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Re-Envisioning the Command Economy



The collapse of the Soviet Union in 1991 marked the end of the Cold War and lifted previous restrictions for capitalist nations, allowing them to shift focus from ideological conflicts with their communist adversary and instead address their own issues. If the United States and other developed capitalist nations had taken advantage of this opportunity to establish an international economic and political system based on principles such as fair trade agreements that support development in emerging countries, the world would have greatly benefited. Instead, the developed countries used this opportunity to create a global trade regime that primarily served their own corporate and financial interests, at the expense of the poorest nations in the Third World.


It is ironic that three decades after the fall of the Soviet Union, economist Joseph Stiglitz had to concede in a 2019 article published in The Guardian: “…we need to dismiss the view that because the US won the Cold War, America's economic system had triumphed. But it was not so much that free-market capitalism had demonstrated its superiority but that Communism had failed”. Joseph Stiglitz's aforementioned article, titled 'Neoliberalism must be pronounced dead and buried. Where next?', served as a virtual obituary for the ideology, as it proclaims its demise. In the article, Stiglitz declares, “the neoliberal experiment - lower taxes on the rich, deregulation of labour and product markets, financialization, and globalisation - has been a spectacular failure”. The 2008 financial crisis exposed the shortcomings of America's position as a global economic leader, damaging its soft power in the process. It is now widely recognized that the American capitalist system benefits only a small elite, leaving a majority of citizens in poverty.


If both communism and capitalism have been shown to be ineffective, the question arises: What kind of economic system is most beneficial for human well-being?


Efforts are being made within progressive capitalist circles to find alternatives to the centre-right economic paradigm of neoliberalism within the framework of capitalism. Different capitalist models such as far-right nationalism, centre-left reformism, and progressive capitalism are being reevaluated to determine if they can produce better outcomes than neoliberalism. However, of these alternatives, only the 'progressive capitalism' model remains relevant today, as the other two models remain tied to ideologies that have, or should have, been discarded. For instance, the centre-left, which tries to give neoliberalism a human face, attempts to update the policies of the 20th century like those of Bill Clinton and Tony Blair for the 21st century, only making minor revisions to the current modes of financialization and globalization. At the extreme end, the clique of nationalist-right-wingers represented by Donald Trump subscribed to a fascist-like ideology that blamed immigrants and foreigners for all of the US's problems. These neo-fascist cliques inflict on humankind the kind of evil that goes far beyond what has hitherto been perpetrated by the neoliberal economic agenda.


The 'progressive capitalist' camp advocates for a new interpretation of Keynes's ideas, maintaining that the state needs to have a larger role in the economy in order to achieve both economic growth and social equality. The progressive capitalists are merely seeking an alternative to American-style capitalism by examining the various forms of democratic market economies like the social democracies of Sweden and Norway, which appear to them to be achieving faster economic growth and better living standards for their citizens.


However, social democracy represents an insufficiently radical solution to the problems of modern capitalist societies. It is unlikely that the revised Keynesian ideas would ever be allowed to be implemented by the powerful private interests who are completely opposed to the idea of Keynesian-style state intervention in capitalist market economies.


Therefore, there is a need to go beyond Neo-Keynesianism and search for another alternative economic model that establishes a fundamentally different economic agenda. The ideal future direction for economics could be to completely abandon the market economy model and create a technologically advanced version of a centrally-planned, command economy model. It is possible to construct a democratically planned economy based on modern computer technology - it would be both more economically stable and morally superior to free market economies. In a command economy model, a central agency (the government), instead of the free market, controls the means of production. The 'cyber command economy' model involves creating centralized, non-market-directed economic plans that aim to balance the physical quantities of available inputs with desired outputs to decide on investment and resource allocation in the economy.


Even though the command economy model is often associated with Soviet-style communism, it does not necessarily have to be linked solely to extreme-left ideologies. In current American-style capitalism, a small group of financial capitalists and corporations exerts a level of control over their economy and government that exceeds the influence that the communist bureaucracy ever had on the Soviet economy. In reality, market economies often have a much higher degree of top-down control (by the power elite) than the general public realizes. Bernie Sanders sarcastically points out that in many ways, America is a socialist country, but the issue is that it has socialism only for the wealthy and rugged individualism for the poor. For example, the financial responsibility of paying Walmart workers is passed on to the public because the government provides Walmart workers with Medicare and food stamps, while the wealthiest family in America (the Walton family, which owns Walmart) becomes richer by not paying its workers a living wage. The former command economies of the Soviet era faced persistent problems with supply. The crude 'material balance' method used in Soviet-type planning (STP) caused inefficiency and led to a strong bias towards underproduction, resulting in a shortage of consumer goods. Neo-Marxist economist Alec Nove in his book 'The Economics of Feasible Socialism' estimated that without the advanced computing technology available today, creating a comprehensive and balanced plan for Ukraine alone would have required the work of the entire world's population over a 10 million-year period.




However, the difficulties that plagued Soviet-type planning can now be overcome with advancements in information and communications technology.


Nevertheless, the same technological advancements that could improve the command economy model also present a risk of abuse by corporate interests in capitalist economies. Large technology corporations like Amazon, Google, and Facebook gather huge amounts of data on individuals, known as Big Data, and use Artificial Intelligence (AI) to process it. They then misuse the information to increase their own market power at the expense of customers. These companies can use this data to engage in price discrimination by determining how much each customer values different products and is willing to pay for them. As a result, those who value a product more or have fewer options are charged more. If used correctly, the information obtained from Big Data could provide many positive opportunities such as customized healthcare to meet the diverse needs of people. Instead, AI and Big Data are being utilized by large technology companies to capture a larger portion of the value that society produces, leaving most people worse off.


Despite these challenges, the advanced computational infrastructure available today can assist in processing and interpreting vast amounts of data and statistics using mathematical optimization methods, computer algorithms, and artificial intelligence, to achieve optimal outcomes from economic planning. It has the potential to make the modern command economy model highly efficient. For example, Google is able to solve systems of linear equations that are far larger than those required for large-scale economic planning. In fact, modern computational planning can provide an alternative to the traditional market system.


The command economies enabled by computational planning would be vastly different from their earlier versions, therefore it would be appropriate to create new terminology to reflect their enhanced capabilities. They could be referred to as 'cyber command economies' or 'command economies on steroids'.


The command economy model was a 20th-century concept that required 21st-century computer technology to succeed. Although we now have the technology to support an efficient command economy, the current oppressive political climate is preventing the idea of a 'cyber command economy' from becoming a reality. However, any transition from capitalism to a 'cyber command economy' would follow a similar path as the transition from feudalism to capitalism - it would happen gradually and not all at once. We are already seeing some aspects of the 'cyber command economy' emerge within capitalism, but capitalist features still predominate, just as early capitalism still featured remnants of feudalism. Eventually, capitalist features will fade away and the vision of the 'cyber command economy' will be realized.


This article was written by Sharmista (Sherry) Lakkineni.



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tarastrunov
tarastrunov
03 feb 2023

Computerisation might make brute processing simpler, but it doesn't eliminate the two main issues with planned economies: bad policy design and cascading single-point failures. On the first point, a computer ultimately behaves as it is programmed to behave. It sees what it is told to see. This still requires that the planners in charge of the economic programming be effectively omniscient, as anything they fail to account for in their economic calculations (or deliberately include/exclude on ideological grounds) will be transposed to the software. Many of the issues of the Soviet planned economy arose specifically because the people in charge had unrealistic expectations and incomplete information. Alleviating that requires local representatives willing to speak truth to power about planning failures, and…

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