When the world has taken the great forward step of establishing Socialism production will, of course, be planned so that there will at all times be enough basic materials, finished products, and transport and other services, etc., to meet the requirements of the population. The chief aim will be to have enough to satisfy all needs after making allowance for growing population and for all possible wastage and destruction through storm, fire, and other eventualities. But it will not matter greatly if too much is produced because nobody will be dependent on paid employment for his living and therefore nobody will lose anything by finding that the articles he works to produce have been produced in too great abundance. Men and women will be be rather complacent about producing too much and only worried if they should err by producing too little.
Too Much or Too Little
Notice how this differs from the kind of planning that goes on in the world of manufacture today. Now the business man would be quite unruffled if he had planned the output of his factory so that it turned out to be rather less than demand, but he would be very worried indeed if his output was too large for the market for that would mean falling prices and smaller profits.
Planning versus Forecasting
We are, however, dealing with two different operations, for the kind of planning of production that will be possible under Socialism is quite unlike the market forecasting that goes on now. The one is concerned with determining how much you need and then getting things organised so that you will have that amount produced in good time. But present day forecasting of demand starts at the other end and is really much nearer to guesswork.
It requires that the manufacturer shall form an opinion about what kind of product will be a saleable one, two, five or ten years ahead and how much of it will in fact be sold and at what price. Of course the length of time varies according to the nature of the product. Christmas Cards are designed and planned something more than a year ahead and women’s dresses and hats something less than a year. Planning and sinking coal mines may take several years, as also does the planning and construction of an oil refinery. In all these instances market conditions at the end of the period may be quite different from those the planner thought they would be. He may find his anticipated sales of summer dresses and hats ruined by an English “summer,” or that the market for coal or oil has suddenly grown or suddenly shrunk.
Forecasting for 1960-1970
Information was given in a Financial Times supplement on the Motor Industry, about the problems of forecasting future sales of motor cars (15 October, 1956, p. 7). The head of the Sales Analysis Department of the Ford Motor Company, Mr. K. D. Bull, explained that companies in the motor industry undertake two types of forecasting:
“The first covers the short-term period up to and including the next 12 months and is used for production planning. The second covers a longer period and is used for much wider purposes. This latter type of study is undertaken not as an interesting academic exercise, but as a necessary concomitant of future planning; The time taken for the installation of new facilities, and in the processing of new models from conception to production, means that the investment involved can only be justified in terms of the sales to be expected over the period of their employment, which may be some years ahead.”
Mr. Bull went on to explain that this second type of forecasting deals with the period which “does not start for two or three years hence and covers generally the ensuing ten years. In using this forecast we pay little attention to the results for individual years, accepting only that these give a reasonably accurate measure of the market in the average.’’
This period of three to ten years means that in 1957 they would be trying to figure out what average conditions will be between 1960 to 1970 and it is not at all surprising therefore that they do not attempt to forecast what is likely to be the state of the market in individual years within the 10 year period.
Mr. Bull says too that past efforts to forecast the long term demand for motor cars have all underestimated the size of the demand that actually came.
Where Labour Party Planners Go Wrong
The Labour Party (and the Communists), are believers in what they call planning, but the trouble with it is that it is out of its time. They are trying to apply planning of production to Capitalism, but what Capitalism requires is not the planning of production but the forecasting of demand in the market—a very different thing. So far as this near-guesswork about sales is possible at all, the manufacturers can do it as well (or as ill) as anyone else; certainly better than a Labour Party Committee, or a Labour Cabinet. The real planning of production is not. required under Capitalism and will only be possible under Socialism.
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