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Tuesday, December 18, 2012


In view of these difficulties, it is not surprising that practically all, who have really tried to think through the problem of central planning, have despaired of the possibility of solving it in a world in which every passing whim of the consumer is likely to upset completely the carefully worked out plans. It is more or less agreed now that free choice of the consumer (and presumably also free choice of occupation) and planning from the centre are incompatible aims. But this has given the impression that the unpredictable nature of the tastes of the consumers is the only or the main obstacle to successful planning. Dr. Maurice Dobb1 has recently followed this to its logical conclusion by asserting that it would be worth the price of abandoning the freedom of the consumer if by the sacrifice socialism could be made possible. This is undoubtedly a very courageous step. In the past, socialists have consistently protested against any suggestion that life under socialism would be like life in a barracks, subject to regimentation of every detail. Dr. Dobb considers these views as obsolete. Whether he would find many followers if he professed these views to the socialist masses is not a question which need concern us here. The question is, would it provide a solution to our problem?
Dr. Dobb openly admits that he has abandoned the view, now held by Mr. H. D. Dickinson and others, that the problem could or should be solved by a kind of pricing system under which the prices of the final products and the prices of the original agents would be determined in some kind of a market while the prices of all other products would be derived from these by some system of calculation. But he seems to suffer from the curious delusion that the necessity of any pricing is only due to the prejudice that consumers’ preferences should be respected, and that in consequence the categories of economic theory and apparently all problems of value would cease to have significance in a socialist society. “If equality of reward prevailed, market valuations would ipso facto lose their alleged significance, since money cost would have no meaning.”
Now it is not to be denied that the abolition of free consumers’ choice would simplify the problem in some respects. One of the unpredictable variables would be eliminated and in this way the frequency of the necessary readjustments would be somewhat reduced. But to believe, as Dr. Dobb does, that in this way the necessity of some form of pricing, of an exact comparison between costs and results, would be eliminated, surely indicates a complete unawareness of the real problem. Prices would only cease to be necessary, if one could assume that in the socialist state production would have no definite aim whatever—that it would not be directed according to some well-defined order of preferences, however arbitrarily fixed, but that the State would simply proceed to produce something and consumers would then have to take what had been produced. Dr. Dobb asks what would be the loss. The answer is: almost everything. His attitude would only be tenable if costs determined value, so that so long as the available resources were used somehow, the way in which they were used would not affect our well-being, since the very fact that they had been used would confer value on the product. But the question whether we have more or less to consume, whether we are to maintain or to raise our standard of life, or whether we are to sink back to the state of savages always on the edge of starvation, depends mainly on how we use our resources. The difference between an economic and an uneconomic distribution and combination of resources among the different industries is the difference between scarcity and plenty. The dictator, who himself ranges in order the different needs of the members of the society according to his views about their merits, has saved himself the trouble of finding out what people really prefer and avoided the impossible task of combining the individual scales into an agreed common scale which expresses the general ideas of justice. But if he wants to follow this norm with any degree of rationality or consistency, if he wants to realize what he considers to be the ends of the community, he will have to solve all the problems which we have discussed already. He will not even find that his plans are not upset by unforeseen changes, since the changes in tastes are by no means the only, and perhaps not even the most important, changes that cannot be foreseen. Changes in the weather, changes in the numbers or the state of health of the population, a breakdown of machinery, the discovery or the sudden exhaustion of a mineral deposit, and hundreds of other constant changes will make it no less necessary for him to reconstruct his plans from moment to moment. The distance to the really practicable and the obstacles to rational action will have been only slightly reduced at the sacrifice of an ideal which few who realized what it meant would readily abandon.

Collectivist Economic Planning

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