In a message dated 7/22/00 12:22:55 AM Eastern Daylight Time,
michael@xxxxxxxxxxxxxxxxx writes:
<< I disagree with Justin that the USSR crashed because of poor planning.
Please Justin, let us drop it. You and I disagree. Neither of us will be
easily convinced by their other. >>
* * *
This isn't me. It's someone who disagrees with me. Therefore, a comment
addressed to me for repetitive harping is inappropriate.
Moreover, I didn't say the USSR "crashed" because of poor planning. I have
argued (see Socialist Register 1991), and still believe, that if we ask why
the USSR finally crashed, that is, suffered a final economic collapse and
political disintegration, it is because the perestroichiki, Gorbachev chief
among them, consciously and deliberately dismantled the planning system
without developing and implenting any adequate replacement. They were under
the false impression, possible derived from bourgeois advisers like sachs,
that markets grow automatically and naturally, without any requirement soif
social and legal supporting and resytrianing institutions. That of course was
nonsense, and in the context, fatal.
The defects of planning played a role in the story, though. The Soviet
economy had been deteriorating for decades. It has entered a serious enough
crisis that the leadership thought radical reform--perestroika--was called
for. Moreover, the doubts were widespread enough to gather, initially,
widespread enough support for an increasingly radical program of reform, that
ere led to the results I have discussed. How bad the situation really was is
open to debate. Some thing that the USSR was just suffering the normal
slowdown after rapid (re)development after the war; some think that there was
a real crisis. I don't think we have enough data to say at this point.
My own belief is that whichever was true, had the planning system been left
in place and not dismantled, the USSR would still exist and would continue to
limp along into the foreseeable future. I do not think that the crisis,
however bad it was, that lead to the introduction of perestroika, was
terminal. It was the "cure" that was fatal.
All that said, the evidence of the USSR is that at its absolutely best, and
certainly in its normal operations, the planning system suffered from the
problems that you would expect from the calculation arguments: bad
information, perverse incentives, systematic lying, bhittlenecks, sdhortages,
stifled innovation. Anyone familiar with the planning literature can report
that these problems, and "Hayekian" complaints and explanations, were
absolutely familiar to Soviet planners and managers, even though most of
these had never heard of Hayek, Austrian economics, or any such things. They
just describedtheir own experience and frustrations, and tried, with greater
or lesseer, mainly lesser, success to get around these problems. The problems
were never as catastrophic as Hayek expected.
The USSR had a functioning economy that was operating at "second world"
rather than "third world" levels. But there was no question, after 1965,
about the USSR "overtaking and surpassing" the US, a had been hoped (there)
or feared (here) during the rapid growth of the later Stalin and Krushchev
years. On the contrary, the USSR was falling behind and stuck in a
permanantly second-rank position. That is what I mean by the failure of
planning and the vindication, at least partially, of the Hayekian arguments
about calculation.
It is possible to argue, as Charles does, that the very low but quite
widespraed social welfare net that the USSR provided most iof its citizens,
combined with the possibility of indefinite survival at this low level of
arguably greater equity, means that Soviet planning was really a success
comparedto the advanced capitalsit west, or anyway to the US, which produces
great wealth but also great poverty, and is poor on equity.
Apart from the response that social democractic countries in Europe are far
better on equity, the main thing about this reply is that is is a dramatic
concession, a tremendous reduction in socialist goals. Raher than wealth and
freedom for all, socialism on this view offers on a minimal hedge against
absolute poverty. That would npt be nothing; indeed, for many in the third
world, it is far more than they can hpope for from capitalist markets. That
is part of the reason socialism has been popular in the third world. But is a
far cry from what Marxists and other socialsits have claimed for the planning
as an overall superior method of allocating economic resources than markets
or a mixed economy.
--jks