There's a lot of misunderstanding and flat-out distortion about the theory of socialist planning. And there's a lot of ignorance and simple suppression of facts about how such economies have actually worked in practice.

Look, we're not simply talking abstract models here. In China during the Maoist years (1949-76), one-quarter of humanity was creating a new society, free from exploitation and oppression. And it was a society in which a planned economy was quite functional.

Bourgeois experts matter-of-factly declare that socialist economies are lumbering, bureaucratic monstrosities. They declare that socialist economies, when and where they have existed, were hated by the people. They say that so-called "command economies" are doomed to fail and fall apart. A lot of progressive people repeat this without examining the facts.

I do have to set the record straight: Maoist China had great economic successes.
The masses constructed a comprehensive, integrated, and independent agricultural-industrial base. During the years of the Cultural Revolution industrial growth averaged 10 percent a year.

Living standards greatly improved. The food problem was solved; a growing assortment of consumer goods was being produced; housing needs were met; and the revolution created the most egalitarian health care system in the world (thatâ€(TM)s according to the World Bank!). Life expectancy in China increased from about 35 years in 1949 to 65 years in the mid-1970s. Shanghai had a lower infant mortality rate in 1975 than did New York City! None of this would have been possible without socialist planning and economic coordination.

And weâ€(TM)re not talking here about some giant welfare state.

These advances were made on the basis of social mobilization and mass political awareness. People were taking up and debating major issues of politics and culture in factories and communes. It was in the period of the Cultural Revolution that Mao summarized the approach with the slogan, "Grasp Revolution, Promote Production."

New forms of worker control and revolutionary management were being developed and struggled out within factories and workplaces. Barriers between workplaces and between people working in agriculture and people working in industry were being broken down.

Okay, but isn't it true that more consumer goods are available in China today than under Mao? Yes. Once the Maoists were overthrown, and China was integrated into the world capitalist market, the variety and quantity of consumer goods expanded. The problem is that the people who mainly can afford these things are from new privileged strata-while millions of ordinary Chinese are working in sweatshops, producing consumer goods that they cannot afford for markets in the imperialist countries. And talk about a thriving market: a major cause of the AIDS epidemic in China's countryside is the sad fact that today, with poverty and inequality spreading, poor and landless peasants are selling their blood in order to survive.

When people talk about "command economy," they usually mean two things.
First, there is the idea of people on top attempting to "micro-manage" everything-from the leading ministries all the way down to the smallest of enterprises.

Second, there is the idea that people are simply being barked orders at and moved around like pieces on a chessboard.

That's not how things worked in Maoist China. Mao and the Chinese revolutionaries had learned from the negative features of the Soviet experience. Under Stalin, there was too much top-down, vertical control over the economy. Mao said this stifled popular initiative He also said this approach was unworkable--because there is no way that a complex and diverse economy could be managed on the basis of detailed commands from the top.

1) Mao saw planning as involving centralized leadership and coordination, and decentralized responsibility and initiative. And leadership is not just a matter of who is leading-but what line and policies are leading, what lines leading people are carrying out and fighting for.

In Maoist China, the socialist plan incorporated clear political, economic, and social priorities. These had to do with developing agriculture and feeding people, developing a regionally and technologically balanced industrial system, overcoming the city-countryside divide, revolutionizing management, organization, and the labor process.

A revolution has to identify key needs and priorities. Are you going to work to support revolution in other countries? Do you build baseball stadiums or hospitals first? Where do you focus efforts to improve transport-on private autos or mass transit?

You need centralized direction over the output levels of major products. You need to be able to mobilize resources for priority needs and sectors. You need society-wide coordination of some forms of technology (power and communication systems, for instance). Centralized coordination is also needed because economic activities at any given level have economic, social, and environmental effects at other levels of society. And people at the "ground level" cannot anticipate all such consequences, even as they act with the interests of the whole society and world in mind.

The national plan in revolutionary China projected the principal requirements of the provinces, but substantial powers of planning and administration were delegated to the provinces and localities. The number of materials placed under central allocation was relatively low compared to the situation in the Soviet Union during the Stalin years.

Provinces and local areas assumed responsibility for supplying key goods to enterprises within their areas of responsibility.

A plan can't be rigid. Targets should be attainable and flexible. If economic or political conditions change, if new understanding is gained, then adjustments may have to be made-and that should built in to the planning system. Another point is that planning needs to unfold within "multiple time horizons": longer term, like 5 years; and shorter-term, like one year.

One of the big breakthroughs in planning methods in Maoist China was the practice of "two track" planning. You had industrial ministries drawing up plans to meet the needs and requirements of particular branches of production. This was one track. But the main track was "area planning."

Local areas took principal responsibility for basic production decisions and allocation of resources. Local plans were drawn up with a keen sense of local capabilities and resources, and with a concern for issues of pollution, population density, ways in which residential areas could be developed into new kinds of units of collective economic and social life.

2) How were plans worked out?

I wrote about this in an essay included in the book Maoist Economics and the Revolutionary Road to Communism. The overall process was described as the "two ups and the two downs."

An initial plan, based on mass experience flowing upward and the overall needs of advancing the revolution, would be formulated and sent down through all administrative and production channels. It was then put to mass review, with suggestions getting transmitted upward. Then a final modified plan would be sent back down.

The goals of the plan were the object of mass discussion and evaluation, according to the overall and guiding political objectives. Where should society be heading and how should we be getting there? There was the principle of overcoming the "three great differences"-overcoming the gaps and inequalities between industry and agriculture, town and country, and mental and manual labor.

A plan is not just some "input-output" cookbook, or some grandiose set of marching orders. A socialist plan, first and foremost, serves and concentrates the political and social objectives of the revolution.

One of the primary purposes of a socialist plan is to give people a deep and accurate understanding of the conditions of society and of peopleâ€(TM)s real interrelations with one another-precisely what the market with its mystification can never do. The masses need to have wide knowledge of the whole system: its economic laws, its contradictions, and its goals.

A socialist plan is worthless and unworkable if the masses are not politically won to it-because it is the masses that have to grasp and act on it; it is the masses who have to define and carry out responsibilities:to do that with the interests of the whole society, the whole revolution, and the whole world in mind. This is why planning has to be linked with mass social movements and with political campaigns focusing attention on the key issues confronting society.

In sum, the planning system has to rely on collective responsibility. Socialist planning is the practice of the "mass line": carried out in accordance with the interests of the masses and on the basis of mobilizing the masses.

The recent Draft Programme of the Revolutionary Communist Party,USA explains that commodity-money relations cannot be immediately overcome under socialism. They will persist for some time. [See the DP section: The New Socialist Economy, Part 1: Grasp Revolution, Promote Production]

The law of value-- according to which the value of things produced is equivalent to the socially necessary labor time required to produce them-will play a role, a secondary role, but a role nonetheless, in the socialist economy. Socialist production will still have features of commodity production. A commodity has two aspects. It has use-value-it satisfies a human want; and it has exchange value--it can be exchanged for other commodities according to the value it contains.

It will be necessary for the socialist economy to undertake cost accounting, as expressed in value/money/price terms, in order for the planning system to estimate production costs and to measure, compare, and promote efficiency. But what gets produced will be determined by social need, and workplaces will be organized on the basis of politics in command, not around profit or efficiency first. A price system will be used to serve socialist exchange. A substantial portion of consumer goods will still be purchased by individuals in consumer markets. But these markets will be strictly regulated and controlled, so that social need is met.

Here's how Maoists come down on these issues: Commodity production will exist in various forms and exchange through money will exist in various degrees under socialism; and they will be utilized within the planned socialist economy. But these phenomena are not neutral.

Where market-money-price relations exist in any form, there are elements and seeds of the negative things Iâ€(TM)ve been talking about:

· economic differentiation,
· social polarization,
· people and groups being pitted against each other,
· individuals and units seeking to maximize income instead of the social good,
· and, in the ideological realm, the spirit of narrow calculation and selfishness.

From the standpoint of where humanity has to go, these relations are defects of the new society.

But that very judgment will be contested. Thereâ€(TM)s going to be class struggle in socialist society over whether to perpetuate and expand these relations and restore exploitation; or to monitor, restrict, and transform them, and to continue the revolution to move society forward and beyond commodities, money, the market, and the mind-set of "me first."

People ask how plans would decide such issues of light and heavy industry, where to focus research, what consumer goods would get produced, etc.

Would these things be voted on? The answer is no.

For one thing, certain common needs (housing, healthcare, etc.) are not such a mystery. For another, it's an impractical way of running an economy and society. And one has to ask, according to what standards and preferences would people be voting?

But planners must not become divorced from the masses, and the planning system has to involve deep investigation among the masses and feedback from the masses. On the one hand, you need society-wide priorities and direction. On the other hand, you also need society-wide debate, education, and struggle, both over the immediate and the long-term goals of the revolution. This is essential in order for the masses to be relied on to solve problems and to transform society through their own efforts. The party has tried to learn from this.

The Draft Programme lays out an approach to economic development and indicates specific policies. I want to highlight a few of the most important of these principles and policies.

1) "Raising the bottom up." The new proletarian state must take special measures for "raising the bottom up." This applies to rebuilding and improving the ghettoes and barrios, the distribution of social goods and services (like health care centers), and giving preference in development to less developed and more backward areas. The whole society, people from every stratum, will be mobilized to overcome the inequalities left over from the old society.

2) "Socialist sustainable development." Step-by-step efforts will be undertaken to develop technology, industrial-agricultural systems, and infrastructure that are economically productive, ecologically rational, and socially just. The new society must promote the outlook that humanity is the caretaker of the planet for present and future generations.

3) "Creating new urban-rural relations." The size of cities will be consciously reduced; new construction and economic-social planning will integrate work, residence, and community; the characteristic mode of suburban development will be halted and reversed; people will live in closer proximity to agricultural land and agricultural production.

4) "Reconfiguring a formerly imperialist economy". The new socialist economy will shatter the old society's former international economic relations. It will immediately cut links and ties with institutions like the World Bank and WTO and expose their crimes and wage struggle against such institutions. The proletariat in power will utilize the productive forces it inherits first and above all to advance the world revolution toward the aim of overcoming all exploitative and unequal relations in the world.

Where are these principles coming from?

· They represent the distillation of socialist experience and the application of the lessons of that experience to the concrete conditions of U.S. society.
· They flow from concrete analysis of what it will take to overhaul the economic structure and social fabric of U.S. capitalism.
· They incorporate the insights of various social movements and oppositional social theory.
· They reflect the just demands and highest aspirations of the struggling masses in U.S. society.
· They correspond to the needs and interests of the oppressed of the world-who want U.S. imperialism off their backs.

The RCP is promoting and popularizing these principles today. It is rallying people to a revolutionary cause and to a revolutionary struggle capable of ultimately putting them into practice.

Under socialism, you need core principles as guideposts for economic development and as yardsticks against which to evaluate progress and backsliding. These kinds of principles set out in the Draft Programme will become the object of mass study, discussion, and debate. They will be taken up by the masses and used to transform society. New knowledge and understanding will be gained.

But this will not be taking place in a vacuum. Such principles will come under attack by new privileged forces within socialist society and the state who stand for very different economic priorities and social direction. This is another reason that you need revolutionary leadership: to focus up key questions confronting society and to politically arm and organize the masses so they can wage complicated class struggles to defend and advance the revolution.