Letter: Some Points on Planning

Date: 2022-09-21T14:31:01+00:00

Location: cosmonautmag.com

Nat Winn’s recent letter discusses economic planning, which is a welcome return to one of socialism’s greatest ‘problems.’ Unfortunately, his argument suffers from a number of issues, only one of which I will address, namely his misunderstanding of the planned economy’s central dynamic, as shown here:

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 And the data is often outdated before it arrives or else is false for other reasons. 2) They had a false theory that overemphasized steel.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.

I will have to widen the scope of discussion to adequately respond to Winn. We must first examine the underlying dynamic of the capitalist system to discuss planning. Let’s begin.1

At any one point in a given economy, save for a capitalist one, productive investment2 is inversely proportional with consumption.3 In other words, we must choose whether we want stuff today (consumption) or wait to make even more stuff tomorrow (investment). It follows that we consume only that which we can produce. This is perfectly intuitive. 

In contrast, the capitalist system flips this relationship. Investment is directly proportional with consumption. The greater the market, the more we can make. Put another way, we produce only that which we can already consume. This is quite strange and outright perverse. The system defies basic intuition, yet it is just so, for ‘it is not the observation that is absurd, but the reality it reflects. For a long time now it has been noted that the economic system we live in is a world turned upside-down. Accordingly, unless this is just some simple figure of speech, it can only mean just that: the outflow of a river determines its sources.’4 How can this be? Simple: Production for sale. 

Under the capitalist system, people enter business not to make products but to sell them. Production is an intermediary step between accumulation–the familiar M-C-M’ cycle. Private property5 means that each is interested in only their own profits as opposed to the general development of society, even when this development would be personally beneficial. Thus, we find ourselves in the extremely strange situation where productive investments–those which improve the general social level–are possible only when we can already consume the fruits thereof. We can build new metalworking and electrotechnical factories–crucial to electrification and modern housing–only if our society already has an appetite for, say, automobiles and personal boats (which also use pressed metals and turbines). The effects are disastrous, especially in societies lacking a sufficient market for large-scale investment–like China and Russia of old.

Here, we return to Winn’s argument, namely his charge that ‘super centralized’ economic planning ‘overemphasized steel’, his stand-in for heavy industry. The suggestion is that a more decentralized system would allow for both increased final consumption and general economic development. In effect, we would bypass repeating the Soviets’ rocky relationship with the countryside and its lackluster consumer culture. We can decide exactly how much we should invest or consume, but to suggest that both are equally possible together in a developing society is simply untrue. Economic planning–that is, socialism–restores the inverse relationship discussed above. The degree of centralization is a red herring–it is the fundamental dynamic of planning at hand here. We return to a society where we consume only that which we can produce. This means beginning from the foundations of an economy and moving progressively upwards to greater consumption, proceeding like so: ‘first, the construction of basic heavy industry, then the machine-tools industry, and then the manufacture of particular machinery, and so on, up the ladder, right to final consumer goods, with each stage of production generating its own market, instead of its requiring the stimulus of a pre-existing market.’6 It must be admitted that in these early stages, this is a society of relatively few consumables since there isn’t much of use for a regular person. This isn’t mindless ‘steel-eating’ but the necessary sacrifice for the general betterment of society. ‘For it is all too often forgotten that steel, cement, copper, tin, oil and plastics not only serve to produce private cars and gadgets but also, for instance, doctors–a lot of steel and cement and all kinds of materials are needed to make a good modern doctor–healthy leisure, concerts, books and so on.’7

I’d like to thank Winn for restarting this conversation, and I look forward to his reply and to letters by anyone else.

Comradely,

R. Ashlar

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  1. The argument which follows is strongly inspired by Arghiri Emmanuel, cf. Profit and Crises, trans. N.P. Costello (New York & London: St. Martin’s Press, 1984). For an abbreviation, see: ‘The Socialist Project in a Disintegrated Capitalist World,’ Socialist Thought and Practice: A Yugoslav Monthly 16, no. 9 (1976) [Link].
  2. Funds deployed now to expand future production.
  3. Funds deployed now to produce final goods.
  4. Emmanuel, ‘Socialist Project…’
  5. That is, the division of social product into claims held by individual and independent claimants.
  6. Emmanuel, loc. cit.
  7. Idem, ‘Unequal Exchange Revisited’, IDS Discussion Paper, no. 77, (Brighton: University of Sussex, 1975), 77 [Link].