During a busy start to the year this month I've been winding down in the evenings with suitably diverting reading matter: a history of the application of cybernetic mathematical models to the design of post-war Soviet economic policy.
Nothing unusual about that, I grant. But Francis Spufford's Red Plenty is an account of centrally administered resource allocation quite unlike any other. Part fiction, part historical narrative, it's one of the most brilliant books I think I've ever read, and given the continued fallout from the global financial crisis we're living through, one that - esoteric subject matter notwithstanding - is relevant to our contemporary economic circumstances.
I referred to the parlous state of the global economy in a post published few weeks ago, iSustainability: the world is facing two serious economic crisises, the solutions to which seem to cancel each other out. On the one hand, economic austerity for the foreseeable future; on the other, precipitant ecological catastrophe. The planet can no longer support a return to uninhibited economic growth. But we need some kind of sustainable recovery to secure a decent, stable standard of life for all: not just for those in the developing world who, quite rightly, want to experience living standards enjoyed by many in the west for the past few decades, but also, as a matter of increasing urgency, for the great majority in the wealthiest countries, now entered into a period of unprecedented economic insecurity.
The world produces sufficient wealth to provide decent living standards for everyone. And the technology required to support sustainable growth is available. But we face the challenge of designing a sustainable economic model that will actually deliver the just, stable world that most us say we want. It is one thing to analyse the shortcomings of freewheeling global capitalism: chronic fluctuation between economic cycles of boom and bust, great wealth for the few and insecurity for the majority, the exploitative vulgarity of commercialism, the sacrifice of the environment to the pursuit of profit. One could go on. But is it even possible to devise and realise an environmentally sustainable economic system that closes gaping inequalities of wealth and secures a decent standard of life for all?
All attempts so far to implement the principal alternative model, socialism, have failed. Communist revolutions, in which private property has been abolished and the means of production and exchange taken into public ownership, have always ended in impoverished dictatorship. Political progressives have managed to reform capitalism with some success: social democracy has given us public services and a measure of social security. But under the bonnet social democracies still run on the same capitalist engine. As the socialist historian G A Cohen notes, the issue for progressives has always been one of practical implementation:
In my view, the principal problem that faces the socialist ideal is that we do not know how to design the machinery that would make it run. Our problem is not, primarily, human selfishness, but our lack of a suitable organisational technology: our problem is a problem of design. It may be an insoluble design problem, and it is a design problem that it undoubtedly exacerbated by our selfish propensities, but a design problem, so I think, is what we've got.
Red Plenty is a richly evocative attempt to recreate the one period in history thus far when it seemed conceivable that a world power might just be on the way to developing a workable alternative to the capitalistism.
During the 1950s and early 60s the Soviet Union achieved the highest rates of economic growth in the world, at some 5 to 10% a year. In so many ways their economic system was still disastrously inefficient, but by the 1950s it was becoming clear even to western observers that the Soviets were making real progress towards their goal of dragging an impoverished rural economy towards a hi-tech, industrialised future. In the course of successive economic plans implemented in five year sprints vast new industrial complexes and cities were appearing on the plains of the USSR. Something of the collective spirit that had defeated the Nazi advance during the Second World War was being harnessed towards the end of breakneck economic growth. As Spufford writes:
For a while, in the late 1950s and early 1960s, people in the west felt the same mesmerised disquiet over Soviet growth that they were going to feel for Japanese growth in the 1970s and 1980s, and for Chinese and Indian growth from the 1990s on. Beneath several layers of varnish, the phenomenon was real.
The Soviets showcased their technological advance by putting the first satellite into orbit, Sputnik 1 in 1957, followed four years later by Yuri Gagarin's spacewalk.
All this, they claimed, was being made possible by rational marshalling of industrial and technological resources through systematic economic planning. To the Soviet mind capitalist economies were doomed to stumble blindly through periods of growth and recession, blown hither and thither by the random gusts of a capricious free market. Collective ownership, however, enabled a communist society to allocate resources rationally.
With all the relevant statistics at hand, the idea went, planners would be able to design logical supply networks between producers, ensuring optimal distribution of the raw materials necessary for carefully crafted, sustainable economic growth. There would be plentiful supply of consumer goods, affordable to all through just and equitable income distribution. There would be no unemployment, with a place available for each person at a suitable workplace appropriate for their skills and aptitude. And there would be no economic cycles: just steady, continuous growth, facilitating ever greater prosperity and opportunity for leisure. At the start of the 1960s General Secretary Nikita Khrushchev predicted that Soviet living standards would overtake those in the United States by 1980.
A clip from the visionary 1963 Soviet sci-fi film Mechte Navstrechu indicates something of the future the Soviet's were imagining for themselves at this time:
In view of how things turned out those dreams seem as fantastic as the images in their science fiction. But Spufford illuminates the thought world of the economists, scientists, engineers and administrators of 1950s Russia so convincingly that one sees just why they thought it really was possible.
He vividly recreates the heady atmosphere that prevailed during the late 1950s at the 'science city' of Akademgorodok, a vast university town built in western Siberia to to allow the USSR's best minds to research strategies for economic growth. Here leading scientists and economists sought to apply mathematical concepts such as cybernetics and game theory to economic planning models. The prospect of putting their theories into practice was made real by the development of the first Soviet mainframe computers, machines capable of carrying out the abstruse calculations necessary to resolve a seemingly infinite array of economic variables into a workable plan. Planners would feed all the necessary data into the mainframes, which would calculate the optimal targets to be met by each node in the economic network.
In one of many lyrical passages Spufford imagines the hopes of the Nobel prize winning economist Leonid Kantorovich, as he and his team work towards the development of an optimal planning theory:
The world was lifting itself up out of darkness and beginning to shine, and mathematics was how he could help. It was his contribution. It was what he could give, according to his abilities. He was lucky enough to live in the only country on the planet where human beings had seized the power to shape events according to reason, instead of letting things happen as they happened to happen, or letting the old forces of superstition and greed to push people around. Here, and nowhere else, reason was in charge.
But sadly, as the second half of Red Plenty illustrates, reason was not, and never has been in charge when it is necessary to orchestrate the actions of millions of human actors in pursuit of a grand economic scheme. After the reformer Khrushchev was forced out by more cautious members of the Politburo, the dreamers of Akademgorodok never got the go-ahead for large scale implementation of their proposals: in the final analysis their ideas were considered too risky. The politicians chose to stick with the older planning model, extraordinarily wasteful though it was, because the system was just too fragile to allow any significant experimentation.
The deeper problem, though, was the fundamental issue that has beset all command economies: systems of resource allocation work best when self-organised from below, not when planned centrally from above. Some kind of price mechanism is necessary to send the appropriate signals for matching the supply and demand of goods and services. In other words, something akin to the free market that operates in capitalist economies, where production responds to the drift of consumer demand, alternately rising and falling. It seems the only economic system that allows us to get by is a kind of non-system: a simple, free-floating open market from which some kind of order arises spontaneously, not in response to the dictate of a grand plan devised by a benevolent all-seeing eye. As Spufford concludes:
Years pass. The Soviet Union falls. The dance of commodities resumes. And the wind in the trees of Akademgorodok says: can it be otherwise? Can it be, can it be, can it ever be otherwise?
Red Plenty is fascinating reading for anyone who wonders about the possibility of designing viable alternatives to capitalism, a question that, since the financial crisis, has re-emerged for serious discussion. It's a question, I think, worth holding open: I like Albert Einstein's reference to the socialist ideal as 'humanity's attempt to overcome and advance beyond the predatory phase of human development.'
But Red Plenty has helped confirm my own view that social democracy, rather than socialism, is the best we can hope for: capitalism controlled and channelled, not overthrown.