lanned economy in the OM system

Do you know about the planned economy? This is one of the principles of the economy in the state. The essence of this principle is that all economic activity is managed from a single center.

The activities of any enterprise are planned, and this is a way to rationally distribute the time and effort of employees in time so that everything is carried out at the right time and in the right quantity. Planning in production is necessary, but state planning or a planned economy, at least as it was organized in the Soviet countries, is not only planning itself, but also the elimination of other participants in economic activity with their own plans. A state-planned economy meant a ban on competition from other producers, which stemmed from the ban on private ownership of the means of production.

Inefficiency of the state planned economy

In practice, the planned economy was not effective for many reasons. For example, Ludwig von Mises in his book “Socialism” as the main argument says that a planned socialist economy is impossible because of the impossibility of calculating market prices. That is, with total planning it is impossible to understand how much it costs.

My opinion: management and planning are the same activities that can be performed worse or better. And only the market, or, more simply, people, can evaluate the quality of this activity by directly acquiring certain results of this activity, as is the case in an ordinary economy. The choice occurs both among goods, that is, what to spend money on in order to get the greatest benefit, and among places to work, what is more profitable to spend time on. When we limit this choice, the quality and variety of goods fall due to the lack of competition, working conditions deteriorate, and so on.

I see the problem in a planned economy and in general in centralized management not in the impossibility of calculating prices or even in determining the needs that need to be satisfied, but in the absence of competition, that is, the same individual plans of each person, the implementation of which remains the best. And, as a result, the lack of personal motivation to create something better or not necessarily better, because sometimes it is enough just to make a product look a little different, have a new taste, and this can affect its purchase.

When all decisions in the company come from a single center, without feedback from customers and their own employees who have the motivation to do something better. The company stops growing. The quality of goods decreases, and the cost price relative to the cost price of competitors increases. Goods, and then the company that produces them, leave the market.

Of course, to some extent, the process of growth of the company is necessary, for example, an automobile company that produces cars for mass use cannot be small. Nevertheless, these companies at some stage of growth, in order to avoid all the same bureaucratization, create within themselves freely trading and competing independent departments.

 Planning, in my opinion, is justified only when it concerns some particular area of ​​activity, which is fully understood by a specific person. And if, for example, Henry Ford understood how the entire production of a car is arranged in the best possible way, starting with the manufacture of parts. But, if there is no such person in the Ford company who would understand the whole process of creating a car in exactly the same way, then it would be reasonable to divide the process of creating a car into independent stages, each of which would be controlled by a separate person who would make every effort to make this particular production stage is better, regardless of Ford’s overall development plan. This is roughly how the modern automobile industry exists, in which automobile companies are intertwined with the supply of parts that produce the best and many separate industries that, for one reason or another, make certain parts better or cheaper.

All this shows that the main organizing element of the economy is a person, and not a plan, and not even any best economic model. The model is the best, which allows you to realize the desires and abilities, talents of the best people. Moreover, the final answer, what is the best person – no. During the Soviet revolution, the proletariat was such a person, and the Soviet economy was created for him or for the realization of his abilities. Speaking frankly, for any state power, the best people will be, first of all, representatives of the power itself.

In some areas of the economy that are not so strongly associated with competition for the satisfaction of finite needs and desires, for example, in the field of resource extraction, metal smelting, space industry, the Soviet planned economy achieved relative success. All this was to become elements of larger fundamental processes associated with scientific and technological progress, which, of course, we had, but at the same time, its results did not satisfy domestic and global demand for goods and services for the mass consumer.

It is not enough to invent or discover something in science, you need to introduce it into production. It so happened that the West or countries with a market economy, based on the same scientific achievements, created more popular goods and better organized state institutions, including scientific ones.

 Probably and soit’s not that the planned Soviet economy is bad – perhaps a bad person who actually values ​​his own material well-being above state achievements. If the majority, in fact, really were more important than the achievements of the state, then it would produce better goods and would buy them with pleasure and would be proud that it eats and dresses its own, and not someone else’s. But for now, it’s all just words.

The market beat the plan

The economy, having moved to globality and, one might say, to the highest point of its efficiency, under the influence of external circumstances, namely the limited resources of the planet, for objective reasons, is forced to move on to planning these resources. And if, up to a certain point, individual companies competed for resources, then having reached the maximum of their development, having united in mega-corporations, they began to think about the future from which they would produce their goods in the future, satisfy demand and make a profit.

Such planning is possible only for the global economy, where there are monopolies or oligopolies that control almost all the available resources of the planet.

And at the same time, the global economy becomes inefficient, because, violating the principles of competition, commercial enterprises, uniting in corporations, turn into the bureaucratic apparatus described by me above, merging into state power. In the sense that the co-owners of these corporations become politicians and government officials. The economic elite itself becomes in fact the power, provides its state not in a free market way independent of the authorities, as it should be in a free competitive market, but by political methods, including influencing the legal and financial system, receiving preferences from the state, from which the economy also suffers, in view of the fact that the ordinary population does not develop either, because it loses money on inflation.

 Various antimonopoly laws and anti-lobbying laws do not interfere with this process either. Rather, they only allow one financial elite to better stand up to others who encroach on their power, so to speak. I, like Mises, am sure that there is no harm from monopolies in themselves. This harm arises only when the owners of these monopolies merge with the authorities and maintain their existence not by economic, but by so-called statist methods, that is, with the help of laws and other instruments of state power. To which I also include the possibility of “printing” money.

When rich people begin to engage in state activities in order to preserve and increase their wealth, this has a bad effect on the economy, that is, the quality of goods and services provided, and on the very quality of state activity, since the state ceases to serve the general needs of the people, which can be opposite commercial interests and should not depend on them.

The state must create such conditions that the economy does not develop at the expense of society, especially with regard to the environment. With the development of the economy in the OD, it is ecology that is not only the goal, but also a certain indicator of the correctness of development.

Resource planning

Resource planning should not be done by the market participants themselves, as it allows them to retain the power that should belong to society.

For planning, there must be a state authority separate from the market, created on the principles and knowledge of ecology. Such an authority will allow the rational use of resources without political and economic struggle for the right to use them. This body should be guided not by how to make the most of these resources, but how best to conserve or, if possible, increase them.

The right to use resources should be given to those who can use the least amount of them. The one who can ensure their renewability, proper disposal, reuse, etc.

Planning in the OD system

In the OA system, the source of planning will be ecology, the purpose of planning is the improvement of natural conditions, the achievement of a sustainable balance with the natural environment. In many cases, this is no longer enough, since such a balance preserves what is, and what is already there, one might say, is no good. Therefore, the task of OA is to improve and restore the natural environment, which has been ruined by human activity today.

Participants in environmental planning should, as far as possible, be independent of economic activity itself. This governing body is based on purely scientific principles, incompatible with any kind of prejudice.

In terms of directly planning the time and effort of people. This should and will happen in the OD exclusively voluntarily by those participants who deem it necessary to organize something and they will have the funds for this, or they will collect them from those who voluntarily want to help them. So any public cause is realized if it receives specific financial support. The structure of the economy in the OA system will allow economic measures to stimulate the implementation of socially useful deeds and create conditions for more money to be set aside or used for one’s own needs.