There is something I am struggling to reconcile with when looking at centralized planning and distribution of goods under a communist form of the economy.
As I understand it, under such a system, there is very thorough planning on what gets produced, how much, and how it is distributed. Talking here more about consumer goods, eg shoes for instance.
In this system, I think an issue to be contended with is concerns around quality and actual demand for shoes, as well as the missing incentive to produce the best shoes that exist. Since every year (let’s say) production is planned, what’s to stop such a system from either under or over producing (since as I understand it, demand is driven top-down)? Also, what incentive does such a system have to enforce quality?
Posting this here because I want to learn and understand.
I am already convinced of the failures of capitalism, I see it every day when reading the news. I want to understand what is a viable alternative, and whether it has already been applied successfully somewhere.
I’d argue that full on central planning was the wrong model. I can highly recommend reading Thinking in Systems to understand the problem. But the gist is that any large system will have noise, as information travels through it. So, when you do central planning the way USSR was, it becomes very difficult to balance things. You make a plan, the directives travel down to the factories and farms where production happens, there’s delay in the information arriving, mistakes in transcription, and so on. Then the same thing happens on the way back up, so the picture at the top is divergent from the situation on the ground. And that leads to things like overcorrections, and plans based on false data, so the system becomes unbalanced over time. And that’s what we saw happen in USSR.
Now, that doesn’t mean that the idea of central planning itself is wrong. The problem is with micromanagement which just doesn’t work. And this is the problem China figure out by using markets as allocators within the centrally planned system. The planners still set five year plans, they still control the commanding heights of the economy, and give overall direction on what types of things should be produced, but the details are left to market mechanisms to work out dynamically at the appropriate level. And this type of a hybrid system is proving to be highly effective.
Demand does not necessarily be driven top-down. The same feedback systems that are in place under capitalism can be used under socialism as well.
Look at a supermarket chain for example. Supermarkets stack certain items, these items are bought, an electronic inventory system is aware of how much is stacked and updates as items are run through the checkout and leave the supermarket. Taking into account the latencies of the logistic system, new items are automatically ordered at the correct time when items run low.
Over time order numbers are optimized to prevent both scarcity and waste.
These are all technical problems that can be solved already right now that are completely orthogonal to the economic system. The only metric that is necessary is “demand”, which needs to be objectively measured.
The way i see the issue about quality is similar to others here. I think people want to do thinks well. The only reasons why people don’t do thinks well are:
a) Burnout. Lack of or insufficient recognition for the effort both intrinsic (telling yourself “what’s the point?”) and extrinsic (family, friends, colleagues and superiors don’t care and don’t give positive feedback)
b) Economic constraints. Superiors demand the MVP or actively demand cheaper materials/ cheaper build processes or enshitification to drive up profit margins.
Point a) is independent of the economical system and point b) is a direct result of capitalism.
I also don’t think that everything needs to be centrally planned. I like chinas decentralized approach where the further down the hierarchy you go, the more concrete and granular the plans become and some things aren’t planned at all but are fully delegated to markets.
This helped me, thanks.
I also think that a bottom-up drive of demand (vs top-down) might be more efficient in the end.
China has been mentioned a lot in this thread, I think that is a good example to take, to answer my question about viable alternatives that have been applied successfully.
Market systems already have a tendency to over and under produce as well, and even when they manage to model demand appropriately, they are prone to cyclical periods of over-production due to the nature of the circulation of capital. These periods of over production have wide reaching impacts like mass unemployment and consolidation of the market under the surviving firms. When a socialist system over produces, either under a market or planned economy, it is better suited to absorb the impacts without it leading to wider crises within the system.
Currently China is being attacked by the capitalist press because when it undergoes periods of over production it is able to bounce back surprisingly well and their companies are able to maintain their position in the market as they are sustained through a localised crisis that fails to become systemic. This allows their firms to maintain market dominance in the capitalists world system, as they aren’t prone to complete collapse like firms under capitalism might be.
I can see that. Anecdotal, but when I was a kid we used to have a Soviet built stereo that my parents got before I was born. It was running fine several decades afterwards. I bet if I go to their place and dig it out of the cellar it can still play cassette tapes even today.
I guess the problem in such a system arises when people no longer want to make things well and for that I assume there would be good feedback mechanisms to somehow move those people out of the critical path of making the thing.
Also, one bigger advantage of this system would be that repairability is built into the process as a prerequisite, not an afterthought (or because x or y organization “forces” the “poor capitalist” to make their crap nominally repairable).
One of the key things of socialism is “From each according to his ability, to each according to his needs” so the issue of people not wanting to do things well (or at all) should never arise due to this
There is something I am struggling to reconcile with when looking at centralized planning and distribution of goods under a communist form of the economy. As I understand it, under such a system, there is very thorough planning on what gets produced, how much, and how it is distributed. Talking here more about consumer goods, eg shoes for instance. In this system, I think an issue to be contended with is concerns around quality and actual demand for shoes, as well as the missing incentive to produce the best shoes that exist. Since every year (let’s say) production is planned, what’s to stop such a system from either under or over producing (since as I understand it, demand is driven top-down)? Also, what incentive does such a system have to enforce quality?
Posting this here because I want to learn and understand.
I am already convinced of the failures of capitalism, I see it every day when reading the news. I want to understand what is a viable alternative, and whether it has already been applied successfully somewhere.
I’d argue that full on central planning was the wrong model. I can highly recommend reading Thinking in Systems to understand the problem. But the gist is that any large system will have noise, as information travels through it. So, when you do central planning the way USSR was, it becomes very difficult to balance things. You make a plan, the directives travel down to the factories and farms where production happens, there’s delay in the information arriving, mistakes in transcription, and so on. Then the same thing happens on the way back up, so the picture at the top is divergent from the situation on the ground. And that leads to things like overcorrections, and plans based on false data, so the system becomes unbalanced over time. And that’s what we saw happen in USSR.
Now, that doesn’t mean that the idea of central planning itself is wrong. The problem is with micromanagement which just doesn’t work. And this is the problem China figure out by using markets as allocators within the centrally planned system. The planners still set five year plans, they still control the commanding heights of the economy, and give overall direction on what types of things should be produced, but the details are left to market mechanisms to work out dynamically at the appropriate level. And this type of a hybrid system is proving to be highly effective.
Demand does not necessarily be driven top-down. The same feedback systems that are in place under capitalism can be used under socialism as well. Look at a supermarket chain for example. Supermarkets stack certain items, these items are bought, an electronic inventory system is aware of how much is stacked and updates as items are run through the checkout and leave the supermarket. Taking into account the latencies of the logistic system, new items are automatically ordered at the correct time when items run low. Over time order numbers are optimized to prevent both scarcity and waste.
These are all technical problems that can be solved already right now that are completely orthogonal to the economic system. The only metric that is necessary is “demand”, which needs to be objectively measured.
The way i see the issue about quality is similar to others here. I think people want to do thinks well. The only reasons why people don’t do thinks well are: a) Burnout. Lack of or insufficient recognition for the effort both intrinsic (telling yourself “what’s the point?”) and extrinsic (family, friends, colleagues and superiors don’t care and don’t give positive feedback) b) Economic constraints. Superiors demand the MVP or actively demand cheaper materials/ cheaper build processes or enshitification to drive up profit margins.
Point a) is independent of the economical system and point b) is a direct result of capitalism.
I also don’t think that everything needs to be centrally planned. I like chinas decentralized approach where the further down the hierarchy you go, the more concrete and granular the plans become and some things aren’t planned at all but are fully delegated to markets.
This helped me, thanks. I also think that a bottom-up drive of demand (vs top-down) might be more efficient in the end.
China has been mentioned a lot in this thread, I think that is a good example to take, to answer my question about viable alternatives that have been applied successfully.
Market systems already have a tendency to over and under produce as well, and even when they manage to model demand appropriately, they are prone to cyclical periods of over-production due to the nature of the circulation of capital. These periods of over production have wide reaching impacts like mass unemployment and consolidation of the market under the surviving firms. When a socialist system over produces, either under a market or planned economy, it is better suited to absorb the impacts without it leading to wider crises within the system.
Currently China is being attacked by the capitalist press because when it undergoes periods of over production it is able to bounce back surprisingly well and their companies are able to maintain their position in the market as they are sustained through a localised crisis that fails to become systemic. This allows their firms to maintain market dominance in the capitalists world system, as they aren’t prone to complete collapse like firms under capitalism might be.
deleted by creator
I can see that. Anecdotal, but when I was a kid we used to have a Soviet built stereo that my parents got before I was born. It was running fine several decades afterwards. I bet if I go to their place and dig it out of the cellar it can still play cassette tapes even today.
I guess the problem in such a system arises when people no longer want to make things well and for that I assume there would be good feedback mechanisms to somehow move those people out of the critical path of making the thing.
Also, one bigger advantage of this system would be that repairability is built into the process as a prerequisite, not an afterthought (or because x or y organization “forces” the “poor capitalist” to make their crap nominally repairable).
One of the key things of socialism is “From each according to his ability, to each according to his needs” so the issue of people not wanting to do things well (or at all) should never arise due to this