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Tuesday, December 4, 2012


When with the end of the Great War socialist parties came into power in most of the states of Central and Eastern Europe, the discussion on all these problems necessarily entered a new and decisive phase. The victorious socialist parties had now to think of a definite programme of action and the socialist literature of the years immediately following the War was for the first time largely concerned with the practical question how to organize production on socialist lines. These discussions were very much under the influence of the experience of the war years when the states had set up food and raw material administrations to deal with the serious shortage of the most essential commodities. It was generally assumed that this had shown that not only was central direction of economic activity practicable and even superior to a system of competition, but also that the special technique of planning developed to cope with the problems of war economics might be equally applied to the permanent administration of a socialist economy.
Apart from Russia, where the rapidity of change in the years immediately following the revolution left little time for quiet reflection, it was mainly in Germany and even more so in Austria that these questions were most seriously debated. Particularly in the latter, country whose socialists had always played a leading rôle in the intellectual development of socialism, and where a strong and undivided socialist party had probably exercised a greater influence on its economic policy than in any other country outside of Russia, the problems of socialism had assumed enormous practical importance. It may perhaps be mentioned in passing that it is rather curious how little serious study has been devoted to the economic experiences of this country in the decade after the War, although they are probably more relevant to the problems of a socialist policy in the Western world than anything that has happened in Russia. But whatever one may think about the importance of the actual experiments made in Austria, there can be little doubt that the theoretical contributions made there to the understanding of the problems will prove to be a considerable force in the intellectual history of our time.
Among these early socialist contributions to the discussions, in many ways the most interesting and in any case the most representative for the still very limited recognition of the nature of the economic problems involved, is a book by Dr. O. Neurath which appeared in 1919, in which the author tried to show that war experiences had shown that it was possible to dispense with any considerations of value in the administration of the supply of commodities and that all the calculations of the central planning authorities should and could be carried out in natura, i.e. that the calculations need not be carried through in terms of some common unit of value but that they could be made in kind.1 Neurath was quite oblivious of the insuperaole difficulties which the absence of value calculations would put in the way of any rational economic use of the resources and even seemed to consider it as an advantage. Similar structures apply to the works published about the same time by one of the leading spirits of the Austrian social-democratic party, Dr. O. Bauer.2 It is impossible here to give any detailed account of the argument of these and a number of other related publications of that time. They have to be mentioned, however, because they are important as representative expression of socialist thought just before the impact of the new criticism and because much of this criticism is naturally directly or implicitly concerned with these works.
In Germany discussion centred round the proposals of the “socialization commission” set up to discuss the possibilities of the transfer of individual industries to the ownership and control of the State, It was this commission or in connection with its deliberations that economists like Professor E. Lederer and Professor E. Heimann and the ill-fated W. Rathenau developed plans for socialization which became the main topic of discussion among economists. For our purpose, however, these proposals are less interesting than their Austrian counterparts because they did not contemplate a completely socialized system but were mainly concerned with the problem of the organization of individual socialized industries in an otherwise competitive system, For this reason their authors did not have to confront the main problems of a really socialist system. They are important, nevertheless, as symptoms of the state of public opinion at the time and in the nation where the more scientific examination of these problems began. One of the projects of this period deserves perhaps special mention not only because its authors are the inventors of the now fashionable term “planned economy”, but also because it so closely resembles the proposals for planning now so prevalent in this country. This is the plan developed in 1919 by the Reichswirtschaftsminister R. Wissel and his under-secretary of state W. v. Moellendorf.1 But interesting as their proposals of organization of individual industries are and relevant as is the discussion to which they gave rise to many of the problems discussed in England at the present moment, they cannot be regarded as socialist proposals of the kind discussed here, but belong to the halfway house between capitalism and socialism, discussion of which for reasons mentioned above has been deliberately excluded from the present work.

Collectivist Economic Planning

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