USSR industrialized itself very quickly. China had some success and did not shut down its central planning but hybridized it. South-Korea's steel production is an example of success in state-planning that contradicts market logic. Depending on your metric for success, you can also cite Cuba's life expectancy as it planned to become a medical nation.
Central planning fails when you have to invent new things. New services, new products can't be planned. Very few anticipated internet, almost no one expected cell phone and then smartphones to be that prevalent.
But do not throw away central planning as a systematically failed decision process. It works for :
- big scale infrastructure projects that require little innovation. - wars - big research programs: Apollo, Operation Manhattan
Actually, I think that with a public funded, government-supported centrally planned program, we could have deployed a self-driving cars network as early as the 90s.
The space program is a great example. Could the US have beaten the USSR to the moon without private suppliers like IBM? IBM couldn't exist in a centrally planned economy, and the Apollo missions wouldn't have been successful without private suppliers like IBM.
Apollo, Manhattan, WWII and South Korea via the Korean War and post-war American influence are all great examples of successful government programs, but I don't know that any of them would have happened without US markets providing funding and infrastructure. Ford was building a Sherman tank every 90 minutes during WWII.
There's probably a tipping point where large programs like these extract so much value from the markets that fund them that those markets cease to function, which is probably why wars are often funded with debt instead of direct taxation.
Intelligence is scarce, honesty too and information is often only partial. Some decisions are better done at a local scale.
I believe that NASA would have designed computers even without IBM. Possibly even faster but it would have been a tailored computer that would have been very expensive and of little civilian application.
We see it now with SpaceX: NASA sucked at cutting costs. But it excelled at skipping steps and it put a man on the moon in 1969, a goal that vastly outpaced the private space industry, that did not even exist at the time. The whole space industry was quickstarted by this centrally planned effort.
My personal opinion is that the red line that a state should not cross lest it has a complete information and huge stash of intelligence to process it, is price setting. It can have, for many things, a target and try to enforce it (in the case of oil, through some sales quota for instance) but it should use failure to achieve these targets as an indication that it misses some information about the economy or that its incentives are insufficient.
In large projects, you generally have a major single, measurable goal (interstate highways, a man on the moon, a nuclear weapon) and may have lots of little milestones and spinoffs along the way.
An economy is millions of little goals - some complementary, some competitive - that might add up to something larger but no one knows. But most of are okay with it because some portion of those people will be able to meet their goals and strive for bigger ones.
I read biographies on Cleopatra and Julius Caesar a couple years back and was amazed how much planning went into Egypt's economy.
The similarities to Venezuela can be pretty interesting! In the ancient world when economies were highly reliant on wealth created by agriculture, the Nile delta was the most fertile land in thousands of miles in any direction. Each year the Nile flooded predictably. When irrigation was plentiful, all of Egypt prospered. When the Nile went through a dryer year, all the peasants working the land starved.
Excellent reference!
