Can planning replace the market

Solidarity looks at how a socialist planned economy that puts the needs of people and planet first could work

We are told that the market is the only efficient way to organise society. But capitalism is actually hugely inefficient and incapable of distributing resources equitably.

Under capitalism competition and profits determine how resources are allocated and what is produced, not rational decisions about human needs or the environment.

As a result there is too much of some things produced that aren’t needed, and not enough of others that are. Huge amounts of money are invested in biofuels rather than growing food to feed the starving. There are more useless gadgets produced every day.

People who contribute nothing to society like hedge-fund managers are paid six figure salaries while teachers and nurses are underpaid and undervalued.

Competition between different companies making the same products breeds inefficiency, duplication and waste. As Marx explained, capitalism is the first economic system to produce crises from overproduction, rather than scarcity. Competition for market share means that companies race to sell more products than each other, so more goods are produced than can actually be sold.

To influence the choices people make between products, billions are wasted on advertising every year. This kind of wastefulness, inefficiency and inequality is built into the system.

Yet there has been a huge expansion of wealth under capitalism. There is more created now than ever before, with more than enough to go around so that no-one need starve or live in poverty.

A socialist revolution would harness all this potential by putting production under democratic control and making the things we actually need.

Planned economy

We are told that planning simply can’t work. In fact, there is a tremendous amount of planning that goes on under capitalism to co-ordinate production within individual corporations.

Vast international supermarket chains need to carefully plan enough stock daily, but not so much that food goes bad before it can be sold. To do this they use complex data and distribution systems. Such technology and organisation could be generalised across the entire economy.

Because of their association with Stalinism in Russia and Eastern Europe, planned economies have reputations for inefficiency and mismanagement. Defenders of the market say that at a whole economy level, the scale of information required to produce the things society needs is too complex for centralised planning.

But under Stalinism, in which a small clique ruled Russia and made all economic decisions, there was no attempt to have any democratic input about what society needed. The economy was run on the basis of competition with surrounding military powers.

A genuinely socialist planned economy would make use of an array of decentralised, local democratic bodies to feed in decisions of what society needed produced.

Delegate voting bodies at workplace, local, city and regional levels would make decisions about how resources are allocated, what is produced and where surplus value would be invested in society.

Capitalism gives us a false sense that managers and bosses are best equipped to make decisions within particular workplaces or companies.

But in a socialist economy many decisions would be made at a workplace level by the people who know their industry best and are most affected by those decisions—workers themselves. We already run the schools and treat the patients and write the software. This would unleash a level of collaboration and innovation unlike anything possible under capitalism.

In the Paris Commune in 1871 and the Russian Revolution in 1917, and in many struggles between and since, ordinary women and men have organised to take control of their own lives. They’ve created organs of political power for strikes and factory occupations.

But in these struggles they also organised the most basic necessities like distributing food and housing.

This kind of democratic control would also mean we could make much larger decisions about what is produced. We would produce technology that’s not designed to be obsolete in two years. We would get rid of the nuclear arms industry and patents on pharmaceuticals.

To do this we would need planning on an international scale. Capitalism is an international system where production chains are organised across borders.

Without the full international expansion of socialism, individual planned economies would be up against economic isolation, capital flight, political intervention from outside and even armed invasion.

Climate action

The current climate crisis is a clear example of how necessary socialist economic planning is. Cutting emissions means implementing a strict global set of targets and investment in renewables on a huge international scale. There is no way to organise such a global effort without co-operation and planning.

UN summits and international conferences can set emissions reductions targets, but they are small and unenforceable. Instead capitalism invents new (and profitable!) markets for emissions trading, dodgy carbon offsetting schemes, or carbon taxes that force ordinary people to pay for climate action.

Right now it is still profitable to pull coal out of the ground for energy production in Australia and for export. This means companies are less interested in investing in riskier and less profitable clean energy technology.

But a rationally organised and planned economy would decide to switch from fossil fuels to solar thermal and wind. Workers in the energy sector in Australia would be re-trained and power stations re-tooled. We could massively expand public transport and high-speed rail between cities so there’d be less reliance on polluting cars and planes.

We could plan urban spaces that reduced the need for long commutes, build safe and accessible bike paths, insulate buildings properly, build low-energy public laundromats. These things are only possible on a mass scale with huge public investment.

A planned socialist economy could harness all the creative, innovative and economic potential humans already possess. We could direct this toward human need and environmental sustainability, instead of profits for a tiny elite.


Solidarity meetings

Latest articles

Read more

Workers and the alternative to capitalism

The history of workers’ struggles shows the possibility of a socialism based on mass democratic control of society, writes Judy Cox

How colonial war led to revolution in Portugal

The revolution in Portugal beginning 50 years ago in 1974 with a revolt in the army, saw workers take control of hundreds of factories, writes Luke Ottavi

How resistance can turn into revolution

Ending the domination of Israel in the Middle East and the Western imperialism behind it will require revolution, writes James Supple.