Planning is in great fashion at the moment. In France planning is state policy and here in Britain the National Plan is still awaiting the starter’s gun. According to the Labour Government once the economy is correctly set it will improve in every aspect. Time will show.
The Russians like to think that the popularity of planning throughout the world is due to the success in the growth of their own economy, although Professor W. W. Rostow has provided evidence that economies expand, in the period when capital formation is difficult, at about the same rate whether they are planned or not. It would seem that if planning in Russia was successful there would not be any need to change its basic character. Yet what do we find? Without doubt a decline in centralised control!
In The Plan and Initiative by S. Pervushin it is pointed out that planning takes place in capitalist economies. Each organisation plans its own expansion in the light of the market conditions, and the state controls different parts of the economy through its expenditures and in raising income to meet them. According to Pervushin, the actual implementation of a national economic plan requires a “unity of purpose. In other words, all society, or the majority of it, must strive to one and the same goal . . . This can only be achieved by the socialisation of the means of production.” These conditions, he asserts, exist in Russia. Further, in bourgeois capitalist countries planning must fail because “the mistakes made by one economic unit spread like a chain reaction to many others, and in the end often cause disruption of the whole economy.”
But what has been happening in Russia? According to Pervushin, despite a definite correlation between the different branches of the economy, a correlation which is established beforehand and strictly observed, errors arose due to wrong planning, short-comings in the functioning of various organisations or industries, or, finally, unfavourable natural conditions.
Kantorovich, in his book The Best Use Of Economic Resources, was much more explicit. He writes of “substantial shortcomings,” “considerable losses,” “idleness of labour and equipment,” “rush work” and the “greater use of manual methods and consequent lowering of labour productivity.”
Yefim Manevich, in Voprosi Ekonomiki (Economic Problems) in 1965, reported the “accumulation of a considerable labour surplus” in Moscow, Leningrad and Odessa which was extending into rural areas. At this time, summer 1965, the Communist youth paper, Komsomolskaya Pravda, was suggesting the break-up of the system of collective and state farms into smaller units farmed by groups of half-a-dozen peasants and their families, with a minimum of state interference, who would keep the profits from the sale of their cash crops. Whilst the argument against collective and state farms was their unwieldy size and inefficiency, family farming would help to solve the problem of rural unemployment.
Meanwhile, in Russian industry the Liberman thesis was gaining ground. Liberman, a Kharkov economist, argued that the economy cannot function effectively without the profit motive. The introduction of the “Liberman system” means that factory direction in parts of the consumer goods sector of the economy will have much greater freedom to plan output and fix prices according to market conditions. Management will also have greater autonomy in the raising of capital for improving or reconstructing their factories. They will plan separately as in the western economies, and, according to Pervushin’s quotation above, will fail for their errors will react on each other.
Actually there is little new in this situation, for it is largely a case of Russians recognising what before was the unspeakable. In Russia at the moment it is not profit that is new, but a decline in state control. The planners have failed.
In backward emergent capitalist countries state control is inevitable when only the state can raise capital in large lumps and co-ordinate economic activity to promote future expansion. Once development takes place, and capital is easier to obtain, pressures arise to break down the centralised control. This is what is happening in Russia. Industrialists are seeking freedom from political control.
So as Russia retreats from control, the western powers increase the amount of it. It would appear that for advanced capitalist communities some state control is necessary today. But whether control of the economy is being relaxed or tightened, in neither case is it Socialism.