Thu May 30, 2024
May 30, 2024

Before the Capitalist Catastrophe, the Solution is Socialist Economic Planning

Socialism means workers’ democracy and planned management of the economy. Only in a working-class democracy can the working class dominate and effectively rule

By Jeferson Choma

Rarely in history is the catastrophic and destructive potential of capitalism exposed as clearly as we witness it today. This is no exaggeration. The very heads of the system are saying that. In a simulation done last October, 65 million people would die over 18 months from the spread of a coronavirus. The exercise was conducted by several organizations, including the unsuspected World Economic Forum and the Bill and Melinda Gates Foundation. The last time humanity witnessed a catastrophe of this magnitude was in World War II (1939-1945).

As far as the economy is concerned, forecasts are for a fall in GDP of 18% in the European Union and 14% in the United States. The regional president of the St. Louis FED (US central bank,) James Bullard, estimates that the unemployment rate in the world’s biggest economic power will rise from 3% to more than 30%. These rates are similar to the great depression faced by the U.S. in the 1930s. In Brazil, the estimate is of up to 40 million unemployed.

Not by chance, many of those economists who professed until a few weeks ago the religious lessons of neoliberalism, today call for “a new Marshall Plan”. One of them is the secretary-general of the OECD (Organization for Economic Cooperation and Development), the Mexican Angel Gurria. It is clear that the upper floor class already knew what could happen. There was no shortage of warnings, but there was a lack of science, early planning to combat the virus, etc.

The social catastrophe that will hit the peoples of the planet is incalculable. The crisis that is upon humanity brings us only one certainty: the world, as we knew it, will no longer exist. The return to “normality” of our lives is something impossible to restore. In fact, it was this “normality” – that is, the general laws that rule the capitalist system, that led us to the pandemic of the new coronavirus and the greatest economic crisis since 1929 (which, by the way, was already showing signs long before the pandemic and was only accelerated by it).

Social barbarianism will ravage entire regions 

Unemployment, death, violence, ruin and social decomposition will take a quality leap, while capitalists will continue doing what they have always done: making money over the misfortune of millions. After all, the capital cannot stop. Goods need to circulate. Let it burn and die is the formula of accumulation. All this has already been said by odious figures such as Donald Trump, Bolsonaro, and several businessmen, saying that “the economy cannot stop” and that “many companies will enter bankruptcy”. As if a pandemic of such size would not, sooner or later, force the economy to stall. But the “economy” that these gentlemen are talking about is the “accumulation of capital” of some sectors. But the logic inculcated in the capitalists’ brains is foreign to science’s warnings about the lives of millions. Thus, workers can get sick and die. These are disposable pieces that can be replaced by even more disposable ones.

The current catastrophe also exposes the absurd irrationality of capitalism. How can a system that has endowed humanity with such a productive capacity not even produce enough gel alcohol to combat a pandemic threat announced since the end of last year? How can a system that has provided such a productive integration in the planet not be able to meet the current demand for ventilators for artificial respiration, necessary to treat the most serious cases of coronavirus? How can the most powerful country in the world not be able to perform enough tests for the disease and thus become the epicenter of the current pandemic? The anarchic character of capitalist production, caused by competition in the market, is revealed here, as we will explain below.

Capitalism is the empire of chaos and disorder at the service of profit. A machine for the permanent production of disasters, as Rosa Luxemburg suggested. This places socialism as a historical necessity; that is, a radical change in the mode of production and distribution. Either this will be the case, or mankind will move towards barbarism, engendered within the system itself.

A socialist economy requires the socialization of the means of production and centralized planning built democratically by producers and consumers. The advantages of a planned economy become clear in the face of the current chaos. Imagine such an economy in the face of the current situation. It would be possible to quickly allocate all its existing productive potential for the much-needed equipment manufacturing to combat the pandemic, the rapid and agile construction of ICU and hospital beds, ventilators, tests, and even resources for the financing of scientific research.

However, it is very likely that we would never see a pandemic like the current one [under socialism]. This is because the history of capitalism has shown us that part of the technological development of the 20th century points to a complex and contradictory situation, given the directly destructive potential generated by these advances. The origin of the current coronavirus, for example, is directly related to the commercial exploitation of nature and the ecological imbalance caused by policies fomented by the Chinese capitalist government, which created a large market for wild animals. Thus, a virus that had bats as a natural reservoir began to contaminate human beings from a market appropriation of millenary Chinese feeding habits, combined with the inequality of social development and rapid and chaotic urbanization. Imagine what could result in the annihilation of tropical forests, like the Amazon? How many new epidemics could the devastation cause?

The increase in the average temperature of the planet, mainly induced by the emission of greenhouse gases, will have terrible consequences for the emergence of new epidemics. Global warming should contribute to expanding the distribution area of four mosquito-borne viruses in Brazil: the Oropouche (OROV), Mayaro (MAYV), Rocio (ROCV) and the Saint Louis encephalitis virus (SLEV). This is the conclusion of a study conducted by Brazilian scientists, as can be seen here.

In the face of pandemics and global warming, a socialist society will need to take into account everything that affects the environment and the climate of the planet. In other words, it will need to simultaneously revolutionize the social relations of production and the productive forces, developing eco-technologies.

But what is economic planning, anyway? How would it work in a society of associated producers and what would be the differences with the current capitalist mode of production?

Planned economy vs. anarchy of capitalist production

In short, planning means the direct allocation of the resources required for the reproduction of life, including work. There are two forms of planning adopted by the most diverse human societies in the course of history: planning before actual production (ex-ante) and later planning (ex-post), which is made from an evaluation based on the results of what has been produced and played on the market. These two modes have very different internal logics and generate distinct laws of motion.

In capitalism, the anarchy of social production predominates, whose driving force is competition among capitalists. Therefore, there is an overproduction of goods. If they are sold, great. If not, they will be destroyed or rot, the company will go into crisis, close its doors and fire its employees. This represents the waste of an enormous amount of work and wealth in useless productions. The capitalists stop producing items that are fundamental to society, such as the equipment needed to combat the coronavirus, simply because they make little or no profit. But in the capitalist society, there are cars, superfluous trinkets of all kinds, luxury objects for a few, military technology; but there is lack of hospitals, investment in science for human well-being, medicines, houses, sanitation… In 2016, the United Nations Food and Agriculture Organization (FAO) published a study showing that the world production of food is enough to supply the demand of the 7.3 billion people who inhabit the Earth. Despite this, approximately one in nine (1/9) of these people still lives the reality of hunger.

The allocation of resources in a society ruled by market laws acts after production, to neutralize or correct previous decisions taken in a fragmented and anarchic way in different companies and factories. This is because the real needs of society are not taken into account; furthermore, they are even unknown. It is up to the market to reveal them later through the expenditures of “effective demand”.

Contradictorily, capitalism has developed technical coordination, of interdependence and integration that denies private work, isolated in a factory. Throughout its history, this coordination of production has involved many production units and branches of the industry until it reached the global scale of integration of the production chain among many nations. The problem is that these decisions made by an individual allocation firm, however rational and even if based on scientific methods, are ruled by purely market laws. There is, therefore, a conflict between the rational planning of the production of a large factory or individual firm and the general anarchy of capitalist production. In other words, the partial rationality of production units contradicts the global irrationality of capitalist production.

In socialism that would not happen. The proletariat, which becomes the dominant class thanks to the expropriation of capitalists, controls production and consumption according to the needs of the population and the capacity of the economy. This is what we call economic planning.

Lenin already stressed that this would be the most important task in Russia after the October 1917 revolution. “The transformation of the entire economic mechanism of the state into a single great machine, an economic organism that works in such a way that hundreds of millions of people are directed by a single plan – this is the gigantic organizational task that has fallen on our shoulders” (Seventh Extraordinary Congress of the PCR, March 1918).

Socialism starts from the socialization of production as a condition for overcoming social and economic underdevelopment of the vast majority of the population. By not aiming at profits, planning is carried out before the effective production of goods or services, because it must take into account the needs of society. Production is thus organized to satisfy it.

Obviously, we do not intend here to present a formula or a manual on how a planned economy should work in a society of associated producers, because the concrete organization of production will develop from concrete objective conditions set in reality. But we present some general ideas, the result of some historical experiences and of a long debate that has moved Marxist thinkers.

The planning of the economy needs to include the workers who produce the goods and services offered to society. For this reason, it needs decision-making bodies that act at the plant level, at the municipal, regional and national levels, which we will call councils.

In them, the workers themselves would define the priority needs to be met through guaranteed resource allocation (free distribution, etc.,) the volumes of resources intended for population growth and its age composition; the production of non-essential goods and services; pricing policies, technical choices to be used in production, and the working hours required to carry out the plan. All this would point to a general economic plan established based on the choices of the majority.

The debate on economic planning should start at the plant scale, move to the municipal and regional level, and finally be defined in a national producers’ council. Democratically elected delegates from the plant base would participate in this latter body.

In a planned economy it is important to organize self-managed bodies, such as a congress of workers’ councils of industries of food, energy, communication, electronic production, transportation, etc., which can determine the work shift from the need of the approved economic plan, design the creation of additional production units, look for the best technical means available, etc. All these bodies would also play a role in the permanent surveillance by the workers on the elaboration and the fulfillment of this plan.

To meet the goals of the plan, the total of what should be produced, such as components for mobile phones, leather, cotton, steel, raw materials for medicines, logistics for the construction of hospitals, etc., would be divided among the various production plants. This is already done by any capitalist company nowadays through the administrators. But in a planned economy, it would be the producers themselves who would discuss (and no manager or shareholder would be better than them) the best way to allocate resources for the production of certain products.

In the service sector, the same operating structure can be adopted in hospitals, schools, transport, supply network, communication, etc. For example, a health workers’ council, elected by the workers themselves, could manage hospitals and allocate resources, consulting other citizens, and establish a plan based on society’s concrete needs.

Many of these decisions, however, especially those of goods and consumption for the public, would need to be determined in prior agreements between worker-producer and consumer councils, all democratically elected. In capitalism, just like the producer, the consumer is totally susceptible and at the mercy of what is produced from the needs of the market. In a planned economy, he is an active subject. As the producer, he is part of the planning process. In this way, not only would the quality of what is produced be guaranteed, but many products could be tested beforehand before they reach the population.

Obviously, such decisions would be increasingly fully effective with the necessary general elevation of the cultural standard of the entire population and the most complete access to information. A society of associated producers can only prosper in a fully democratic environment.

The current technological development is a tool of utmost importance to be applied in the reduction of working hours and the full dissemination of information. It would increasingly allow the full participation of the population in the political and economic decisions of this new society and would facilitate the planning itself, in the surveillance of the execution of the goals set. Imagine, for example, the use of the Internet as a tool for the flow of information regarding production. It would not only facilitate the maximum dissemination of proposals, to consult the availability of resources, expose goals, etc., but it would also provide real-time monitoring of the production process, which would allow a large margin of safety to ensure the right initial data provisions for planning, correct inefficiencies and waste of resources. Imagine Industry 4.0 used for the welfare of mankind. A technology that integrates the automation and data exchange of Cyber-physical Systems, the Internet, the Internet of Thing with Cloud Computing.

Like this, the current technological development created by capitalism would already allow for the drastic reduction of the work shift, almost the total liberation from hard work, and the inclusion of all those who are unemployed in the productive process. But in capitalism, things do not work that way. Technology serves to create unemployment, reducing the capitalists’ job and production costs, see the generalized employment of applications that result in labor precariousness. Socialism would totally reverse this logic. It would be a society of full employment.

The active participation of the society in the decision-making process and direct administration of the society’s economy would gradually dissolve the social division of labor, between managers and administrators, between bosses and managers. The abolition of private ownership of the means of production does not in itself guarantee that everyone will become co-owners of everything. For everyone to be equal, the differences regarding the power to control what will be done with the resources must be abolished.

As stated above, planning must take into account everything that affects the environment and the climate of the planet. All those processes that may pollute and affect the oceans, cause global warming -such as the emission of greenhouse gases- or destroy global bases of ecological balance -such as forests- need to be discussed democratically. Global warming is a reality caused by capitalism since the Industrial Revolution. Not by chance many scientists already use the term Capitalocene to describe a more recent period in the history of Planet Earth. A geological period that, by the way, will last much longer than the very social system that created it. Even with the overcoming of capitalism, future generations will still have to deal with the consequences of climate change. The socialist society will have the task of building ecological productive forces to restore the metabolic balance between society and nature. This is very distinct from the blind and bureaucratic Soviet industrialization that resulted in the Chernobyl disaster.

Socialism, which intends to be a society superior to capitalism, must utilize all the conquests of the old class society; in the first place, the worldwide character of production. One cannot speak of a socialist society that is not richer, freer and more developed than the capitalist one if not built it at a world scale.

What would be the motivations in a planned economy?

Most bourgeois liberal economists and advocates of capitalism argue that such a society would not be possible because it would weaken what is, for them, the main motivator of production and innovation. That is the possibility of accumulating money and buying more goods. We know that this is nothing more than a stupid daydream since the immense majority does not even have the minimum conditions to survive, and even less to accumulate goods and merchandise. But for the liberals, who live in a parallel universe, workers would have no reason to be motivated, since in an egalitarian society accumulating wealth is no longer the driving force of people’s lives.

However, there are reasons. And they are far nobler than the liberals think. Work in a socialist society would be geared to improving oneself and the whole of humanity. In a planned economy, the producers’ interests in reducing the work shift, in dedicating themselves to enriching the spirit, would generate an automatic incentive. Saving their efforts to satisfy their intellectual, artistic and scientific curiosity would be one of the driving forces of society.

Every worker knows that the nature of his work is, in the vast majority of cases, physically and emotionally exhausting. The workers’ daily time, energy and capacity are practically sucked into his work and into his journey to work. This prevents him from acquiring scientific knowledge and being able to participate in a cultural or political activity. He/she is not even aware of the whole chain of work and trade in which his/her individual work is inserted. His condition in capitalism is one of total cultural underdevelopment.

The desire to minimize arduous, mechanical, boring and repetitive work would be a good incentive to ensure efficient production and to secure consumer goods and services. The incentive would spring from the awareness that effective, productive and reduced work would mean less life lost.

In a socialist society, people would not seek their fulfillment through consumption or monetary accumulation, as advocated by the liberals, but rather by improving themselves and society as a whole through the development of the sciences, understanding of nature, arts, sports, etc. It would be a society that would grow in civilization, and not by the mere frenetic acquisition of goods. In this way, society would develop to the full expansion of meaningful human activities and relationships.

The reverse of bureaucratic planning

The democratic and centralized planning of the economy is the reverse of Soviet bureaucratic planning, which in turn is the result of the Stalinist counter-revolution that took place in the country.

Bureaucratic planning is based on the intellectual division of labor. Knowledge, therefore, is the monopoly of a group of specialists who assume administrative and managerial functions. Planning and responsibility for its execution remain in the hands of this layer of administrators.

In bureaucratic planning, producers and consumers are cut off from any discussion of an economic plan. The decision is vertical and dictatorial, and all of the country’s productive potential must comply with it, even if it implies irrational and oppressive decisions. The bureaucratic factory administrator seeks to keep his job and material advantages to himself. For this reason, he blindly follows the orders of the bureaucratic hierarchy, conceals waste and failures, corrupts other bureaucratic administrators, and exploits the workers.

All this had absolutely nothing to do with Lenin’s concerns after the October Revolution. He wished to pull Russia out of a huge cultural and technical underdevelopment, industrializing an agrarian country composed of 90% of peasants, while at the same time betting on the massive education of the population, mostly illiterate, to prepare it for the administration of production and political life. To do so, he advocated adopting an effective measure against bureaucratization. He looked for ways to reduce the work shift, in order to include producers in the active participation of business administration and the general political life of the country. His formula was: six hours of work + four hours of activities related to production management. The objective was that everyone could commit to both activities, which would result in the end of the social division of labor.

The bureaucratic planning imposed by Stalinism was the realm of administrators. Its inefficiency led to enormous social contradictions, which would result in the restoration of capitalism in the Soviet Union.


The reader may object: but is this not utopian, unrealizable in our society? Even in times of capitalist dystopia, with pandemics, economic and climate crises, many still believe that it would be easier for a meteor to fall to Earth than for humanity to build a socialist society. At the other end, there are the merchants of illusion who sell the possibility of reforming capitalism, making it more humane. Both the past and the present show that this, reforming capitalism, is absolutely unrealizable, as it is bottling clouds.

Basically, the debate boils down to one question: can humanity manage to shape its own destiny, is its self-emancipation something tangible, or just a summer night’s dream? Let us remember that it is human beings who make their own history. Socialism is a historical possibility that emerges from the objective contradictions of capitalist production. But to realize it, it takes more than objective conditions. It depends fundamentally on the political action of men and women, on their organized conscious intervention in a revolutionary party until the proletariat takes power, in alliance with the other oppressed classes.

However, in no way can the working class dominate without effectively governing. It needs to exercise power within factories and the most diverse branches of industry, while at the same time it must exercise state political power in all spheres. This places us before an essentially political task in the period of the construction of socialism. State control, reorganized in a new form, based on councils made up of democratically elected members, which incorporate the working masses into fundamental decision-making and radically restrict the role of specialized officials. Only in this way will the working class dominate, in the real sense of the term, the economic, social and cultural priorities of the new society.


Translation: Sofia Ballack.

Check out our other content

Check out other tags:

Most Popular Articles