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.