[Marxism] Red Plenty

Louis Proyect lnp3 at panix.com
Tue Jul 27 14:49:59 MDT 2010


http://21stcenturysocialism.com/article/review_red_plenty_by_francis_spufford_01992.html
Tuesday, 27th July 2010

by Paul Cockshott / May 23rd 2010
Review: Red Plenty by Francis Spufford

This is a marvelous and unusual book. It sits in a remarkable way in 
between science popularisation, social history and fiction. The author 
describes it variously as a novel whose hero is an idea and a fairytale. 
The hero idea is that of optimal planning. The idea of running a planned 
economy in just such a way as to ensure that resources are optimally 
used in order to deliver the ’red plenty’ of the title.

Combining real and imagined characters, politicians like Khrushchev, 
mathematicians and economists like Kantorovich and Nemchinov with 
fictionalised minor characters, it gives a gripping and apparently 
realistic picture of life in the USSR during the 50s and 60s. It is not 
a single narrative as one expects from historical fiction. Instead it 
gives us a series of snapshots from the lives of individuals, separated 
by years. The common link is the project of the Cybernetic economic 
reformers, and the ambitions of Khrushchev to attain communist plenty.

The author shows real skill as a science populariser, explaining such 
diverse topics as how the Pentode valve logic of the early BESM 
computers worked, to the molecular mechanics of the carcinogenesis 
mechanism that eventually killed its designer. He vividly portrays the 
enthusiasm and self confidence of the USSR in the late 50s when 
Khrushchev’s boasts that they would overtake the USA by 1980 and achieve 
communism seemed plausible. He gives a good didactic account both of the 
basic mechanisms of the Soviet Economy, and, through the lives of 
incidental characters paints a picture of its real operation that is 
more detailed and convincing than any academic history.

He traces the idea of cybernetic economic management from the hope of 
the 50s and early 60s to its sidelining under Kosygin, and the eventual 
relegation of Kantorovich to the less ambitious task of optimisating 
steel tube output for the oil and natural gas industry. Ironically, says 
Spufford, as growth rates slipped in the 70s, it was only the 
exploitation of petroleum for export that allowed Soviet living 
standards to rise.

This is a book that should be read by anyone who is seriously interested 
in the possibility of a different sort of economy from the one we now 
have. It shows both the strengths, and the hidden weaknesses of the most 
serious attempt so far to construct an alternative to capitalism, an 
attempt that was born when the idea of a communist future was taken very 
seriously by a whole society. To read it is to be convinced that 
whatever the truth of standard leftist criticism of the USSR as being 
undemocratic and bureacratic, there was much more than that at issue in 
this tragedy.

It raises real political and philosophical issues that would have to be 
faced by any future socialist project, and draws attention to a 
forgotten history that today’s socialists ignore at their peril.

The bulk of what we read and hear about the USSR focuses on the 20s and 
30s. The remaining 50 years of its history fade before the glamour, 
grandeur and horror of the early years. But the early 1960s, when Russia 
was already an industrial country, with many areas of internationally 
competitive technology in aviation, space, computing holds more relevant 
lessons for the European left than its early years.

It is clear what lesson orthodox economists will draw:

     "It’s a timely exploration, now so many people have gone off the 
idea of markets, of why the alternative is worse."

But such conclusions betray an unjustified and callous smugness. It is a 
smugness not justified by the elegaic last paragraph of the book. The 
restoration of the market mechanism in Russia was a vast controlled 
experiment. Nation, national character and culture, natural resources 
and productive potential remained the same, only the economic mechanism 
changed. If Western economists were right, then we should have expected 
economic growth and living standards to have leapt forward after the 
Yeltsin shock therapy. Instead the country became an economic 
basket-case. Industrial production collapsed, technically advanced 
industries atrophied, and living standards fell so much that the death 
rate shot up by over a third leading to some 7.7 million extra deaths.

If you were old, if you were farmer, if you were a manual worker, the 
market was a great deal worse than even the relatively stagnant Soviet 
economy of Brezhnev. The recovery under Putin, such as it was, came 
almost entirely as a side effect of rising world oil prices, the very 
process that had operated under Brezhnev.

But this does not excuse us from seriously considering the problems so 
vividly raised in the book. Spufford recounts how the attempt to follow 
the reformers' recomendations and raise the price of food to provide 
more income for farmers provoked strikes by industrial workers, which 
were suppressed with great brutality. The same scenario played itself 
out in Poland in the 70s and 80s, when any attempt to raise the 
ridiculously low subsidised meat prices led to strikes.

Spufford brings out the disconnection between the recomendations of the 
reform economists and the real lives of the people that the reforms 
would impact on. Food subsidies were the bad conscience of inequality. 
They were necessary because without them, those on the lower wage rates 
could scarcely have survived. Marx had advocated that in the first stage 
of communism everybody would be paid in labour vouchers not money - 1 
hour's work getting 1 hour's vouchers. Goods would be directly priced in 
terms of the labour required to make them and social expenditure would 
be met out of a tax or time-levy on incomes. Soviet prices deviated 
considerably from labour values for two reasons:

     * The well known subsidies on essential foods and housing.
     * The turnover tax was, I think, calculated on the basis of total 
turnover not just wages, as such it was similar to the fixed percent 
markup Marx posited for prices of production. Given that due to 
subsidies, wages underestimated the real value of labour power, this 
sort of markup would mean that the deviation of prices from labor value 
would actually have been bigger than under capitalism.

To have furthered Khrushchev’s avowed aim of communism, Kantrovich would 
have had to propose egalitarian pay rates and a shift in state finance 
from turnover taxes to income taxes, before prices could be rationalised.

Spufford gives greatest emphasis to the policies of those around 
Kantorovich and Nemchinov, who were advocating price reforms as part of 
a programme to allow optimal operation of the economy. Kantorovich 
argued that these prices - objectively determined valuations - arose out 
of the objective technical structure of the economy. If actual prices 
corresponded to objectively determined values, then the signals that 
these prices provided would guide individual factories to produce in 
accordance to what the plan needed.

There is of course a strong similarity between this argument and that 
put forward by Western economists about the role of prices in guiding 
resource allocation in a market economy. It is probably no accident then 
that Kantorovich was the only Soviet economist to get a Nobel Prize for 
economics.

But there was a fatal paradox in this whole notion, one that Spufford 
brought out in a meeting between Kosygin and a leading reformer: how 
were these optimal prices to be calculated? The maths was well 
understood, but the technical problems of handling that much data with 
1960s computers were vast. And if Gosplan could concentrate the 
information and could have done the computations, then the indicative 
prices would have been unneccessary - the whole process of calculation 
could have been done in-natura with the Objective Valuations only having 
a fleeting existence as coefficients within the matrices of the planning 
computers.

So the programme of Kantorovich ended up requiring the same level of 
computing resources as that of his rival cyberneticist Victor Gluschov 
who apparently advocated the complete abolition of money - something 
superficially closer to Krushchev's vision of communism. In this context 
it is worth reading InterNyet: why the Soviet Union did not build a 
nationwide computer network by Slava Gerovitch. It would have been 
interesting had Gluschov appeared as a character in the book, rather 
than just as someone who is refered to indirectly. In the afterword it 
becomes clear why Gluschov remains such a shadowy figure to Spufford. 
Spufford reveals that he relied entirely on English language sources. 
What he knew of Gluschov came from Gerovitch’s brief account.

All in all, let me say again, this is a book that should be read by 
anyone with a serious interest in economic alternatives.




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