“A plan is an ideological form. Ideology is a reflection of realities, but it also acts upon realities. Our past plans stipulated that no new industry would be built on our coasts, and up to 1957 there was no construction there. We wasted seven years. Only after 1958 did major construction begin. These past two years have seen great developments. Thus, ideological forms such as plans have a great effect on economic development and its rate.” – Mao Zedong, A Critique of Soviet Economics
Planning based on balances (and imagined as a process regulated by super-computers) is the quintessential revisionist (meaning state capitalist) approach to supposedly socialist “planning.” Bukharin pioneered this approach (after his 1928 fall from his leading posts in the CPSU) when he developed an institute to theorize planning that was based on balances. And these same themes run (like a reactionary thread) through subsequent generations of revisionist economists. They are always looking for some “mechanism” (whether profit or magically omniscient expert detail) for “regulating” and governing a planned economy. It denies the role of proletarian politics and class interests, ongoing revolutionary transformation, and the crucial importance of communist priorities. And in all its forms takes “planning” away from the conscious activism of the people, away from the priorities of ongoing socialist revolution, and toward some larger impersonal expert “mechanism” that will identify need, supply, balance and indices in a classless, impersonal, anonymous way (completely divorced from the revolutionary process.)
Once computers arrived, the revisionist planning theories of “balance” plus market “signaling” often started to incorporate a magical idea that some central computer superbrain could keep track of all the rapidly changing details that the human Soviet planners constantly failed to incorporate. Soviet planning, even at its best during the explosive creative invention of a new socialist industry in the 1920s and 1930s, overestimated the ability to fix prices, outputs, goals and method centrally (in a way that underestimated how complex a modern economy is.) So, for some of them, their failure to function as godlike super-brains meant that they moved on to the straw fantasy that COMPUTERS might supplement THEM centrally, and solve all the nagging problems of Soviet planning.
By contrast, Mao Zedong, leader of the Chinese revolution and a critical observer of problems within Soviet socialism, spoke of socialist plans as an “ideological form” — and argued that planning was an important way of setting economic priorities serving ongoing socialist revolution – while relying on, leading, and mobilizing the masses of people. Mao saw that it was a fantasy that the details of a modern economy could simply be “worked out” by some vast central planning agency…. and in his works emerging from the first decade of Chinese socialism, including the pivotal speech “10 major relationships,” laid out the outlines of a radically alternative approach.
The balances theory of planning was always looking for a “mechanism” to accumulate enough data to arrive at “balance” predictions and proposals. And both market mechanism AND some imaginary super-computer served as possible mechanism for such counter-revolutionary approaches to “planning” – mechanisms divorced from the emerging goals and experiences of ongoing socialist transformation.
The market mechanism is something that CAN be implemented (and was). By contrast, “the supercomputer creating balances” approach was always a fantasy, and couldn’t be successfully implemented. So over time and practice, the capitalist market mechanisms won out in the calculations and practice of revisionists. Socialist societies do (of course) need balances (of supply and need, of light and heavy industry, etc.) But those balances are not anonymous or divorced from POLITICAL decisions and priorities that are deeply entwined with class and road. All socialist planning must seek specific balances of specific kinds. And a major conceptual flaw in SOVIET planning initially was that they thought they could aggregate all the necessary input data centrally, and then declare the necessary balances. In fact, that’s never how it worked (because it couldn’t work that way.) And that led to the constant movement in Soviet planning toward market mechanism that ultimately became an important part of the restoration of capitalism.
Several gray economy features developed. First you had (attached to every workplace, etc.) a team of scrounger salesmen…. who would fan out in related industries and buy missing resources and products that were coming up short. And in that way, you had defacto markets in capital (and other) goods — to make up for constant shortfalls and glaring gaps in “balances.” Also, data was unreliable. Managers and ministers lied about whether their productive units had met their quotas. Or they lied about quality, etc. And so the quality of info (at the center) was often flawed, outdated and even simply false.
This problem of flawed economic reporting was also a huge problem for the Maoist communists during the Great Leap forward, when widespread lower-level exaggeration of outputs and false claims of big advances led to false optimism and mistaken decisions at the leading levels.
So on one hand you had Soviet institutions developing semi-legal salesmen scroungers similar to the main character in Catch-22. At the same time, the Soviet leadership dealt with recurring problems by developing an ongoing crisis mechanism of rushing in plenipotentiary teams to forcefully break up bottlenecks. When some key process got all fucked up, there were specialists who zoomed in — and kicked ass until the flow restarted. And that often solved very specific local crises at the expense of larger, surrounding production and supply.
The downside of this permanent emergency approach is that this too disrupted expected balances…. And that even when resolutions were reached (by intense pressure), the costs of these often-pragmatic emergency measures were unjustifiably high. The article correctly points out that under Stalin they constantly TRIED to predict and achieve functional balances (which are needed in any economy). And since that failed often, they developed unofficial market mechanisms AND kick-your-ass emergency measures to avoid short-term disasters.
For example, transportation was a CONSTANT problem in the early, rapidly industrializing Soviet Union. Often fruit and vegetable harvests were respectable — but the produce rotted while waiting for transport. In a system that didn’t deliberately rely on or unleash the conscious activism of the masses of people, the party found itself in a constant pragmatic search for some OTHER mechanism that could foresee problems, establish quotas and prices, and correct errors.
Mao had a different approach: First he saw central functions as goal setting (as a question of road and priorities). Then he advocated multiple decentralized adjustment and decision processes. This was not a plan to micro-manage all the endless details of an economy.
Because such super-centralized approaches have inherent fatal flaws: 1) there is never enough data to really understand what is happening. And the data is often outdated before it arrives or else is false for other reasons. 2) They had a false theory that overemphasized steel. And the Soviet communists were ironically called “steel eaters” — because they one-sidedly believed that heavy industry steel production was the key to progress – specifically in contrast to light industry and consumer goods. That introduced the fundamental problem that the explosively expanding urban socialist industry naturally consumed rural products, but that same socialist industry wasn’t able to produce products to exchange with the peasant farmers for their food produce. The logic of a one-sided stress on heavy industry and steel led to an increasingly coercive extraction of food from farmers who felt they were simply being ripped off.
Mao developed a critique of Soviet methods, and counter-theory of priorities. Regarding the Soviet methods of the 1930s and beyond, he said: “You make the peasants run non-stop, but you don’t allow them to eat.” So he argued to take agricultural machinery production as the key link — and avoided blindly following Soviet projects that leaned toward giganticism. Instead Chinese socialist industry produced mini-tractors that the peasants themselves could deploy and repair.
If you “never have enough data in time” — then the pull is constantly toward markets where there is always a demand mechanism and prices to convey real time conditions.
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