After reading my "The Other Manhattan Project," a reader asked why central economic planning worked so well for America in WWII but so badly almost everywhere else—most notably in the Soviet Union.
For a telling contrast, look at the mission to put a man on the moon with the contemporaneous social programs of the Great Society. The point of course stands that having achieved the mission, the bureaucracy of NASA then devolved, as bureaucracies do.
The problem with the moral equivalent of war is that war requires the resolve to kill people, and to possibly die yourself, whereas the "equivalent" never does (and frankly shouldn't). That's the hollowness of that argument.
Great question, great reply. "Abundance Progressives" can study this carefully to achieve many of their goals, though at the cost, to them, of leaving Society deeply unjust.
I think we could debate the term "central planning" - in this context, you've largely defined it as "big project with end state defined by the government". But is is that really central planning?
The execution of these projects was largely left in the hands of professional managers who planned and executed these projects not very differently than projects are planned and executed in other contexts - they did initial planning, executed, collected feedback, iterated, repeat. The big advantage they had were really big budgets (your third condition), so they could mostly (but not completely) ignore the cost feedback.
When I think of central planning, I generally think of bureaucracies that not only centrally develop the plan, but most crucially, stick to it because they don't have any way (or desire) to collect feedback and make changes.
To be clear - this is a definitional quibble.
I would posit that centralized planning at any echelon really appeals to most humans' desire for certainty and predictability - which is why we see it attempted so often in business, the military, government, etc.
You are absolutely correct, which is why I included that "a central planning enthusiast can plausibly argue that the U.S. had a quasi-centrally planned economy and that it was a rousing success." Two hedges--"plausibly" and "quasi." And on your final point, it's ironic that people turn to planning for certainty and predictability--and it delivers neither.
The United States outproduced every other Ally and Axis power. Combined. By, IIRC, a factor of three.
Yet while War Production Board could order people to NOT do something, it could not coerce any business to DO anything. Businesses had to apply for contracts.
Could be. Though one could argue that the power to say “Thou shalt not” was effectively the power to say “Thou shalt” in that particular economy. Kind of like the federal government’s power to tell colleges, “Thou shalt not receive thy research grants if one does not eliminate thy DEI program” is effectively “Thou shalt eliminate thy DEI program.”
I'll posit that central planning, much like netzero, the not-fading-quickly-enough transmania and many other progressive battlecries, are articles of faith, and offer some of what religion provides - the aforementioned sense of certainty and control.
And the true believers will stick to their dogma, regardless of the data presented to them.
I agree with both of the above points. I would also point out that there were multiple companies that designed and competed for government contracts during WWII but after winning a contract the government then let many subcontractors produce the same product. As an example Singer Sewing Company making M1 Garands.
The “success” of US central planning is partially due to the success of the Russian army at the battles of Kursk & Stalingrad long before US troops set foot at Normandy. WWII was won (in Europe) by massive sacrifices by the Red army. It is fashionable in the US to overlook these facts & pat our forebears on the back. The war in Europe was not won by US planning. It was won by overwhelming Russian forces.
No objection to giving the Russians their well-deserved due. But that's no reason to minimize the accomplishments of the U.S. or British Empire forces or French Resistance. (Russians didn't take back the Pacific.) And I also don't forget that the Russians' role of ally followed their role as signatory to the Molotov-Ribbentrop Pact, which allowed Nazi Germany to roll unimpeded into Poland a week after the pact was signed. Without Stalin's welcome mat for Hitler, I'm not sure that Germany could have succeeded for as long as they did.
Of course, let's not forget that those Russian victories were largely enabled by US material provided via the Murmansk Run, one of the deadliest arenas of the War...and that's even *before* you consider the U-boot threat.
Had the United States followed then-Senator Truman's advice and stopped sending the Russians Lend-Lease once they were able to withstand the German aggression, we might have spared Central Europe a half-century of oppression and misery.
I expect it's fair to say that the Russians provided the men, but we provided a good chunk of the material those men used to fight the Germans...especially in the area of offensive operations, e.g. trucks and other unglamorous but utterly necessary logistics support equipment.
Great Stalin cared little for the lives of his subjects, so the human sacrifices the Red Army endured were not something he much concerned himself with: "One death is a tragedy, a million deaths are a statistic."
Finally, in assessing the human losses to the Soviet Union, it's quite difficult to sort out how many of those were of military necessity. Let's not forget that this is a regime that deliberately starved millions of its own people *in the pre-War period* with malice aforethought.
I expect we will never know how many of those "Russian deaths" were civilians executed or otherwise killed as "enemies of the State." Katyn Forest is merely the tip of a much larger iceberg.
The war in Eastern Europe was also won by all the distractions on the Western Front, such as North Africa, Italy, and the air war, which alone drew millions of men away. Every flak site was hundreds of men, and it took thousands of shells to bring down one bomber. All of these were not available for fighting Russians.
Neither should one forget that Stalin was Hitler's partner in starting the war, and continued supplying Germany for two years.
Something like 90 or 95% of the explosives Russia used came from America, 400,000 trucks came from America. Little old Britain was sending critical supplies to Russia before America entered the war, and all Stalin did was berate the British for not sending more. To claim "overwhelming Russian forces" won the war in Europe is partisan blindness.
We sometimes forget how successful the USSR was in WW2 for the same reasons listed above. defeating Germany.Cost and human life no problem. And there were even technological advances. But after the war that all died. All they could do was steal from the west.
An additional thought: the nature of large hierarchical organizations is that information gets increasingly distorted--and in predictably-systemic ways--as it flows up the chain. We see this in corporations in this country all the time, as well, obviously, as government.
But at least during the War, the "laser-like focus" we brought to the problem of winning the war avoided that to some degree. And--here's the point I'm getting to--if you failed to meet The Plan in the Soviet Union, you got shot. In the United States, about the worst that would happen to you was internal exile: as one of my naval aviator friends used to joke, "Next assignment: XO, NAS Adak!"
So in the USSR, you were hugely motivated to gundeck your reports, whereas in the US, there was less incentive to do so because the stakes for owning up were a lot lower. This is not to say there wasn't plenty of that going on here as well, but I expect it was significantly less than in the USSR.
BTW when I studied Soviet industrial management in the 1970s, it was the received wisdom that "true" business accounting did not come to the USSR until the Khruschev era, under the so-called "Liberman reforms."
I don’t know if the Lieberman Reforms were where they got Net Material Product, but that one always amused me. Their GDP-equivalent only included the manufacture of stuff—not the services that put it into a user’s hands or kept it running. So, a combine manufactured in some desolate place in Siberia added to NMP, but not getting it to a farm in Ukraine or the annual maintenance to keep it from rusting. In some ways, the current administration’s focus on manufacturing jobs springs from the same fallacy.
For a vivid, fictional account of life and work in Krushchev's USSR, read "Red Plenty", a novel written by Francis Spufford and published in 2012. Its theme is the contrast between Soviet central planning in theory, vs. life and work under Soviet central planning in practice.
US WWII production was not really central planning, nor was Apollo. It was central-goaling, central-specifying, central-purchasing, central-allocating.
The reason the factory at Willow Run was able to turn out a B-24 bomber every hour (an incredibly complex aircraft with 1.5 million parts) was because the US government contracted Ford, gave them the design specifications (provided by private company Consolidated Aircraft), provided the funding, and got out of the way. Parts procurement was not centrally planned in Washington; Ford subcontracted parts procurement in the free market.
Apollo was slightly more centrally-planned in that government engineers drew up the overall design and supervised final assembly. But, for example, the Lunar Module Guidance Computer (designed by MIT) was contracted to Raytheon, who subcontracted Fairchild Semiconductor for the integrated circuits.
In each case, the government provided a requirement and copious funding for an item, and the private company contracted for that item managed its parts procurement through the free market.
Soviet central planning failed because it was true central planning, in contrast to the American free market where planning was delegated and distributed by the market. When Ford needed wiring clips for a bomber they put the word out to shops from Flint to Kalamazoo to Omaha, who eagerly responded to the promise of lucrative government contracts by bidding to fulfill the need at low cost. When a Soviet factory manager needed wiring clips for a bomber, he had to pray that last year’s central planners gave orders to some factory in the Urals to make them in the right quality and quantity.
The US WWII effort was not centrally-planned, it was centrally-allocated; the government declared ownership of a percentage of GDP and told free market companies what it wanted, using that monetary allocation to steer industrial effort. Henry Ford didn’t turn out a B-24 bomber once per hour because Franklin Roosevelt ordered him to, he did it so Ford could profit from the contract. He didn’t rely on government planners having the godlike omniscience to order 1.5 million parts, he delegated and distributed that procurement through the free market.
When you think of what it means to have a real centrally-planned economy where every item must be written on a master order list by a bureaucrat in the capitol city, it’s an astonishing miracle that the Russians succeeded in manufacturing a significant number of WWII tanks and aircraft that actually worked. I credit the patriotism of the Russian workers who tried to make things work against all odds; but mostly I credit the use of fear, specifically fear of Stalin. A factory manager who fears for his life can threaten associate factory managers to drag them along when hauled before Stalin, if they don’t deliver the parts he needs next month.
But fear is an inferior motivator compared to profit and self-improvement, because it’s prone to short-term butt-covering instead of long-term value adding.
BTW another reason government procurement of advanced things like space vehicles and fighter jets bogs down over time is regulatory capture, i.e. the vendors take charge over the government. So government’s ability to clearly specify and demand requirements gets adulterated by industry self-serving.
I agree with you in general, but I wonder if we aren’t begging the question. Are we concluding that central planning worked because we won the war? Japan and Germany also engaged in central planning, and they lost, which tells us that (obviously) central planning isn’t always successful. So, was it the superiority of US central planning that won the war? Well, the US had a massive industrial base and was not subject to attacks on its industrial assets during the war. None of this was a product of planning. I’m sure the US did many things better than our central planning enemies, but we also made a lot of mistakes that we were able to overcome by being very large. The Japanese recognized the significance of aircraft carriers and developed advanced naval air operation techniques before the US, but they couldn’t keep up with the US in building carriers or aircraft because they were a relatively small country with limited resources. US torpedoes were a scandal that cost many lives and fixing the problem took much longer than it should have. It can be argued that the US unnecessarily fought two wars against Japan at the same time – one by the Army and one by the Navy and Marines which, if true, wasted resources. And was invading Italy a good allocation of resources?
Finally, when we consider the question of whether central planning was good during WWII we must ask, compared to what? Clearly just leaving the war up to the market wasn’t going to work – underinvestment in public goods and all that. So, there was no alternative to central planning for all the participants, and, in the end, someone had to win. I’m very glad it was us, but I don’t know that this provides much support for central planning except for when there is no other option.
"It can be argued that the US unnecessarily fought two wars against Japan at the same time – one by the Army and one by the Navy and Marines which, if true, wasted resources."
Arguably, yes: Nimitz up north, Mac to the south. OTOH it harnessed the power of competition and may have sped up the war effort, leading to a swifter conclusion.
While there is no doubt the US economy was centrally planned in WWII, there remained such an ingrained element of American individualism and initiative that defied central planning. This showed in leadership and weaponry. To cite some examples: The Jeep was designed by a little known company besting the Fords and General Motors but was so good it could not be overlooked. The best fighter, the Mustang was a combination of the best American airframe and the best British engine, the Rolls Royce Merlin. Another example is the Sherman tank. This tank was only able to break out of the French hedgerow country because GIs went down to the Normandy beaches and cut up the steel beams put there by the Germans and welded pieces to the front of the tanks. Otherwise the Sherman would have failed.
I disagree with your example of the Human Genome Project as an example of successful central planning. This project was sped up tremendously by the unique approach of Craig Venter not even funded by the HGP. He and his unorthodox approach beat Francis Collins and the HGP like a rented mule
A factory in the USA, Germany or Japan tries to keep a high, steady pace of production. The Americans do it with a "just in case" inventory of extra parts and supplies just in case too few arrive in time. The Japanese do somewhat better. Their efficient, reliable delivery system allows a "just in time" delivery of parts and supplies without the overhead expense of spare inventory. Soviet manufacturing achieved only much lower load factor because the Plan only required each producer to produce his quota by the end of each month. Many Soviet factories were starved of parts and supplies early each month, forcing them to "storm the plan" late each month to meet their quota even if that meant hasty, slapdash production.
Soviet joke: A Soviet worker died and went to Hell. He found himself in front of a demon sitting at a desk, who asked him, "Do you want capitalist Hell or Communist Hell?"
"What's the difference?"
"In capitalist Hell, they're very efficient. They drive a nail in your butt once a day."
"What about Communist Hell?"
"Things aren't so well organized over there. Most of the month, they haven't any nails."
"In that case, I prefer Communist Hell."
"All right. But, on the last three days of the month, they drive ten nails a day in your butt."
The Commissar of a remote Siberian village won a railway trip to Moscow, and he took a flunkie, Vasya, along to do chores for him during the trip. At the hotel in Moscow, he wanted some items from the great GUM department store. He gave Vasya a list of things to buy. Vasya walked out into the maze of streets and got confused. He mistook Lenin’s Tomb for GUM. He stood in line for three hours and, when he got in, he saw Lenin’s remains, scowling for decades under a glass cover in the sparse marble room. He stood looking at Lenin’s face till a guard told him to leave, and he went straight back to the hotel. The Commissar saw him come in and said, “You are carrying nothing. Where are things I sent you to get?” Vasya said, “Was just like home. Long line to get in. No merchandise on shelves. And … just like home … clerk was asleep.”
I love that one, too. Here’s another: Ivan worked in a tractor factory in Yakutsk, and the local commissar he did favors for awarded him with a free trip to Moscow. At the train station, the commissar says, “Now Ivan, what are you supposed to see in our great capital? Ivan says, “I am supposed to see how socialism brings wealth to man.” The commissar says, “Correct! No have wonderful time on your great journey.” In Moscow, Ivan sees people standing in a long line, waiting to buy bread. A limousine drove up, and the baker ran out with many loaves of bread and gave it to the man in the back seat of the limousine. When Ivan gets back to Yakutsk, the commissar greets him at the station and says, “Welcome back, comrade! Did you see what we discussed?” Ivan says, “YES! With my own eyes, I saw the wealth! … And I saw the man, too!”
And if you want a real anecdote about the difference between free market capitalism and communist central planning…my brother, a USG employee in Budapest prior to collapse of the USSR, was allowed to take a Hungarian acquaintance for a weekend in Vienna. They went into a supermarket and the Hungarian, looking at a dozen different toothpaste brands, began weeping, weeping both at the mere availability of toothpaste and, to him, the vast array of choices for such a mundane consumer good. He also confessed to my brother than only then did he realize socialism was a complete lie.
I reflect on this story often. Budapest and Vienna are roughly the same distance apart as Yale and Harvard, yet in the 1980’s worlds apart.
Interesting example, especially because Bernie Sanders said we don’t need all those brands of toothpaste. https://reason.com/2015/05/26/bernie-sanders-dont-need-23-choices-of-d/ I wonder whether he tells an anecdote about taking a Viennese friend to Budapest and watching him weep with joy when he saw only one brand of toothpaste. (And even more joy when he realized it was the last tube on the shelf.)
I spent some time in the Soviet Union during Gorbachev’s time. I was a part of a team negotiating with a Soviet ministry for the rights to explore and develop oil and gas resources in the Russian arctic. One day I visited the famous GUM which I found to be pretty much completely empty except for one stall that had wool hats and no clerk. We spent two weeks in negotiations until we discovered that another major oil company was simultaneously negotiating with a different Soviet ministry for the rights to explore and develop the same area. Before we pulled out, I attended a reception with a group of our Russian counterparties. I met a Soviet economist who asked what I had learned from my time there. I told her that, while studying economics in the US I had learned that without enforceable property rights the economy wouldn’t work. I said that I was heartened to visit the Soviet Union so that I could see that my professors were telling the truth. She laughed.
That’s great. In 2000, I made the first of two teaching missions to Kazakhstan. An old boss, who had been a CIA energy analyst, told me I’d have a great time but that it would be like lecturing on Jupiter, because their thinking would be so alien. My audience was medical doctors, the topic was economics, and I lectured through an interpreter. They instantly understood and were an easier, more comprehending audience than any group of American doctors I had ever addressed. Afterward, I wondered why. Then it hit me. Economics is the study of choice under scarcity. American doctors are taught that everyone is entitled to everything; even though they make choices to deny care all the time (under the name “standard procedure”), they tell themselves that they don’t. In contrast, no doctor in Kazakhstan was ever told that there were no tough choices to make, no care to be denied because of resource constraints. They understood the economic problem intuitively.
Ironically "just-in-time" manufacturing was part of Deming's concept of Total Quality Management. But the Japanese eagerly adopted the whole package after the War--like so much else, nothing puts you more in the mood to try new stuff than having all your old stuff blown to tiny pieces--and it wasn't until the 1980s that American industry got on board. Dunno when Germany got in on the act.
A minor comment: at least when I was learning about this stuff back in the 1990s, my understanding was that JIT management in Japan was reliant on the subcontractors and in turn their subcontractors carrying the load on inventory. The Big Boys made it look easy because they forced everyone else to make it happen.
I’m all for JIT, but it can be a high-wire act. When an earthquake cut Japan’s major trucking route in half, a lot of stuff shut down for lack of parts.
Hard to see these as equivalent. Certainly there was a robust patriotic element that drove many WWII era businesses to ask “what can we do.” Kaiser and Liberty ships come to mind. That’s a lot different than SCOTUS essentially rendering much of DEI unconstitutional, and research grants being withdrawn as a result.
Substack has been sending me several emails a day, and alerting me just as often on the phone app, that you are sending me messages saying "Hi" and nothing else. When I click "See message", it takes me to some other comment.
They've got some bugs to work out. In the meantime, well. Hi! :-)
OK. I think I know the comment you’re referring to. If I’m right, my only point was to say that even if the government can’t order you to do something, they can make it highly comfortable for you not to do it.
Again, nothing to add to the main discussion, just a comment. When I read your answer as to why central planning the U.S. was successful, I was reminded of Saroyan’s THE HUMAN COMEDY.
In "The Practice of Management", Peter Drucker wrote, "The new technology will demand the utmost in decentralization. Any society in the era of the new technology would perish miserably if it were to attempt to get free of management of autonomous enterprise so as to run the economy by overall central planning. And so would any enterprise that attempted to centralize responsibility and decision making at the top." Drucker wrote that in 1954, when the new technology was television. Telephones had rotary dials and computer data was stored on punched cards. There were no transistor radios. Xerox didn't introduce their first photocopier until 1959.
And yet, Drucker's prediction of the failure of central planning in an era of advancing technology hit the bullseye. Communist China's Great Leap Forward promptly bore out his prediction with central planning's worst failure in history: At least 20 million deaths. Gorbachev couldn't save the USSR and the Securitate couldn't save Ceaucescu.
Then, is central planning dead as an idea? Not at all. The European Commission has this year launched their Competitiveness Compass, a central plan to make the EU more competitive with the USA. If Drucker is correct, advancing technology will doom this effort. What the Europeans really need is their own Elon Musk. The trouble is, every smart, ambitious young Frenchman wants to be Emmanuel Macron and every smart, ambitious young German woman wants to be Christine Lagarde.
For a telling contrast, look at the mission to put a man on the moon with the contemporaneous social programs of the Great Society. The point of course stands that having achieved the mission, the bureaucracy of NASA then devolved, as bureaucracies do.
The problem with the moral equivalent of war is that war requires the resolve to kill people, and to possibly die yourself, whereas the "equivalent" never does (and frankly shouldn't). That's the hollowness of that argument.
Great question, great reply. "Abundance Progressives" can study this carefully to achieve many of their goals, though at the cost, to them, of leaving Society deeply unjust.
I think we could debate the term "central planning" - in this context, you've largely defined it as "big project with end state defined by the government". But is is that really central planning?
The execution of these projects was largely left in the hands of professional managers who planned and executed these projects not very differently than projects are planned and executed in other contexts - they did initial planning, executed, collected feedback, iterated, repeat. The big advantage they had were really big budgets (your third condition), so they could mostly (but not completely) ignore the cost feedback.
When I think of central planning, I generally think of bureaucracies that not only centrally develop the plan, but most crucially, stick to it because they don't have any way (or desire) to collect feedback and make changes.
To be clear - this is a definitional quibble.
I would posit that centralized planning at any echelon really appeals to most humans' desire for certainty and predictability - which is why we see it attempted so often in business, the military, government, etc.
You are absolutely correct, which is why I included that "a central planning enthusiast can plausibly argue that the U.S. had a quasi-centrally planned economy and that it was a rousing success." Two hedges--"plausibly" and "quasi." And on your final point, it's ironic that people turn to planning for certainty and predictability--and it delivers neither.
Very true.
The United States outproduced every other Ally and Axis power. Combined. By, IIRC, a factor of three.
Yet while War Production Board could order people to NOT do something, it could not coerce any business to DO anything. Businesses had to apply for contracts.
One wonders whether that was the secret sauce.
Could be. Though one could argue that the power to say “Thou shalt not” was effectively the power to say “Thou shalt” in that particular economy. Kind of like the federal government’s power to tell colleges, “Thou shalt not receive thy research grants if one does not eliminate thy DEI program” is effectively “Thou shalt eliminate thy DEI program.”
The corporations were entirely free to chose which contracts to pursue.
Thou shalt do something for the war effort or stand idle is a very loose form of central planning.
Indeed there was a big glossy book about The War And Your Company touting all the contracts you could apply for.
I'll posit that central planning, much like netzero, the not-fading-quickly-enough transmania and many other progressive battlecries, are articles of faith, and offer some of what religion provides - the aforementioned sense of certainty and control.
And the true believers will stick to their dogma, regardless of the data presented to them.
I agree with both of the above points. I would also point out that there were multiple companies that designed and competed for government contracts during WWII but after winning a contract the government then let many subcontractors produce the same product. As an example Singer Sewing Company making M1 Garands.
The “success” of US central planning is partially due to the success of the Russian army at the battles of Kursk & Stalingrad long before US troops set foot at Normandy. WWII was won (in Europe) by massive sacrifices by the Red army. It is fashionable in the US to overlook these facts & pat our forebears on the back. The war in Europe was not won by US planning. It was won by overwhelming Russian forces.
No objection to giving the Russians their well-deserved due. But that's no reason to minimize the accomplishments of the U.S. or British Empire forces or French Resistance. (Russians didn't take back the Pacific.) And I also don't forget that the Russians' role of ally followed their role as signatory to the Molotov-Ribbentrop Pact, which allowed Nazi Germany to roll unimpeded into Poland a week after the pact was signed. Without Stalin's welcome mat for Hitler, I'm not sure that Germany could have succeeded for as long as they did.
Of course, let's not forget that those Russian victories were largely enabled by US material provided via the Murmansk Run, one of the deadliest arenas of the War...and that's even *before* you consider the U-boot threat.
Had the United States followed then-Senator Truman's advice and stopped sending the Russians Lend-Lease once they were able to withstand the German aggression, we might have spared Central Europe a half-century of oppression and misery.
I expect it's fair to say that the Russians provided the men, but we provided a good chunk of the material those men used to fight the Germans...especially in the area of offensive operations, e.g. trucks and other unglamorous but utterly necessary logistics support equipment.
Great Stalin cared little for the lives of his subjects, so the human sacrifices the Red Army endured were not something he much concerned himself with: "One death is a tragedy, a million deaths are a statistic."
Finally, in assessing the human losses to the Soviet Union, it's quite difficult to sort out how many of those were of military necessity. Let's not forget that this is a regime that deliberately starved millions of its own people *in the pre-War period* with malice aforethought.
I expect we will never know how many of those "Russian deaths" were civilians executed or otherwise killed as "enemies of the State." Katyn Forest is merely the tip of a much larger iceberg.
Agree on all counts. Thanks.
The war in Eastern Europe was also won by all the distractions on the Western Front, such as North Africa, Italy, and the air war, which alone drew millions of men away. Every flak site was hundreds of men, and it took thousands of shells to bring down one bomber. All of these were not available for fighting Russians.
Neither should one forget that Stalin was Hitler's partner in starting the war, and continued supplying Germany for two years.
Something like 90 or 95% of the explosives Russia used came from America, 400,000 trucks came from America. Little old Britain was sending critical supplies to Russia before America entered the war, and all Stalin did was berate the British for not sending more. To claim "overwhelming Russian forces" won the war in Europe is partisan blindness.
We sometimes forget how successful the USSR was in WW2 for the same reasons listed above. defeating Germany.Cost and human life no problem. And there were even technological advances. But after the war that all died. All they could do was steal from the west.
An additional thought: the nature of large hierarchical organizations is that information gets increasingly distorted--and in predictably-systemic ways--as it flows up the chain. We see this in corporations in this country all the time, as well, obviously, as government.
But at least during the War, the "laser-like focus" we brought to the problem of winning the war avoided that to some degree. And--here's the point I'm getting to--if you failed to meet The Plan in the Soviet Union, you got shot. In the United States, about the worst that would happen to you was internal exile: as one of my naval aviator friends used to joke, "Next assignment: XO, NAS Adak!"
So in the USSR, you were hugely motivated to gundeck your reports, whereas in the US, there was less incentive to do so because the stakes for owning up were a lot lower. This is not to say there wasn't plenty of that going on here as well, but I expect it was significantly less than in the USSR.
BTW when I studied Soviet industrial management in the 1970s, it was the received wisdom that "true" business accounting did not come to the USSR until the Khruschev era, under the so-called "Liberman reforms."
I don’t know if the Lieberman Reforms were where they got Net Material Product, but that one always amused me. Their GDP-equivalent only included the manufacture of stuff—not the services that put it into a user’s hands or kept it running. So, a combine manufactured in some desolate place in Siberia added to NMP, but not getting it to a farm in Ukraine or the annual maintenance to keep it from rusting. In some ways, the current administration’s focus on manufacturing jobs springs from the same fallacy.
For a vivid, fictional account of life and work in Krushchev's USSR, read "Red Plenty", a novel written by Francis Spufford and published in 2012. Its theme is the contrast between Soviet central planning in theory, vs. life and work under Soviet central planning in practice.
I like the title!
US WWII production was not really central planning, nor was Apollo. It was central-goaling, central-specifying, central-purchasing, central-allocating.
The reason the factory at Willow Run was able to turn out a B-24 bomber every hour (an incredibly complex aircraft with 1.5 million parts) was because the US government contracted Ford, gave them the design specifications (provided by private company Consolidated Aircraft), provided the funding, and got out of the way. Parts procurement was not centrally planned in Washington; Ford subcontracted parts procurement in the free market.
Apollo was slightly more centrally-planned in that government engineers drew up the overall design and supervised final assembly. But, for example, the Lunar Module Guidance Computer (designed by MIT) was contracted to Raytheon, who subcontracted Fairchild Semiconductor for the integrated circuits.
In each case, the government provided a requirement and copious funding for an item, and the private company contracted for that item managed its parts procurement through the free market.
Soviet central planning failed because it was true central planning, in contrast to the American free market where planning was delegated and distributed by the market. When Ford needed wiring clips for a bomber they put the word out to shops from Flint to Kalamazoo to Omaha, who eagerly responded to the promise of lucrative government contracts by bidding to fulfill the need at low cost. When a Soviet factory manager needed wiring clips for a bomber, he had to pray that last year’s central planners gave orders to some factory in the Urals to make them in the right quality and quantity.
The US WWII effort was not centrally-planned, it was centrally-allocated; the government declared ownership of a percentage of GDP and told free market companies what it wanted, using that monetary allocation to steer industrial effort. Henry Ford didn’t turn out a B-24 bomber once per hour because Franklin Roosevelt ordered him to, he did it so Ford could profit from the contract. He didn’t rely on government planners having the godlike omniscience to order 1.5 million parts, he delegated and distributed that procurement through the free market.
When you think of what it means to have a real centrally-planned economy where every item must be written on a master order list by a bureaucrat in the capitol city, it’s an astonishing miracle that the Russians succeeded in manufacturing a significant number of WWII tanks and aircraft that actually worked. I credit the patriotism of the Russian workers who tried to make things work against all odds; but mostly I credit the use of fear, specifically fear of Stalin. A factory manager who fears for his life can threaten associate factory managers to drag them along when hauled before Stalin, if they don’t deliver the parts he needs next month.
But fear is an inferior motivator compared to profit and self-improvement, because it’s prone to short-term butt-covering instead of long-term value adding.
BTW another reason government procurement of advanced things like space vehicles and fighter jets bogs down over time is regulatory capture, i.e. the vendors take charge over the government. So government’s ability to clearly specify and demand requirements gets adulterated by industry self-serving.
I agree with you in general, but I wonder if we aren’t begging the question. Are we concluding that central planning worked because we won the war? Japan and Germany also engaged in central planning, and they lost, which tells us that (obviously) central planning isn’t always successful. So, was it the superiority of US central planning that won the war? Well, the US had a massive industrial base and was not subject to attacks on its industrial assets during the war. None of this was a product of planning. I’m sure the US did many things better than our central planning enemies, but we also made a lot of mistakes that we were able to overcome by being very large. The Japanese recognized the significance of aircraft carriers and developed advanced naval air operation techniques before the US, but they couldn’t keep up with the US in building carriers or aircraft because they were a relatively small country with limited resources. US torpedoes were a scandal that cost many lives and fixing the problem took much longer than it should have. It can be argued that the US unnecessarily fought two wars against Japan at the same time – one by the Army and one by the Navy and Marines which, if true, wasted resources. And was invading Italy a good allocation of resources?
Finally, when we consider the question of whether central planning was good during WWII we must ask, compared to what? Clearly just leaving the war up to the market wasn’t going to work – underinvestment in public goods and all that. So, there was no alternative to central planning for all the participants, and, in the end, someone had to win. I’m very glad it was us, but I don’t know that this provides much support for central planning except for when there is no other option.
All perfectly valid points. Well within the arguability window.
"It can be argued that the US unnecessarily fought two wars against Japan at the same time – one by the Army and one by the Navy and Marines which, if true, wasted resources."
Arguably, yes: Nimitz up north, Mac to the south. OTOH it harnessed the power of competition and may have sped up the war effort, leading to a swifter conclusion.
I like that!
While there is no doubt the US economy was centrally planned in WWII, there remained such an ingrained element of American individualism and initiative that defied central planning. This showed in leadership and weaponry. To cite some examples: The Jeep was designed by a little known company besting the Fords and General Motors but was so good it could not be overlooked. The best fighter, the Mustang was a combination of the best American airframe and the best British engine, the Rolls Royce Merlin. Another example is the Sherman tank. This tank was only able to break out of the French hedgerow country because GIs went down to the Normandy beaches and cut up the steel beams put there by the Germans and welded pieces to the front of the tanks. Otherwise the Sherman would have failed.
I disagree with your example of the Human Genome Project as an example of successful central planning. This project was sped up tremendously by the unique approach of Craig Venter not even funded by the HGP. He and his unorthodox approach beat Francis Collins and the HGP like a rented mule
A factory in the USA, Germany or Japan tries to keep a high, steady pace of production. The Americans do it with a "just in case" inventory of extra parts and supplies just in case too few arrive in time. The Japanese do somewhat better. Their efficient, reliable delivery system allows a "just in time" delivery of parts and supplies without the overhead expense of spare inventory. Soviet manufacturing achieved only much lower load factor because the Plan only required each producer to produce his quota by the end of each month. Many Soviet factories were starved of parts and supplies early each month, forcing them to "storm the plan" late each month to meet their quota even if that meant hasty, slapdash production.
Soviet joke: A Soviet worker died and went to Hell. He found himself in front of a demon sitting at a desk, who asked him, "Do you want capitalist Hell or Communist Hell?"
"What's the difference?"
"In capitalist Hell, they're very efficient. They drive a nail in your butt once a day."
"What about Communist Hell?"
"Things aren't so well organized over there. Most of the month, they haven't any nails."
"In that case, I prefer Communist Hell."
"All right. But, on the last three days of the month, they drive ten nails a day in your butt."
The Commissar of a remote Siberian village won a railway trip to Moscow, and he took a flunkie, Vasya, along to do chores for him during the trip. At the hotel in Moscow, he wanted some items from the great GUM department store. He gave Vasya a list of things to buy. Vasya walked out into the maze of streets and got confused. He mistook Lenin’s Tomb for GUM. He stood in line for three hours and, when he got in, he saw Lenin’s remains, scowling for decades under a glass cover in the sparse marble room. He stood looking at Lenin’s face till a guard told him to leave, and he went straight back to the hotel. The Commissar saw him come in and said, “You are carrying nothing. Where are things I sent you to get?” Vasya said, “Was just like home. Long line to get in. No merchandise on shelves. And … just like home … clerk was asleep.”
The best Soviet-era joke was Ronald Reagan’s about buying a Russian car and the plumber’s appointment. On YouTube.
I love that one, too. Here’s another: Ivan worked in a tractor factory in Yakutsk, and the local commissar he did favors for awarded him with a free trip to Moscow. At the train station, the commissar says, “Now Ivan, what are you supposed to see in our great capital? Ivan says, “I am supposed to see how socialism brings wealth to man.” The commissar says, “Correct! No have wonderful time on your great journey.” In Moscow, Ivan sees people standing in a long line, waiting to buy bread. A limousine drove up, and the baker ran out with many loaves of bread and gave it to the man in the back seat of the limousine. When Ivan gets back to Yakutsk, the commissar greets him at the station and says, “Welcome back, comrade! Did you see what we discussed?” Ivan says, “YES! With my own eyes, I saw the wealth! … And I saw the man, too!”
And if you want a real anecdote about the difference between free market capitalism and communist central planning…my brother, a USG employee in Budapest prior to collapse of the USSR, was allowed to take a Hungarian acquaintance for a weekend in Vienna. They went into a supermarket and the Hungarian, looking at a dozen different toothpaste brands, began weeping, weeping both at the mere availability of toothpaste and, to him, the vast array of choices for such a mundane consumer good. He also confessed to my brother than only then did he realize socialism was a complete lie.
I reflect on this story often. Budapest and Vienna are roughly the same distance apart as Yale and Harvard, yet in the 1980’s worlds apart.
Interesting example, especially because Bernie Sanders said we don’t need all those brands of toothpaste. https://reason.com/2015/05/26/bernie-sanders-dont-need-23-choices-of-d/ I wonder whether he tells an anecdote about taking a Viennese friend to Budapest and watching him weep with joy when he saw only one brand of toothpaste. (And even more joy when he realized it was the last tube on the shelf.)
I spent some time in the Soviet Union during Gorbachev’s time. I was a part of a team negotiating with a Soviet ministry for the rights to explore and develop oil and gas resources in the Russian arctic. One day I visited the famous GUM which I found to be pretty much completely empty except for one stall that had wool hats and no clerk. We spent two weeks in negotiations until we discovered that another major oil company was simultaneously negotiating with a different Soviet ministry for the rights to explore and develop the same area. Before we pulled out, I attended a reception with a group of our Russian counterparties. I met a Soviet economist who asked what I had learned from my time there. I told her that, while studying economics in the US I had learned that without enforceable property rights the economy wouldn’t work. I said that I was heartened to visit the Soviet Union so that I could see that my professors were telling the truth. She laughed.
That’s great. In 2000, I made the first of two teaching missions to Kazakhstan. An old boss, who had been a CIA energy analyst, told me I’d have a great time but that it would be like lecturing on Jupiter, because their thinking would be so alien. My audience was medical doctors, the topic was economics, and I lectured through an interpreter. They instantly understood and were an easier, more comprehending audience than any group of American doctors I had ever addressed. Afterward, I wondered why. Then it hit me. Economics is the study of choice under scarcity. American doctors are taught that everyone is entitled to everything; even though they make choices to deny care all the time (under the name “standard procedure”), they tell themselves that they don’t. In contrast, no doctor in Kazakhstan was ever told that there were no tough choices to make, no care to be denied because of resource constraints. They understood the economic problem intuitively.
Great joke—its success was fueled by a well told story. Bravo!
Ironically "just-in-time" manufacturing was part of Deming's concept of Total Quality Management. But the Japanese eagerly adopted the whole package after the War--like so much else, nothing puts you more in the mood to try new stuff than having all your old stuff blown to tiny pieces--and it wasn't until the 1980s that American industry got on board. Dunno when Germany got in on the act.
A minor comment: at least when I was learning about this stuff back in the 1990s, my understanding was that JIT management in Japan was reliant on the subcontractors and in turn their subcontractors carrying the load on inventory. The Big Boys made it look easy because they forced everyone else to make it happen.
Love the Commie Hell story! :-)
I’m all for JIT, but it can be a high-wire act. When an earthquake cut Japan’s major trucking route in half, a lot of stuff shut down for lack of parts.
Just so...! :-)
Hard to see these as equivalent. Certainly there was a robust patriotic element that drove many WWII era businesses to ask “what can we do.” Kaiser and Liberty ships come to mind. That’s a lot different than SCOTUS essentially rendering much of DEI unconstitutional, and research grants being withdrawn as a result.
Apologies … I’m not sure what you’re responding to. (Substack’s thread design sometimes makes it tough to tell.)
Substack has been sending me several emails a day, and alerting me just as often on the phone app, that you are sending me messages saying "Hi" and nothing else. When I click "See message", it takes me to some other comment.
They've got some bugs to work out. In the meantime, well. Hi! :-)
Thanks. It was a phony account made by who the hell knows who. It’s gone for now.
Comparing WW2 war production versus withholding fed funding from Harvard.
OK. I think I know the comment you’re referring to. If I’m right, my only point was to say that even if the government can’t order you to do something, they can make it highly comfortable for you not to do it.
Again, nothing to add to the main discussion, just a comment. When I read your answer as to why central planning the U.S. was successful, I was reminded of Saroyan’s THE HUMAN COMEDY.
In "The Practice of Management", Peter Drucker wrote, "The new technology will demand the utmost in decentralization. Any society in the era of the new technology would perish miserably if it were to attempt to get free of management of autonomous enterprise so as to run the economy by overall central planning. And so would any enterprise that attempted to centralize responsibility and decision making at the top." Drucker wrote that in 1954, when the new technology was television. Telephones had rotary dials and computer data was stored on punched cards. There were no transistor radios. Xerox didn't introduce their first photocopier until 1959.
And yet, Drucker's prediction of the failure of central planning in an era of advancing technology hit the bullseye. Communist China's Great Leap Forward promptly bore out his prediction with central planning's worst failure in history: At least 20 million deaths. Gorbachev couldn't save the USSR and the Securitate couldn't save Ceaucescu.
Then, is central planning dead as an idea? Not at all. The European Commission has this year launched their Competitiveness Compass, a central plan to make the EU more competitive with the USA. If Drucker is correct, advancing technology will doom this effort. What the Europeans really need is their own Elon Musk. The trouble is, every smart, ambitious young Frenchman wants to be Emmanuel Macron and every smart, ambitious young German woman wants to be Christine Lagarde.
Agree with all.
Great post. Your work inspires the most thoughtful comments. I always enjoy reading through them all.
That means a lot! Thanks.