In Praise of Planning
In our crisis-ridden world, could centralized economic planning, rather than the ideal of free markets, be the solution?
Leigh Phillips and Michael Rozworski (2019). The People's Republic of Walmart: How the World’s Biggest Corporations are Laying the Foundation for Socialism. Verso Books.
What makes this cleverly titled book worth returning to five years after its publication? The authors, Leigh Phillips and Michael Rozworski, develop a deceptively simple argument: Pay closer attention to what major corporations like Walmart do, and less to what free-market ideologues say, and you'll find that most capitalist enterprises operate more like carefully planned command economies than idealized market actors. Centralized planning, far from being relegated to the scrapheap of twentieth-century history, is alive and well at the heart of American capitalism: It lies at the core of what companies like Amazon and Walmart do every day.
While classical economic liberalism espouses the ideal of a self-regulating market, no large corporation can actually live and thrive by the principles of laissez-faire economics: Big business demands lots and lots of planning, which in turn means taking charge of resources and building up what in essence amounts to a giant internal planned economy—an economic dictatorship where resources are commandeered and allocated through managerially enforced plans about what to do, when, and where. Phillips and Rozworski (hereafter P&R) suggest that, when examined more closely, the logistics of a corporation like Walmart—the largest private employer in the United States—resembles more the Soviet State Planning Committee (Gosplan) than any of the stylized notions of market actors envisioned by the likes of Ayn Rand or Milton Friedman.
This may seem controversial, but it really shouldn’t be. In his landmark studies in business history, The Visible Hand (1977) and Scale and Scope (1990), Alfred Chandler showed how large firms in the early twentieth century were more interested in maximizing throughput—the constant churn of raw inputs turned into processed outputs—than they were in maximizing profits; the way to accomplish this was through carefully planned managerial action. All successful business is logistics. A steady, stable flow of inputs to outputs was the only way to maintain the “cost advantage” associated with economies of scale (producing a single thing lots of times over) and economies of scope (producing multiple things using the same operating unit). American capitalism is characterized more by the “visible hand of management,” as opposed to the “invisible hand of market forces,” as Chandler puts it—in other words, the active, interventionist agency of centralized (corporate) planning, rather than the spontaneous, self-regulating actions of market-responsive actors.
Similarly, to P&R, “planning exists on a wide scale within the black box of the corporation,” and companies like Amazon and Walmart are essentially gargantuan command economies. On P&R’s account, “great swaths of the global economy exist outside the market and are planned,” and Walmart is a “prime example.” Its modus operandi punctures a century-old debate about the impossibility of “socialist calculation.” In the 1920s, the Austrian economist Ludwig von Mises claimed that markets were inherently superior to anything socialist planning could devise, simply because of informational complexity: Economic life is inherently too tangled, too multifaceted, involving too many actors doing too many things at the same time for centralized planning to be sufficiently efficient; leave that to the information-transmitting effects of prices in self-regulating markets, Mises posited, and the world would be a far better place. But the Misesian argument against socialist calculation has one major flaw: We already live in a world of capitalist calculation; replace the capitalist head with a collectively-oriented one, able to take into account public needs, and planned economies look far less improbable: “Planning exists all around us, and it clearly works; otherwise capitalists would not make such comprehensive use of it.”
Deepening Democracy
Despite its clever and, to my mind, unobjectionable central argument, The People’s Republic of Walmart is weakened by some of its formal features. There is at times a jarring, jokey tone. The authors could have used better data; this is not a book of social science, and there is little by way of first-hand observation or even interviews; most of its contents are based on press reports, and missing is an account of the nitty-gritty of Walmart logistics, despite the book’s titular promise. And there are entire chapters that don’t make much argumentative sense: Detailing the history of Britain’s National Health Service feels unnecessary to building the case for centralized planning—even if any major public health enterprise must of course involve a great deal of it. A chapter on the USSR contains a potted history of 1920s Soviet state and society, only picking up steam midway through with the story of Gosplan, the Soviet state planning agency.
Still, The People’s Republic of Walmart makes an important, if polemical, contribution to the case for economic planning.
Incidentally, theirs is not an argument in favor of nationalization, the take-over of enterprises by the state. To P&R, nationalization can be quite undemocratic, even if decommodifying, because states are hierarchical, stratifying entities. (To illustrate: Norway’s state-owned oil company, Statoil, was a force for decommodification, strengthening the welfare state’s tax base helping expand public-service provision, but it was hardly democratic: There was no meaningful way for the public to force the Norwegian oil giant to pivot to renewables, for instance, which delayed a green transition in this northern European society.)
Economic planning ought instead to deepen democracy; it has to decommodify, certainly, cushioning everyday life from the tyranny of markets, but it should also intensify popular involvement in economic life. After all, there is curious gap at the core of liberal democracy, in which most workers—and we’re almost all workers—are asked to accept that at least one-third of their lives are to be spent on “islands of tyranny,” on P&R’s apt phrase, those economic dictatorships known as the modern workplace, in which time belongs to another—managers, owners—with limited influence on the allocation of means or selection of ends. Why should democracy end at the factory gates?
Some critics have charged that P&R confuse two distinctive concepts: economic planning and planned economies.
I’m not so sure. Clearly, the two are related: If one accepts that corporations in fact engage in lots of long-term planning, then joining up these entities into some kind of coordinated superentity seems more like a technical challenge than an a priori impossibility—a tractable problem of computation, not an article of dogmatic impossibility. Still, more work clearly needs to be done on the move from internal to external, economy-wide planning, in which centralized allocation mechanisms might govern firm-to-firm relations, subject to some form of democratic control.
From Punch Cards to Big Data
P&R are optimistic about the possible role of technology. Sheer computer-processing power should allow us to engage in centralized coordination in ways that a twentieth-century figure like the Austrian socialist Otto Neurath could only dream of. Was planning plagued by inefficiencies because its earlier proponents were trying to do too much with too little? Supercomputers and "big data promise to solve planning and calculation problems that were irresolvable in the former age of typewriters and punch cards. Future work needs more input from the mathematical and computational sciences, P&R argue: Many planning theorists have “come from the academy, in particular from the humanities—history, law, philosophy, literature—and from the social sciences—sociology, anthropology, economics, political science,” but, they argue,
Any future Left that takes the question of planning seriously will also have to depend heavily upon talents from computer science, operations research, combinatorics and graph theory, complexity theory, information theory and allied fields.
At the end of the day, do we even have a choice? In an unequal world and on an overheating planet, planning looks increasingly imperative. The world faces a calamitous series of decades ahead. Climate catastrophe looms large on the horizon. Can we really allow corporations to blindly obey the dictates of the market, prioritizing their shareholders in self-directed fashion? Precious resources, including energy and emissions, need to be allocated in sensible ways. Strangely, Walmart has done a great service to calculation debates by showing that planning is not just some relic of the past but integral to contemporary capitalism. What remains is to show how this might scale up to entire economies—to counteract some of the fundamental crises of our age.
A Selection of Links
Thank you for reading The Theory Brief. Here are some of the things we’re reading and thinking about this week:
Journal of the History of Ideas: Virtual Issue: Recent Work in French Intellectual History
Aeon: When AI summaries replace hyperlinks, thought itself is flattened
WSJ: Inside the Sprawling Military Zone Israel Uses to Control Gaza From Within
WSJ: He Was Going to Save Intel. He Destroyed $150 Billion of Value Instead.
Politico: Sweden’s Social Democrats struggle in traditional blue-collar heartlands
E-flux: New Silk Roads - Azadeh Mashayekhi et al. - Consuming Baghdad
Bloomberg: Russia's Military Buying US Chips From Texas Instruments Despite Sanctions
Euronews: Germany and Austria freeze Syrian asylum applications, local media report
Foreign Policy: Syria Gives Erdogan His ‘Leader of the Muslim World’ Moment
AP: Pope creates 21 cardinals, many of them reformers in their own right, to carry out his reform plans
Book Spotlight
A recently published book I’m enthusiastic about:
Peter Brown (2023). Journeys of the Mind: A Life in History. Princeton University Press.
This distinguished historian and scholar looks back on a long life in the academy, moving from his Protestant upbringing in the Republic of Ireland to historical training in Oxford and extensive writings on the world of late antiquity.
Reading Adam Hanieh’s Crude Capitalism - he makes a similar argument about the decades long stronghhold of the Seven Sisters over the oil market - integration and coordinated planning from upstream to downstream.