> I have to wonder if more balance with this would result in better outcomes, or worse.
Iirc that is exactly the problem that the Soviets claimed they solved with state-owned and centrally planned production, no more boom/bust cycle. And early on it did have some in the West worried about it. Turned out not to work, probably b/c you can't stablize an inherently unstable complex system.
Fundamentally centralized control has an information problem. Decisions about how to allocate resources require complex information that mostly exists at the edge, but communicating all of that back to the central controller would just overwhelm them. This is why markets work so well, the decisions about how to allocate the resources are pushed down to where the information is. But this is also why market are bad at solving systematic issues, in that case the information is above where the decisions are being made. You can see where there are tradeoffs and cases where one system works better than the other, so anybody who issues a blanket statement like "markets are always the best solution" is not operating with a complete picture of the world.
I seem to remember that due to political infighting and ass-covering, they never really tried it. There were competing proposals that they hybridized in broken ways, and nobody in power wanted to commit to have their name on something that might fail or become unpopular.
I recommend the excellent novelization of the period “Red Plenty”. My understanding is that it stays fairly true to the history.
> I seem to remember that due to political infighting and ass-covering, they never really tried it.
What do you mean by "never really tried it"? This was a state that set production quotas, dictated prices, and set priorities in 5 year intervals. What more could they have done? The fact that even a regime that was willing to starve and enslave its own people could not make a planned economy work, just shows the futility of the approach.
I think the commenter was referring to a supposedly accurate historical fiction book that describes how the system was never truly working in an honest fashion. I have a colleague that worked in optimization in the Soviet Union and he explained that factories would lie about their data in order to look better and essentially you'd have garbage in and garbage out for the models. So we don't know if the linear programming tools were truly broken or if it was because all the input data was corrupted. I think the book said the same thing.
Like you, I've become fairly suspicious of economic models that attempt to explain something complex and unstable like an economy. Equilibrium is an exception in the real world...not an inevitability and the caveats of that model are often discarded.
The point is not about the basic principles, but how these decisions were made. This is like being a higher up in a company making a call about something, which goes from placing the bet on the wrong horse, political infighting between different departments, up to decisions which are based on incentives that go counter to the well-being of the company. We are talking about humans with all their flaws.
Especially large corpos developed more and more similarities to how eastern bloc countries were operated, believe it or not. Very top down decision making (with all the problems), large bureaucracies, people who are employed but effectively don't do anything ("bullshit jobs" / David Graeber), company propaganda (all hail to the great company!), bothersome people getting "mistreated", and so on. I've experienced the eastern bloc from inside and I'm not sure whether I should laugh about or be terribly afraid of the things that are still to come.
Edit: Forgot one big thing: Metrics / quotas.
The other thing to keep in mind that "responsibilities" were split between members of the eastern bloc and the decisions who took over what that were often influenced by all kinds of things, just not what made most sense.
There was also huge trade embargo, CoCom, in place.
> The fact that even a regime that was willing to starve and enslave its own people could not make a planned economy work, just shows the futility of the approach.
I disagree with this way of thinking. A willingness to apply lots of cruelty to an attempt doesn’t make up for a lack of skill or capabilities. Cruelty is often a failure-mode, not a recipe for success.
>What do you mean by "never really tried it"? This was a state that set production quotas, dictated prices, and set priorities in 5 year intervals. What more could they have done?
Obviously: not have different political factions and concerns from individual officials to "look good" affect the content of those plans, nor have the same factions and concerns distort the reports about the state of production and the results of said plans.
And instead to try what they purported to be doing but didn't do: plan solely based on optimization concerns, and get back non purposefully-distorted reports so that they can re-plan and course-correct as needed.
Btw, those "five year plans" are not what people think, which usually involves a mental picture of someone calculating the amount of desired production of X or Y product for the next five years and setting some prices in stone.
They rather were sets of goals and associated organized efforts on multiple fronts to meet them. Like "let's industrialize that province" or "let's build transport infrastructure", etc.
Like current multi-year "initiatives" or often still call "plans" like "The Biden- Harris Plan to Revitalize American Manufacturing and Secure Critical Supply Chains in 2022"
I think it's much simpler than that. Instead of factories self-reporting, you have rivals report on each other, as well as client and suppliers report on what went in and out of the factory in a given time period.
It wouldn't be a perfect system, but like capitalism the competition would force everyone into relative honesty. It is pretty weird they didn't do that at the time though, considering the KGB kinda had that sort of setup with respect to everyone individually being required to snitch on each other.
The best critique I heard about the central planning system is that it’s just that, planning.
You might be able to plan, but what about the advancements that nobody would plan for.
“Don’t build a faster horse”
Would a communist system ever advance beyond the planned scientific and enginnering goals? Is there someone thinking “what people need doesn’t exist?” and actually direct resources to it?
That’s the beauty of the the free market system - you can come up with a crazy idea and just do it. You often fail, but if you succeed, the risk you took is rewarded.
I can’t ever see a communist system coming up with an iPhone. They might copy an existing product, but that’s not innovation.
> I can’t ever see a communist system coming up with an iPhone.
Soviets invented a lot of things, in terms of aviation, computers, celestial navigation in intercontinental missiles. There was also an article, which I read recently but failed to find it now, about how they revolutionized mechanical watches, and came out with their own quartz movements, without copying anyone.
Oh lastly, they did the "iPhone of sea going vehicles", the erkanoplan, and VLIW computing which led us to Itanium at some point [0].
Soviet citizens were always at the mercy of central planners deciding if they got to enjoy any innovations (mostly aped from the west). Toasters only started production in 1967 and were mostly unobtanium for the next 25 years.
While the title is provocatively titled, "How the Soviets revolutionized wristwatches", it seems to be more of a play on words around the Soviet revolution. The article is about how they bought watchmaking equipment from the US, looted machinery from Germany after WWII, and copied swiss designs.
Soviet watches were workhorses, but not revolutionary at all.
>You might be able to plan, but what about the advancements that nobody would plan for
You obviously adjust the plan? Planning was never supposed to be some static system (and the "5 year plans" are not about market planning, they were more like "5 year initiatives to improve this or that aspect", e.g. "develop more tank making capacity", or "take a man to the moon").
>I can’t ever see a communist system coming up with an iPhone.
Iirc that is exactly the problem that the Soviets claimed they solved with state-owned and centrally planned production, no more boom/bust cycle. And early on it did have some in the West worried about it. Turned out not to work, probably b/c you can't stablize an inherently unstable complex system.