Facing the ecosocial crisis: Is a socialist planning of the economy feasible?

28 May 2020 — MROnline

by , , and

The current ecological and social crisis, a crisis which has seen its effects increased by a public health emergency caused by the COVID-19 pandemic, is a crisis that raises serious concerns over environmental sustainability and social polarization. It has a fundamental cause: the blind logic pursued by our economic system, where everything is secondary to profits. The seriousness and urgency of the situation faced by humankind once again brings to the fore a discussion of alternatives to the capitalist mode of production and, in particular, the feasibility of economic planning given our current technological conditions.

The need to plan

In order to sketch a real solution to the unfolding worldwide ecological and social crisis, we have to first understand the serious environmental crises affecting humanity, which are primarily caused, or at least extremely aggravated by, our economic system. Despite the opinion of some environmental activists, the clash between humanity and nature is not an inevitable consequence of the “industrial civilization,” “economic progress,” or “productivism.” It is, on the contrary, a conflict stemming from the irrational processes and perverse incentives imposed by the market logic of profit-oriented production, competition and accumulation for accumulation’s sake. Following a never-ending thirst for profits and the compelling need to reinvest them continually, capitalism configures itself as a mode of production that expands its radius of action, bringing everything under the sway of the market, conquering every last corner of the earth, and consuming growing quantities of raw materials, pointing to the eventual exhaustion of natural resources.

Environmental destruction and the pillage of natural resources happen in a systematic fashion—capitalist private property and market competition always promote the production of anything that is profitable, no matter how harmful it might be to our environment. All of this happens while activities necessary for our survival are not undertaken, or at least not as quickly and on the scale needed, since they are not profitable enough, or simply because capitalists cannot stomach the required monetary investments. Under capitalism, the relationship between humans and nature is not rationally planned in order to fulfill social and environmentally sustainable needs, but rather, the relationship finds itself submitted to the blind forces of the market and profit.

A blind and expansive productive logic based on profits, displaying itself in an anarchic fashion over a finite planet, constitutes a contradiction so obvious and absolute that any social and politic project that is not explicitly anticapitalist is simply not worth pursuing. Environmental destruction, caused by both pollution and the ravenous pillaging of natural resources, is a quintessential part of capital in the same way that the exploitation of labor is. As Richard Smith explained in “Green Capitalism: The God that Failed,” the interests of capital and of humanity cannot be aligned. Private companies are never accountable to society, only to their stockholders. “Green capitalism,” as dreamed by economists and ecologist entrepreneurs in attempt to “save the planet by making money,” is a dangerous utopia that must be fought. The enormous environmental crisis that humanity faces cannot be solved by individual choices, be them of production or consumption, within the framework of the market. We need radical changes in the economic and power structures that allow us to rationally and democratically control activities and resources in order to prioritize social needs and environmental sustainability over profits. Neither companies’ “green entrepreneurs” nor “responsible consumption” from citizens allow us to get to the root of the problems and mitigate climate catastrophe with the necessary urgency. In fact, after several decades of promoting all types of “green” market practices, the conditions of our planet have never been worse and carbon emissions keep rising.

The market “solutions” that have been proposed and tried basically amount to taxes over emissions and emission markets. Nevertheless, none of them have proved successful at directly stopping, reducing, or reconverting the productive activity that generates those emissions, as they are always subordinated to private property rights. None of these “solutions” ever address the market logic of profits and competition, the roots of the problem—and some liberal economists even maniacally end up portraying ecological problems as new business opportunities. In fact, such “solutions” have had a negligible impact on the problem (as shown by the European system of cap-and-trade emissions implemented in 2006), making the climate crisis even worse.

The ecological transition toward a sustainable world demands the urgent implementation of a radical conversion, without precedent in human history, of the current productive, transport, and energy systems. It also demands the reorganization of our territory in order to redefine economic and residential uses, and investment in fixing the currently irrational and inefficient use of space, with its extreme spatial dispersion of activity and urbanism. The nature of this general economic conversion—due to the depth, scale, and urgency required—is simply impossible to accomplish within the restrictive framework of the private property of the means of production, without directly challenging the power of the global capitalist class and their institutions of imperial hegemony. The ecological transition and the social revolution are two sides of the same struggle, of the same project of human emancipation. Any other political option that rests on class conciliation—such as the ecosocialist current that doesn’t question private property or the market, or green Keynesianism—is not only doomed to fail but constitutes a waste of precious time when the environmental disaster keeps getting closer.

Is a planned economy feasible?

Efficiently organizing a complex economy such as our current one, where dozens of millions of goods and services are produced, doesn’t mean facing just a “technical” problem when it comes to computation and optimization. That would simply be a “static” problem, since it assumes a great deal of the necessary data is “given.” It also means facing an “economic” problem when it comes to human decisions and valuations, which assume a “dynamic” form when creating and mobilizing new information about new goods, technologies, and investments.

Economists aligned with the capitalist order will, of course, defend that none of these problems can be solved without the private property of the means of production and if lacking market processes. They consider that collective property, as far as it supposes the end to the atomization of capitalist production, leads inevitably to the existence of a “single will” or decision center where every single detail of the economy would be planned. A “center” that would also need to be “omniscient” because, these critics allege, planning a complex economy makes it necessary to anticipate human behavior. And as this is impossible, it follows that economic planning is not feasible on logical grounds, making communism an “intellectual mistake.” This mindset is shared by all within the anticommunist political spectrum, from libertarianism (including those with more or less overt fascist sympathies) to the degrowth ecosocialist positions, but also by social democrats, populists, and supporters of market socialism. For all of them, with all their differences, the market (more or less idealized) is supposed as an essential tool when it comes to assigning resources and creating information for economic calculation and coordination.

But this conception stems from an absolute confusion over the meaning of communism as a project of human emancipation, as well as over economic planning as a tool to achieve it. First, we need to clarify that planning an economy in the communist sense has nothing to do with the project of building a “happy Arcadia,” nor does it assume any kind of “omniscience” of economic authorities. Planning is simply an institutional mechanism that allows us to pursue the communist principle of the conscious, rational, and democratic regulation of the social productive process. That doesn’t mean, in any way, a single deciding instance, a “center” where every single detail of economic life gets determined. It only assumes the distribution of competences between several areas, levels, and agents that are involved (authorities, councils, productive units, users, consumers, etc.) in a consistent manner that guarantees the organic quality of all the decision-making processes.

The model of a planned communist economy we sketch here answers criticisms and allows us to solve two problems we mentioned earlier. Current ICT (mainframes, big data, artificial intelligence, and the Internet of things) would serve as the base for a planned democratic economy that would work as a distributed system, both centralized and decentralized, as the Internet does. Such a system allows the management of information flows in real time, linking together within that process both local knowledge and decisions within the framework of a general plan for the economy. The need for consistent coordination and a strategic vision demands centralization. At the same time, the need for detailed information and promotion of a local free initiative demands some degree of decentralization. Decisions will be taken at different levels depending on the nature of the decision at stake. In this sense, decisions that require a high degree of coordination for an optimal result (such as large infrastructures), must be centralized enough as to avoid overlapping, while decisions that require local and detailed information and don’t involve coordination problems (such as deciding the specific quantity and characteristics of consumer means) must be sufficiently decentralized. Here, decentralization does not mean adopting a market form, as in no case do we find private control over resources and investment, nor of what is produced, follows the logic of profits.

Under this perspective, a democratically planned economy must accomplish two other types of conditions in order to be feasible and efficient: technological conditions, so that it is possible to calculate costs, assign resources, and process information in the absence of market processes; and institutional conditions, in order to establish the participative organisms and procedures in order to make economic decisions, particularly for investment. Technological solvency and a robust institutionality would be key, therefore, to give the communist economy a certain automatism that allows it to stay clear from both bureaucratism and short-term changes derived from political voluntarism that characterized past experiences. In this way, we would be able to focus collective participation and deliberation on the affairs that are really decisive for the social and economic life, freeing producers from the purely technical and administrative tasks of the economy.

These technological and institutional demands would materialize in the design of a planning device with two circuits or procedures for economic coordination that would act in an overlapping fashion, performing different but complementary functions. On the one hand, scientific-technical coordination procedures based on mathematical optimization and artificial intelligence in order to efficiently assign resources, and in which already existing information is used, which is then reassigned in function of the changes in the consumer preferences of the population. In this sense, a planned economy would work in a similar fashion to the way big retail stores such as Amazon or Wal-Mart organize and manage their supply chains in real time. And, on the other hand, economic coordination and decision-making procedures that would adopt the design of an institutional structure for the social control of investment and to promote entrepreneurial innovation. The point would be to generate new information in a decentralized fashion, through the structure of plural participation that involves very diverse actors and with the right incentive system. We will go into some detail in the following sections.

Technological coordination: mathematical optimization

There is no single way to plan a complex economy such as the one we envision for a socialist society, be it through linear programming, algorithms that maximize a specific function that represents the adjustment between what is produced and what is consumed, or through the structure of a national economy as if it were a neural automatized network. What is relevant is that all of these options are currently feasible.

In the case of lineal programming, the point would be to optimize a specific objective function—optimization subject to certain restrictions (available resources and technologies, for instance). Such an optimum point would depend on what is represented in said function. If we want to optimize costs (be it of material resources or of human labor time), the optimization would be a minimization of said function. If, on the contrary, we try to optimize the production of a certain good, we would face then a problem of maximizing an objective function. In any case, they are both mathematically equivalent processes that suppose no technical difficulty once we are able to obtain the necessary information to solve the mathematical problem. Linear programming also makes it possible to identify which areas are more profitable for the investment of an additional unit of resources with regard to the optimization of the objective function that we want to attain.

In the case of recursive algorithms, we would face a finite series of instructions that, given initial data and a function to maximize (which could measure the divergence between what is produced with regards to what was planned, or, following Paul Cockshott and Allin Cottrell in their Towards a New Socialism, the harmony in a planned socialist economy), would process the data fed to reach a specific assignment of resources within a timeframe. The technical difficulty in this case would stem from guaranteeing the convergency conditions of algorithms, something that is given both by the set of instructions and by the form in which economic information is fed into the recursive algorithms.

Organizing the economic information of a planned economy in a systematic fashion would then mean to represent the different specific relations of production through an input-output matrix of the national economy that, following the Russian-American economist Wassily Leontief, could describe through lineal equations (the content of which would be given by several technical coefficients) what amount of which resources are necessary to produce, on average, in this or that industry.

With all the above, we think it is abundantly clear (for those who want to see it) that a planned socialist economy is nowadays technologically viable: the supposed “technical” impossibility of socialism is something that has long been overcome. Moreover, the problem of obtaining the necessary information that is sometimes brought up is answered through technical means so widespread as to allow the control of productive processes in real time. When we defend the feasibility of a planned socialist economy we are not talking about a pie-in-the-sky dream: a single year was all it took a modest economy such as the Chilean one in the 1970s, under President Salvador Allende, to kickstart the Cybersyn project, a real-time planned management system of the nationalized industry that tried to democratize the process of decision-making.

Economic coordination: social control of investment

The other basic foundation of the model of planning we are proposing is the social control of investment. This would be the necessary condition in order to democratically guide the economic development (voting over the main macroeconomic objectives, projects, and indicators) and, at the same time, to spur business innovation in a decentralized fashion, fostering entrepreneurship within the framework of the social ownership of the means of production.

The method we propose to assign investment takes the following steps and involves three types of actors with different functions, competences, and incentives:

  1. The Strategic Plan of the economy (periodically developed by democratically elected authorities) establishes economic and social development priorities: changes in the structure of the economy sectors, creation of new infrastructures, technological development projects, energy conversion, organization of the territory, etc. In order to reach all these objectives, the Plan assigns resources through two complementary ways: (a) in a centralized fashion, directly assigning investment to specific activities and projects (prioritizing certain branches, research programs, new technologies, infrastructures, etc.); and (b) in a decentralized fashion, through sectoral Investment Councils that are democratically elected and are in charge of deciding new business projects. The incentive for planning activities to act in a responsible fashion stems from their elective nature, with all members subject to revocation mechanisms.
  2. The Investment Councils (IC) formed in the different branches have funds available to them as established by the Strategic Plan and must assign them to different proposals that entrepreneurs present to them. Business projects that are selected are included into the Detailed Plan of the economy and their possible consolidation within the productive framework is determined by trial and error, dependent on reaching certain objectives (saving costs, quality, etc.), and, ultimately, by the verdict of consumers as shown by their purchasing decisions. Moreover, besides the elective nature of the members, the incentive for these IC would be established by premiums depending on whether the selected projects have the backing of consumers or if they reach certain economic objectives.
  3. Entrepreneurs (either individuals or teams) present their proposals for new products, techniques, or business projects to the IC when applying for funding. Platforms for the development of enterprise innovation would be similar to the ones operating nowadays: incubators, responsible for adopting projects still in the planning stage (transforming the knowledge into products) that can count on specialized counseling, training, and infrastructures; accelerators to develop projects or startups, where their “technical” implementation within the productive framework is evaluated. Incentives for entrepreneurs could be material, in the form of bonuses according to the success of the project, or professional, with the possibility to develop and direct their own business project. In any case, it is important to stress that these incentives are not linked to the property of means of production, something already happening in capitalist economies where entrepreneurs are commonly not the owners of businesses.

This entire process as described takes part within a pluralistic structure of actors, decision-making instances, and practices that promote individual initiative and rivalry within the framework of the social property of the means of production. Decentralization takes a nonmarket form, since there is no private control of resources nor competence (“free mobility of capital”), so we find no compulsive dynamics of investment and avoid the productive anarchy characteristic of capitalist economies. At the same time, dispersal of knowledge is mobilized through different agents, overcoming the main criticism by liberal economists. Another important trait from our proposal is that planning organisms are simple administrative-technical coordination agencies, with no ability to decide on business projects to pursue, as they only channel information and coordinate decentralized decisions by entrepreneurs and IC. All of this looks to accomplish a higher dynamism, efficiency, and responsibility assumption in the process of selecting, funding, and developing innovating ideas, involving the highest amount and diversity of agents possible in the process of decision-making within the framework of well-established competences and incentives.

These would be the foundations for a democratic and rational economy, free from the blind logic of profits and the despotism of capitalist private powers, able to face the global ecosocial emergency. There are no technical obstacles. These foundations as described respond to the common criticisms by liberal economists (and that have been adopted by most environmental and progressive activists). The debate is, therefore, completely political. Our conviction is that only a planned communist economy will allow us to overcome the enormous challenges, whether they are social, ecological, or public-health related, that humanity faces today. Contributing to this project would then constitute a true practical activist task for anyone who feels committed to social emancipation and concerned with the current environmental emergency.

You can find out more about the authors at cibcom.org and their Twitter account twitter.com/cibcomorg

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