What Would a Socialist Planned Economy Look Like?

As the current crisis of capitalism unfolds a new and potentially decisive layer of workers and youth will be looking for a socialist way forward. Naturally, this way forward raises crucial questions such as; how a socialist economy would work? How would it solve the problems of mass poverty and hunger? How could it put end to the environmental destruction of the planet? Below is a piece written for the University of Portsmouth debating society which attempts to address some of these issues albeit in a very broad fashion. All comments and criticisms are welcome.   

How does Socialism create and maintain jobs and keep the economy functioning effectively and growing?

The first thing that would happen under socialism is that unemployment would be eliminated overnight. Even in 2000, during a boom period, the UK had 2 million people unemployed. The cost of this is estimated at £5,000 per family per year in terms of lost production and benefit claims. Under socialism everyone would be guaranteed a job by reducing the working week without loss of pay. The reason this doesn’t happen under capitalism (or at least neo-liberal capitalism) is because getting fewer people to do more work is a fantastic way to make profit! However, as Tony Benn said, if full employment can be used to fight Hitler why can’t it be used to feed people? Jobs would be created for the benefit of society as a whole, not for the bank balances of the rich.

As for allowing the economy to grow; even in a bureaucratically deformed workers’ state with no democracy such the USSR and other planned economies they had production levels that were for decades on a par and often better than in the West. This phenomenon would be magnified in a true socialist society with the active engagement of the population and the ‘oxygen’ of workers’ democracy.

Besides, as we’ve all seen recently, capitalism by no means guarantees economic growth indefinitely. What is happening at the present time is precisely what Karl Marx analysed years before, a classic case of over-production. Products such as cars were produced for people to buy but we could no long afford to buy back the things we had produced. And who suffers as a result of this system? Not the capitalists who caused this crisis but the ordinary workers who one day were in a job (so long as it made profit for the bosses) and the next on the scrapheap! This anarchy and unjust ‘employment strategy’ would be consigned to the dustbin of history.

How does it invest in research and development, and find new alternatives for industry, for example switching from dirty fuel such as coal to clean and renewable energy such as wind or hydroelectric power?
How does it create innovation and entrepreneurs, and inspire young people to work hard and achieve?

Under capitalism, the majority of people (i.e. the working class) are coerced to work, we literally have no choice but to otherwise we starve! We are compelled by the logic of capitalism to sell our labour and, as such, capitalism calls the shots, not the people who produce the wealth in society. Under socialism, people would of course be expected to work, but for very different reasons. Instead, workers would be encouraged to work for the benefit of society and not just reasons for of survival. Despite the arguments of conservatives, socialists believe that humanity is basically good but is shaped by the society it lives in. Therefore, I believe that people that believe in a society that works for them, and is, ultimately, run by them will make sure it works. As a socialist society is run by the working class it is in our interests to make sure it works. Every effort will be made to make people’s lives easier and it stands to reason that innovation will still be needed under socialism. A society can never be too efficient.

Again, under capitalism, innovation and entrepreneurship reflect class interests and is therefore only utilised to make profit and not for the overall good of society. The technology exists for everyone to drive around in environmentally-friendly cars but capitalism will not allow this to happen on a mass scale because it will cut into its profits. Production would be based on human need not personal greed.

On the subject of the environment: at the present time science also reflects the interests of the ruling class. What better example of capitalism caring for its own ends rather than the future of the planet and of working people than the Vestas wind turbine factory, where, rather than nationalise the company to save it from going under (although, absurdly, Vestas continues to make a profit) the factory was allowed to shut and 600 workers ended up on the dole. Research and development are based on creating the greatest profit for private owners and shareholders.

We argue for all industry, including energy, to be nationalised under workers’ control who could then draw up a plan of production to develop a sustainable and renewable economy that can save our planet from destruction. The technology exists now for our environment to be cleaned up but this does not fit in with the outlook of capitalism. Any workers that became surplus to requirements as unsustainable industries die out would have the opportunity to retrain in the new industry (something that the government should have done with miners who worked in pits whose reserves were GENUINELY exhausted).

Where does it get its money?
How does it continue to invest in services, industries, secure economic growth and job creation?
I know that you will say tax the rich, but there’s only so much milk you can get from a cow! Once you have taxed the rich into poverty, and hence created a universally poor society, where will you then get money?

There are a number of ways in which wealth will be created under socialism. Firstly, you are correct in saying we will take the wealth of the rich away from them. Taxing the rich would be one of our primary demands now but ultimately, in a socialist society, the wealth of the rich would be expropriated from them with compensation only paid on the basis of proven need. All large industry would be nationalised with the same principle of compensation applied. This would be more than a fair enough deal for the capitalists who rob the working class of the wealth we create on a daily basis!

Secondly, luxury expenditure for the rich will be ended. Capitalist experts are always keen to point out that ending the wealth of the rich will not solve the problems of society, because, however obscenely well off they are, there are not enough of them to make a big difference. Nevertheless, the rich do consume 5% of national income which amounts to £40 billion a year in Britain. This is a sum that could begin the process of transforming the NHS.

Thirdly, arms spending would be abandoned. On a world scale the waste of resources on arms is vast, reaching nearly $1 trillion each year at the end of the cold war – approximately $1,000 a year for every family on the planet. For socialism to work it would have to be an international system and, therefore, in time, the need for arms expenditure would become obsolete. Workers in the arms industry would be re-employed in other, socially useful, industries.

Finally, the obscene waste that occurs under capitalism (in resources and employment) will be abolished and a democratically planned economy will take its place. The world is currently dominated by a handful of multinational corporations who duplicate expenditure in research and development, spend unnecessary vast sums on advertising and design products with planned obsolescence. For example, rival drug companies spend billions on developing varieties of pain killers with marginally different effectiveness. There is also the disgraceful wastage of food that occurs due to overproduction or, even more shamefully, to manipulate prices on the world market.

Given these factors and the huge improvement in resources available and with the profit motive eventually abolished, a socialist government would invest in socially useful production. Commodities would exist for people to buy (planned and monitored democratically by consumer unions) and any money gained would be re-invested into society. Workers would be paid more than well enough to afford any commodity and would stimulate the economy accordingly. The notion of overproduction would become an absurdity. Trade relations between countries would be based on mutual co-operation (for example, in the USSR different countries specialised on the production of certain things but were traded equally).

The crucial difference is that firms will be operating to new rules. Wage rates, working conditions and prices will no longer be set by multi-national firms but by democratic government. Where the economy is unable to produce sufficient commodities to meet demand then a price mechanism and market could continue to operate. But with the profit motive removed many goods including basic foods, housing, fuel etc could be provided for free.

Lenin (in State and Revolution) and Trotsky (in The Revolution Betrayed) both argued that a state will be necessary during the transition from capitalism to communism. But as the planned economy develops it will be able to meet more and more of people’s wants until there is no need to ration and limit distribution and the state can wither away. They were writing in the early 20th century and today the distribution of such goods could be achieved far more efficiently than they can be retailed in shops, especially given recent developments in IT. What could be simpler than ordering free, publicly provided goods on the internet? Demand and future production needs could be monitored continuously and fed into the planning process.

Huge wealth is created under capitalism but is in the hands of a tiny minority, why on earth would we be in a state of poverty when this ratio is reversed and all the waste that accompanies capitalist society no longer exists? We are living under a system that impoverishes well over half the planet and the opponents of our ideas have the audacity to claim socialism would dump everyone into a perpetual state of poverty without any substantial arguments whatsoever! Far from being a society languishing in poverty, a socialist society would be a society of ‘superabundance’ . Capitalism is based on the fairy tale of the perfect market whereas a socialist planned economy deals with the realities of society and offers a way of providing for it.

This only touch’s the surface of the possibilities available to mankind if production was run by and in the interests of the majority rather than the minority. Of course, none of this would be possible without genuine democracy – where working people are involved at every stage of production and elected representatives receive no more than the workers they represent and are subject to recall at any stage.


2 Responses to “What Would a Socialist Planned Economy Look Like?”

  1. Dan Says:

    the working class creates the wealth in society? they obviously deserve to be respected and treated fairly, but people deserve to be paid significantly more for innovation and new ideas. we’ve established as humans a long time ago that brain power is more valuable than physical ability. smart people need an incentive to innovate. for example, europe’s best and brightest often move to the US in order to keep more of their money. basic ground rules are necessary, such as public health care and protection against corporate abuses, but at the end of the day, capitalism is the only system compatible with human nature. give too much power to the government, and watch the people in charge turn your socialist dream into a nightmare. at least people can be honest in being self-interested.

    • socialistpartyportsmouth Says:

      Hi Dan,

      Thanks for the comment. You’re right, under this system handing more power to the government will simply result in an authoritarian state, something no socialist would want. This is why we always link the demand for nationalisation/public ownership with the need for workers democracy. For example we call for public transport to be publically owned, but under the control of the workers. A system based on this principle, all contributing to a central economic plan, would ensure that no such dictatorial nightmare could happen.

      It is an interesting and often made criticism of the left that we are ‘against ambition’ or ‘self interest’ – we are calling for the total transformation of soceity to ensure the majority of people benefit from the system, it’s hard to imagine anything more ambitious than that! We would argue that yes, under capitalism people can be selfish, but that is because people are a product of the system they live under. To thrive under capitalism you not only need to be selfish, you need to be given the opportunity to exercise that selfishness, often through privilege of birth. Under a genuine meritocracy, where equal opportunity is a basic tenant of society, the need for selfishness would vanish. Furhermore we would say that only under a socialist system, where the waste of competition has vanished, can the smartest people in society fulfil their potential. For example scientists working for drug companies have their research dictated to by the market and the company’s need for profit. Under a socialist system these barriers to science would be removed providing the scientists with the oppotunity to conduct benefical research unhindered. The same would be true for artists, athletes and other skilled people.

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