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Planned Economy Instead of Chaos Economy

by Georg Kummel Wednesday, Oct. 21, 2009 at 1:59 AM

For years US imports have doubled US exports. For 10 years China has contributed billion a day to finance US consumerism. Trade policy in the WTO, GATT and NAFTA have led to mass unemployment. Part time work for all and/or unconditional basic income could humanize society and assure dignified life.


By Georg Kummel, Koln

[This article published in: Sozialistische Zeitung Nr.78, 4/20/2009 is translated from the German on the Internet.]

From northern Europe to South Africa, from Asia to America – the economic crisis races around the globe like an incredible virus, destroying the foundations of existence for millions, leaving people, cities, regions and whole countries impoverished and bringing machines and factories to standstill. The current economic system does not serve people or society. It cannot sensibly organize and regulate the economy and destroys instead of builds. Productive forces become destructive forces. If a proof is still needed, it will be brought by this crisis.

We are now experiencing the beginning of the crisis and its consequences. Competition intensifies every day, survives the crisis and increases the ruthlessness with which capitalists act against workers, the unemployed and the environment to save their profits. Like a pack of starving wolves, capitalists of individual countries will fight for the remaining sales markets. New trouble spots and new wars will arise. It is high time to come up with an alternative to the chaos of capitalism. What will this alternative look like?

150 years ago Karl Marx and Friedrich Engels described socialism as the society that must supersede capitalism. The economic foundation of socialism is common ownership of the means of production and organization of the economy according to a conscious plan. But can a planned economy function? The collapse of states based on a planned economy has shown that planned economy is not feasible. That is the crucial objection.

East Germany, the Soviet Union and the other states of the eastern bloc (we call them Stalinist states) were not democratically organized. For that reason, their failure in no way proves that a planned economy is impossible. A highly complex economy cannot be organized with bureaucratic command methods.


The different objections against the idea of a planned economy are very surprising because planning occurs in capitalism on a large scale internationally and not only on the company plane. As an example, BASF has around 82,000 employees, production facilities in 41 countries and customers in 170 countries. With the help of a computerized system, large-scale and precision planning is carried out. What products, what quantities, what locations and what machines should be targeted are planned and controlled as flexibly as possible. Raw materials and preliminary products, workers, machines, buildings and energy must all come together at the right moment and in the right quantity.

The planning of production is also scientifically explored and pursued today. This includes special fields production planning, personnel management and supply-chain-management. Developing computer programs that plan and control the whole production cycle in industrial- and service-enterprises is an important branch of the software industry.

This is not only short-term planning. Developing and manufacturing new products and building new factories require planning extending over several years. Every enterprise utilizes comprehensive planning because it fits the myth of the “invisible hand of the market” according to which everything wondrously fits together by itself at the end.


Planning in capitalism has one decisive limitation: every enterprise and corporation only plans for itself. The production of a car model is planned in detail. At the end, it turns out that a part of the work was or will be pure waste because there was only solvent demand for the production of four instead of five manufacturers. What is true for the planned manufacture of cars side by side and against one another is also true for production altogether. The absurd situation of crises out of surplus occurs because the motive of production is profit and enterprises and corporations compete with one another, the absurd situation that society becomes impoverished because too much is produced.


What would a democratically planned economy look like? Let us assume industrial corporations, banks and insurance companies were transferred in common property and an overall social plan was carried out. Firstly, the motive for production would be very different. The questions would now be: “What is sensible? What do we need? What priorities should we set?” not “what brings profit?” These questions should be broadly discussed on all planes of society. Take energy supply as an example. In all probability, a social discussion about the future of the energy supply would emphasize all the possibilities for energy savings. Energy supply would be changed to renewable sources of energy – sun, wind, water, waves, biomass and geothermal.

An inventory of society’s potential production would be taken. In Germany, around 750,000 people now work in the auto-industry. In contrast, only 280,000 persons are working in renewable energy. Thus a plan could be worked out on changing production. Equipment for windmills could be produced instead of equipment for trucks. Glass for solar collectors or thermal glazing for apartment buildings could be manufactured instead of glass for car windows. Considering that millions of persons are now unemployed, the extent and speed of developing renewable energy can be envisioned.

The goals of production could be saving the environment and sparing working hours. Unnecessary social production and activities would be stopped, first of all the arms industry and then the advertising branch. The freed working hours could be used to reduce working hours for everyone.

For the implementation of this plan, the more central it is, the further it extends in the future, the more brutal it will be. The more decentralized and short-term, the more concrete it will be. Take the transportation system as an example. Changing the transportation system to buses and trains and planning production could take place centrally but residents of the respective city would decide whether to restore the old street car routes, build new ones or use electric buses.


Local and regional peculiarities are best considered when planning follows the motto: centralized as much as necessary and decentralized as much as possible. This principle was applied in reverse in Stalinist states that had nothing to do with the planned economy and everything to do with power and privileges. The higher and more centralized the respective plane of decision, the greater were the material privileges. Therefore the disastrous pressure to over-centralization occurred. An average wage for people in leadership positions, abolition of privileges, voting into office and voting out of office are necessary measures to prevent that centralization.

The Stalinist bureaucracy has always appealed to Marx. But it was Karl Marx who regarded these democratic principles as inalienable. The positive example of the 1871 Paris Commune should be looked up in his writings.


In capitalism, firms work side by side on account of the competition principle. This leads to the same task planned and carried out two times, three times and sometimes a hundred times. The vacuum cleaner is an example. In any electric equipment store, there are shelves with different vacuum cleaners. Under, there are dust bags for over 20,000 types of vacuum cleaners from over 590 manufacturers. Many dust bags are identically constructed. A hundred dust bags and vacuum cleaners are really different. Working hours are wasted in manufacturing different types of vacuum cleaners together with attachments. From the motor casing to packaging, there must be diverse planning, procurement, labels, storage and so on. In the meantime, there are dust-free vacuum cleaners. If this technology is perfected, a dozen different types of vacuum cleaners could meet the most different needs of different users. This is also true for televisions and bicycles, kettles and wireless LAN-routers, saucepans and dustpans. In addition, the products could be more durable since no profit interest in the production of short-lived junk would exist, which would also save time and resources in planning and production.


The economy must be planned on national and international standards. This is more necessary today than ever. The productive forces (means of production and human work activity) have become so tremendous that they threaten to destroy the whole planet every day they are used in an unplanned, anarchic way. This is true for CO2 production and for pollution of the air and water or the over-fishing of the world’s oceans. Each of these problems (and many others) requires a systematic coordinated action of the countries of this earth.

To many, this task seems so gigantic that they regard it as insoluble. However there are organizations today that try on different planes to tackle these problems – from local citizen initiatives to preserve conservation areas to the meeting of the World Social Forum where people from all continents discuss global problems and solu9tions. But they can only protest today and not decide. Nevertheless groups can be envisioned whose members are democratically elected, pass local and international resolutions, draw up plans and look after their conversion.

In a planned economy organized democratically worldwide, patent rights would obviously be abolished and all existing patents published on the Internet accessible to everyone. Every technical innovation and every new discovery would be the common heritage of humanity. Naturally a broad debate would occur about the technically best solution and the possible consequences of introducing a new product. This can happen at local and international congresses and via the Internet.

Science and technology would experience a new epoch of development.


“Lack of flexibility” is cited on Wikipedia as an argument against the planned economy since instructions and planning goals of the state planning authorities would be binding in such an economy and no or trifling decision possibilities would exist. That was true in Stalinist countries but need not be the case.

The structures for democratic decisions result from the terms of reference. Employees in the affected enterprise would decide how production in a car- or truck-factory can be changed most quickly, most sensibly and most effectively to produce machinery for windmills for example. Parents, students and teachers of the respective school would decide over organization of the district would decide over projects of the district. Delegates for over-arching groups could be elected to decide over questions (alternative production plan for the auto-industry altogether, general education subjects…). In a democratic society, a debate over these decisions would take place in advance and afterwards by employees in the enterprise, by consumers, in assemblies and on the Internet. Changed desires of consumers could also be identified.

Every complex system needs a regulation like a heating radiator. A temperature sensor is necessary that measures and registers the correct temperature. In a planned economy, a great amount of data must be recorded and passed on correctly to make the right decisions. This most simple prerequisite was not guaranteed in the Stalinist states. For political reasons, production results were regularly exaggerated. This shows the problem was not planning as such but the political conditions under which planning took place.

Flexible means changing, correcting or completely revoking decisions already made. This is necessary because circumstances change through technical progress, changed needs or because the original plan turned out full of mistakes. The first presupposition for flexibility is the possibility for free discussion and open criticism. The opposite was the case in Stalinist states.


Another objection is that all economic calculation is impossible since no market prices would exist. The expense in working hours for different products can be calculated. We know today how many hours are necessary to manufacture a car. The production time would be the decisive standard. But the follow-up costs like the production time necessary to repair the environmental damage through auto transportation or the working hours of hospital personnel to care for the 400,000 injured yearly in street traffic would not be ignored.


Without competition, there would be no impulse for innovations of products and production methods. This is another argument often made against the planned economy. Innovation potential becomes free when employees are called to make sweeping proposals.

Workers in the British Lucas Aerospace Company gave an impressive example in the 1970s. Unionists in the firm organized a campaign to develop an alternative production. (Lucas Aerospace produced military aircraft) Several thousand workers were asked for proposals. Contacts were made with potential consumers and with citizen initiatives. A hundred proposals were offered within a few weeks. Many ideas were developed further with construction blueprints and prototypes. Portable dialysis machines (instead of connecting to artificial kidneys in hospitals), development of heat pumps, windmills, machines for using wave-energy and hybrid motors were among the alternative products – in 1976!


In grappling with the different objections against a planned economy, one conclusion is reached time and again: the problem in a democratically planned economy is not the planning but the realization and maintenance of democracy.

Democracy is not question of good will or noble moral standards. Democracy is based on certain material prerequisites. Social rights presuppose equal ownership relations. The ownership of a business gives capitalists the power today to decide over production and the fate of employees. The first prerequisite for democracy is created through common ownership in the means of production, the foundation of socialism and planned economy.

Equality of rights and possibilities presuppose material equality. A society with a division in poor and rich can never be democratic. A division of society existed in Stalinist states. The ruling official caste controlled a graduated system of privileges.

A third material prerequisite for democracy is enough time for all members of society. Participation in discussion- and decision-making processes requires time. Working hours could be drastically reduced through distribution of work to everyone and abolition of socially meaningless activities.

A democratically planned economy can function under these presuppositions. The battle for a democratically planned economy begins here and now. For democratic ownership relations, we need the transfer of key industries, banks and corporations into common ownership. For democratic organizations of society, principles like average wages for officials, voting into office, voting out of office and transparency are necessary. As Marxists, we support these principles in social movements, unions and DIE LINKE (the German Left Party).

Even the most brazen defenders of capitalism no longer dare draw the vision of a capitalist world where global problems like poverty, hunger and wars are solved. A “healed” capitalist world is a utopia because it is inconsistent with the laws of capitalism.

On the other hand, a world where people consciously plan and organize the whole material production and the entire economy corresponding to their common interests is possible and necessary. This only functions when it is democratic.


Economic researchers are at a loss. No one can say how long the crisis will last or how deep it will be. The crisis appears like an incalculable external force. Humanity faces this crisis as powerless and ignorant as Stone Age persons faced the natural elements of lightning and thunder. The forces of nature could be understood and utilized systematically and scientifically – for the well being of all people and protection of the planet.


Noam Chomsky, 70 minutes at the Commonwealth Club, Oct 2009

Michael Moore, 75 minutes at the Commonwealth Club, Oct 2009

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