England, Wales and Scotland section of International Socialist Alternative

Why we need a planned economy

Low wages, rising energy bills, rocketing food prices and shortages in the shops. Hand in hand with this cost of living crisis we are also seeing an environmental catastrophe overwhelm the planet. This is the ‘magic’ of the market. 

The end of the 20th century was supposed to be the end of history. The collapse of Stalinism heralded the final victory of free market economics: we were told there was ‘no alternative’ by every capitalist politician and media outlet. 

However, the past fifteen years have shown that to be the folly it always was. The 2007/08 crash was the consequence of allowing bankers to run wild, free from the constraints of any kind of state regulation or democratic control. Complete collapse was only prevented by the state handing huge bailouts – billions of pounds of tax-payers’ money – to the banks. 

The pandemic has further laid bare the shortcomings of free market economics. As workplaces were closed because of a series of lockdowns, it was the state which again stepped in to pay wages through furlough schemes and business grants. 

And even the rightly celebrated Covid vaccines are not a product of free enterprise or “greed” as Boris Johnson put it. Instead, Big Pharma was subsidised to the tune of billions in order to develop them, with much of the research necessarily done in public institutions such as universities. For example, less than 2% of the funding for the AstraZeneca vaccine came from the private sector. 

A rigged market 

The economic turmoil triggered by the pandemic has further accelerated existing inequalities. Gas producers are forecast to make £170bn in excess profits according to the Treasury’s analysis. The big oil companies have made £100 billion so far this year! At the same time ordinary people face eye watering energy bill increases, which have now been capped at a (still eye watering) £2,500. 

Rail companies in Britain raked in £500 million in profits during the pandemic off the back of huge government payouts. Instead of investing this money in production or infrastructure, the wealth that the working class creates is being hoarded by those at the top with executives and shareholders receiving huge dividends. This is at the same time as prices rocket in the shops with inflation, which currently stands at a 40-year high of 9.9%, forecast to hit 14% in 2023. We now stand at the edge of a recession the like of which has not been seen since 1929. 

The question that many working-class and young people embarking upon the path of struggle will be asking now is: what is the alternative? If the market and free enterprise can’t solve any of the problems we face on a day-to-day basis, then what should the response of socialists be? Socialists have always stood for an alternative to the chaos and anarchy of the free market.

We stand for a different type of economy where the wealth produced by working-class people is owned and controlled by working-class people. For this to be possible, the big corporations that control vast swathes of the economy would need to be taken into public hands to allow us to use this huge wealth to meet the needs and aspirations of everyone. 

This would be achieved by establishing democratic workers’ control and management over the economy so that we could plan how resources are used and directed. On that basis, we could end the naked and single- minded pursuit of profits, which is the sole aim of private enterprise. That is why the demand for nationalisation of the commanding heights of the economy has been a key demand for socialists for the last century.

Socialist nationalisation 

Many defenders of capitalism will respond that this has been done before and it didn’t work. In most western countries large portions of the economy were nationalised by social democratic governments. But this was not done as part of a planned economy. Instead, around 80% of the economy was left in the hands of the capitalists, leaving the state sector at the mercy of market forces. Most industries that were nationalised at this time were run by boards consisting of government and private sector bureaucrats – the very same capitalists that had run those industries into the ground in the preceding period. 

The nationalisation of the post-war period were carried out to provide cheap infrastructure, basic utilities and essential services for capitalism. The oil price shock of 1972 created an economic crisis and gave the capitalists the excuse they needed to wrestle back the concessions that had been conceded in the postwar period. This took the form of neo-liberalism and the “greed is good” philosophy of Thatcher and Reagan, namely the privatisation of the nationalised sector with promises of wealth for all through what Thatcher called a ‘shareholding democracy’. 

Unfortunately this went hand in hand with the weakening of the trade unions, resulting in the driving down of wages and the resultant widening gap between the rich and the poor. For Socialists, nationalisation has to go hand in hand with economic planning. And the potential for that as an answer to the current crisis is clear to see. If the energy, water, and utility companies were in public hands then we wouldn’t have to pay out to executives and shareholders and we wouldn’t have the huge hikes in prices across the board we see today. 

Planning for the planet 

In fact, we could move away from our reliance on gas and fossil fuels to heat people’s homes and direct more resources into better insulation and greener forms of energy production like wind and solar energy. This is not happening at the present time because of the huge vested interests of the fossil fuel companies in maintaining the status quo and which exercise disproportionate influence over all governments and the State. 

Added to this, the Ukraine War has allowed these companies and governments to actually step up fossil fuel production just when the world is facing a fast escalating climate breakdown. Since 1991, greenhouse gas emissions have risen by 60%. The vast bulk of these come from big corporations. And, as many climate scientists have pointed out, we have already passed numerous climate “tipping points”, and are on the verge of passing many others. 

To reach the very urgent target of zero emissions will require huge levels of state intervention in order to create the infrastructure by which this is possible. Wind and solar farms would have to be set up across the world on a massive scale. This will require the training and retraining of 100,000s of workers as well as the production of the raw materials necessary to make it work.

Private industry is incapable of making this shift as it would impact on short-term profits. It will require planning and coordination on a world scale which private companies will not tolerate given that they are driven by completely opposite imperatives, namely competition and the drive for maximising profits. 

The move to electric cars has been proposed by some as a solution. But this itself would itself require huge levels of planning to create the infrastructure for it. Charging ports would have to be installed on every road in the country for the cars to work. Teams of people would also have to be employed to carry out maintenance, repairs and, from time to time, updates to the technology. The reality is, however, that a socialist planned economy would rapidly move in the direction of an integrated and efficient public transport network, negating the need for privately owned vehicles. 

While the world is crying out for environmentally sustainable public transport, the skills and resources that already exist to make it possible are going to waste. A democratic plan of production would make it possible to make the small adjustment needed to the machinery in the plants to make buses and other forms of public transport. With one simple measure we could have moved towards a more environmentally friendly economy as well as save thousands of jobs. 

This is work that would again require a level of coordination that is beyond a myriad of often competing manufacturers, utility companies and various layers of local and national governments. What would be required is a democratic plan drawn up on a national and even international scale to ensure that it happens to the necessary time scales and that the technology is integrated. 

Capitalist food crisis 

The climate catastrophe is also feeding into a food crisis. In agriculture, emissions have risen by 17% since 1990. Along with this, 33 countries have experienced social unrest as a result of increasing food costs. According to the world bank, 100 million people have been plunged into extreme poverty since the pandemic. The cost of rice increased by 75% in the two months up to July 2022. Wheat is up 130%, in large part due to the disruption of supply chains brought about by the Russian invasion of Ukraine. Millions around the world have been forced to go hungry as they pay the price of the greed of large corporations, which at times of shortage have prioritised their own profits at the expense of the rest of us. 

A socialist government would immediately introduce price controls in order to tackle runaway inflation. It would also ensure that food supply chains are reorganised so that resources would be directed to those in the most need of food. But it would have to go further. The large multinational food producers as well as those selling fertilisers and seeds etc would be nationalised, and production shifted toward meeting people’s needs, and those of the planet, rather than simply making profits. It is only on the basis of planning that the irrigation and other infrastructure projects could be carried out to make this possible. 

Is a planned economy still relevant? 

Many capitalist commentators argue that public ownership and economic planning are out of date. That they are solutions to the problems of a previous era of heavy industry and large-scale factory production, but that they are irrelevant when talking about new technologies and the ‘information’ economy. This is nonsense. In fact, the development of new tech makes these arguments more relevant than ever. 

Capitalist free markets are proving to be a fetter on the development of AI and automation which could be of huge benefit to the whole of humanity. Where it has been developed it is used to drive down labour costs and make people redundant. This is perhaps most prominent in the gig economy, characterised by an increasingly casualised workforce with a massive turnover. 

Far from making economic planning irrelevant, new technology could be used to make planning easier and more efficient. And planning is necessary in order to realise the full potential that new technology holds. New technology in the hands of the working class through a planned economy would immediately allow the swift introduction of an efficient and extremely advanced plan of production, geared to peoples’ needs and not profit. 

Capitalism is beset by crises on all sides. Far from ensuring endless economic growth and continuous improvements in our lives, the market has only brought anarchy, chaos, mass poverty, starvation and climate breakdown. And the supporters of the system can see no way out of the mess. Only on the basis of ending that system can we end the calamity that has come with it. The struggle for a democratic socialist plan of production is now a more vital struggle than ever. With the scale of the crises we now face it is a question of life and death. 


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