On central plannning and market socialism

Central planning and central management: not the same thing!

Photo by Marek Studzinski on Unsplash

Though socialist discourse often uses the terms central management and central planning interchangeably, I think that for Marxists it is worth reflecting on their differences. Centrally managed socialism is what Westerners often have in mind when they think of the USSR: a society in which every economic development is controlled by the state. Here, direct and active control is what matters, and anything short of that is understood as creeping laissez faire capitalism.

This, again, seems to be a distinctly Western perspective — and one encouraged by capitalists, who prefer to portray socialism as ubiquitous government intrusion. But all you have to do is see an old Soviet ruble to realize that even at its most radical, the USSR always had markets. This is because what they were really engaged in was not central management; it was central planning. The Soviets did not let markets dictate economic outcomes, but they would use markets to accomplish narrow objectives, EG to track demand for certain goods.

That, I would argue, is the key distinction between capitalism, market socialism, and a command economy. Capitalism, by default, allows markets to dictate economic outcomes; market socialism uses markets insofar as they create certain planned outcomes; and command economies, properly so-called, would not use markets at all.

To appreciate how market socialism might work, let’s look at a thought experiment I’ve been toying around with for a couple weeks. Imagine an economy defined by six key features: