In the thirty some years since it fell, American analysis of the Soviet Union has been reduced to one sentiment: communism failed because capitalism is superior. Professional people—especially ones employed by media companies—spend an awful lot of time and energy attempting to rationalize its downfall through clichéd ideological arguments. They bring up the work of Hayek, stories about full grocery aisles, or simply argue that people are too self-interested for mass collectivism to work.
And yes, I understand and even agree with many of these arguments, but it’s also lazy. It’s like analyzing the most recent Super Bowl and concluding that the New England Patriots won because they wanted it more. In How Not To Network a Nation Benjamin Peters provides an exhaustive look at one of the functional problems that plagued the Soviet experiment: information.
Underpinning any idea of socialism or communism is central planning. Loosely defined, central planning is the idea that government controls the means of production and goes about maximizing the economy and welfare of the country. In theory, the people determine what they want to produce (through voting) and the country organizes around that. Again, let’s disregard ideological or theoretical arguments about its viability and focus on what it would need at a functional level.
- Data: To make investing decisions a government would need a large amount of reliable data. Reams of information on customer and industrial demand and industrial supply, crop yields and forecasts. This is in addition to accurate demographic, medical and other information needed for the health of the people.
- Standardization: All input and output would need to be consistent in order to enable the next point.
- Coordination: The government would then need to be able to sift through the data to ensure all industries are coordinating production to maximize finite resources. Eg. Let’s say they want to build 100,000 new cars. 100,000 new cars will require 400,000 new tires and 100,000 seatbelts. What will the impact be on the roads? Will they have to build more grading machines to expand the highways? More railroads to transport the cars? Steel needs to be available for the raw production of automobiles and creating and shipping the component parts.
As you can see, this is a tall order. History shows that the Soviet Union failed—but it wasn’t for a lack of effort. Peters reports in 1962, 1.3 million people (in a nation of about 210 million) were employed in Soviet accounting. That same year the planners accidentally skipped the 1959 census data for their five-year plan. The result was a plan that under-produced goods by about 4 million people. Just to be clear–understandable administrative error caused massive shortages.
Oddly enough, modern computers could theoretically have solved the Soviet Union’s problem. Enterprise software like SAP enables manufactures to track individual paint pellets as they transform into a finished product sprayed on cars. Cloud-based computing solutions enable companies to analyze and manage international supply chains at a relatively low cost. Just-in-time manufacturing enables the rapid manufacturing processes needed to produce products for diverse citizens. Imagine a system where Kiev would in standardized and reliable data, it was reviewed by a distributed network of analysts, and leaders in Moscow dictated production decisions. It’s impossible not to contemplate how Soviet socialism could have been functionally enabled by capitalist technology.
If networked computers were the solution to the Soviet Union’s existential problem, why didn’t they create them? They tried, but failed due to ideological and functional problems. On the ideological side, computer networking was seen as an imperial capitalists plot to further devalue the working class. From a functional level, it ran into administrative problems. Peters explains, “American APRANET initially took shape thanks to well-managed state subsidies and collaborative research environments. The comparable Soviet network project stumbled due to widespread unregulated competition among self-interested institutions, bureaucrats, and other key actors.” Basically, the socialists acted like capitalists and the capitalists acted like socialists.
What a wild world we live in.