ABSTRACT
It is not the purpose of this booklet to describe the administrative machinery, still less the economic theory, of Soviet planning. It must suffice to indicate in very broad outline a few of the main characteristics of Soviet economy in which it stands in most marked contrast with other countries. The first essential difference is that in the U.S.S.R. the land and the capital of the country are owned by the State, that in consequence (with quite unimportant exceptions) no category of income exists other than work-incomes (wages and salaries), and that industry is conducted by managers and directing boards appointed by the State (in collaboration, as we have seen, with the trade unions). A second essential difference is that the key decisions on which the general movement of the economic system depends are co-ordinated and controlled in a general economic plan. These decisions concern the output-programmes of each branch of industry, including output-programmes for the main products for which that branch of industry is responsible. This involves a centralised decision as to what the volume of employment and the intensity of utilisation of existing plant and equipment shall be, and how the available resources of man-power and materials are to be distributed between different industries; and this in turn includes the crucial decision, on which so much depends, about the relative scales of output of the group of industries producing consumption goods and the group of industries producing capital or investment goods. Evidently such a system will be greatly different from the laissez-faire economy which economists have studied up till now and on the basis of which they 79have constructed their economic theories. True, there exist islands of planning even inside capitalist economies, especially in this age of monopoly with its combines and cartels; and sometimes the State takes a hand in this. But this “planning” applies only to certain more or less isolated territories, and it is conducted by bodies concerned with the sectional interest, generally with maximising the monopoly-profit, of the isolated group. Even when the State takes a hand, this is generally (apart from war-time) to reinforce the monopoly-powers of sectional groups, to fix minimum prices and to restrict output rather than to expand it. At any rate, the links between these sectional groups, however large they may be—the interstitial adjustments of the system—are entirely through the market, via the movements of prices on the market, whereas in Soviet economy the links between industries and the various parts of the economic system are directly embodied in a single composite decision, which constitutes the plan. The plan is, in fact, the co-ordinating mechanism of the economy; and the co-ordination is a direct one between the output-programmes of the various industries. Clearly, if such co-ordination worked with perfect efficiency, there would be no occasion for the costly fluctuations and maladjust-ments that periodically show themselves as crises in the economic system with which we are familiar. Such efficiency can never, of course, be perfect: it is subject to the limitations of knowledge and of experience and of human efficiency that prevail at any place and time. Moreover, while such co-ordination is capable of eliminating most of the uncertainty which paralyses an individualist and competitive world, there will always be certain elements which can never be completely foreseen (for example, the weather and the harvest); and the vagaries of such factors are bound to throw out-of-joint the most wisely conceived Plan.
