69-518: Agro-Industrial Complex is a term aimed to identify the combination of several sectors of the economy providing mass production of food and consumer goods. The term is more common in countries of command economy , particularly the former Soviet Union where the term appeared in the 1970s. Beside regular farming and agriculture it also encompasses industries such as forestry , fishing and others. The agro-based industries includes four main fields of interest: Command economy A planned economy
138-413: A market economy , a free price system is intended to serve this purpose). This difficulty was notably written about by economists Ludwig von Mises and Friedrich Hayek , who referred to subtly distinct aspects of the problem as the economic calculation problem and local knowledge problem , respectively. These distinct aspects were also present in the economic thought of Michael Polanyi . Whereas
207-683: A New Socialism (1993), the computer scientist Paul Cockshott from the University of Glasgow and the economist Allin Cottrell from Wake Forest University claim to demonstrate how a democratically planned economy built on modern computer technology is possible and drives the thesis that it would be both economically more stable than the free-market economies and also morally desirable. The use of computers to coordinate production in an optimal fashion has been variously proposed for socialist economies . The Polish economist Oskar Lange (1904–1965) argued that
276-432: A bias for so-called "productive" work (i.e., yielding measurable physical output) over "unproductive" work (services, trade, etc.). "Such a wage policy calls into question the modernization of society, its efficiency, its competitiveness." Using this method any changes in the plan to remove mismatches between inputs and outputs would result in hundreds, even thousands, of changes to material balances. This meant that, without
345-481: A centre point for central planning and expanded investment in heavy industry, with Leon Trotsky one of the leading political patrons of the agency. In June 1922 a new decree further expanded Gosplan's purview, with the agency directed to compose both "long-term" and "immediate" plans of production. Gosplan was to be consulted regarding proposed economic and financial decrees submitted to the Council of People's Commissars by
414-411: A competing marketplace to meet the needs of the most consumers most efficiently. This phenomenon is recognized as spontaneous order . Additionally, misallocation of resources would naturally ensue by redirecting capital away from individuals with direct knowledge and circumventing it into markets where a coercive monopoly influences behavior, ignoring market signals. According to Tibor Machan , "[w]ithout
483-510: A desired pattern. In international comparisons, state-socialist nations have compared favorably with capitalist nations in health indicators such as infant mortality and life expectancy. However, according to Michael Ellman , the reality of this, at least regarding infant mortality, varies depending on whether official Soviet or WHO definitions are used. The state can begin building massive heavy industries at once in an underdeveloped economy without waiting years for capital to accumulate through
552-555: A distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet-type economic planning of the Soviet Union 's command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in
621-404: A fictional planned economy in a United States around the year 2000 which has become a socialist utopia. Other literary portrayals of planned economies include Yevgeny Zamyatin 's We (1924). The government can 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 in
690-543: A focus on the management of the Soviet economy. Opposition from the Defence Ministry killed Kitov's plan. In 1971 the socialist Allende administration of Chile launched Project Cybersyn to install a telex machine in every corporation and organization in the economy for the communication of economic data between firms and the government. The data was also fed into a computer-simulated economy for forecasting. A control room
759-598: A frenzied effort to sustain what remained of Russian industry on behalf of the Red Army , locked in a life or death struggle with the anti-Bolshevik White movement , backed by the foreign military intervention of Great Britain, France, Japan, the United States, and other countries. In the countryside food requisitions , often backed by brute force, took place under the nominal auspices of the People's Commissariat of Agriculture . In
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#1732854952339828-813: A hasty version of planning with unrealistic targets, bureaucratic waste, bottlenecks and shortages . Stalin's formulations of national plans in terms of physical quantity of output was also attributed by Daniels as a source for the stagnant levels of efficiency and quality. Economist Robin Hahnel , who supports participatory economics , a form of socialist decentralized planned economy, notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom. Furthermore, Hahnel states: Combined with
897-533: A market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals". Historian Robert Vincent Daniels regarded the Stalinist period to represent an abrupt break with Lenin's government in terms of economic planning in which an deliberated, scientific system of planning that featured former Menshevik economists at Gosplan had been replaced with
966-404: A more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as
1035-407: A planned economy in that a comprehensive and binding plan did not guide production and investment. The further distinction of an administrative-command system emerged as a new designation in some academic circles for the economic system that existed in the former Soviet Union and Eastern Bloc , highlighting the role of centralized hierarchical decision-making in the absence of popular control over
1104-457: A post-capitalist society. Decentralized planning has been a feature of anarchist and socialist economics . Variations of decentralized planning such as economic democracy , industrial democracy and participatory economics have been promoted by various political groups, most notably anarchists , democratic socialists , guild socialists , libertarian Marxists , libertarian socialists , revolutionary syndicalists and Trotskyists . During
1173-631: A project called Million Programme , implemented from 1965 to 1974. Some decentralized participation in economic planning occurred across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936 . In the May 1949 issue of the Monthly Review titled " Why Socialism? ", Albert Einstein wrote: I am convinced there is only one way to eliminate these grave evils, namely through
1242-399: Is a type of economic system where investment , production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized , decentralized , participatory or Soviet-type forms of economic planning . The level of centralization or decentralization in decision-making and participation depends on
1311-467: Is contested by some Marxists . Decentralized planning has been proposed as a basis for socialism and has been variously advocated by anarchists , council communists , libertarian Marxists and other democratic and libertarian socialists who advocate a non-market form of socialism, in total rejection of the type of planning adopted in the economy of the Soviet Union . Most of a command economy
1380-424: Is highly undemocratic and totalitarian in practice. Indicative planning is a form of economic planning in market economies that directs the economy through incentive-based methods. Economic planning can be practiced in a decentralized manner through different government authorities. In some predominantly market-oriented and Western mixed economies, the state utilizes economic planning in strategic industries such as
1449-461: Is organized in a top-down administrative model by a central authority, where decisions regarding investment and production output requirements are decided upon at the top in the chain of command , with little input from lower levels. Advocates of economic planning have sometimes been staunch critics of these command economies. Leon Trotsky believed that those at the top of the chain of command, regardless of their intellectual capacity, operated without
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#17328549523391518-789: The Egyptian countryside, for Hellenistic India , and to a lesser degree the more barbaric regions of the Seleucid , the Pergamenian , the southern Arabian , and the Parthian empires". Scholars have argued that the Incan economy was a flexible type of command economy, centered around the movement and utilization of labor instead of goods. One view of mercantilism sees it as involving planned economies. The Soviet-style planned economy in Soviet Russia evolved in
1587-484: The NEP period to counter structural inefficiency and the problem of bureaucracy. Economist Pat Devine has created a model of decentralized economic planning called "negotiated coordination" which is based upon social ownership of the means of production by those affected by the use of the assets involved, with the allocation of consumer and capital goods made through a participatory form of decision-making by those at
1656-531: The Spanish Revolution , some areas where anarchist and libertarian socialist influence through the CNT and UGT was extensive, particularly rural regions, were run on the basis of decentralized planning resembling the principles laid out by anarcho-syndicalist Diego Abad de Santillan in the book After the Revolution . Trotsky had urged economic decentralisation between the state, oblast regions and factories during
1725-518: The 1970 Chilean distributed decision support system Project Cybersyn in an attempt to move towards a decentralized planned economy with the experimental viable system model of computed organisational structure of autonomous operative units through an algedonic feedback setting and bottom-up participative decision-making in the form of participative democracy by the Cyberfolk component. The 1888 novel Looking Backward by Edward Bellamy depicts
1794-661: The Gram Sabhas (village-based institutions) and the planners subsequently seek to plan accordingly. Some decentralized participation in economic planning has been implemented across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936 . The United Nations has developed local projects that promote participatory planning on a community level. Members of communities make decisions regarding community development directly. Gosplan The State Planning Committee , commonly known as Gosplan (Russian: Госплан , IPA: [ɡosˈpɫan] ),
1863-472: The Soviet economy on the basis of a network of computing centers in 1959. Kitov's proposal was rejected, as later was the 1962 OGAS economy management network project. Soviet cybernetician , Viktor Glushkov argued that his OGAS information network would have delivered a fivefold savings return for the Soviet economy over the first fifteen-year investment. Salvador Allende 's socialist government pioneered
1932-583: The Statistical Directorate was merged into Gosplan, and on 3 February 1931 Gosplan was resubordinated to the Sovnarkom . During May 1955 Gosplan was divided into two commissions: the USSR Council of Ministers State Commission for Advanced Planning and the USSR Council of Ministers Economic Commission on Current Planning. These were, respectively, tasked with predictive and immediate planning. The work of
2001-459: The aerospace industry. Mixed economies usually employ macroeconomic planning while micro-economic affairs are left to the market and price system. A decentralized-planned economy, occasionally called horizontally planned economy due to its horizontalism , is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through
2070-485: The aid of information technology, Gosplan could only deal with the economy in very general terms. Ideological bias resulted in unrealistic plans that were impossible to execute. Pressure to execute them anyway resulted in widespread falsification of statistics on all levels of reporting. Falsified plan realization feedback further resulted in Gosplan preparing plans even more detached from reality: The second economy engulfed
2139-546: The computer is more efficient than the market process at solving the multitude of simultaneous equations required for allocating economic inputs efficiently (either in terms of physical quantities or monetary prices). In the Soviet Union, Anatoly Kitov had proposed to the Central Committee of the Communist Party of the Soviet Union a detailed plan for the re-organization of the control of the Soviet armed forces and of
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2208-563: The context of a mixed economy as well as in a post-capitalist economic system. This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy . Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists . Proponents present decentralized and participatory economic planning as an alternative to market socialism for
2277-482: The countryside to claim a place in land redistribution and in order to avoid the unemployment, lack of food, and lack of fuel which had become endemic. By 1919 hyperinflation had emerged, further pushing the struggling economic system of Soviet Russia towards total collapse. An ad hoc system remembered to history as military communism emerged. The Soviet government's Council of Workers' and Peasants' Defense rushed from economic bottleneck to economic bottleneck in
2346-515: The decision-making STO. Gosplan was formally established by a Sovnarkom decree, dated 22 February 1921. Ironically, the decree was passed on the same day that an article by Soviet leader V. I. Lenin was published in Pravda criticizing advocates of a "single economic plan" for their "idle talk" and "boring pedantry" and arguing that the GOELRO plan for national electrification was the "one serious work on
2415-465: The economy matched outputs from another part of the economy. Gosplan achieved this using a methodology called the system of ' material balances '. For a plan period (in detail for one year and in lesser detail for a five-year plan) Gosplan drew up a balance sheet in terms of units of material (i.e. money was not used as part of the accounting process). The first step in the process was to assess how much steel, cement, wool cloth, etc. would be available for
2484-695: The economy. More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology. Planned economies contrast with unplanned economies , specifically market economies , where autonomous firms operating in markets make decisions about production, distribution, pricing and investment. Market economies that use indicative planning are variously referred to as planned market economies , mixed economies and mixed market economies . A command economy follows an administrative-command system and uses Soviet-type economic planning which
2553-607: The economy. The possibility of a digital planned economy was explored in Chile between 1971 and 1973 with the development of Project Cybersyn and by Aleksandr Aleksandrovich Kharkevich , head of the Department of Technical Physics in Kiev in 1962. While both economic planning and a planned economy can be either authoritarian or democratic and participatory , democratic socialist critics argue that command economies under modern-day communism
2622-579: The economy. If mismatches between supply and demand were identified then, for the one-year plan, utilization plans for a particular input material could be cut or alternatively effort was made to increase supply. For the five-year plan mismatches between supply and demand could be mitigated by modifying long-term plans to increase productive capacity. Wages and pensions were leveled upwards, and skilled and manual work began to exceed much mental and professional work in remuneration. The Italian economic historian Rita Di Leo found "a compression of differentials" and
2691-457: The economy. The goal of such an economic system would be to achieve conscious control over the economy by the population, specifically so that the use of the surplus product is controlled by the producers. The specific forms of planning proposed for socialism and their feasibility are subjects of the socialist calculation debate . In 1959 Anatoly Kitov proposed a distributed computing system (Project "Red Book", Russian : Красная книга ) with
2760-420: The effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And
2829-506: The entire economy. To be sure, the system had its limitations, including the absence of meaningful price and cost information and the difficulty of extending planning to all the special commodities and enterprises in a modern economy. More serious difficulties stemmed from the attitudes and priorities built into the Stalinist planning system. "From the start," write the Soviet economists Nikolai Shmelev and Vladimir Popov, "the administrative system
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2898-457: The establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of
2967-421: The expansion of light industry and without reliance on external financing. This is what happened in the Soviet Union during the 1930s when the government forced the share of gross national income dedicated to private consumption down from 80% to 50%. As a result of this development, the Soviet Union experienced massive growth in heavy industry, with a concurrent massive contraction of its agricultural sector due to
3036-610: The first half of the 1920s, with Gosplan's desires and actual policy largely disjointed. Tension continued between Narkomfin and Gosplan throughout the NEP period, with Narkomfin advocating for increased grain exports as a means of bolstering the currency by balancing imports and exports while simultaneously bolstering peasant prosperity, while Gosplan emerged as the chief advocate of cheap food and planned development of industry. During 1925 Gosplan started creating annual economic plans, known as "control numbers" ( контрольные цифры ). Its work
3105-441: The former stressed the theoretical underpinnings of a market economy to subjective value theory while attacking the labor theory of value , the latter argued that the only way to satisfy individuals who have a constantly changing hierarchy of needs and are the only ones to possess their particular individual's circumstances is by allowing those with the most knowledge of their needs to have it in their power to use their resources in
3174-483: The individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow-men in place of the glorification of power and success in our present society. While socialism is not equivalent to economic planning or to the concept of a planned economy, an influential conception of socialism involves the replacement of capital markets with some form of economic planning in order to achieve ex-ante coordination of
3243-450: The input and participation of the millions of people who participate in the economy and who understand/respond to local conditions and changes in the economy. Therefore, they would be unable to effectively coordinate all economic activity. Historians have associated planned economies with Marxist–Leninist states and the Soviet economic model . Since the 1980s, it has been contested that the Soviet economic model did not actually constitute
3312-542: The labor shortage. Studies of command economies of the Eastern Bloc in the 1950s and 1960s by both American and Eastern European economists found that contrary to the expectations of both groups they showed greater fluctuations in output than market economies during the same period. Critics of planned economies argue that planners cannot detect consumer preferences, shortages and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in
3381-513: The latter was based on the five-year plans delivered by Gosplan, with Gosplan planning 10–15 years ahead. Gosplan was headquartered at the building now occupied by the State Duma, in Moscow. The introduction of the first five-year plan in 1928 led to a re-examination of the roles of Gosplan and VSNKh, the supreme state organization for management of the economy at this time. This re-examination of roles
3450-505: The midst of such chaos the mere idea of long-term economic planning remained a utopian dream during these first years of existence of Soviet Russia. It was not until the Civil War had drawn to a successful conclusion for the Bolsheviks in 1920 that serious attention was paid to the question of systematic planning for the Soviet economy. In March 1920 the Council of Workers' and Peasants' Defense
3519-452: The most localized level of production. Moreover, organizations that utilize modularity in their production processes may distribute problem solving and decision making. The planning structure of a decentralized planned economy is generally based on a consumers council and producer council (or jointly, a distributive cooperative) which is sometimes called a consumers' cooperative . Producers and consumers, or their representatives, negotiate
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#17328549523393588-437: The next year. This calculation was based on the following formula: production minus exports plus imports plus or minus changes in stocks. The planning system as such was fairly simple. Gosplan calculated the sum of the country's resources and facilities, established priorities for their use, and handed down output targets and supply allocations to the various economic ministries and through them to every branch and enterprise in
3657-478: The planned system of regular five-year plans started in 1928. Leon Trotsky was one of the earliest proponents of economic planning during the NEP period. Trotsky argued that specialization , the concentration of production and the use of planning could "raise in the near future the coefficient of industrial growth not only two, but even three times higher than the pre-war rate of 6% and, perhaps, even higher". According to historian Sheila Fitzpatrick ,
3726-520: The quality and quantity of what is to be produced. This structure is central to guild socialism , participatory economics and the economic theories related to anarchism . Some decentralized participation in economic planning has been implemented in various regions and states in India , most notably in Kerala . Local level planning agencies assess the needs of people who are able to give their direct input through
3795-430: The question of the single economic plan." Other members of Sovnarkom were more optimistic, however, and Lenin sustained a defeat on the establishment of another planning entity, Gosplan. As a compromise measure uniting the mission of the two planning entities, head of GOELRO Gleb Krzhizhanovsky was tapped to head Gosplan. Initially Gosplan had an advisory function, with its entire staff consisting of just 34 people at
3864-458: The scholarly consensus was that Stalin appropriated the position of the Left Opposition on such matters as industrialisation and collectivisation . After World War II (1939–1945) France and Great Britain practiced dirigisme – government direction of the economy through non-coercive means. The Swedish government planned public-housing models in a similar fashion as urban planning in
3933-445: The specific type of planning mechanism employed. Socialist states based on the Soviet model have used central planning, although a minority such as the former Socialist Federal Republic of Yugoslavia have adopted some degree of market socialism . Market abolitionist socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially owned economic enterprises that make up
4002-581: The time of its April 1921 launch. These were selected on the basis of academic expertise in specialized aspects of industry; just 7 were members of the Russian Communist Party (bolsheviks) . With the ongoing turn to a market-based system of production as part of the New Economic Policy (NEP), very real constraints existed on the possible extent of central planning during the initial phase of Gosplan's institutional life. Gosplan quickly became
4071-561: The truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power. Planned economies contrast with command economies in that a planned economy is "an economic system in which the government controls and regulates production, distribution, prices, etc." whereas a command economy necessarily has substantial public ownership of industry while also having this type of regulation. In command economies, important allocation decisions are made by government authorities and are imposed by law. This
4140-610: The various economic People's Commissariats. An administrative rivalry ensued between Gosplan and the People's Commissariat of Finance (Narkomfin), the latter the agency most in favor of currency stabilization and expansion of the general economy through the regulated market. Gosplan had no power of compulsion in this early interval, but was forced to work through Sovnarkom, STO, or the People's Commissariats to have its suggestions implemented by decree. The agency's economic calculations and policy suggestions remained largely abstract throughout
4209-506: The wake of a continuing existing World War I war-economy as well as other policies, known as war communism (1918–1921), shaped to the requirements of the Russian Civil War of 1917–1923. These policies began their formal consolidation under an official organ of government in 1921, when the Soviet government founded Gosplan . However, the period of the New Economic Policy ( c. 1921 to c. 1928 ) intervened before
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#17328549523394278-503: The work of the individual People's Commissariats toward this plan's fulfillment, so that "for the first time the RSFSR had a general planning organ with clearly defined functions," as historian E. H. Carr has observed. The State Committee for Planning, commonly known as "Gosplan," was launched as a permanent advisory subcommittee of STO, assigned with the task of conducting detailed economic investigations and providing expert recommendations to
4347-433: Was built for real-time observation and management of the overall economy. The prototype-stage of the project showed promise when it was used to redirect supplies around a trucker's strike, but after CIA-backed Augusto Pinochet led a coup in 1973 that established a military dictatorship under his rule the program was abolished and Pinochet moved Chile towards a more liberalized market economy . In their book Towards
4416-475: Was characteristic of the former Soviet Union and Eastern Bloc before most of these countries converted to market economies. This highlights the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems. In the Hellenistic and post-Hellenistic world, "compulsory state planning was the most characteristic trade condition for
4485-775: Was coordinated with the USSR Central Statistical Directorate , the People's Commissariat of Finance, and the Supreme Soviet of the National Economy (VSNKh), and later with the State Bank (Gosbank) and State Supply Committee (Gossnab) . With the introduction of five-year plans in 1928, Gosplan became responsible for their creation and supervision according to the objectives declared by the All-Russian Communist Party (Bolsheviks) . During 1930
4554-445: Was distinguished by economic romanticism, profound economic illiteracy, and incredible exaggeration of the real effect that the 'administrative factor' had on economic processes and on the motivations of the public." The second step was to identify where there were mismatches between levels of outputs of one material that was used as an input in another part of the economy i.e. where there were differences between supply and demand within
4623-596: Was given a new name – the Council of Labor and Defense (STO) – and a broader planning mission. STO was established as a commission of the Council of People's Commissars (Sovnarkom), to be headed by the leading People's Commissars themselves, a representative of the Russian trade unions, and the chief of the Central Statistical Agency. STO was directed to establish a single economic plan for Soviet Russia and to direct
4692-524: Was required because VSNKh itself also had responsibility for planning through the Industrial Planning Commission (Promplan). Re-examination of roles was also required as the introduction of the first five-year plan meant that Gosplan's role was no longer one of prognosis and drafting of 'control figures' since plans had now become orders to act. In order to ensure the success of the plan it was necessary to ensure that inputs from one part of
4761-758: Was the agency responsible for central economic planning in the Soviet Union . Established in 1921 and remaining in existence until the dissolution of the Soviet Union in 1991, Gosplan had as its main task the creation and administration of a series of five-year plans governing the economy of the USSR . The time of the October Revolution and the Russian Civil War which followed was a period of virtual economic collapse. Production and distribution of necessary commodities were severely tested as factories were shuttered and major cities such as Petrograd (now Saint Petersburg ) were depopulated, with urban residents returning to
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