Introduction

In February 1921 Russia established a State General Planning Commission to work out and implement a unified economic plan for the national economy. For seventy years this commission, known as Gosplan for short, played a significant, but varying, role in Russian and Soviet economic life. Under the influence of the Soviet example, planning organisations spread throughout the world, to state-socialist countries, to OECD countries such as the USA, France, the Netherlands and Japan, and also to developing countries such as India. In April 1991, deeply discredited by the poor performance of the Soviet economy and the ideological developments of 1985–90, Gosplan was transformed into a Ministry of Economics and Forecasting with substantially different tasks. Hence, socialist planning came to an end in the USSR, even prior to the end of the USSR itself. This radical transformation was not confined to the USSR or Eastern Europe. Two years later, in March 1993, China amended article 15 of its constitution to replace the description of its economic system as a ‘planned economy’ with the term ‘socialist market economy’. The term ‘planned economy’ was seen as discredited and inappropriate and was replaced by a term which incorporated the once rejected ‘market economy’. This chapter gives an overview of these dramatic developments and their causes.

The classics

Marx devoted most of his life to the analysis of capitalism and was notoriously opposed to attempts to design utopias. Nevertheless, from his scattered observations about socialism, and from those of his close comrade Engels (for example, in Anti-Dühring and Karl Marx) his followers drew the idea that in a socialist economy the market mechanism would be replaced by economic planning. That the market economy was inherently inefficient, and fundamentally unsuited to coordinate large-scale industrial production, came to be widely believed. Similarly, the notion of the superiority of planning, which would enable society as a whole to coordinate production ex ante, became widespread in the international Marxist movement. These ideas became an integral part of the Marxist critique of capitalism and the Marxist conception of socialism. They were elaborated in the works of the late nineteenth-century German Social Democrats and were regarded as axiomatic by the Russian Bolsheviks.