Planning is vitally necessary if the disasters of climate change, already with us, are to be mitigated and the planet is no longer degraded by greenhouse gas emissions. How planning by replacing the market would work.
Michael Roberts is an Economist in the City of London and a prolific blogger
Cross-posted from Michael’s Blog
The only way humanity has a chance of avoiding a climate disaster will be through a global plan based on common ownership of resources and technology that replaces the capitalist market system. In a new book by Scottish Marxist economists Paul Cockshott, Alin Cottrell, and Jan Philip Dapprich, entitled Economic Planning in an Age of Climate Crisis, the authors take up this issue.
Over the years, Cockshott and Cottrell have done sterling and important work in showing that planning in a non-capitalist economy is feasible and would work so much more effectively than the capitalist market economy. In this new book, the authors go further to show how planning is vitally necessary if the disasters of climate change, already with us, are to be mitigated and the planet is no longer degraded by greenhouse gas emissions. And they spell out how planning by replacing the market would work.
The authors first explain the basic science of climate change before looking at the transformations needed for a ‘green world’. Then they look at the previous successful history of deliberate planning practised in the UK during WW2 and then how, using modern computing techniques, it would be possible to organise resources to save humanity and the planet. The authors argue that “we can longer go on with a system that just maximises private profit without consideration for its effects. Instead we have to consciously plan how to change to a fossil fuel free society.”
In arguing their case, they start by showing how successful planning for the allocation of resources can be so much more successful even when capitalism still operates – for example during World War 2, when governments took over the war effort and controlled production allocation. “It’s clear that the profit motive is not going to do the job, transition to carbon neutrality will have to be driven by the state. But state-driven economic restructuring does not necessarily equate to socialism, and the experience of planning in the UK economy during World War II provides an interesting case in point.”
They present data that show, when compared to previous and subsequent periods, during the war years the UK had the best economic performance on record. The ‘war economies’ of the UK (and to a lesser extent the US) showed how much can be achieved in a short time via planning—even without comprehensive state ownership.
Of course, that was only possible because capitalists were told what to do by government directives. “Despite the fact that no formal transfer of capitalists’ property into the hands of the state took place during the war, in the circumstances of the time it seems to have been widely accepted that government could tell firms what they had to produce and what resources they were allowed to acquire. Indeed, in some cases government officials effectively took over the management of private firms.”
The authors address the usual objections to planning raised by mainstream ‘market’ economists and by the Austrian school in the so-called ‘socialist calculation’ debate. They have shown before that it is perfectly possible to plan the allocation and production of resources to a high degree of efficiency given modern computers and ‘big-data’ technology. Indeed, it is now much more feasible than in that war-time period.
They refer, in particular, to the work of Kantorovich whose linear programming showed that it was possible, starting out from a description in purely physical terms of the various production techniques available, to determine which combination of techniques will best meet plan targets. There can be a ‘non-monetary’ objective function—the degree to which given plan targets are met—which can replace the capitalist profit motive. And further, there was the work of Wassily Leontief, whose signal invention was the input–output table, which displays the interrelationships between sectors and so allows for the allocation of resources and production within an economy.
Now the theory of economic planning is considerably more developed than in the 1940s, while the computing technology needed for planning has advanced not only relative to WW2, when computers were in their infancy, but also relative to the Soviet Union in the 1980s, when planners had sound methods at their disposal but lacked the computing power to implement them. In addition, the required data are now easily available; in the 1940s planners had to collect the data they needed more or less from scratch.
The obstacle now is not the feasibility of planning but the political one of the class interests of the capitalist class. Expecting planning to work without the expropriation of the capitalist class and the ending of the law of value and the market economy is really utopian, except for the short ‘emergencies’ of war time. As the authors point out: “We have suggested that planning of the sort that was implemented during World War II— effective as it was in achieving a very specific goal—is ‘second best’ to a system where the economy as a whole is under public ownership and regulated to serve the needs and interests of the population.”
But the major innovation in this book is to consider how to plan for environmental needs as well as production per se in a non-market economy. In Marxian political economy, the labour value of an item is the socially necessary labour time required to produce it. Given the technological, environmental and social conditions of a society, it is the labour time that is generally required to produce an item that can be used to cost or ‘value’ it. But the labour time model for planning does not account for the ‘external’ impact of greenhouse gas emissions. So the authors propose a measure of value in planning that considers all factors of production, including both labour time for production and the emission effects.
First it is important to understand, as Marx explained, there are two main parts to the planning of resource allocation and production. The first is the macro allocation for social needs eg investment in capital goods, health care, education, transport, public services and basic consumer goods – free to all at the point of production. But second, there needs to be a mechanism for allocating other resources for personal consumption beyond the ‘social wage’. These personal consumer needs will be determined by the labour time used to produce them and individuals will ‘buy’ them based on the ‘labour time vouchers’ issued to to a worker for the individual contribution to overall production in labour time.
Now the authors propose an adjustment to that model based on the economic category of opportunity cost. “To specify the cost of a product, we must thus determine what else could have been produced instead. Moreover, we must be able to measure this on a common scale so that costs of various products can be compared.” So if the planners ‘priced’ products with an extra constraint on greenhouse gas emissions that they generate, this require a higher ‘opportunity cost’ valuation for high emission products. This would result in a shift of demand towards low-emission products. “Rather than simply reducing the economy’s overall output to abide by emission constraints, the composition of output is changed to emphasise green products.”
This book offers a further development of technical feasibility of socialist planning that incorporates the climate crisis. It further enhances the advantages of the planning mechanism for human organization over the anarchic, crisis-ridden, exploitative capitalist market economy that is failing to deliver the needs of humanity and is destroying the planet. It offers yet more powerful arguments for planning over the market.
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