Why Soviet-Style Planning Fails

So I think we're gonna spend a lot of time focusing specifically on the Soviet Union, just because that's the most canonical, important example.

Um, there were more planned economies than just the Soviet Union's economy.

But I think this will also give us kind of a good window and, and anchor into exploring what a planned economy is, what planned economies were able to accomplish, and why, ultimately, they pretty much all failed.

So to start with the Soviet Union, what were the goals the Soviets had in mind when they were trying to use the state to plan the economy?

I think it's good to study the Soviet example because it was, first of all, the most ambitious of all the planning efforts.

It was also the one that was tried the longest.

Uh, Eastern Europe attempts really started in the '50s.

The Soviet Union had about a 20-year head start on them, and so its attempts at planning unfolded over half a century.

And so it's a wider canvas on which we can draw to make our assessments.

And when you look at it, the picture that emerges from the Soviet experience is that planning was made extremely difficult because of the difficult conditions in which it was carried out.

But it's also the case that when you look at the institutional features of how they planned, the problems that emerge from it are probably gonna be general wherever it's attempted, wherever it's tried, whether it's in a poor country or a rich country.

Whatever you think about the Soviet example, the single most important thing for the s- the left today is that you cannot afford to ignore it.

There is a feeling among many socialists that because the Soviet Union was a dictatorship or because it wasn't a rich country, because it was tried in an, still in an agrarian country, the conditions in which it was carried out were so forbidding, were so difficult, and were so far removed from the traditional institutional vision that Marx and Marxists had about how socialist planning should be institutionalized, that that experience sort of doesn't count.

Mm-hmm.

And my view, and this is not just my view, much of the economic and historical literature from left and right really kind of cautions us that while many features of Soviet planning were kind of organic to that country at that time, there are very many more features that are going to be intrinsic to any attempt at planning.

And therefore, studying the Soviet experience really is kind of a must for anyone who thinks about a non-market-based alternative society.

So what you're saying is that the issues that the Soviet Union experienced with a planned economy, it wasn't just because of the historical circumstances they were in, it was because there are fundamental issues with trying to implement a fully planned economy.

Yes, that's exactly what I'm saying.

The conditions, the facts about Russian history, and the conditions in which the Soviet Union was built made things worse, but they are not what made planning fail, per se.

Why don't we take a step back for a second? When we say planned economies, we're trying to contrast it to a capitalist economy.