques that allow labor productivity growth which is essential to raising living standards.
From 80s and onwards, there was even a process of de-industrialization in the west due to the nature of capitalism that works between core and perihphery countries whereas the second world was isolating itself.
De-industrialization and rise of service economies, perhaps largely thanks to nature of global dynamics of capitalism allowed this room for the west to increase living standards by greatly pushing labor into even more productive sectors.
CP economies could not do any of this.
I do not view them as absolute utter failures but long-term failures. CP economies were shaped in the time of fordist capitalism, imagining that sort of industrialization as the end of history, but the world changed and the rigid bureucratic regime could not adapt to it at an adequate speed. (so much for dialectical thinking :) )
They also could not exploit the global dynamics like the west did and ended-up spending a lot of money on militarization and self-sufficiency.
In the end, they had to fucntion in a very limited market as well, that directly relates to low quality consumer goods.

Now the question is, would the development process had been much better if they were not in CP? Were these purely politically motivated changes or were they necessities of conditions in these countries....I am not read into these countries enough to comment on that but I'd like to see some comments.

[exeexe]

I think planned economy can work under one or two assumptions, that you dont force people into it, and that you accept that things doesnt always go according to the plan.

[VinnieUK]

I disagree with the above posters. The fSU had problems with corruption (stalinism et al) however the planned economy which could not possibly be considered capitalist to anybody who understands basic economics was the best thing they had going for them, not only in Russia but in the eastern bloc. Its dismantlement is the biggest blow to the working class to date. If NATO didn't outspend the fSU militarily and fund the Taliban in Afghanistan, I believe the fSU would still be around and the economy would be publicly owned in most of Europe.

Wage slaves are exploited through the wages system. It doesn't make any difference if the means of production are owned by the state.

[FSL]

Ironically it was the other way around: the plan assumed increased importance in the post-war period. It's something of that myth that there was any real planning during the 1930s. The Plan was never more than an aspirational target and, at best, a gauge for prioritising investment decisions. Not that there were many of the latter to begin with, as the state ignored cost accounting and let managers spend what they wanted. (Oddly enough that led to disaster.) There was no science behind its formulation and truly fantasy figures were called for. By Spring 1932 the figures called for by the Politburo were so huge that Gosplan didn't even bother recompiling the Plan - it was a propaganda document and little else.

For example, in August 1929 the plan for crude oil production was increased from 22m to 26m tons by 1932. In October of 1929 the target was increased again to 40m tons. This is despite the fact that existing (ie known) oilfields only had a capacity of 25m tons. Actual production in 1929 was 12m tons. By 1933 it had increased to 21m tons - that is, short of the initial FFYP target, never mind the fantasy increases.

And not one source was given!
The "led to disaster" part is especially funny. It reminds me a part in Trotsky's works -as he's on his way to becoming completely crazy- where he without a doubt states that the soviet economy is ready to implode in a 1929 manner. Didn't happen. Success happened. It's in the numbers and in the sources for anyone who really wants to know.




In his infamous address to business leaders in June 1931, Stalin made his contempt for planning clear (and veered very close to 'triumph of the will'): "Drive away all these 'wise men' who talk to you about realistic plans and so on. We know what these 'realistic' plans are. Reality - that's you and us! If we want to work in a new way, we shall achieve everything.
This is similar to what was said regarding stakhanovism and placing workers' initiative over the bureaucrats. That is actual planning.





I'm picking this up purely because bad stats annoys me. If we use the 60% figure (as an assumption) then that is 60% of US GDP in the mid-1980s. Since then US GDP has effectively tripled (from about 5 trillion in 1988 to 16 trillion today, Google doesn't say in what prices). For your assertion to hold true then the USSR would have had to have matched this US growth, for approximately 3.5% annual growth. That is, pretty much twice the rate of growth of the stagnation period. I'll not do the full analysis but we all know that that, given the USSR's structural problems, this rate of growth was never going to happen.
It's not bad stats, it's you being unable to comprehend them. They show the relative importance of the soviet economy in the 80s. No one could say that China is negligible now, therefore no one could really say that about the Soviet Union then.

[ComradeOm]

And not one source was given!All you had to do was ask. The oil figures come from Davies' Crisis and Progress in the Soviet Economy 1931-1933 and Nove's Economic History of the USSR. See Davies for Stalin's speech. For the wartime reforms, I'd recommend Resisting the Plan in the Urals 1928-1956 by John Harris.


The "led to disaster" part is especially funny. It reminds me a part in Trotsky's works -as he's on his way to becoming completely crazy- where he without a doubt states that the soviet economy is ready to implode in a 1929 manner. Didn't happen. Success happened. It's in the numbers and in the sources for anyone who really wants to know.The disaster comment was in reference to the crisis of 1932-33. Never mind the famine and agricultural catastrophe that killed millions, that year saw a decline in the growth of industrial production across the board. While not quite a shrinkage in production, there was a sharp contraction in the rates of growth. This was due to "over-stretched investment plans, which had concentrated on the main shops of key projects at the expense of auxiliary processes and materials, and had siphoned resources away from existing enterprises" (Davies). The failure to account for energy dependencies was particularly harmful.

The response, in macro terms at least, was the reintroduction of financial controls and cost accounting (khozraschyot) to try and enforce some sort of order on the industrial expansion. 1933 capital investment, for example, were 14% below the 1932 level, an implicit admission that they had pushed too far too fast (Nove). This, along with the mini-NEP in agriculture, was to usher in a period of consolidation that cooled the economy and allowed growth to pick up again. Until the next crisis, in 1937, of course.

The USSR got there in the end but this had nothing to do with effective national planning. If that had been in place then perhaps some of the massive amounts of waste and hardship would have been avoided. (And, if you want to talk of figures, very few sectors actually hit their FFYP targets; revealing just how aspirational they were.)


This is similar to what was said regarding stakhanovism and placing workers' initiative over the bureaucrats. That is actual planning.No it's not. You can argue that stakhanovism is superior to planning or that it complements planning but it's not planning. If you think it is then you don't know what these terms mean.

But then there is a kernel of truth here in that Stalinist state tended to govern by campaign. Out the window with "realistic planning" and in comes 'shock campaigns' that brought great energy at the cost of actual planning. No wonder there was so much inefficiency in the system when no one was seriously considering constraints, resources, money, dependencies or timelines.

It's absolutely crazy to think that a sector could over invest by almost 145% against the plan (as heavy industry did during the FFYP, Nove) and there not be any consequences or impact on the wider economy. And this was money spent in the most scatter-gun approach - with the country littered with half-completed building sites. The SFYP had to prioritise completing and bringing online the plant that had been started and abandoned during the previous Plan. And this was a 'planned economy'?


It's not bad stats, it's you being unable to comprehend them. They show the relative importance of the soviet economy in the 80s. No one could say that China is negligible now, therefore no one could really say that about the Soviet Union then.Then I'd suggest that next time you just say 'the USSR was the second largest economy in the world' instead of making a flawed comparison with made-up figures.

[FSL]

The oil figures come from Davies' Crisis and Progress in the Soviet Economy 1931-1933
And in this book it is stated clearly that the soviet union planned to use all of its known resources in one year without establishing the existence of new ones.
Then you're reading some trully awful books or you have trouble understanding what you read. The second option seems much more likely since you have already demonstrated that weakness.

In any case, the blinding success of the first 5 year plan speaks for itself.



The disaster comment was in reference to the crisis of 1932-33. Never mind the famine and agricultural catastrophe that killed millions, that year saw a decline in the growth of industrial production across the board. While not quite a shrinkage in production, there was a sharp contraction in the rates of growth. This was due to "over-stretched investment plans, which had concentrated on the main shops of key projects at the expense of auxiliary processes and materials, and had siphoned resources away from existing enterprises" (Davies). The failure to account for energy dependencies was particularly harmful.

The response, in macro terms at least, was the reintroduction of financial controls and cost accounting (khozraschyot) to try and enforce some sort of order on the industrial expansion. 1933 capital investment, for example, were 14% below the 1932 level, an implicit admission that they had pushed too far too fast (Nove). This, along with the mini-NEP in agriculture, was to usher in a period of consolidation that cooled the economy and allowed growth to pick up again. Until the next crisis, in 1937, of course.

The USSR got there in the end but this had nothing to do with effective national planning. If that had been in place then perhaps some of the massive amounts of waste and hardship would have been avoided. (And, if you want to talk of figures, very few sectors actually hit their FFYP targets; revealing just how aspirational they were.)

The disaster in reference was that Soviet Union completed the 5 year plan in 4 years. The disaster was that the soviet economy grew even faster than the plan demanded.



No it's not. You can argue that stakhanovism is superior to planning or that it complements planning but it's not planning. If you think it is then you don't know what these terms mean.

But then there is a kernel of truth here in that Stalinist state tended to govern by campaign. Out the window with "realistic planning" and in comes 'shock campaigns' that brought great energy at the cost of actual planning. No wonder there was so much inefficiency in the system when no one was seriously considering constraints, resources, money, dependencies or timelines.

It's absolutely crazy to think that a sector could over invest by almost 145% against the plan (as heavy industry did during the FFYP, Nove) and there not be any consequences or impact on the wider economy. And this was money spent in the most scatter-gun approach - with the country littered with half-completed building sites. The SFYP had to prioritise completing and bringing online the plant that had been started and abandoned during the previous Plan. And this was a 'planned economy'?

Of course stakhanovism is planning. It is the quintessence of socialist planning, a procedure which depends on the participation and the input of the workers. Your problem is that overfulfilling the investment plan was crazy. Your problem is -as you mentioned before- that not only the plan was successful but that it was overly succesful much sooner than anticipated.
Obviously no reasonable person would treat this fact as anything else but a cause for celebration.

The goal here isn't some idealistic perfection, some chimaera, a talk of what "might have been". The goal is to make use of all your resources and come up with results. Soviet Union did just that, using its advantages over the market economies, namely central planning and workers' participation. The results were great and they continued being great despite all the sad and half-crazy people who at the time predicted a coming implosion.




Then I'd suggest that next time you just say 'the USSR was the second largest economy in the world' instead of making a flawed comparison with made-up figures.
The figures weren't made up, they were taken from cia documents and are in fact widely available.
And I believe that stressing the huge importance of the soviet economy then by comparing it to its equivalent today, China, gives people a much clearer image of what the Soviet Union was, even in the 80s.
Everyone hears about chinese manufacturing and everyone sees chinese cities coming out of nowhere. Well, the Soviet Union was at its time equally important, a global leader in industry, in many sectors of research etc.
You're right to say that it was the second biggest economy in the world, thanks to the breakneck speed with which it grew in the 30s-50s era but without a modern-day comparison people won't really understand how important that is.

[ComradeOm]

And in this book it is stated clearly that the soviet union planned to use all of its known resources in one year without establishing the existence of new ones.It stated that the Soviet Union planned to massively expand its oil capacity (including through the identification, exploration and exploitation of new fields) in four years. That this was wildly optimistic (madly underestimating the time needed to identify and tap new fields) is very much the point - these were fantasy figures that could never have been achieved in the allotted timeframe.

Now let's be clear: this is fact. You can throw your toys out of the pram all you want but this was a resolution passed by the 16th Party Congress in October 1929. Either prove that Davies is incorrect (or presumably a liar) or accept reality and shut up.

*I didn't even go into the fantasy that constituted refining plans. From Davies again: "Even if the planned 40 million tons of crude oil were obtained in 1932/33, additional plant would be needed to crack 7 million tons of petrol from heavy oil... This was a formidable task. The Soviet Union had virtually no experience of the cracking process but plants to be installed were the equivalent of over one-third of world cracking capacity." No wonder Stalin had no time for "realistic planning".


The disaster in reference was that Soviet Union completed the 5 year plan in 4 years. The disaster was that the soviet economy grew even faster than the plan demanded.Oh dear. You really don't know what you're talking about. The Soviet economy outpaced the plan? To start with, let's look at the actual outputs of the FFYP:

http://img.photobucket.com/albums/v142/GreaterDCU/Misc/FFYPOutputs_zps8d03ce12.jpg
For each category the initial figure is that demanded by the plan, while to the right sits the actual output obtained. In only two categories did 'the Soviet economy grow even faster than the plan demanded'. Output in all others lagged behind that expected by the 'planners'. These figures don't even include the more ludicrous late-plan additions, like the oil figure mentioned above.

Secondly, the very slogan 'The Five Year Plan in Four Years' betrays an ignorance as to how planning actually works. In an actual plan, or indeed any system, every element should be in synch. If one element races ahead and completes its tasks, using more resources than expected, then it throws everything else out of whack. At best it's merely wasted resources. That was one of the reasons you had steel mills waiting semi-idle for coal mines to come online - leading to wasted, or at least sub-optimally used, resources.

Now you may want mad headlong rush that but don't have the gall to claim it was planning.


Of course stakhanovism is planning. It is the quintessence of socialist planning, a procedure which depends on the participation and the input of the workersAnd how does this equate to national planning of the economy? More to the point, how was it a substitute for national planning?

I don't want buzzwords or half-regurgitated nonsense. Tell me how the stakhanovite movement constituted, in itself, a nationally planned economy.


Your problem is that overfulfilling the investment plan was crazy. Your problem is -as you mentioned before- that not only the plan was successful but that it was overly succesful much sooner than anticipated.Really? Really? Think about this for a moment. No actually, don't. You've done enough damage trying to think already. I'll spell it out.

Investment does not lead to completion (obviously!). The reduction in investment in 1933 was a good thing because it recognised that the FFYP had started too many construction projects, in too many fields, and was unable to complete them all. Hence the need to give top priority in the SFYP to completing those capital projects begun in previous years but still not on-line. Even those factories declared open still required further investment to complete: to use an example, the Krasnoural'sk copper facility was officially live on 1 Jan 1932 but was undergoing intensive construction throughout the year - virtually no copper was actually produced here in 1932. Too many projects were begun with not enough time or resources to complete them all; it would have been better to save the capital in the FFYP and focus on those that could be completed.

Similarly, nor does investment guarantee that you've invested in the right areas. Running a steel mill at half capacity or building tractors that you've got no fuel for is silly. It means that either too much was invested in those industries or not enough in other areas (eg energy or infrastructure). It is, as everyone should know, a poor use of money. Better to start the mill/factory a year or two later and spend the capital instead on another industry/region that would provide a more immediate return on investment and wasn't as constrained by the same dependencies.

Finally, all this matters because resources are finite. How is it a success if I give Sector A 100m to spend in a period and you go ahead and spend 140m? That means that I have to somehow come up with an additional 40m that I hadn't planned for. I end up taking some of the difference from Sectors B & C (who also want to overspend) and putting the entire financial structure under strain to come up with the rest. Not a great solution when there's a severe shortage of hard cash; it means wage arrears, rampant rising inflation and dwindling cash reserves. The whole point of planning is to avoid such madness.

So it wasn't that the Soviets had been "too successful" but that they'd bitten off more than they could chew - committed too much capital too widely. Which led to the slump of 1932-33. This is exactly what you would expect to have avoided in a truly planned economy.

But this is the Stalinist mentality: there's no such thing as 'too much'. And it's why there was no such thing as central planning (beyond the setting of fantasy targets) in the 1930s. What you instead had was a mad helter-skelter dash towards ever-increasing targets. No coordination or planning, just everyone working like mad. Management by shock campaign - the antithesis of executing a properly prepared plan.

They got there in the end of course, no one denies that. Albeit, with massive waste, extreme hardship, millions dead and a stop-start approach that has since been superseded by both Japan and China. I'm not particularly invested in whether or not you consider this on balance to be a 'success' but it certainly was not an example of a well planned economy.


The results were great and they continued being great despite all the sad and half-crazy people who at the time predicted a coming implosion.It should be clear from the above that the warnings of the "racehorse-gallop" leading to a "breakdown in capital construction" were correct. The FFYP economy was, in the modern parlance, overheated and operating at an unsustainable rate. This was the product of a lack of planning. The result was mass inefficiencies that brought the economy to a crisis in 1932-33.

The Stalinist state belatedly backed away from the edge and artificially cooled the economy - limiting investments, reintroducing financial controls and prioritising consolidation - and thus saved itself for the ignominy of fulfilling a Trotskyist prophecy. Until 1937 at least, when there was another crisis year and another round of consolidation.


The figures weren't made up, they were taken from cia documents and are in fact widely available.The Soviet economy was never worth 9-10 trillion dollars and almost certainly never would have been if it had survived. Nor had anyone ascribed any sort of dynamism to it since the late 1960s. You're just trying to puff it up with comparison to a fast growing economy.