Thoughts On Command Economies

THOUGHTS ON COMMAND ECONOMIES
Non-capitalist ownership of the means of production and reliance on a command- rather than a market- economy were among the defining features of Communist states.
COMMAND AND MARKET ECONOMIES
The difference between a market and a command economy is that whereas the former relies on decentralised decisions between customers and suppliers to determine such things as what should be produced and in what quantity, in a command economy such decisions were undertaken by a hierarchical, top-down process. This system was organised with the politburo at the apex. Next down the chain of command were ministries for every major branch of industry. These were, in turn, supervised by the State Planning Committee and by departments of the Central Committee of the Communist Party. Unlike with market economies, producers working in command economies had little reason to be concerned with the wishes of whoever used their products. Nor were the activities of their competitors of any concern. This was because competition was absent; other producers engaged in production of similar goods were comrades collaborating on execution of the State plan. Above all else, producers were concerned with meeting whatever targets planners set.
COMMAND ECONOMIES AND IDEOLOGY
If we take these two defining features of a Communist state and also take into consideration other defining features such as democratic centralism, and the leading role of the Communist party, what we find in common with all of them is a strong ideological component. As Archie Brown said:
“These defining features of Communism, while ideologically significant, were also of clear organisational importance. They were part of the operational code of Communist rule with an everyday relevance to the task of maintaining power”.
They were ideological because they were part of the Bolshevik (and successor) belief system that held Socialism to be a higher stage of development than capitalism. While the Communists considered the victory of Communism over Capitalism to be inevitable, they also believed that the process could be speeded up, provided political power was firmly in the hands of the Party.
The absence of a market economy and private ownership played a definite part in placing power within the hands of the ruling Party. At times, upsetting State authorities meant imprisonment or death, but even in more relaxed times public dissent from State authorities was a serious threat to one’s career. After all, the State controlled the career possibilities of all citizens. Brown again:
“Communism was an all-encompassing system of beliefs…It had authorities whose word could not be questioned, and whose interpreters and guardians acted also as gatekeepers, deciding who belonged and who did not”.
SVYAZI, BLAT AND TOLKACH
It would be wrong, however, to assume that Communist countries were 100% run by a command economy, with no private ownership and market activity whatsoever. In fact, some private activity (whether legally, illegally, or a mixture of both) occurred in Communist systems. Agriculture, in particular, was not uncommon in favouring private enterprise. Indeed, in the case of Yugoslavia and Poland, agriculture was mostly in private hands.
In non-market economies, goods and services often suffered shortages and probably could not have functioned at all, were it not for informal rules that developed around three key Russian words: Svyazi, Blat, and Tolkach. Translated into English, those are ‘Connections’, ‘Pull’ and ‘Fixer’ (or ‘Pusher’). Together, they compromised practices that oiled the wheels of the command economy.
Let’s start with Svyazi or ‘connections’. Given the control that State authorities had over people’s lives, it shouldn’t be surprising to learn that connections- knowing the right people- were very important. Although Communism was supposedly a system that abolished class, Svyazi was mostly a privilege of the Soviet middle classes and elites.
Where Svyazi was concerned, favours could be rendered without expecting anything in return, even indirectly. However, ‘Blat’ (or ‘pull’) always involved a reciprocal exchange of favours. The exchange of favours need not have been direct and could have consisted of a long and rather complex chain. According to Brown:
“How much pull a person had depended, obviously, on that person’s position within society, but at all social levels in the Soviet Union, there were unofficial networks which, to a certain extent, bypassed the official structures”.
Perhaps the most important part of the informal set of rules oiling the wheels of the Command economy was the tolkach or ‘fixer’. If a factory were to fall behind schedule, that could have a huge effect in a command economy, because there was an absence of alternative suppliers. Therefore, despite official disapproval, the tolkach were tolerated because they served t o make the top priority of meeting production targets somewhat easier. This they did through begging, borrowing, bribing- basically any persuasive method that could ensure needed supplies actually arrived.
So, as stated before, the Communist command economy was never totally without private ownership and decentralised interactions between consumers and suppliers. Of course, the same thing can be said of market economies, which are, after all, never operating completely without State intervention. The State makes the sale of certain products illegal even though there is an economic demand for such products (such regulations are not 100% effective, and tend to cause the emergence of black markets) and also affects prices by imposing higher taxes on certain products. Perhaps most importantly, at times of financial crisis even the most ardent free-market ideologues find themselves turning to Government for rescue.
Still, an economic system must either be predominantly a command or a market economy, as the disastrous attempts to find a ‘third way’ have proved. Going on what history has taught us, though, one would be unwise to consider the command economy the superior of the two. Quite simply, the planned Soviet economy never worked all that well (although it could sometimes produce impressive results- think of the Soviet success in launching the first satellite, for example). A prime reason for its relative lack of success was the fact that prices were determined bureaucratically and, unlike in a market economy, budgets were not controlled by the need to make a profit. This lead to both a weakness of the penalties for failure and scant reward for success. As Brown explained:
“Shortfalls and waste…were automatically excused by the soft budget constraint…when extra costs were incurred, prices were allowed to rise, either openly or in a disguised form through a lowering of the quality of the product (which was not high to begin with). And, purchasers, whether of producer goods or consumer goods, did not have the option of taking their custom elsewhere”.
CONCLUSION
Perhaps it is no so surprising, then, that, far from overthrowing the Capitalist system, instead Communist States relaxed more and more top-down control over time. For example, in 1987, the law on the State enterprise had devolved power to factory managers, and by 1988 Gorbachev abolished pretty much all of the Central Committee’s economic departments. What was left by then was neither a functioning Command economy nor a market economy, but instead a dysfunctional hybrid which only added to the pressure to change the Communist system in such fundamental ways that it ceased to be by the mid 1990s.
REFERENCES
The Rise And Fall Of Communism by Archie Brown

Wikipedia

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