Planning, Market & Unemployment

[Michael Hoover]

> At 05:13 PM 8/26/99 -0400, Michael Hoover wrote, inter alia:
> >Soviet central planning generally eliminated long-term secular
> >unemployment and short-term cyclical unemployment associated with
> >capitalist business cycles from the 1920 onwards.  While elimination
> >of mass unemployment was, in part, the result of extensive industrial
> >growth, Soviets and other 'actually-existing' socialist states
> >provided job security that was perceived as positive achievement
> >and cannot be lightly dismissed nor should it be sacrificed as a valued
> >goal. 
> 
> Michael, the question is however, whether that wass accomplished by central
> planning itself or the rapid pace of industrialization that created a
> massive demand for labor.  Mind that the one of the main headaches of SOE
> managers was the shortage not the surplus of labor.
> So the bottom line is thatthe elimination of unemployment was the function
> of the pace and type of industrialization rather than central planning
> itself.  
> Of course, is whetehr such a rapid pace of industrialization would have
> been at all possible wihtout central planning is another question which,
> imho, has a negative answer.  
> wojtek

Not either/or and if you read from my previous post (see above excerpt that 
you included), I reference both planning and *extensive industrial growth* 
so I guess we're in general agreement. 

Soviet central planning system certainly mobilized human (and natural)
resources for rapid industrialization.  Maximum investment was
channeled into heavy industry (steel, iron, coal, electric power,
machine building, and military).  A kind of permanent war-time
economy, Soviet economic mobilization was not directed to fulfiling 
individual consumer demands. Central planning system paid less attention 
to efficiency and technological innovation in pursuit of bulk output. 
And it worked.  

Between 1928 and 1975, Soviet growth rates averaged 4.7%/year, even 
including the devastation of WW2.  By the 1980s, Soviet oil production
peaked, new labor force entrants declined, and the environmental costs
of industrial 'gigantomania' were revealed.  The old extensive growth
model had reached its outer limits.  Gorbachev leadership launched
greater initiatives for "intensification" of production methods and
greater reliance on market-type demands.  This also meant accepting
inevitable trade-off of considerable joblessness since any return to
a predominantly market-driven economy produces not just temporary mass
unemployment, but unemployment as as basic feature of the social
landscape, with all the consequences that this brings for market
societies. (*real* point of my previous post)  

I stated in my previous post (see above excerpt) that *job security
was perceived as positive achievement not to be dismissed nor to be
sacrificed*.  I should have indicated that, based on data collected from
public opinion polls that were introduced, this was the view of the
overwhelming percentage of working people in the Soviet Union in the
1980s.  I spent some time with Soviet sociologists engaged in this
work back then and they were very clear: professional/managerial
types were more supportve of 'reforms' than was working class.  

Despite acknowledged poor quality of consumerable durables compared
to capitalist West, most working people expressed relative
satisfaction in these polls.  Professional/managerial stratum
expressed greatest dissatisfaction, as did younger folks who
increasingly knew about and longed for Western consumer lifestyle.
Perestroika initiatives neither sufficiently redressed exhaustion
of 'extensive growth' model nor satisfied new consumer demands.
In fact, such policies resulted in growing criticism and dismissal
of planning system and increasing calls for marketization and
privatization.

I should have also indicated that 'frictional' unemployment in the
Soviet Union was less than 1% until 1980s.    Michael Hoover