The Merits and the Disadvantages of Central Planning

Of course the subsequent collapse of the Soviet Union and the communist regimes of Central and Eastern Europe gives a different perspective from when central planning seemed to give the Soviet Union the economic and military capacity to take on the United States during the Cold War. After all the centrally planned Soviet economy had allowed the Soviet Union to beat the Germans during the Second World War. By the early 1960s the Soviet leader Khrushev was boasting that central planning would allow the Soviet Union and its communist allies to economically out produce the United States. Before the Soviet Union entered into its unplanned and also equally unexpected economic and political terminal decline debates were centred around the completeness, capacities, and the alleged shortcomings of the central planning systems in use at that point in time. There were arguments and counter arguments as to how economically developed and prosperous communist states with centrally planned economies would become if all their plans were completed successfully. Central planning of the economy was presented as a means by which the capitalist economic cycles of boom and bust would be over come as demand and supply would always be effectively controlled. Discussions were between the supporters and the detractors of the Stalinist era central planning systems in use in the Soviet Union and the communist states of Central and Eastern Europe. The supporters of Stalinist style central planning would often use official statistics from the Soviet Union and the communist regimes of Central and Eastern Europe to back up their arguments, yet such data was of doubtful reliability or accuracy.

Central planning was not just advocated by the Soviet Union and the other communist regimes of Central and Eastern Europe. Elements of economic central planning had been put forward and used by the majority of the combatant European governments during the course of the First World War, mainly as a result of pragmatic needs instead of ideological beliefs. Some European governments had previously shown more interest in economic planning than others had, as did the American and Japanese governments further afield. For instance the Prussian and later the German government had intervened in the country’s economy to increase the speed as well as the level of industrialisation, whilst the British government had not intervened unless absolutely necessary and to the minimal degree. Government intervention in the German economy had arguably been very successful as the country had greater industrial capacity than Britain had by 1914. Britain and France were forced into using central planning techniques as well as American supplies to continue fighting in the First World War, and without effective economic planning Germany would have lost the war much sooner. In the end German central planning could not over come the adverse consequences of fighting a war of attrition upon two fronts, whilst the highly effective Royal Navy blockade literally starved the Germans into submission.