We are all familiar with the image of shortages of goods in the USSR. And I’m not so much talking about the particular breadlines of the late 1980s created by the Perestroika, I’m talking about the occassional lack of access to certain consumer goods. This is very often brandished by libs as a weapon against communism or against economic planning vs markets. But what if I told you that, for the most part, this was not just intentional, but I can convince you that it was desirable?
To explain this, I need to introduce a concept: surplus economies (like the USA), and shortage economies (like the USSR). In surplus economies, like most modern capitalist countries, the total amount of goods and services produced is determined by the laws of supply and demand. Opening up a business in a sector of the economy where the demand is stronger than the supply will always ensure profit, which leads to most sectors of the economy being dominated by excessive production, i.e, companies produce more than the total sold. This leads to a given percentage, let’s imagine it’s 5% of all total goods, being wasted after production due to the lack of demand for them, and it leads to companies generally producing under their maximum capabilities, let’s say at 95% of their total possible output (for a given amount of capital and worker-hours bought by the company).
In shortage economies, like the USSR, the production and allocation of goods wasn’t done through markets or through supply and demand, but rather through a centralized economic plan deciding almost exactly how much of each good, whether industrial or consumer, would be manufactured, based on the demands that could in many cases be defined. The communist block, being mostly self-sufficient in resources and labour and having 0% unemployment, operated in such a way that the limitations to production weren’t demand driven, but instead were production given. I’ll give an example: it’s predicted that in the year 1970 there would be 10 tons of steel and 10.000 man-hours of work available, to be allocated in all sectors of the economy that require steel: electric drills, automobiles, screwdrivers… If we overproduce, for example, electric drills, in order to ensure availability of electric drills to everyone at any given time, it means we’re substracting material resources and labour from other sectors of the economy. It means that if we want surplus of drills, this necessitates a big shortage of any other good which requires steel and man-hours to be produced. By producing just below enough drills for everyone who needs a drill, we will make it so that not literally everyone has a drill, but also we make sure that literally every drill will be allocated, and that the drill-production industry will be functioning at maximum capabilities. This leads to a negligible amount of total goods being overproduced and unallocated, close to 0% compared to the (made up) 5% of surplus economies, and to a close to 100% utilization of the production capabilities of the labor and capital in the factories making all the products, since making more products given a slight shortage would always find allocation for these products.
In other words: the shortages of consumer products were, for the most part, a planned feature of a self-sufficient economy without unemployment, to ensure that as close as possible to 100% of production is reached, and that as close as possible to 100% of the goods produced are allocated. Surplus of one good would NECESSARILY mean a reduced availability in other goods. Shortage economies are intrinsically more efficient in the utilization of production and complete allocation of produced goods than surplus economies. So yes, every time that we see the filled shelves of the supermarket, we can be sure that this is only due to an inefficient excess of labor in a given sector of the market, and the lack of it in other sector that might improve our quality of life more (e.g. we suffer a shortage of affordable housing in the entirety of the western world).
I found out about this concept in an episode of The Deprogram podcast (with Second Thought, Hakim and Yugopnik) in an episode about economic planning, “Episode 69: GOSPLANning industrial Funko pop production (Ft. Tomas Härdin)”, I highly recommend The Deprogram podcast, and this particular episode was enlightening given my interest for economics.
Thanks for the long read, I hope you learned something new!
Isn’t the goal of both systems to meet supply with demand precisely? Also, you pretty much handwave away the fact that demand predictions are estimates with “based on the demands that could in many cases be defined” - if the demand can be defined, why would a shortage economy sit at 95% (while the surplus apparentlyoscillates between 105% and 95%) when they could go up closer to or even exactly 100%?
I’m certain there are examples where shortage economies have failed to predict demand correctly, leading to over-production and under-allocation.
I think the relationship between supply and demand and supply/production across industry is far more complicated and intricate than your generalised statements do justice to.
Isn’t the goal of both systems to meet supply with demand precisely?
Technically no. Capitalism wants to sell as much as possible, and will try to create artificially high demand, because profit only comes from selling commodities. The production isn’t planned to meet demand, but also to create it.
How about the part where a government employee with too much too do for too little pay is bribed to say one thing needs 110% production? Or that the people who are demoralised by scarcity decide to work at a fraction of the effort?
BS
Shortage of supply created shadow distribution system, where people in power and connected people had access to goods.
People in villages had cash to buy 3 cars, while had none. People had to wait to buy a car for 10 years. Needless to say cars were junk, when sales are guaranteed.
There was shortage of housing with similar problems.
One could always buy goods if paid large amount of bribes.
First of all, chill. We’re all here to learn.
Second of all, you haven’t addressed my post at all, you’ve just dismissed it completely and talked about some example of cars which goes exactly in the direction of what I point towards. If the USSR had made more cars, there would have been less labour and resources destined to other goods. Cars simply weren’t a priority because they’re expensive and inefficient, if anything the USSR made too many instead of focusing on better urban planning and public transit.
There was shortage of housing
People had to wait to buy a car
Those are consequences of allocating goods based on needs rather than based on purchase power. Homelessness in the USSR was nonexistent, millions of new homes were built every year. The fact that you complain about access to housing in the USSR shows how detached you must be from the realities of access to housing in the western world even in 2024, with 50 years extra of technological development.
Your point about bribery or contacts as a form of access to goods is true, but corruption is a natural part of all systems. It’s just that it’s not defined as such in the private sector so suddenly we don’t care about it when it’s outside the public sphere. If I own a car factory and decide that the first 1000 cars will go to my friends, that’s my right to do so, it’s only illegal and immoral in the public sphere.
