HOW TO MAKE CENTRAL PLANNING WORK
Opinion Piece
Premise: If we assume that humanity will be around in 2 million years and more, and I see no reason why, if the dinos could be around for 150 million, there’s no reason why we couldn’t be, then in that period of time, inflation even if kept at a steady 2%, or we assume a more dynamic system, with ups, downs (from disasters or even civilizational collapse) and plateaus (marked by central banks or other controlling mechanisms), then it is easy to assume that inflation, barring some dramatic boosts in production or efficiency like a Galactic or extra-galactic civilization with a representatively large market, would see an inflation of unimaginable proportions necessitating a command economy at some point in human history, or some sort of central planning whether by the community in a more decentralized manner, or by the state, dependent on the ideology of the polity/polities which would exist in that period of time, or any time period in general from now till then and beyond. Of course, even if we have the resources of the entire Universe and God-like technology, there would still not be enough productive capacity in the Universe to handle the continuous expansion from millions of years of growth-led inflation. This is of course assuming that there is the possibility of FTL travel and communication. This is theoretically possible and given enough time, it could be that we have a governance system that can exert control over vast reaches of space through a practical application of such theoretical knowledge.
But if we assume that this is true and humanity continues to exist well into the future, then how would such a Centrally-Planned Economy function?
In the Soviet Union, the centrally-planned economy first used the martial power gained from the Russian Civil War to enforce the rapid collectivization of resources under the banner of War Communism, then it moved on to the NEP, which allowed some capitalistic measures to revive the economy, rapid collectivization and using brute force and brute violence allowed Stalin to make the Soviet Union into an industrialized state in 20–25 years. With Khruschev and Brezhnev came a selective Liberalization and Stabilization and finally with Gorbachev, came dissolution, because loosening control with losing the grip on the economy allowed centrifugal forces to spin the Soviet Union apart.
However, underneath this overarching story, there is the story of successful and advanced military goods which did not make their way into the civilian economy, due to secrecy, which inspite of its many inefficiencies kept the Soviet Union the second largest industrial power for much of the 20th century.
Among the experiments done along with the NEP (one could regard Stalin’s collectivization an experiment too, conducted in another way it could’ve failed) and in the Tsarist experience of the command economy required for the first world war (which could’ve lead to the same kind of industrialization as Stalin, had it been uninterrupted, one could argue that the hardships suffered in 1917 were much lower and fewer than those faced in 1918–1923) and in the 1960’s the proposal of the OGAS, or the Soviet Internet as it is colloquially known, to modernize, accelerate, decentralize, debureaucratize and bring some efficiency and purposeful direction to the Soviet Economy, Kosygin’s Reforms and other such attempts at acceleration before Gorbachev.
In Yugoslavia, there was a volatile, chaotic and a system for great potential for growth and great potential for failure, a system which combined markets, central planning, soviet and western aid, leading to a system influenced by all systems, yet not sticking to one. This lead to great growth, but also great volatility, for example, while enterprises were worker run, but were not worker owned, so wages rose, but not productivity and profitability at the scale needed, and so inflation crept up as profitability declined, this created the foundations of the future decline and eventual dissolution of the YFSR. This happened, as some theorize because of the workers not feeling as involved in the daily running of their enterprises as they did not own them, they could perform lower, reduce the profitability of their enterprises, the government would support them with subsidies and prevent their firing, those workers who owned their enterprises have a record of performing better than merely those who run them, especially if market forces are not involved.
Within the Warsaw Pact, there were similar experiments, when there was Liberalization, such as in Hungary (even after Nagy’s execution), Goulash Communism, Poland, Czechoslovakia, etc. One such example, is the agricultural cooperative, JZD Slusovice in the Czechoslovakian Socialist Republic, who had a good director, some would say or a corrupt one according to others, Frantisek Cuba, showed much success during the Communist Era, although worker-ownership was not as prominent in this enterprise, Frantisek knew how to motivate people really well, with his various motivators of man, Joy from Work, Existential Fear, etc. Workers felt more involved due to him to, boosting output and productivity, a few such enterprises with hands on Directors were present in Russia too, which persevered into the Post-Cold War Era for sometime, like Nikolai Tonkov and the Tyre factory which he directed in the late ’90s in Yaroslavl and another agri-cooperative that I had heard of who also had a good director (but I am forgetting his name and where he was from), these Russian directors of the quasi-coops (as I like to call them) along with their wages they also provided, hospitals, spas (important for Russians, because of their social value), pensions, housing, food, etc. all the things that were needed for good Russian life and life in general.
In the People’s Republic of China, till 1976 there was much the same of the command economy shared with Russia, however at its start, agri-coops could trade in a market-like system, a part of their surplus could be sold for profit, there was also some other forms of decentralization and local rule, as the Chinese focused on the Peasants as their revolutionary base, whereas the Russians focused on the industrial workers. It is also the case that China wanted to keep what they called the Nationalist Bourgeoise on their side, that is the Capitalist who were pro-China, or pro-CCP, however, I don’t know how true this is, in the sense that while Mao expressed this view, I’m sure many National Bourgeoise were lost in the Cultural Revolution and the Great Leap Forward. Even so, it is possible that amongst those who survived, their experience with Capitals, Markets and management must’ve allowed what trading existed on a personal or private basis to evolve into the Market-based reforms which China underwent, i.e. smoothed them.
Some speculate, that it is this important difference which allowed China to undergo successful market reforms as opposed to Russia, it could also be that the Chinese state was more obedient to Mao’s Successors than the Russian state was to Stalin’s successors. However, I do find this explanation dubious, as the Soviet Union implemented Glasnost and then subsequently collapsed a few short years after, breaking open copious amounts of classified Soviet documents, allowing us to judge the volatility of the final 4 years of the Soviet Union from 1987–1991, no such grand opening or even loosening happened for the PRC, so we can’t really say what happened. India’s GDP was ahead of China’s till the mid-90’s, so, it is entirely possible that some failures were present that were suppressed and that we are unaware of.
In Chile, there was the experiment with a similar socialist internet which wanted to coordinate production, it was of the name Cybersyn, while removed by the Pinochet government and his economic advisors of the Austrian School or the “Chicago Boys”. And while it was rejected and abolished and dismantled, the Stock Market, it was eventually parallelly imitated by a capitalist and individualist version of such a system, known, as you guessed it, the stock market, it also coordinates production by taking information from as many companies as listed on it. Although Cybersyn took information of raw materials, personnel, raw output, etc. along with other metrics. The latter are metrics generally excluded from Capitalist coordination.
In Vietnam too, we know of Central-Planning modified by market-based reforms, while Cambodia’s Ultra-Communism was eventually wholly rejected for State Capitalism, or State Controlled and Directed Capitalism.
Nazi Germany, while it had a centrally-planned economy which coexisted with private capital, also controlled worker’s wages by encouraging them to save, which also helped fund the war, much like how the MEFO Bills helped earlier. The Germans at that time also had the necessity of keeping prices, consumption and production in check while the war was going on to prevent shortages in the war economy, this of course, led to shortages in the civilian economy and rationing.
North Korea, while still a rigid, Stalinist regime, the famine and the collapse of the Eastern Bloc, with the Liberalization of China, led to the failures of the NK economy becoming painfully evident, market-based reforms allowed much food production to become quietly privatized, even if under constant scrutiny of the state, the trade of consumer goods from China to NK, the establishment of a small middle-class, the quiet entrepreneurship and business ownership in NK, the “Socialist Enterprise Responsibility Management System (SERMS)”, which devolved decision making to enterprises and allowed the sale of some surplus on a “market”, even if under the scrutiny of the state, etc. even if these reforms have been recently rolled back under the new recentralization under Kim Jong-Un, during and post-covid, the state still requires greater funds, so, it is likely the bigger, more closely aligned pseudo or quasi-privatized enterprises continue to create a revenue stream for the state and acquire the smaller ones when they fail or are under pressure from the state. Not to mention that scholars of the Kim Il-Sung University, discuss and renounce SERMS, market reforms, efficiency, acceleration, reconsidering Songun (military first policy) as and when the poltical wind vane moves from favourable to unfavourable.
In India, while we had import-substitution industrialization, quasi-central planning, import tarrifs, serious regulation of the market, high bureaucracy, high taxes, etc. we also had a flourishing, semi-feudal economy (reformed partly by the Bhoodan, or voluntary land transfer movement), capitalism, market socialism through cooperatives all coexisting in our so-called state directed top-down socialism. As there was never the widespread violence and destruction of the communist revolutions of China and Russia, ours was a “peacefully” placed central-planning system which did not require the entire country to conform to these State Socialist requirements, as we had plenty of black markets, small to medium and even large private actors, village economy, personal consumption, etc.
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I could go on and on about various central-planning examples and experiments, but what I think would be the ideal scenario in a Long Future, millions of years from now, would be that a Centrally-Planned system, which is cybernetic, that is like Cybersyn and OGAS, it takes in a lot of information and with decentralized central-planning, allows the coordination of goods, resources, manpower to make basic goods and services necessary for life highly affordable or even free. Working off of the psychological benefit of working for the collective and getting things done. If people sacrifice for capitalism, due to cultural values, they could do the same thing for central-planning for their fellow man. The rest of the economy, through indefinite perpetual bonds, socialization bonds, could be bought from the private sector, to ease the transition, and given to worker ownership, workers are likely to manage their enterprises better if they own them, rather than simply manage them, as they will be less likely to give a lot of pay rises to them, if the success or failure of their enterprise depends on them. This doesn’t mean of course that the government won’t bail out or ease the collapse of corporations in the economy, just because they’re worker-managed now. Or that subsidies would disappear, it’s just that now, because workers own their enterprises, and have decentralized their own enterprises, much like Haier in the PRC, the government can reduce expenditures and regulations (bureaucracy) to focus on more important matters of development.
A part cybernetically decentralized centrally-planned (with the ability to sell surplus as determined by the workers and required by the state, perhaps a middle ground between directive and indicative planning) and rest worker-owned economy with a reasonable private sector as needed, that is a truly mixed economy, would benefit the nation and its people, and prevent runaway inflation, by giving much of the economy a floor and a ceiling. In such a system, which would be oriented towards the workers and the civilian economy, the risk of shortages in the civilian economy would be limited mitigated. By borrowing from the best aspects of different Central-Planning experiments, and rejecting the bad ones, we can have an economic system that moves stably in a range while allowing for dynamism and welfare for all citizens.
Examples of what could be accommodated in this system include beyond what was mentioned above, a stock market (except with more information, like the ones socially important in Cybersyn, which would also be present in the information gathered in an encrypted fashion from all enterprises and individuals and individual businesses who wish to participate in the Department of Planning) and any other economic attribute which may not typically align with a stereotypical and orthodox planning system.
In fact, such a system should be implemented at the soonest.
(Nobody says that worker run enterprises are infallible, but economics is not just a tale of efficiency, but also of morality, we do hear capitalists speak of freedom of choice and private ownership as moral, ethical and social goods, because humans are not just calculating machines, but also social)
PS: I recognize that Cuba has gone through or incorporated many if not all of the reforms above, there of course, we also have the limits of what a small country, lacking full democracy (even if it may occur in different forms), proper economic management, small and fragmented markets, fuel shortages, embargoes, etc. can undergo, we could make an easy comparison with Haiti and say that it’s collapse can be attributed to inspite or partly due to Capitalism and its related wealth concentration, however, it would pay to not be so lazy in one’s analysis, and that while all those factors in Cuba and Haiti play a role, the wisdom of coexistence is such that economic coordination (regardless of dependence) can help mitigate issues, much like a central government helps flailing smaller regions within its own territory with measures of subsidy and the like.
Sources for North Korea (Others may follow soon):
6. North Korean Economy — Page 2 — The Diplomat
8. https://thediplomat.com/2017/04/will-marketization-bring-down-the-north-korean-regime/
