. But A communist Party is better placed to achieve capitalism after thowing the feudal State as it can approach such a development in an orderly way compared to the market dictated unplanned chaotic development such as India is facing right now. So there is a need for a communist party in any stage of development provided that party does not confuse the prevailing stage and try to build socialism straight away.
[WS:] Replace "Communist Party" with "centrally planned economy" and we are in full agreement. The clear advantage of the central planning approach to accelerated development - at least in the initial stage - was a significant reduction of transaction costs of such development, including an effective anti-inflationary measure.
The transaction cost argument (i.e. administrative hierarchies being more efficient than free markets because they reduce transaction costs that are inherent in the markets) is well known (cf. Oliver Williamson, _Markets and Hierarchies_) so there is no need to repeat it here.
What needs to be added is that accelerated industrialization of a backward agrarian society generally results in underproduction in agriculture vis a vis increased demand for agricultural products in the cities. It is so, because labor is diverted from labor-intensive agriculture (no mechanization there yet) to also labor intensive industrial projects in the cities.
Under the market condition, that would result in high inflation (skyrocketing of food prices creating a push for higher wages in the industry sector). This in turn would increase the cost of industrialization, much of it would end as profits in inefficient agriculture (the notorious "kulak problem" in x-USSR).
However, administrative control of prices under the central planning system prevents such inflation and provides for a more efficient allocation of resources (e.g. investment in modernization of agriculture, whereas "kulak" profits would likely to be invested abroad to protect them from high inflation.) There is also a reduction of the social cost of development - as state built public housing or health care - no matter how drab or basic - is a vast improvement over the slums, shantytowns, and millions of displaced people that are invariably produced by market-based modernization.
Of course, the trick with central planning is that at certain moment it becomes hindrance to further economic growth, if it is not adjusted to the changing nature of the developing economy. This again was a well known problem faced by central planners in E. Europe - which faced a across-the-board slump in labor productivity (see Chavance, _The Transformation of the Communist System_), coupled with popular demand for higher wages and greater consumption (vis a vis investment favored ply the planners - an increasing portion of which went to cover up the cost of shortages and inefficiencies).
The metaphor that I use for planned economies is a wheel chair. This is an ideal solution to someone with broken legs, because it gives him mobility that more efficient means of transportation (e.g. a bicycle) would not be able to provide. However, as his condition improves, the wheel chair becomes a hindrance to this mobility if that person does not abandon it in favor of a bicycle.
>From that point of view, central planning worked beautifully - it brought
the backward Eastern Europe to European Union in about fifty years. There
were, of course, some rough transition issues, but from the macroeconomic
point of view it accomplished its objective.
Wojtek