Thread: How Efficient are Communist economies?

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  1. #1
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    Default How Efficient are Communist economies?

    I originally posted this on another forum, but it may be more useful here on revleft to help get a discussion going. enjoy!

    It is a widely held criticism that Communism is an inherently inefficient system, and these popular beliefs originate from what is known as the "Socialist Calculation Debate". The Socialist Calculation Debate boils down as to how socialism/communism could allocate resources based on economic planning and without the use of money as a medium of exchange. This often took place between the Austrian School of Economics (such as Ludwig Von Mises and Fredrich Hayek) who argued that Socialism was inherently inefficient, and Neo-Classical and Marxist economists who argued that socialism was both feasible and potentially superior to Capitalism. The discussion also took place within the Socialist Movement itself based on determining what measure of value would be used, including:

    • The continued use of money as a unit of value under Socialism
    • That Labour-Time would be a unit of value
    • That they would be calculated in kind based on physical quantities

    The Soviet Union used a form of calculation in kind known as "material balance planning" where the unit of account was physical units rather than money in which the material the inputs into production with a set of output targets. This has been contrasted with the "Input-output model" developed by Wasily Leontief which looked at the relationship between sectors of the economy and the "Lange Model" which developed around a form of market mechanisms into socialist planning. Money was still however used in the USSR as a legacy of the New Economic Policy (1921-9) but wasn't used in the planning models even though there were discussions within the Communist Party about the degree and nature of market relations within the system. In terms of the level of knowledge that would be required to run a planned economy, Leon Trotsky described it as:

    "If a universal mind existed, of the kind that projected itself into the scientific fancy of Laplace – a mind that could register simultaneously all the processes of nature and society, that could measure the dynamics of their motion, that could forecast the results of their inter-reactions – such a mind, of course, could a priori draw up a faultless and exhaustive economic plan, beginning with the number of acres of wheat down to the last button for a vest. The bureaucracy often imagines that just such a mind is at its disposal; that is why it so easily frees itself from the control of the market and of Soviet democracy. But, in reality, the bureaucracy errs frightfully in its estimate of its spiritual resources...The innumerable living participants in the economy, state and private, collective and individual, must serve notice of their needs and of their relative strength not only through the statistical determinations of plan commissions but by the direct pressure of supply and demand."

    More recently, the rise of information technology and social networks has given prominence to ideas about using computers in economic planning. Such ideas were also entertained in the Soviet Union in the 1960's based on using cybernetics to understand the economic system, but was abandoned by the 1970's.

    Ludwig Von Mises wrote "Economic Calculation in the Socialist Commonwealth" in 1920 in which he argued that no prices could be obtained for Capital Goods (investment in the means of production) since there was not a price mechanism to allocate resources because the valuation of goods is subjectively determined by from the consumer as to what they want an economy to produce. Without the use of price-signals from consumers, it is therefore impossible (or else very difficult) to know what needs to be produced, in what quantity and where it would need to be allocated. This simultaneously became a criticism of socialism and a defence of capitalism and the efficiency of the market mechanism. There is a summary of the criticisms and the response at the Von Mises Wiki.

    Do you think that Communism and Socialism can be efficient economic systems? Can they be superior to Capitalism? What method of allocating resources do you think is best in a planned economy?
  2. #2
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    What about undermining the very basis of what we call "economics"?
    "I'm not interested in indulging whims from members of your faction."
    Seeing as this is seen as acceptable by an admin, from here on out when I have a disagreement with someone I will be asking them to reference this. If you want an explanation of my views, too bad.
  3. #3
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    I'm not sure why the neo-classicists would argue that socialism was more efficient than capitalism since neo-classicists would argue in favour of capitalism.

    Suffice to say, I think you're asking the wrong questions almost. In the capitalist system a small handful of people lay claim to the vast majority of the fruits of human production, they own the majority of capital and monetary wealth, and the rest of humanity, the billions of people who work for a living, share what's left. This is the inevitable product of monopoly, the result of the free market and competition. Is that an efficient system? Depends who you're talking to. The capitalists, who own the wealth, would claim it is a very efficient system because it serves their interests.

    Both the austrians and the neo-classicists argue in favour of capitalism from a perspective that assumes that capitalist economics occurs in a utopian vacuum. There's an assumption that two individuals engaging in exchange both reach a satisfactory and beneficial conclusion to that exchange and this is extended onto the macro scale to include international trade. We know in reality that international trade or individuals exchanging goods can lead to individuals being ripped off, irrational market valuing that lead to bubbles and crashes and countries being plundered for their wealth whilst their people remain in poverty - the exchange of selling your labour-power leads to huge numbers of people in shitty jobs they don't like just because that's the only way they can afford to live. My criteria for 'efficiency' is obviously different to the capitalists and their endless pursuit of profit but it is one rooted in the idea 'from each according to their ability, to each according to their need'. So if socialism isn't more 'efficient' than capitalism, and there's every reason to believe that it would be just as efficient due to a lack of the irregularities and failures of the capitalist market, then at least it would be a system that would provide the entirety of society with a decent standard of living if not better.
    Modern democracy is nothing but the freedom to preach whatever is to the advantage of the bourgeoisie - Lenin

  4. #4
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    I don't think it's reactionary to admit that the market system actually functions *well* for conditions of *scarcity*, but that's no longer the situation of the material world today -- productive technologies (factories) have repeatedly reached conditions of *overproduction*, leading to fierce international economic competition, competitive national currency devaluations, and world war, to *destroy* the 'excess' exchange values resulting from that overproduction. (Note today's stubborn deflation and slumping interest rates / prices.)

    There will *have* to be some system of material-economics with or without capitalism, because not everyone wants the same products for (necessarily-individualist / personally-customized) *consumption*, and so 'mass demand' will have to be sampled in *some* kind of way.

    I tend to think that this is currently the biggest impediment to a pan-revolutionary agreement towards a goal-direction -- this material-economic issue splits us into a 'micro' perspective (the necessarily-localist anarchists), and the 'macro' perspective (the state-wielding-aim socialists).

    But we, together, don't have *any* interest in a circumscribed, Stalinist-type socialism-in-one-country formulation, either, because that's just specialized-administrative bureaucratic substitutionism all over again, and is certainly *not* international workers power over social production.

    My own proposal is here:

    labor credits framework for 'communist supply & demand'

    communist supply & demand -- Model of Material Factors

    A post-capitalist political economy using labor credits

    To clarify and simplify, the labor credits system is like a cash-only economy that only works for *services* (labor), while the world of material implements, resources, and products is open-access and non-abstractable. (No financial valuations.) Given the world's current capacity for an abundance of productivity for the most essential items, there should be no doubt about producing a ready surplus of anything that's important, to satisfy every single person's basic humane needs.

    [I]t would only be fair that those who put in the actual (liberated) labor to produce anything should also be able to get 'first dibs' of anything they produce.

    In practice [...] everything would be pre-planned, so the workers would just factor in their own personal requirements as part of the project or production run. (Nothing would be done on a speculative or open-ended basis, the way it's done now, so all recipients and orders would be pre-determined -- it would make for minimal waste.)

    We can do better than the market system, obviously, since it is zombie-like and continuously, automatically, calls for endless profit-making -- even past the point of primitive accumulation, through to overproduction and world wars, not to mention its intrinsic exploitation and oppression.

    Labor vouchers imply a political economy that *consciously* determines valuations, but there's nothing to guarantee that such oversight -- regardless of its composition -- would properly take material realities into account. Such a system would be open to the systemic problems of groupthink and elitism.

    What's called-for is a system that can match liberated-labor organizing ability, over mass-collectivized assets and resources, to the mass demand from below for collective production. If *liberated-labor* is too empowered it would probably lead to materialistic factionalism -- like a bad syndicalism -- and back into separatist claims of private property.

    If *mass demand* is too empowered it would probably lead back to a clever system of exploitation, wherein labor would cease to retain control over the implements of mass production.

    And, if the *administration* of it all is too specialized and detached we would have the phenomenon of Stalinism, or bureaucratic elitism and party favoritism.

    I'll contend that I have developed a model that addresses all of these concerns in an even-handed way, and uses a system of *circulating* labor credits that are *not* exchangeable for material items of any kind. In accordance with communism being synonymous with 'free-access', all material implements, resources, and products would be freely available and *not* quantifiable according to any abstract valuations. The labor credits would represent past labor hours completed, multiplied by the difficulty or hazard of the work role performed. The difficulty/hazard multiplier would be determined by a mass survey of all work roles, compiled into an index.

    In this way all concerns for labor, large and small, could be reduced to the ready transfer of labor-hour credits. The fulfillment of work roles would bring labor credits into the liberated-laborer's possession, and would empower them with a labor-organizing and labor-utilizing ability directly proportionate to the labor credits from past work completed.

    This method would both *empower* and *limit* the position of liberated labor since a snapshot of labor performed -- more-or-less the same quantity of labor-power available continuously, going forward -- would be certain, known, and *finite*, and not subject to any kinds of abstraction- (financial-) based extrapolations or stretching. Since all resources would be in the public domain no one would be at a loss for the basics of life, or at least for free access to providing for the basics of life for themselves. And, no political power or status, other than that represented by possession of actual labor credits, could be enjoyed by liberated labor. It would be free to represent itself on an individual basis or could associate and organize on its own political terms, within the confines of its empowerment by the sum of pooled labor credits in possession.

    Mass demand, then as now, would be a matter of public discourse, but in a societal context of open access to all means of mass communication for all, with collectivized implements of mass production at its disposal. It would have no special claim over any liberated labor and would have no means by which to coerce it.

    The administration of all of this would be dependent on the conscious political mass struggle, on a continuous, ongoing basis, to keep it running smoothly and accountably.
  5. #5
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    ckaihatsu: You seem to have put a lot of time into the economic model presented in the first graphic, but I haven't the faintest idea of what it's supposed to mean. Is there other posts of yours where you explain it in more detail?
  6. #6
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    ckaihatsu: You seem to have put a lot of time into the economic model presented in the first graphic,

    Yes and no -- *all* of the diagrams ( were also a way for me to overcome the learning curves of the software that I use.

    but I haven't the faintest idea of what it's supposed to mean. Is there other posts of yours where you explain it in more detail?

    Have you seen the two other parts at that same post -- ?

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