{"id":36173,"date":"2019-10-31T22:10:01","date_gmt":"2019-10-31T19:10:01","guid":{"rendered":"https:\/\/prohoster.info\/blog\/plan-vernulsya-v-ekonomiku\/"},"modified":"2019-10-31T22:10:01","modified_gmt":"2019-10-31T19:10:01","slug":"plan-vernulsya-v-ekonomiku","status":"publish","type":"post","link":"https:\/\/prohoster.info\/en\/blog\/news\/plan-vernulsya-v-ekonomiku","title":{"rendered":"The plan has returned to the economy","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

Big data has created new opportunities for a post-capitalist future. However, to take advantage of them, our democracy needs to evolve.<\/p>\n

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When the USSR collapsed, the issue of economic planning seemed resolved once and for all. In the battle between the market and planning, the market emerged victorious. Thirty years after the fall of the Berlin Wall, the verdict is no longer so clear-cut. Academic and political debates about economic planning are gaining momentum worldwide.<\/p>\n

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From the translator: technologies are changing lives; even some previously unshakeable economic tenets may fall. Here\u2019s a brief note on why economic planning is back in the conversation.<\/em><\/p>\n

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Average reading time: 5 minutes<\/em><\/p>\n

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There are three reasons for this unexpected resurgence. First, the Great Recession of 2008. This crisis not only revealed the irrationality of markets once again, but efforts to contain it manifested in large-scale government intervention, both financial and regulatory. In the post-2008 world, the triumph of the 'free and clean' market mechanism looks less definitive.<\/p>\n

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Second, the ecological crisis. When it comes to sustainable development, many think of planning but call it by another name. Nowadays, experts are more likely to refer to 'scenarios' in ecology, leading to a future without hydrocarbons. In discussions surrounding the 'Green New Deal,' which gained traction after Alexandria Ocasio-Cortez's support, the term 'planning' is rarely mentioned. However, the idea of subordinating production decisions and investments to long-term goals, rather than profit, is already in play. This is the foundation of economic planning.<\/p>\n

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The third reason is the development of information technology. Historically, planning forms faced the so-called 'information problem.' Socialist regimes of the 20th century attempted to replace price signals of supply and demand with preliminary planning. This was supposed to lead to a more rational allocation of resources (labor, natural resources) and, consequently, make the economy less susceptible to crises and unemployment. Among other things, this required the ability to predict in advance which needs needed to be satisfied and transmit this data to production units.<\/p>\n

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In the 20th century, preliminary planning definitely failed. What consumers want and how much they want of it \u2014 these two questions were not addressed effectively within the plan. Collecting the necessary data to coordinate economic activity turned out to be impossible. To develop a plan, information needed to be gathered at the macroeconomic level, while at the same time confronting the inevitable uncertainties in production and changes in consumer preferences. Furthermore, this had to be done promptly. Distortions in expressing needs and the inertia of the production apparatus led the system into a deadlock.<\/p>\n

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One of the most important questions of the 21st century: do algorithms and big data change the nature of this problem?A revolution in big data could revive planned economies<\/a><\/noindex>, states a column in the Financial Times in September 2017. Digital platforms are a powerful tool for centralizing and managing information. Unlike what happened in the USSR, this centralization is not led by individuals with their limited cognitive abilities, leading to mistakes and corruption. It is led by algorithms.<\/p>\n

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Amazon knows a lot about consumer preferences in various sectors. Big data allows for the combination of macroeconomic (or quantitative) coordination with microeconomic (or qualitative). Platforms can collect vast amounts of information instantly, while simultaneously tracking individual preferences. This is something the Soviet Gosplan could never achieve.<\/p>\n

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In recent decades, enterprise resource planning (ERP) software has become a primary management tool in both the industrial sector and the services industry. Powerful ERPs provide a comprehensive view of the ecosystem in which companies operate, in real-time. This significantly enhances management and transformation capabilities.
\nWalmart uses the HANA software suite as a catalyst for innovation. Data obtained from 245 million customers at a rate of one million transactions per hour, from 17,500 suppliers based on the companies' internal activities, as well as external data affecting the business (weather, social media sentiment, economic indicators) \u2014 analytics extract solutions for the challenges facing the company from this raw data.<\/p>\n

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Nonetheless, algorithms can very well be socialists. Is it possible that Amazon, Google, or Germany's Industry 4.0 program are preparing for a post-capitalist economic future? This argument is developed by Lee Phillips and Mikhail Rozhkov in their recent book People\u2019s Republic of Walmart<\/a><\/noindex>. Alibaba's boss Jack Ma took the idea very seriously<\/a><\/noindex>:<\/p>\n

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Over the last 100 years, we've seen that the market economy is the best system, but in my opinion, significant shifts have occurred over the last three decades, and planned economies are gaining momentum. Why? Because with access to all kinds of data, we can now see the invisible hand of the market.<\/p><\/blockquote>\n

Planning is clearly not merely an economic issue. It is political. It requires taking control of critical production decisions that will affect all areas of public life, and the relationship between society and nature. Consequently, this means a deepening of democracy.<\/p>\n

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In the 20th century, economic planning required authoritarian political structures. In the USSR, the bureaucracy of Gosplan determined the quality and quantity of goods to be produced, that is, which needs to satisfy and which not. This was done top-down. However, this connection between authoritarianism and planning is not inevitable. After all, capitalism also generates political authoritarianism, as evidenced by the rise of right-wing populism in governments.<\/p>\n

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Now is the time to showcase creativity in the development of power institutions to combine democratic control over the economy with individual liberation from consumption. Economic planning should be bottom-up. There have been many experiments with 'cooperative' or 'deliberative' democracy over the past twenty years. However, to this day, focus groups, citizens' juries, participatory budgets, or consensus conferences are not used to influence production decisions.<\/p>\n

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French philosopher Dominique Bourg advocates for an Assembly of the Future. Through regulation, it can be responsible for medium- and long-term public projects, for example, those addressing climate change mitigation and adaptation. The Assembly should have the authority to make decisions about economic activity. Modern institutions of representative democracy will remain but will be enhanced to meet the challenges of the 21st century.<\/p>\n

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The goal is to overcome economic crises and environmental degradation. Democratic economic planning is a tool for restoring collective action and, over time, achieving a new form of independence.<\/p>\n

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With the support of the Telegram channel Politeconomics<\/a><\/noindex><\/em><\/p>\n

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Plan or market?<\/h2>\n