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What I've been learning about planned economies
Published on Aug 8th, 2023.

Over the last couple of months I’ve been following a mental thread that has me exploring the idea of planned economies. If you’ve never heard of it before, strap on your economics hat and get ready for a wild ride. The high-level idea behind them is to allocate scarce resources according to a set of society or community level goals. These goals can be anything from pointing everything at building machinery for protecting oneself during a war1 to transitioning to a sustainable economy.

The economic goals of planned economies offer a lot of flexibility, and they come in contrast to the profit motive driving most economies today. Rather than relying on private firms and individuals to distribute capital according to their interests, planned economies can distribute capital according to a diverse set of goals and metrics.

If you’re wondering why this idea might sound a little familiar, it’s because the Soviet Union is the infamous experiment in planned economies. It is also the experiment any critic will point to as an example of why they don’t work. Yet in the face of this age-old argument there is renewed interest in the idea. More people have been writing about planned economies as potential solutions to problems we face today, learning from the mistakes of their past implementations and attempting to adapt them towards creating a more democratic society.

Lately I’ve been binging through a few of these books and think it’s worth sharing the trail of thought. If you’re interested in learning more about potential alternatives to our economic system, read on!

This binge all began with an article in The European Review of Books: Tragedy & farce in climate commentary, which explores the thrashing themes of “we’re fucked” vs “it’s not too late” found in today’s discourse on climate change. The article cites a book called Half-Earth Socialism, praising it for filling a void in “leftist utopian literature.” I had previously read and enjoyed Ursula Le Guin’s The Dispossessed, another “leftist utopian” book, so hearing this piqued my interest.

I picked up a copy and was quickly lured in. It was the first book I’ve read in a long while within the realm of climate change that felt creative and interesting. While two-thirds of the book is pretty dense academic speak, it nonetheless paints a compelling picture of what a pathway out of climate disaster could look like- one worth getting excited rather than depressed about. That’s no small feat considering the current state of climate discourse! Not to spoil too much, but redeveloping society around a planned economy is a star of the show. To emphasize the surprising practicality of this idea, the book leans heavily on the ideas of Leigh Phillips and Michal Rozworski’s The People’s Republic of Walmart.

When I searched the book’s title online, a top result was this article from the Cato Institute, a libertarian think tank, “proving” how the ideas of this book couldn’t possibly work. If a Koch brother funded think tank is so worked up about a book that they felt the need to pay someone to write a take-down of it, you can bet your bottom I want to read that book.

As such, I picked up a copy and was not disappointed. The People’s Republic of Walmart makes the argument that, contrary to the orthodoxy of markets being the only viable form of efficient economic allocation, economic planning is already pervasive and highly efficient. Look no further than Amazon or Walmart for examples of sprawling institutions that are able to efficiently allocate resources to get goods from production lines to consumers’ homes. The crux of the argument is: if economic planning is such a bad idea, why are capitalist firms relying upon it so heavily?

The final chapter of the book discusses the closest example the world has seen to a democratically planned economy: Chile’s Project Cybersyn. Long story short, in the early 70’s the Chilean government attempted to build a computer network that could transmit economic data in real-time in order to properly allocate resources throughout the country’s newly nationalized industries. The project was far ahead of its time, especially in a region of the world not usually associated with advances in computation during that era.

At this point I’d heard about Cybersyn through three different sources: both of the aforementioned books and this episode of Radio Ambulante. Each of them have hyped up its legend, but all have been scarce on the details of how it actually worked. A desire to learn more about what this looked like in practice has brought me to the best source of information I’ve found thus far on the topic, Cybernetic Revolutionaries. This book was written over ten years, assembling together a number of interviews of people originally involved in the project and documentation of its implementation that managed to escape the US-backed coup which resulted in the projects early demise.

I’ll likely have more to say once I’ve finished with this book, but I felt my path thus far has been more than enough to merit a blog post about.

To be clear, I don’t know how much of what I’m reading here are good ideas. For now, I simply think they’re interesting ideas. It seems increasingly clear to me that the heavily market-driven economy of the US, at least in its current implementation, is leading to disastrous social and environmental outcomes. Yet even with the era of McCarthyism long behind us, ideas of making any kind of large-scale change to our economic system seem to remain on the fringe of our political discourse.

I’m under no delusion that I can fix these large-scale problems, but for some reason I’m having fun learning about them anyways. I feel my best contribution at this point is to spread the word that there’s some interesting stuff to be learned here. The orthodoxies of our current economic system are far from the only way of organizing the resources available to us. Given the increasing severity of our environment’s deterioration, there’s no better time than now to start thinking creatively about what something better could look like.

If you’re interested in this topic and have any thoughts or suggestions that might be helpful in my academic journey, please don’t hesitate to reach out. I’d love some book recommendations either in support of or arguing against any of these ideas, or to discuss the topic with others who might be interested.

  1. Something I found out recently: the American economy was briefly converted to a planned economy during WWII when it became apparent that private companies couldn’t be trusted to manufacture the materials necessary for sustaining the war effort.