2010s >> 2019 >> no-1379-july-2019

Socialism and Planning: What Can Work

The impossibility of ‘One Big Plan’

In any kind of society, people need to plan. Even in the most gung-ho, ruggedly individualist laissez faire society imaginable, there would be plenty of planning. Entrepreneurs would have to plan what and how much to produce, along with the requisite quantities of material and labour inputs needed, in the face of market uncertainty. No large-scale system of organised production can function without planning.

Obviously, this would be true also of a future socialist society though, according to some commentators, what distinguishes socialism from capitalism is not the need to plan but, rather, the number of plans needed. In short, the sheer scale of planning.

In capitalism, literally millions of plans are implemented every day. Most obviously, this is because there are literally millions of separate competing enterprises operating in a capitalist economy – from some giant corporation like Walmart to your local self-employed plumber. Thus, capitalism is a ‘polycentric’ system – meaning it has multiple planning centres or bodies. Those millions of plans are said to mutually adjust to, and mesh with, each other in a quite spontaneous, or unplanned, fashion via the market mechanism and in a way that purportedly benefits everyone in accordance with Adam Smith’s quasi-theological concept of the Market’s ‘Invisible Hand’.

Socialism’, argue these commentators, would be very different. Instead of millions of bodies each striving to implement their own plans, there would be just one single planning body and one single vast plan encompassing the totality of production. Meaning there would be conscious, society-wide, ‘central planning’ in the classical sense of this term.

This, it is argued, is because the entire apparatus of wealth production would be socially owned. There would be just one ‘owner’– society itself. However, society-wide planning is not a necessary corollary of social ownership. Even within a large capitalist corporation today, though it is owned by those who hold equity in it (and who thus exert ‘ultimate’ control over it), there are numerous gradations of control below this level of ‘ultimate control’. Different departments or branches of the same corporation often exercise a considerable degree of initiative in planning their activities. Even within each department or branch we see gradations of control in the form of a managerial hierarchy.

Of course, the workers filling the various positions in this hierarchy don’t own the corporation they work for. They don’t exert ‘ultimate control’ over the corporation which is what real de facto ‘ownership’ boils down to – having the final say over the disposal of the corporation’s assets. But they do exercise some control, albeit within certain limits.

The point is that the numerous operational decisions affecting the corporation’s performance don’t all emanate from a single source. Of necessity, a great deal of decision-making is devolved down the managerial hierarchy. Only the most important decisions get to be made at the top.

If a single entity like a corporation today is obliged to implement a ‘polycentric’ model of decision-making, then how much more true would this be of a future socialist society embracing all humanity? Of course, this is not to suggest the organisational structure of a future socialist society would be modelled on that of a hierarchical capitalist corporation.

Lenin once famously depicted a post-capitalist world in The State and Revolution (1917) as one in which, ‘The whole of society will have become a single office and a single factory, with equality of labour and pay’ (he soon enough abandoned the idea of ‘equal pay’ on taking office). No doubt the dictatorial principle of ‘one-man management’ ruthlessly imposed by the Bolsheviks on Russian workplaces would similarly apply in Lenin’s imaginary post-capitalist world. Socialists see nothing appealing about this top-down version of what a socialist society is supposed to look like.

From our standpoint, it is entirely possible to envisage the world’s productive resources being owned in common by the global community yet subject to a complex system of polycentric democratic planning – with multiple plans being implemented at different spatial levels of organisation: global, regional and local – (depending on the nature of the ‘resource’ in question). While under capitalism, ‘planning’ likewise takes a polycentric form, minority class ownership of the means of wealth production invests it with a thoroughly authoritarian character. This is where any comparison with socialism ends.

Common ownership of the means of wealth production eliminates the very possibility of one individual or group exercising economic leverage over another, compelling the latter to comply against its will. In fact, socialism is the only conceivable basis upon which a truly free society can flourish.

Society-wide planning

Nevertheless, the idea still persists in certain circles that socialism would be a system based on society-wide central planning. Let’s examine this claim more closely to see why this cannot be so.

There are literally millions of different kinds of goods produced in a modern economy. Some of these (‘consumption goods’), in order to be produced in sufficient quantities to meet the demand for them, depend on the availability of other goods (‘production goods’) that likewise need to be produced in sufficient quantities to ensure enough of the former are produced. To produce production goods requires yet other production goods to be produced. Sometimes, the number of inputs needed can be truly mind-boggling. For instance, a single Boeing 747 plane is reckoned to have approximately 6 million component parts, supplied by hundreds of suppliers scattered right across the globe.

In an idealised system of society-wide planning, the requisite quantities of all these millions of consumption and production goods that society needs will have to be calculated in advance by the single planning centre and expressed as ‘production targets’ for each and every good within some vast Leontief-style ‘input–output’ matrix or table. Calculating these production targets does not simply involve finding out the aggregate demand for each good; one would also have to take into account the ‘technical ratios’ involved in producing them – something that, in theory, can be done through a method called ‘linear programming’ which we will look at later.

So, if a particular good – A – consists of two components, X and Y, and if it takes 2 units of X and 5 units of Y to produce 1 unit of A, then you will obviously need 20 units of X and 50 units of Y if you want to produce 10 units of A. This could change if your method of producing A changes. Let us say due to some technological innovation it now takes 3 units of X and 4 units of Y to produce 1 unit of A. If you stuck with your original production targets for X and Y – namely 20 and 50 units respectively – you won’t have enough units of X to produce 10 units of A while, at the same time, you would end up with a wasteful surplus of units of Y.

Incompatible with socialism

Looking at this simple example, we can begin to see why this concept of ‘society-wide’ planning is completely incompatible with socialism.

Firstly, it is pretty obviously impractical for any kind of large scale system of production, let alone socialism. To successfully implement this society-wide plan would require the production targets for each of the millions of consumption and production goods to be precisely calibrated and then exactly fulfilled right across the board. Any deviation from any one target would have knock-on repercussions that would jeopardise society’s ability to meet all those countless other targets because of the interdependent nature of modern day production.

Even something as simple as a typhoon in Indonesia or a crop blight in the American Mid-West could seriously disrupt supply chains, resulting in shortages of some goods and surpluses of others. The plan would then have to be completely redrawn and, in the real world, since changes happen all the time, what this means is that the plan would never get off the drawing board. It would need to be constantly revised by the planners.

Moreover, for the plan to be successfully implemented, this would require a moratorium on any kind of technical innovation. This is because technological innovation, as we saw, tends to alter the aforementioned ‘technical ratios’ involved in the production of goods, thereby altering the production targets of the inputs needed.

Some enthusiasts for central planning argue that the exponential increase in computing power in recent years now makes the concept quite feasible. However, this is to misunderstand what the problem is about. It is not the lack of sufficient computing power that makes the concept impractical but, rather, the attempt to apply it to the real world when the latter is constantly changing. Saying that ‘the plan’ can be rapidly adjusted to accommodate any change in the real world means simply that it loses its quality of being a ‘plan’ – something that is supposed to guide production in an a priori sense. The application of such computing power then becomes simply the means of tracking, rather than initiating, changes in the real world. This is a very useful faculty to have but it does not technically amount to ‘planning’.

Secondly, and more importantly, the very nature of socialism itself rules out the concept of society-wide planning. The two outstanding features of a socialist society that are relevant here and spring directly from the very fact of common ownership of the productive resources of society are, firstly, that individuals will have free and unfettered access to society’s stock of goods and services and, secondly, that they will freely and voluntarily cooperate to produce these things.

Society-wide planning flies in the face of both these core social practices. To take the demand side of the equation first, how can one possibly ascertain in advance what people want if their appropriation of goods is self-determined? It is not logistically feasible to carry out a global survey of over 7 billion people and then compile a list of production targets for the considerable array of consumer goods they might want. It would also be completely pointless given that what individuals want can change from day to day. This is to say nothing of the fact that the global population can expand or contract.

Instead of free access, what a centrally planned economy would have to institute is some form of universal rationing. People will need to be told what they can consume even if they had earlier been able to vote on the matter. Very likely, this would lead to an asymmetrical distribution of power in favour of a bureaucratic elite tasked with devising and implementing this system of top-down rationing and ensuring compliance. Creeping corruption and re-emergence of some kind of class-based society would be the probable outcome.

Then there is the supply side of the equation – specifically, the labour inputs needed to produce what society wanted. To ensure that, the planners would have to impose some form of compulsion requiring workers each to perform a certain quantum of labour (in order to meet the Plan’s multiple targets) as a condition for gaining access to the goods and services they needed. Not only that, these workers would also have to be subjected to a compulsory division of labour to ensure the proportionate application of labour inputs required to meet all those production targets specified in the Plan: you couldn’t just choose what work you wanted to do, or when.

As the Bolshevik, Leon Trotsky, revealingly noted in 1920:

If we seriously speak of a planned economy, which is to acquire its unity of purpose from the center, when labor forces are assigned in accordance with the economic plan at the given stage of development, the working masses cannot be left wandering all over Russia. They must be thrown here and there, appointed, commanded, just like soldiers … Deserters from labour ought to be formed into punitive battalions or put into concentration camps.’

Exactly. What socialist could possibly endorse this capitalist apology for a workhouse system? As one commentator has noted, Trotsky’s recommendations are reminiscent of the Poor Laws enacted in Elizabethan England to combat the problem of vagabonds and beggars, as the rising bourgeoisie saw it, driven off the land by the Enclosure Acts and deprived of a means of living (‘Capitalism and Planning’, Libcom)

The voluntary nature of work carried out by the freely associated citizens of a socialist society would thus have been utterly obliterated. In short, we would have regressed back to something very much like a system of waged slavery that is the hallmark of capitalism.

(Next month the need for feedback).

ROBIN COX