Central Planning - internationalstudies.us

INT 200: Global Capitalism and
its Discontents
Central Planning
Central Planning
• Socialism
– social and economic doctrine that calls for public rather than private
ownership or control of property and natural resources
• Communism
– the political and economic doctrine that aims to replace private
property and a profit-based economy with public ownership and
communal control of at least the major means of production and the
natural resources of a society
Central Planning
• The Realities of Soviet Communism
– the Bolshevik leaders viewed themselves as the executors of the
Marxist program
– “all products were to be delivered to communal warehouses, and the
members of society would draw them out in accordance with their selfdefined needs”
– Bukharin: “Proletarian coercion, in all its forms, from executions to
forced labor, is, paradoxical as it may sound, the method of molding
communist humanity out of the human material of the capitalist
– Lenin: the "dictatorship of the proletariat"
• the vanguard party could initiate policies in the name of the working class even if
the working class did not support them, since the vanguard party would know what
was best for the workers
• nationalized industry and established a foreign-trade monopoly to allow the
productive co-ordination of the national economy; no competition
Central Planning
• The Realities of Soviet Communism
– before he died, Lenin warned that Stalin has “unlimited authority
concentrated in his hands, and I am not sure whether he will always be
capable of using that authority with sufficient caution”
– Stalin: a “second revolution” with the introduction of state socialism
and central planning
• state ownership of the means of production and centralized planning, along with
bureaucratic management of the workplace by state officials that were ultimately
subordinate to the all-encompassing communist party
• The increasing bureaucracy was at complete odds with the Marxist notion of "the
withering away of the state”
Central Planning
• Command Economy or Centrally Planned Economy
– Economic system in which the means of production are publicly owned
and economic activity is controlled by a central authority
– the total direction and development of a nation's economy is planned
and administered by its government: government control of
production, distribution, and consumption
– Prices are also set by the central planners
• But used mainly as instruments of the central planners in their efforts to reconcile
the total demand for consumer goods with the supply available, allowing also for
revenues to the state
Central Planning
• Command Economy or Centrally Planned Economy
– Advantages
• harness land, labor, and capital to serve the economic objectives of the state
• consumer demand can be restrained in favor of greater capital investment for
economic development
– Disadvantages
Inefficient resource distribution
Suppression of economic democracy and self-management
Economic Instability
Shadow economy
• The End of the Soviet Union
– The Era of Stagnation
– Turn to capitalism and democracy