5 Principles and Procedures of Planning

THE Marxists dismiss the classical economic doctrine that stresses the self-regulating capacities of the market. From this basic and arbitrary postulate a number of crucial consequences flow both in Marxian economic theory and in Soviet planning. The “fundamental contradiction” of capitalism is alleged to consist in the opposition between “socialized” organization in the individual factory and “social anarchy in the production as a whole.” While, writes Engels, capitalist factory production depends on “division of labor, upon a definite plan,” production in capitalist society at large is “ruled by absence of plan, by accident, by anarchy.”¹ Since the market is anarchic, Engels and Lenin assert further that transitions from perfect competition to monopoly and oligopoly are attempts to limit economic “planlessness” and, therefore, steps toward integral planning—which, however, socialism alone can install.² Thus planning, according to Marxist theory, is the opposite of market regulation of production, and, paradoxically, monopoly and oligopoly are steps toward full-fledged planning. By definition, therefore, in this theoretical framework the socialist economy is a non-market economy with a centrally planned organization and regulation of production.

Comprehensive planning evidently requires extensive and methodical coordination among current economic activities and those which will arise in the future as various branches and sectors expand at different rates of growth. This coordination requires, in turn, the establishment of a number of plans: short-term operational plans and long-term “perspective” or general plans, that is, expansion plans covering a number of years and at least certain key industries and sectors. Furthermore, operational and expansion plans must be differentiated and coordinated at various organizational levels, such as the industry, branch, sector, and region.

How can these plans be drawn in a realistic manner and how can they be made to mesh with one another at various points in time? Must all current activities be coordinated? Must scheduled patterns of output and of end-use match perfectly? To what extent must the plan be shaped by past trends, and to what extent and in what ways can the policy maker and the planner aim at changing prevailing interrelationships between branches and sectors? Is the planner’s freedom of choice of goals equal in respect to all sectors and to all time periods? How can the planner achieve consistency among all his goals and efficiency in the use of resources while dispensing increasingly with market relations and market mechanisms?

These problems began to confront the Soviet policy makers and planners on the morrow of the Bolshevik revolution of 1917, as the leaders stressed the need of an integrated national plan for all the economic activities of the country. But a single integrated national plan came into being only in 1929, eleven years after the revolution.

The period 1917-1928 is often described in Soviet official literature as the period of the “struggle for the plan.”³ The “struggle,” according to these sources, involved not only the formulation and selection of workable planning principles and procedures, but also the preparation of the so-called “objective” conditions for planning, that is, in Soviet theory and practice, the systematic limitation of the scope of certain types of market relations. The search for planning principles broadened and intensified the debate between “voluntarists” and “determinists.” The search for planning procedures put to an acid test the alleged opposition between planned order and market anarchy, and raised the question of the respective limits of centralization and decentralization. The preparation of the “objective” conditions for planning raised a host of crucial problems concerning the policy makers’ strategy of development, the pace of sectoral growth, the interaction among different systems of ownership and production in the Soviet economy, and finally, the question of the possible place of “atomistic” (individualistic) agriculture in the framework of planning.

In the Soviet pattern of development large-scale nationalization, and a high centralization of both administrative and operational managerial functions—that is, a wide use of centralized commands to determine investment and all aspects of current output⁴—were all viewed as normal steps toward integral planning and were all associated with the early phase of the Bolshevik regime, the period of so-called War Communism. When the Bolsheviks launched the New Economic Policy (NEP) in the spring of 1921, deliberately restoring market relationships on a wide scale, they limited the sphere of centralized operational commands in the state sectors and in the economy as a whole, and at the same time they gave up for the time being the idea of extensive planning. High centralization at all operational levels was so deeply interwoven with planning that the latter appeared necessarily impaired when the former had to be limited. Bolsheviks of Left or Right persuasion advocated or rejected planning according to their attitude toward market relations —that is, toward the NEP—and toward industry and privately owned agriculture—that is, toward the regime’s overall strategy of development and toward its nationalization and collectivization policies. For no one doubted then that over-all planning necessarily meant both the liquidation of market relationships and the return to a system of highly centralized administration. Those who had an increasing distaste for the consequences of the NEP, and who stressed in particular the danger of socio-economic differentiation among the peasants, became the earliest and most persistent advocates of all-embracing planning. Those who affirmed that recovery and future growth depended upon the conservation of market relationships and upon peasant agriculture ranged themselves against any extensive planning. When the NEP was brought to a close and over-all planning started, the sphere of market relations shrank, that of administrative commands expanded, and agriculture as a whole was engulfed in a massive process of collectivization.

In order better to grasp the various positions taken in the debate on planning, we shall try to disentangle the discussions on planning principles from those on planning procedures. The voluntarists, who were called “teleologists” in the planning debates,⁵ stressed the need for a national plan based on a number of key targets for the priority branches, toward whose fulfillment the economy as a whole should be geared. The plan, they said, must not be merely a summary of individual branch plans; it should be a set of national goals binding the economy in its entirety and dominating current operations and the expansion plans of each branch and sector, according to a scale of priorities reflecting the regime’s over-all strategy of development. All efforts should be directed toward implementing the push forward of the priority branches. The teleologists affirmed that planning is a conscious act and that there can be no talk of planning until the policy makers have set goals and given directives. By definition, the plan is not a piece of neutral research into past trends and their mechanical extrapolation; it is a purposive act setting specific assignments which embody the policy makers’ will to change prevailing social and economic relationships. Consequently, the over-all aims of the policy makers will establish the basic premises of the plan.⁶

There are thus objective limits on the freedom of choice enjoyed by policy makers and planners, but these limits are neither rigid nor immutable. As one of the chief representatives of this tendency, S. G. Strumilin, put it, the further away in time the goals are placed, the greater are the opportunities for the free play of the “social organizer’s” creative ideas. The opportunities are vast in a general plan period of fifteen to twenty years; they are more restricted in an intermediate, perspective plan period of, say, five to seven years; they are almost negligible in a yearly plan period. In the longer perspective, directives or prescriptions predominate; in the shorter run “prognoses” or forecasts based on past trends necessarily hold sway.⁷

After stressing the primacy of goals in perspective planning, the teleologists contended further that planning, being “social engineering,” necessarily displaces and recreates relationships among branches and sectors. The crucial changes planned for the leading branches of the economy have to be carried out, no matter what stresses and strains they may provoke in the rest of the economy. In the process of massive shuffling of socio-economic parameters, bottlenecks and disequilibria of all kinds are unavoidable. “Change,” wrote an official proponent of this policy, “cannot take place smoothly like driving on a well-paved highway from one state of equilibrium to another.”⁸

The teleologists, who advocated designing a consistent “core” plan for the leading branches and open-end planning for the rest of the economy, and after them the party’s leadership, came to combat with tooth and nail the idea of general equilibrium, as if the latter implied immutable relationships among economic variables and particularly among the growth rates of sectors and of systems of ownership. The term “equilibrium” was construed as a cover-up for the idea of unavoidable “automaticity” of economic processes and of their coordination through the market, while planned “balance”—i.e., the deliberate establishment of new patterns of sectoral interdependence around the “key” branches—was affirmed to be its opposite. These involved distinctions between “equilibrium” and “balance” still plague Soviet planning literature. What was really hidden behind the attack on “equilibrium”—that is, the attack on the comprehensive balancing of output and end-uses—was on the one hand a fight against certain tendencies in the party, and on the other a justification of the stresses and strains that would inevitably result from the thrusts forward of the leading branches and the high-handed planning methods of the Soviet bureaucrats.

In agreement with both their concepts of purposive change and their industrialist strategy, the teleologists suggested that the starting points of any Soviet plan are the targets set for the “basic” industries, and that the “core” of any Soviet plan is the input-output balances of these basic industries. But the planner’s information is always imperfect, and no plan can take into account all the variables involved at each point in time. Moreover, new possibilities become apparent or unexpected bottlenecks arise as the plan unfolds. Hence the Soviet planners affirmed that they could and must intervene at any moment and at any level of the organizational set-up; they must continuously direct and control the detailed implementation of the plan from the center of command.⁹ Thus, along with the idea of the primacy of the top priority goals and the unavoidability of disproportions, the teleologists stressed also the idea of the need of elbow room —“maneuverability”—for the policy maker and planner as the plan unfolds.

The second school of thought, that of the “geneticists,” stressed the crucial significance if not the absolute necessity of objective, deterministic processes in the shaping of social economic changes and in the formulation of any plans. Writing in the early years of the NEP, V. G. Groman affirmed that, in contrast to utopianism, “scientific socialism” underlined the idea that “the genetic development of society must create the forces capable of securing both the power and the will to transform society in a certain direction,” and that consequently “the method and the forms of such transformation are dictated by the objective conditions of society and the hidden objective tendencies of its development.”¹⁰ Groman contended that the direction of change was predetermined and that the planner’s freedom to allocate resources in new ways was sharply limited. In short, the objective conditions set the premises of the plan.

In a less metaphysical form, the economist Kondrat’ev remarked that the planner’s goals, at no matter what point in the future, are in the final analysis only forecasts based on a number of assumptions which may or may not turn out to be correct. The real problem for him was to submit the planner’s goals to the test of some general criteria, such as efficiency in the scheduled use of resources.¹¹ Another “geneticist,” V. A. Bazarov, advanced a somewhat different thesis: that the planner’s freedom of choice varies greatly in practice from one economic sector to another. In industry, where specific forms of organization and interchange prevail, the plan can consist of a set of directives. But in agriculture, where a number of “planless” elements predominate— atomistic organization, market relations, the weather, etc.— the plan can take only the form of a forecast. Consequently, suggested Bazarov, the plan must be not only a genetic inquiry but also a teleological construct, the respective spheres of forecasts and directives being determined primarily by the existence or absence of market forces. The task of the planner will consist in blending adroitly “the genetic and teleological methods in the search for the optimum course of development.”¹²

Next, stressed the geneticists, the economy must be viewed as a harmonious, organic whole—as Bazarov put it, “a maximally stable system of mobile equilibrium.” This posits the need of achieving “internal consistency of the separate elements of the reconstruction process,”¹³ that is, the need of “setting goals consistent among themselves,” and achieving balanced growth. In order to avoid any violation of the principle of proportional development of the different elements of the economy which mutually determine one another, Gro-man suggested that the planner must study the basic regularities existing in the economy and construct his plan—in fact his projections—by taking them into strict account.¹⁴ Not only the former Mensheviks Groman and Bazarov but also the Bolshevik N. I. Bukharin underlined the internal unity of Soviet society—no matter how contradictory this unity might be—and demanded that the planner start planning from a model of the basic relationships among sectors of the economy, a model analogous to Marx’s schema of simple and enlarged reproduction.¹⁵ All the geneticists, no matter what their nuances, stressed the need of not losing sight of the organic unity of the economy, even though they conceded that in practice any plan would have an unfinished, relative character, because of the unavoidable impact on it of “planless” (market-determined) elements. Finally, and this is important, former Mensheviks and even Right-wing Bolsheviks suggested, in conformity with their over-all strategy of development, that the planner should start his planning from forecasts of consumers’ demand, rather than from targets for producers’ goods, since they held that economic growth and the rise of living standards are indissolubly connected.

These were the general principles which teleologists and geneticists respectively formulated as they tried to solve the problem of devising planning techniques and methods of execution. Rejecting the need of any macro-model relating in specific ways the crucial variables of the economy, or any preliminary balance of the economy as a whole, and deriding the idea of full consistency among planned goals, and the idea of balanced growth, the teleologists affirmed that planning is as much an art as a science, that absolute consistency is not of this world, and that what matters in a process of development is to determine what sectors of the economy should be singled out for rapid growth. Any plan, said Strum-ilin, is only an approximation, not necessarily the best one. The construction of plans, like the more elementary art of building, is a kind of engineering, and in social engineering, as in any other type of engineering, a problem can be solved in any number of ways: “no one solution is the only one possible, absolutely accurate, and unquestionably optimal.”¹⁶ Citing the example of the old masters who had built at a higher cost and a slower pace than would be necessary today such marvels as the Greek Acropolis or the French Notre Dame, Strumilin noted that these architects accomplished their purpose even though they had to allow “a far larger factor of safety in their designing than the theory of strength of materials would have required of them.”¹⁷

Having thus rejected for practical purposes “the accuracy to which science pretends,” and having reaffirmed the need of elbow room in planning, Strumilin noted that a perspective plan can be viewed in practice as an interrelated program built around a core of engineering blueprints drawn for a number of well-selected branches of industry and coordinated on the basis of given time sequences. First, the scale of development of each key branch is planned according to the policy makers’ goals, and the available and potential resources are roughly assessed. Then the blueprints are integrated into a sort of approximate model of the future, always attempting to adjust each of the succeeding plans to the preceding ones. The key programs determine all the others; the planning sequence goes from basic producers’ goods— intermediate products such as steel, other metals, electricity, etc.—to industry as a whole, then to all other sectors, with agriculture last.

Starting from a general expansion plan covering ten to fifteen years, coordinating a number of basic engineering blueprints, the planner concretizes his intermediate and short-run objectives in an increasingly complex way as he moves down from the general to the perspective and the yearly working plan, and from the planning center to the level of execution. Both the concretization of the plans and their harmonization at various organizational levels are done by successive approximations—a method which circumvents the absence of a basic macro-economic model.

In principle, the perspective plan should be embodied in two variants—minimum and maximum—and should be redrawn each year in the light of the past year’s achievements. The variants would set “boundaries” in the execution of the plan: falling short of the minimum would indicate the danger of maladjustments ahead; reaching the maximum would represent top performance of the economy, since these series would be constructed upon the most favorable assumptions (no harvest failures, availability of foreign loans, etc.). The variants would serve as guidelines to the yearly, quarterly, and other working plans, while these in turn would serve as correcting factors for the perspective plan.

Decisions on capital construction for the key branches would determine the dynamics of plans for all other sectors. In turn, operational goals established in physical terms, on the basis of physical balances of resources and their allocation, and on the basis of capital construction commissioned, would be determined for the leading producers’ goods industries, then for industry as a whole, then for the other sectors. The goals for agriculture—expansion, patterns of output, marketed share—would follow the plans for industry. All these goals would form a system of assignments: they would be specific and realistic within the framework chosen and would conform to present and estimated resources. While the goals would be binding for all, the central planner would not view them as immutable: he would adjust them as the program itself unfolded or as the policy maker decided to shift some of his objectives.¹⁸

The “geneticists,” as well as a number of economists who were not necessarily in full agreement with all their theses, rejected the teleologist approaches to planning as non-scientific improvisation, and accused the teleologists of substituting intuition for the serious search for optimality, consistency, and efficiency in planning. The economists N. D. Kon-drat’ev and G. A. Fel’dman, for example, pointed out that successive approximations cannot be considered as a “method” of determining and coordinating economic goals. They offer only a “technique” which, said Kondrat’ev, helps to harmonize a number of branch or sectoral balances of resources and allocations but does not help to establish the goals toward which these allocations aim nor explain how these goals have been selected.¹⁹ Fel’dman noted that a broad knowledge of “the general laws of Marx” is not sufficient equipment for planning. What is required is “a consistent system of equations to determine the natural dynamic relationships between the basic elements of the economy.” Once such a system of core formulas is established, the “technique of successive approximations” may be a useful supplement, but to use the latter in the absence of the former is to turn planning ‘“either into guessing or into the Sisyphean labor of a genius builder who substitutes intuition for a system.”²⁰

What was meant by “intuition” may be illustrated by the following incident, which occurred during a discussion of one of N. A. Kovalevskii’s reports at the Communist Academy in 1930. It concerned the selection by Cosplan of the goal of an output of ten million tons of pig iron for the Soviet economy. Answering his critics, who were clamoring that this goal was far too low and had been arrived at on the basis of simple extrapolation of past trends, Kovalevskii remarked: “Anyone who has anything at all to do with planning, and with the Five-Year Plan in particular, knows that the goal of ten million tons of pig iron output was one of the main points of a terrific controversy. Those who started from the growth tendencies of the metal industry maintained that we could not produce more than four to six million tons of steel as a maximum maximorum. Only the iron will of the party and of the working class, seizing intuitively upon the future development possibilities of the economy and basing this foresight particularly on consciousness of the advantages of our system, put through this task, which exceeds twice what appeared to be the limit on the basis of the possibilities of growth of a given branch.”²¹

Having rejected the procedure of drawing up a balance of expansion and one of output and allocation separately for each branch, with each goal derived intuitively or by some form of expertise, Kondrat’ev, Fel’dman, and a number of other economists pointed out that the linking of these balances by successive approximations could not in any way insure that the resulting integrated economic model would be optimal or even achievable. Many such projections could be constructed, as Strumilin himself pointed out. But unlike the engineer, who need not solve the problem of whether his building materials or monetary resources will be available, the planner must make sure that scheduled resources included in his projections will be effectively available at the time, and in the magnitude and specifications required by the plans. The planner must not only provide an abstract optimal solution; he must also make sure of its workability— that is, he must assess correctly the type and nature of the restraints under which he is going to operate.²²

What is implied by workability may perhaps be illustrated by the following remark of N. I. Bukharin. After pointing out in a discussion on 1927 performance that industry had developed at “a frantic pace,” generating a frantic demand for intermediate products and creating innumerable bottlenecks, Bukharin noted: “if there is no brick and if its production in a given season cannot (for technical reasons) go beyond a set magnitude, then one may not frame construction programs which exceed that limit and thereby cause a demand which cannot be covered, since no matter how much you go on forcing the pace of construction, you still will not make factory buildings and dwellings out of thin air.”²³ Deriding Strumilin’s proposal to turn planning into an art, M. Birbraer noted that Strumilin’s examples of the masterful successes of the architects of the Acropolis or of Notre Dame are not too convincing, “particularly because there were many unfortunate examples in history—many more than that certain number of fortunate ones to which Strumilin refers—of constructions without scientific foundations which crumbled away long before their elevation was completed.”²⁴

Among the proposals for putting planning on an analytical basis, a special place must be reserved here for the brilliant suggestion made by M. Barengol’ts—to which we have already alluded—concerning the utilization of technical coefficients. Working along the lines suggested by Popov and Litoshenko in their “Balance of the National Economy,” Bar-engol’ts pointed out that on the assumption of stable technological conditions “the coefficients of interindustry turnover relative to the so-called gross turnover”—i.e., the ratios of inputs to gross output—“will provide in physical terms (and, with a correction for price fluctation, in value terms) fairly stable dynamic indicators to determine the total volume of consumption and of interindustry turnover as well as to establish the specific relations among various industries.”²⁵ But the use of such “invariant” building blocks for determining in a consistent way the “volume of consumption and of interindustry turnover” at various levels of output was apparently not resorted to either in the Supreme Council of the National Economy or in Gosplan, though many other experiments of an input-output type were carried out at the time in the planning agencies.²⁶

Another outstanding analytical proposal is the one formulated by G. A. Fel’dman which we have already discussed at some length.²⁷ Let us recall here only that Fel’dman aimed specifically at constructing a model on which the plan “in its abstract form” could be based, and with the help of which a set of variants could be drawn. Using essentially Fel’dman’s method, N. A. Kovalevskii attempted to construct a so-called “working hypothesis” of the general plan. His schema and its underlying assumptions were, however, sternly criticized, since, as we saw, they posited the existence of objective criteria for guiding planners’ choices in the allocation of investment, a fact which implicitly put into question the over-all strategy of development and its specific emphases. The party leadership and its economists rejected all analytical proposals in planning and the main ideas which they implied, namely, planning backward from forecasted final demand, and matching scheduled outputs with end-uses. They continued instead to stress the idea of planning from the “producers’” goods side—i.e., setting targets for the output of producers’ goods and constructing “core” balances to coordinate input and output in producers’ goods industries—and to execute their plans by means of methodical pressure for the fulfillment and overfulfillment of these goals without too much concern for the stresses and strains provoked in the rest of the economy.

Besides the official obsession with accelerating the growth in productive capacity and thrusting forward on the key military and producers’ goods branches, a number of factors facilitated the triumph of pragmatism in planning. Significant among these were the domineering traditions of the leading bureaucracy and its lack of economic sophistication, the absence of experienced planners and of educated managerial “cadres,” and the abysmally low standards of statistical information in industry and even in other fields.²⁸

The first expansion plan for a whole industrial branch was drawn and approved in 1920. This plan, the Plan GOELRO, concerned, as we have stated,²⁹ electricity only, but has often been described erroneously as the first Soviet general or perspective plan. At the time, the IXth Congress of the party (March 29-April 5, 1920) proclaimed the need of coordinating the activity of the economy on the basis of a single plan— an idea then stressed by Trotsky and derided by one of the future leaders of the Right, Rykov;³⁰ but as we have said, the turn toward the NEP pushed the idea of an over-all national plan into the background. When a State Planning Committee (Gosplan) was finally established in the Council of Labor and Defense, in April 1921, as successor and continua-tor of the GOELRO commission, it had no powers whatever, and consisted of a meager staff of only forty persons. Its organization was directed toward dealing with current planning problems not exceeding one year, since in the conditions of the time “the preparation of more concrete projects (other than the one on electrification) for a whole series of years ahead appeared too abstract and too academic.”³¹

Gosplan focused initially on relatively minor, episodic problems, and its reports dealt with such questions as “Special measures regarding the fuel supply of the republic,” “Aid to the southeastern region, stricken with poor crop,” “Regulation of the movement of refugees in poor regions,” “The sowing of winter crops in 1921 in those localities of the RSFSR which suffered from poor crops,” “The collapse of bridges in Novo Balitsa, Bykov, and Shilovka.”³² Perspective planning was at that early time attempted in a rudimentary way in various People’s Commissariats, usually at the level of the Republics. Gosplan itself was not enabled to examine such drafts until the summer of 1923. From then on a large part of Gosplan’s efforts was turned toward perspective planning. In the last quarter of 1923 Gosplan took up the discussion of the first plan of a major industrial branch submitted to it—the “Five-Year Plan for the Metal Industry, 1923/24-1927/28,”—compiled in the industry’s Central Administration by the engineers Khrennikov and Gartvan. Soon afterward, Gosplan discussed a comprehensive draft covering the whole of the so-called “census” industry and its thirty-two branches—the “Industrial Five-Year Plan for 1923/24-1927/-28,” prepared by the engineer Kalinnikov. The following year Gosplan considered a whole range of branch plans, notably a Five-Year Plan for Transportation drawn by engineer Neo-pikhanov, and a Five-Year Plan for Agriculture drawn in the Commissariat of Agriculture by Professor Kondrat’ev. A year later, attempts were finally made, both inside and outside Gosplan, to pass from branch planning to the formulation of a single plan for the economy as a whole.

A powerful impulse in this direction was given by the establishment at the Presidium of the Supreme Council of the National Economy, in March 1925, of a “Special Commission on the Reproduction of Fixed Capital” (OSVOK).³³ The commission, which grew into a major planning organization under the direction of Piatakov, and which undertook the preparation of a five-year industrial plan, released before its dissolution in September 1926 a total of twenty-nine detailed drafts (“hypotheses”) for the output and equipment of various industries for the period 1925/26-1929/30.³⁴ Another special commission succeeded it, also at the Presidium of the Supreme Council of the National Economy, under the direction of A. M. Ginzburg, with the task of drafting a single national Five-Year Plan on the foundations laid by OSVOK. This commission released a year later a comprehensive volume of Materials on a Five-Year Plan for the Economy of the USSR 1926/27-1930/31, but never published a final plan.³⁵

Meanwhile Gosplan, which had also grown from a committee of forty statisticians to a powerful organization with over a thousand specialists, released in 1925 its first one-year plan for the economy as a whole—the so-called Control Figures for 1925/26—and made known soon afterward its first rough draft of a five-year perspective plan. The publication of the Control Figures was greeted as a major event by the “industrialists,” who saw in it a decisive step toward comprehensive planning and, implicitly, the end of the NEP. Though Trotsky thought to discern in the rows of Gosplan’s numbers the “socialist music of the future,” and though this publication did indeed underline the trend toward planning, the Control Figures were only a timid beginning. They did not formulate any new policy or new tasks, and were subsequently proved incorrect by the country’s performance during the indicated year.³⁶ The Control Figures for 1925/26 were followed by yearly Control Figures up to the end of the 1920’s.

Gosplan’s first rough draft of a five-year plan, for 1925/26-1929/30, was presented at the meeting of its agencies in March 1926. Its second, more elaborate, draft of a five-year plan, for 1926/27-1930/31, was presented at the meeting of the same agencies in March 1927. A third, more complete, draft for 1931/32 was fully worked out by the autumn of 1929, when the XVth Congress of the All-Union Communist Party published its extensive “Directives” for the formulation of the first Five-Year Plan. The directives expressed officially the adoption of the strategy of rapid expansion of capacity in the leading branches as the fundamental line of the party, and stressed also that planning on a large scale had become possible because the state industrial complex had become increasingly independent of market forces (“market anarchy”), which allegedly had handicapped planning in the past.

When national planning came to the Soviet scene, it came as the servant of a specific strategy and as a substitute for the “spontaneous,” “anarchic” play of the market. The idea that the sphere of centralized management and planning could expand or contract, that directives from above and the market mechanism could be fruitfully combined even in the sphere of interindustry relations, largely escaped the Soviet policy makers of the late twenties. Planning of interindustry flows was completely identified with centralism and “war economy” methods. Bent on achieving revolutionary shifts in factor allocation and on obtaining the fulfillment of the priority targets as speedily as possible, the Soviet policy makers and planners concentrated their full attention on perfecting the physical balancing of supply and distribution for a number of key products. They discouraged as futile any attempts to combine all these material balances into a single system or to coordinate them fully with all the various balances of value data, such as the balance of income and outlays of the population, the state bank’s currency and credit plans, and the government budget. Intent on reaching a number of limited objectives, the planners relied on the rule of providing the top priority branches with ample resources to fulfill and overfulfill their goals, no matter what the impact on other branches. Intuitive selection of goals on the basis of observation of technological trends in the most advanced countries, engineering projection and coordination of the key material balances by successive approximations (successive cuts here and there on either the supply or the allocation side of one balance or another) appeared sufficient to carry the country ahead. No complicated theory was needed for the purpose: model building, the use of abstract formulas and of higher mathematics appeared for many years as impractical to the bureaucrats. The Soviet economic journals turned all their attention to practical, episodic problems.

In the early years of the NEP, the geneticists and most of the economists had stressed that market mechanisms and objectively determined prices were prerequisites of economic calculation and planning. But when Soviet planning actually did start, the officially accepted point of view was that on the contrary prices could not serve for allocative purposes but would be arbitrarily manipulated in order to “raise or lower the capacity of the market within very wide limits.” The combined effect of the strategy of forging ahead in the key producer’s goods branches, and of the emphasis on the administrative character of Soviet planning (“opposed to auto-maticity”) was to make the bureaucrats visualize agriculture as a sort of bothersome appendix in planning, not as an integral and crucial part of the economy as a whole.

After a number of decades of pragmatic planning, Soviet policy makers, planners, and managers have undoubtedly acquired, through their day-to-day work, an enormous experience in selecting key goals, adjusting physical balances, and carrying out in practice their basic tasks. But this experience is becoming notoriously insufficient today for dealing, in what is now a highly industrialized society, with the increasingly complex problems of setting goals, reaching consistency among them, and achieving efficiency in the use of resources. Fortunately for the Soviet planners, the science of planning has in the meantime made enormous progress in the West. It is from this source that Soviet planners are now borrowing the “abstract models” which Stalin’s bureaucracy rejected as cumbersome in the 1920’s. The irony of history is that some Western planning tools, such as input-output analysis, are in certain ways related to the pioneering works of Popov, Litoshenko, Barengol’ts, and Fel’dman, but owe nothing at all to the Soviet planning practice of the last thirty years. This practice remains in many respects but a clumsy Sisyphean way of solving the basic problems of a planned economy.