How a socialist planned
economy could work
Article taken from the Voice,
paper of the Australian section of the CWI
The collapse of the planned economies in Eastern Europe ten years ago resulted in a tidal wave of pro-capitalist market propaganda againstso-called socialist economies. Politicians and economists alike argued that planning was dead and that the 'free market' of capitalism was triumphant. All of these individuals had a vested interest in upholding the capitalist system which accumulates private property and profits for an elite in society while the mass of the population struggle to survive.
Capitalism is a system that works on privilege and coercion but its defenders argue that it is the only economic system that works. This has caused many workers also to be sceptical about whether socialism could work. The Stalinist soviet economies were a caricature of socialism, which initially achieved economic growth but lacked the workers' participation and democracy that would have allowed a genuine socialist democracy to thrive. Instead the bureaucratic elites that controlled those societies drove the economies to collapse. Now sections of workers, increasingly disenchanted with capitalism, are looking for an alternative socialist way of organising the economy.
So where will the resources for a socialist planned economy come from?
Socialism takes away private ownership of the means of production. Common ownership and control of industry means more wealth is created and resources allocated according to social priorities. This works by:
- The elimination of unemployment. We now have again what Marx called a 'permanent army of unemployed' in the advanced capitalist countries. Even at the height of an unpturn industry never works at full capacity. A planned economy will be able to guarantee work for everyone, with retraining provided to make sure the new jobs are meeting the needs of people, democratically determined.
- Luxury expenditure for the rich will be ended. The capitalist experts are always keen to point out that ending the wealth of the rich will not solve the problems of society, because however obsenely well off they are, there are not enough of them to make a big difference. Nevertheless, the rich do consume 5% of national income which amounts to approximately US$80 billion a year.
- Ending arms spending. On a world scale the waste of resources on arms is vast, reaching nearly US$2 trillion each year at the end of the cold war - approximately US$2,000 a year for every family on the planet. This money would be a big first step in lifting the majority of the world's popultion out of grinding poverty. Although redeploying millions of highly skilled arms workers will be a formidable task, under capitalism such a transformation will never take place. This is because the reason for arms expenditure will not disappear, ie the hostility between rival capitalist countries, and because the market system could not plan the transfer of resources needed due to it anarchic nature.
- Eliminating the waste of capitalism. The world is dominated by a handful of multinational corporations who duplicate expenditure in research and development, spend unnecessary vast sums on advertisingaand design productswith planned obsolesence. For example, rival drug companies spend billions on developing varities of pain killers with marginally different effectiveness.
- Freeing the creative power of the working class. Workers in the market system have no incentive in putting in their energies to helpout the bosses. But in a socialist society it will be possible to release the creative instincts of employees beacuse no fundamental conflict of interests will exist. It is often said by management theorists that the real experts in any firm when a problem needs to be solved are the workers themselves. Although a factor which is difficult to guantify, in the long run this will be a very significant advntage of socialism.
What is a socialist planning?
It is allocating resources of labour and materials for the production of goods and services for the benefit of society as a whole, rather than to make profits for the capitalists. It will operate at three levels, nationally (and internationally) at industry or sectoral level and at the
individual enterprise.
- The overall performance of the economy will be decided at the national (and international) level. There will be targets for productivity growth, investment, consumption etc, which will be determined democratically by institutions created after the overthrow of capitalism. Here the decisions about the priorities that society wants to have, for example between health expenditure or housing will be made.
- Industry or sectoral level. It will be necessary to determine consumer demand for the goods or services of that particular industry and to organise the efficient exchange of materials and semi'finished products with other sectors, eg from suppliers. The determination of demand will be done by obtaining information from powerful, democratically representative consumer bodies and by using the very sophisticated tools for market research developed under capitalism. To organise the movement of goods between industries, avoiding bottlenecks, it will be possible to use the techniques, such as operational research, developed by the big capitalist monopolies to plan the complex movement of goods between their operations around the world.
- Planning at the enterprise level. The methods mentioned above will also be used to determine consumer needs and preferences. It is also likely that as far as enterprises making consumer products are concerned (as opposed to capital goods - machinary etc used in the production process) a type of market system will be retained in the early stages of the transition from capitalism. This could operate through small business or worker co-ops, but only within the framework of a nationalised economy. If the market sector was too large it would threaten to impose its inherent inequalities onto society.
What do the critics say about it?
Since Marx's day, and particularly since the Russian Revolution, academics have written libraries full of books about why socialism won't work. One of the main criticisms is that planning the efficient allocation of resources is impossible because of the vast complexity of modern industrial society, where millions of economic transactions take place every day.
However, most of these economic interactions are between enterprices, they do not involve consumers, and it is quite clear that present-day multinational firms conduct planning of a similar complexity all the time. The activity of the multi-nationals answers a further criticism that the operation of supply and demand to determine price is the only efficient way to proceed in the exchange of goods. In their international operations companies like General Motors simply allocate resources between country and factories without reference to the market.
As far as planning for the consumer needs are concerned the key point is that active democratic institutions should exist that can compel the planning bodies to respond to their demands. In addition to this, techniques such as market research and using the internet will ease the tasks faced by future socialist planners. It is important, though, not to exaggerate the role that will be played by the internet or look for a technical fix; the existance of democratic institutions will be paramount.
The role of democratically elected and powerful consumer bodies will also make sure that shoddy goods are not produced and the quality is maintained. Here as well the advances in modern production management techniques can be applied, since the future socialist society will inherit; unlike the Soviet Union; a quality culture associated with the highest levels of technique development by capitalism.
The quote from Marx at the start of this aticle implies that there will be a super-abundance of goods and services under socialism which will not require rationing by price as under capitalism. The concept of super-abundance, however, raises one of the most serious difficulties of the socialist project, namely environmental destruction caused by consuming energy and resources at the rate of the advanced capitalist countries.
Socialism will not work unless the standard of living of the world's poor majority is raised to that of the industrialised countries causing energy consumption to rise very sharply. This will not result in environmental disaster however. In the first place, there is an enormous waste of energy in the industrialised countries, particularily in the US. Without affecting living standards, energy consumption could be reduced by up to 50% if appropriate investment is made.
Secondly, using fossil fuel is the key problem. Expansion will have to be based on other sources of energy. The technology for this exists now in the form of wave, wind and solar energy, but it will need huge investments to implement the change. Under a socialist planned economy, a large impetus will be given to the development of science and technology leading to new non-polluting energy sources being developed. The arguments for a new way of organising society will find a growing and receptive audience in the coming years.
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