Improving The Planning Process

Improving The Planning Process


The machinery and bureaucracy of plan construction in the Soviet Union are voracious users of manpower and time. If modern data processes were applied to the handling of economic statistics, resources could be freed for more constructive activities. Computerization of data collection has not proved an easy task, however, because of the lag in the Soviet computer industry.

[The head of the computer branch of the Soviet Academy of Sciences] has estimated that more than 4,000 medium-to large-sized computers would be required [for a statistical network]. There probably are not more than 3,000 digital computers now [1966] installed in the U.S.S.R., of which very few are so deployed that they would belong to this system. This contrasts with the 28,000 general-purpose computers that had been installed in the United States by the end of 1965.

The Russians are still far from closing this gap, as shown by recent interest in obtaining computers from the West. Even if computer hardware is imported, there will be a continuing shortage of technical workers with adequate training. In addition, certain institutional barriers discourage the creation of a unified system of accounting to replace the multitude of sys­tems currently employed by various enterprises, industries, and ministries.

The task of computerization is enormous, but it will necessarily have to proceed at an accelerated pace if the economic planning system is to avoid being buried in its own paper work.

Obtaining the annual-plan norms for the Ural Machine Building Factory required compilation of documents 17,000 pages long .... Soviet government agencies collect mountains of information. They then process the information so poorly and store it so inconveniently that only a fraction of it is ever used. The most famous description of the problem is the oft-quoted statement (outside Russia and within) of the prominent mathematician-cyberneticist, V. M. Glushkov, to the effect that, if nothing is done to modernize the planning system, by 1980 planning will occupy the entire adult population of the Soviet Union.

Application of Mathematical Economics

Another suggestion for modernization of the Soviet planning process has come from the new mathematical approach to economics championed by the late V. S. Nemchinov. These suggestions had to be advanced most cautiously to avoid charges of anti-Marxist heresy. Fortunately Marx was very vague about exactly how the economy of a socialist state should be managed. Lenin severely underestimated the skills required for economic planning. Nemchinov tried to avoid any "bourgeois" stigma attached to the use of mathematics by documenting seemingly sympathetic statements of orthodox Marxists and by charging Western mathematical economists with perverting and misusing valuable tools of economic analysis.

One tool advanced by this school is claimed as a Russian invention. Input-output analysis was developed by Professor Wassily Leontief of Har­vard, who left Russia in the 1920s. Input-output analysis makes assump­tions about the economy similar to those underlying the construction of production norms. The application of modern computing techniques makes input-output analysis a flexible and expandable alternative to the method of material balances for achieving internal consistency within a plan. Mod­ern computers make it possible to construct several variants of the plan in order to compare the investment and consumer-welfare results of each, thus giving political leaders a range of choice among economic outcomes.

The success of input-output analysis depends critically on the accu­racy and reliability of the data on which the model is based. Many observ­ers believe that extensive reliance on the results of input-output analysis in the Soviet Union cannot occur until the quality of Soviet economic data improves.

In 1939 a Russian mathematician, Kantorovich, developed a tech­nique for calculating the movement of goods over an existing transporta­tion network at minimum cost. It became the basis for the development of what is called linear programming in the West. The importance of this technique for solving the economic problems confronting economies like that of the Soviets was not recognized in Russia until recent years. Linear programming has been used in the West to select the best technology and to evaluate the efficiency of industrial production. It can also reflect a rational valuation of commodities by means of shadow prices, which show the quantities of scarce resources devoted to their production. This would permit the Soviets to choose techniques of production that maximize pro­duction in terms of objectively determined criteria without resorting to capitalist-tainted profit-maximizing techniques. The use of linear program­ming is spreading throughout Soviet industry now that its usefulness is finally being recognized.

Mathematical economics has gained tremendously in prestige in recent years. When it is combined with computerization, there is increased probability that the ponderous apparatus of Soviet planning can be re­formed. Mathematical techniques are well suited for incorporating con­sumer desires into planning considerations, thus creating a mechanism in which genuine consumer sovereignty could exist outside a market economy if the political leaders ever gave top priority to increased living standards and freedom of consumer choice. These advances, along with some decen­tralization of decision making in recent years, have caused some Western observers to attribute capitalist tendencies to Soviet planners. It is more likely, however, that these developments will be used to preserve the so­cialist character and command structure of Russian economic institutions. The viability of the Soviet experiment with central planning has been strengthened by the ability to overcome ideological barriers to the consid­eration of new ideas and new methods of facilitating economic decision making. The sum total of these intellectual currents is the revitalization of Russian economics for the first time since the 1920s