Paul Mattick 1937

The Nonsense of Planning

Source: One Big Union Monthly, August 1937, pp. 14-7, 33-34.
Transcribed: by Brian Reid, Thomas Schmidt;

The literature dealing with the problems of a planned economy has attained proportions comparable only with those of the depression which brought it forth. In all this welter of thought, we may distinguish three main currents: one which stands for the possibility of capitalist planning, another which denies it on principle, and a third which hovers between these extremes and finds its champions both in the bourgeois and socialist camps.

In view of the depression, the surviving representatives of the laissez-faire principle have a hard time defending their theoretical postulates against the planners. It becomes increasingly implausible that the market mechanism, of itself, can overcome the present difficulties. And even if it could, there still remains open the no less important question of whether society shall submit supinely to the brutal healing process in which the market produces its regulating effects or whether it shall not rather take a conscious part in this process.

In spite of the liveliness of the discussion on the part of the laissez-faires, the fact no less remains that they are historically superseded for their basis in classic competitive capitalism is drawn from under them. The enterprises bound up with free competition fall easy victims to the monopolistic forces in which the process of capital concentration still expresses itself. The resistance offered by these groups to all planning experiments is accordingly not a struggle against any socialistic tendencies of the various governments but the last despairing efforts of weaker capitalist groups against the monopolistic competition by which they are being destroyed. And so, in their agitation, they had to take flight from reality into a mystic fatalism; for monopoly capitalism has undeniably grown out of free competitive capitalism, and thus the representatives of the latter can not attack the first without at the same time striking themselves. The same competitive capitalism which in its heyday never tired of talking about its determining and forming mission in world affairs is today endeavoring to relegate to the realm of fancy any possibility of conscious regulation of the economic life. Its champions see in their own end the downfall of society itself and raise their warning voices with the assertion that no advance is possible except through complete planlessness. However much support they may find for such a position in the past, it remains clear that the future is not destined to follow the pattern of the -past but immediately that of the present. And for that reason their cry of protest can inspire no more terror or restraint than, say, that of the hogs in the slaughterhouse prior to having their throats cut. Rather, as the English champion of planned economy, Blackett, writes, “The idea of planning has passed rapidly beyond the stage of being suspect for its communist connotations and has become perfectly respectable.”


The champions of capitalist planned economy have the present on their side. Their darts directed against laissez-faire principles strike home, even though they are fired with closed eyes. Of course a number of economists reject the possibility of a partial planning, asserting that such a thing is a self-contradiction and that a planned economy necessarily involves the meaningful and harmonious interconnection of all processes in all economic and social spheres, to which end the most consistent centralization of economic direction is indispensable. But such a position, however correct it may be, still fails to meet the objection that a partial planning in certain circumstances is capable of suppressing some of the economic friction, of overcoming a number of minor difficulties and thus of creating new situations which in their turn can exert a more or less favorable influence upon the economic process. If this is the case, one has a perfect right to speak, if he likes, of “partial planning,” and any criticism would practically only be tilting against the terminology which makes this piecemeal planning synonymous with planned economy itself.

Every planned economy has its planless aspects, and every planless economy has also its regulated moments. In the classic capitalism of free competition there were monopolies, and in monopoly capitalism there is competition, even though of a more limited sort. From general competition arose that of the monopolies among each other, which amounts to saying that competition has on the one hand waned as regards complexity in order to wax in other forms as regards intensity. However much the classic capitalism may be differentiated from the monopolistic, still the one can not be set over against the other: monopoly capitalism is the old-age manifestation of laissez-faire, and its planned-economy phraseology is only the makeup which conceals decay.

If we identify the results of monopolization, or of the process of centralization and concentration, with the experiments in planned economy, we get away from the idle and purely conceptual dispute as to whether the planning shall, can or must be carried out completely or half way, at once or gradually. Also the question as to where the planning will lead loses all significance, so that only the question of principle remains open: whether planned economy and capitalism are at all susceptible of being combined.


The major part of the theories of planning hitherto devised can be appraised only as literature, since their authors have refrained from touching upon the laws by which capitalist relations are governed. Their starting point was always discontent with existing conditions. They noted, as anyone may readily do, what was ably set forth by Hoover’s Research Committee on Social Trends: that society’s capacity for producing commodities is continually increasing at a more rapid rate than the purchasing power of the population, that the ratio of employment fails to keep step with the improvement of the productive machinery, and that the means of communication between nations change more rapidly than the reorganization of international relations. In brief, the rate of growth of the social forces of production is such and the forms assumed by them are such that the social relations can not be adapted to these forms, but are breaking them down. The natural conclusion, namely, that these backward relations must be swept aside, never occurs to the theoreticians of planning and can not occur to them, since they are theoreticians of planning only within the existing social relations. So they try to turn history backward and to arrest this painful growth of the social capacities, after the manner of those lovely Japanese ladies who bandage their feet in order to keep them dainty. In both cases, the actual result is simply maiming.

To the economic planners, it is a question of diminishing the productive capacity and at the same time of increasing the purchasing power. In the course of this two-fold process a time must come when the disproportion now existing between the two wall be eliminated and the way prepared for a harmonious interplay. Whatever pains the theoreticians may take to work out their theses down to the least detail, all these pretty games will be very much wasted so far as capitalism itself is concerned. To the capitalists, the problem of planning as a quite one-sided and practical matter, namely, the conversion and adaptation of their productive apparatus and of their business to the automatically contracting relations of the market and to the changes within the economic structure -as brought about through monopolization, cartellization and trustification-in order to win for themselves as much as possible of the social profit. What actual “planning” takes place would take place even without decisive modifications-even if the various brain trusts did not exist-and precisely upon the prescribed basis of the natural market tendencies under monopolistic lassez-faire. The “planning” does not change the social mechanism, but this mechanism functions today in a manner which falls in with the theories of the planners. It expanded the productivity of society in order then, on the ground of this expansion, to contract it. This capitalistic sabotage is not determined by any plans whatsoever,-the plans merely make it known-, but by the planlessness of the existing economic system. Capitalist planned economy is therefore nothing more than “planned planlessness,” or more simply stated-nonsense. With the acceptance of the present economic system as the only one for all time there can, of course, be no insight into the fact that any planning within it can only be a fanciful one; the present economic system really permits no genuine conscious economy at all. To talk of planning from the standpoint of commodity production is just as interesting as to hear a blind man lecture on van Gogh.


The shares of the individual capitalist enterprises in the total social profit being dependent on the magnitude of the capitals involved, so that their owners are compelled to keep on increasing their capital in order to maintain themselves as capitalists when profits are diminishing, it follows that the hindering of the growth of the small capitals means eventually their destruction. And these capitalists are well aware of the fact that control of production means their elimination in the interest of larger aggregations; that the combining process which goes on automatically even during the crisis, by way of bankruptcies, is now to be further promoted by political means, through planned-economy demagogy. That “freeze the status quo” is in reality the planful destruction of small capitals in order to prolong the life of the larger ones. The thing which to some (e. g. Professor Moley) is a new humanitarian adjustment in the economic and political spheres is to the others a downright selfish policy of strangulation, and these latter are justified in appealing to the laws of nature, which do not admit of a “status quo.” And while their downfall is a proof of the correctness of this conception, yet in the capitalist sense natural laws operate only by way of eruptions. Although the stagnating tendencies are doomed to remain no more than tendencies, still, so long as they work, they will accomplish their task, and the fate of many outsiders will be absolutely and forever settled through the “unnatural status quo” of monopoly.

No longer, as formerly, does the number of individual capitals increase; rather, as capitalist development proceeds, that number continually diminishes. We are going back, even though with modifications, to conditions like those which existed in the beginnings of capitalist society, when there was little distinction between expropriation and accumulation. And the reason is that at the end of capitalist society, as at its beginning, the thirst for profit and the compulsion to reaping it are greater than during its time of vigor. The primitiveness and unscrupulousness of childhood repeats itself in old age, though with more finesse. The beneficiaries of the capitalist system grow fewer and fewer, so that the struggle for shares of the social profit must grow sharper. While on the one hand there are increasingly greater possibilities for the conscious regulation of the economic life, they are more and more excluded by the property relations. What passes itself off as planned economy, that is, as a conscious taking in hand of the social process of life, is in reality the sharpening of the struggle of all against all.

So long as society is bound to commodity production, it is only through the market that its needs can be satisfied. Any limitation imposed upon the freedom of marketing is a limitation upon the individual entrepreneurs themselves and can only lead to sharpening their oppositions. Limitation of production, which can only be brought about by way of the market, has the same effect. Even if the idea of a capitalist planned economy need not be completely rejected, it can be assigned no more than a limited validity. It is only under conditions in which a certain group of interests succeeds in completely dominating all the rest of society that the idea could be justified in a conditional sense. And yet the unavoidable social convulsions arising under such conditions are probably enough again to exclude the speculation; quite apart from the still weightier factor that under such conditions, with the retention of capital production, its liability to crisis is still not done away with, for that liability is only modified by the market and has its final basis in capital accumulation itself. From this standpoint, it is impossible to see in the current planned-economy tendencies more than a new conceptual formulation of the legitimate course of the monopolistic movement of capitalism in its period of decline.

The endeavor to stabilize present capital investments at their present level, under the pretext of planned economy, is but an expression of the fact that at a high level of capitalist development further technical progress no longer, as before, increases profits but diminishes them. Though the continuance of monopolization can not be halted, this process is at the same time the destruction of capitalist sources of existence, in that it eliminates more and more such things as capital devaluations by which the load of the crisis is lightened. The opening up of the world to capitalist enterprise, while becoming more necessary, becomes at the same time more difficult by reason of the expansion already attained, since here it is* not the geographical limits but those of accumulation which are decisive. The more imperative the imperialistic conflicts become, the more dubious also their results. In short, the restriction of the productive forces is at the same time their development and this development at the same time their restriction.

It is only to one who has never delved beneath the surface of capitalist phenomena that this contradictory movement appears to arise from the disproportion between production and consumption. Though it can not be denied that such a disproportion exists, it is bound up with the material character of production and consumption, a character which in the capitalist world, however, has validity only for the individuals and not for the social movement. The commodities regarded as use articles in their material form play in the social sense no part. So that when one speaks of the spread between production and purchasing power, one must first know what all the planners completely neglect; namely, what capitalist purchasing power is. Human consumption capacity and capitalist purchasing power are fundamentally different things. The senselessness of destroying commodities, e. g. from the standpoint of natural consumption, is very “sensible” from the standpoint of capitalist purchasing power, and any one who gets excited about this “insanity” and wants to abolish it under capitalism simply fails to understand the prime motive of this society. The natural necessities of a certain proportionality between production and consumption assert themselves violently in the end against such inverted social conditions and form the content of revolutionary history.

Present-day society does not even concern itself with determining the consumption capacity or needs of society, in order to make a corresponding adjustment of production. It leaves this to the individuals, while the only social concern is the market on which the purchasing power depends. And since the market forces the capitalists to individual accumulation, the only decisive factor in determining capitalist purchasing power is the necessities and possibilities of accumulation. Capital itself is the greatest consumer and forms its own market. To speak of lack of purchasing power merely means that capital is not making use of its purchasing power, and we have to inquire about the reason for this fact. Since profit is the motive of capitalist production, it must also furnish the explanation for this abstention. With this question we come up against the laws of capitalist movement. These laws are wisely neglected by the theoreticians of planning, and hence their theories can not be taken seriously.


Since accumulation is in practice the continual growth of the apparatus of production and of its productive capacity, its progressive expansion devours a greater and greater part of the newly produced social product, or, differently expressed, of the newly won capital. The same process cheapens labor and changes the proportions in which the capital is divided. General human advance, which consists in the possibility of setting in motion more and more means of production with less and less labor, and hence of turning out greater and greater quantities of products, expresses itself capitalistically in a more rapid growth of the capital invested in means of production and raw materials than of that invested in wages. This fact is evident at once from a comparison of the capital composition of fifty years ago with that of today. Capitalist profit is, however, computed on the total capital, though, since in the final analysis it is nothing but unpaid labor, it varies only with the magnitude of the wage capital. The contradiction between appropriated labor as the basis of profit and the magnitude of the organic composition of capital (means of production and labor power) leads, with the further development of accumulation, to the fall of the rate of profit and, at a high stage of accumulation, to the actual decline of the mass of profit. In a word: a greater social capital produces a smaller social profit. This contradictory movement must lead to a situation in which the diminished profits not only take away the incentive to further accumulation, since such accumulation would diminish instead of promote profitability, but in which accumulation becomes quite impossible. Absolutely, the profit acquired may be greater than before, and yet be too small relatively to the demands of further accumulation. The capitalist crisis is but an expression of the fact that further accumulation is not worth while or is impossible. The capitalists make no use of their purchasing power, since it doesn’t pay them to do so or because accumulation consumes more than is at hand for its purposes. Practically, there then takes place what the theoreticians want to ‘plan’: the productive apparatus will no longer be expanded to correspond with the hitherto prevailing tempo of accumulation. Of course, profits continue to be made, but those parts set aside for new investments fail to reach their destination, for, however great they may be, they are too small with respect to the demands of accumulation. They lie idle, and one gets the impression that too much capital is present, though in reality this superfluity is a deficiency of capital: an excess of capital arises from a lack of capital. However paradoxical this may sound, scientific truths always appear paradoxical to that “common sense” which never gets beyond appearance.

On this basis it becomes clear that the overproduction of commodities is to be regarded merely as a result and not as a cause of the crisis. Even though accumulation is not continued and the productive apparatus is not expanded in the necessary proportion, still at first production goes on at the previous level. Since, however, there is essentially no new capital invested, so also its material embodiments, the means of production and raw materials, remain unused in their commodity form. Thereupon, production is diminished or quite suspended, workers discharged. The consumption industries also are dragged into the crisis, which soon seizes upon all the social domains. With this, the competitive struggle grows sharper, and this leads to great price drops, bankruptcies and the general predicament.

From this point of view, we see also the factors which may serve in overcoming the crisis. The crisis can be done away with only through the continuance of accumulation. Capitalist purchasing power must be strengthened. Capitalist economists stare in perplexity at the “riddle” of the crisis. If they draw the favorite parallels with the past, they say that ‘scarcity’ was responsible for economic complications in all pre-capitalist forms of economy, though in view of the productive capacity this factor offers no explanation for the present difficulties. In other words, these economists are looking upon the capitalist world in a manner in which it can not be looked upon, that is, as a world which serves to supply the needs of human beings. This crisis too has its basis in ‘scarcity’ – scarcity, however, not of use articles but of capital, and this scarcity must be overcome if the depression is to be weathered. Profitability must be reestablished on the basis of continued accumulation. Since, however, profits do not fall from heaven, but are the results of labor, they can be increased only by raising the expropriable quantity of surplus labor which the workers, because of their social position, have to perform for the capitalists. In other words: the raising of capitalist purchasing power, which alone has any importance, presupposes lowering the purchasing power of the workers. Overcoming the disproportion between capitalist purchasing power and the need for accumulation is bound up with increasing the disproportion between production and consumption. And as a matter of fact all countries, even those engaged with experiments in planned economy, show that the purchasing power of the masses in relation to production is constantly still sinking lower. The statistical material for the United States is at hand: it shows that even after the march of the NRA the disproportion between the purchasing power of the masses and the actual production became greater. And it was precisely in this way that a rise occurred in capitalist purchasing power and production advanced temporarily. But to denote as planned economy the further impoverishment of the population is after all a bit strong.


The various exponents of planned economy are well known. Whatever may be the nature of their particular proposals, they all share with John Dewey the habit of viewing the problem from the side of distribution, even when they speak of production. Various proposals with reference to money, credit, banking, tariff, cartellization, and control of profit are designed to govern the market and, with it, the whole economy according to predetermined plans. The legitimacy of the market, though first rejected, is now to be controlled and again made into the regulator of the social life. However, the market and competition have a meaning only in so long as they work their pernicious effects; if their operations are controlled, they are deprived of their regulating functions and we arrive at the opposite of what we set out to attain. Any market control becomes the privilege of the groups already favored by that market. The individual interests are not governed according to the planning, but this planning can only adapt itself to the existing interests already established as a result of the previous development.

Competition is made responsible for the over-development of the productive apparatus, though it is only this continuing over-development which is the secret of prosperity and its limitation is nothing but the philosophy of crisis. Competition is to be reduced through the further cartellization of enterprises, in spite of the fact that this trustification is a result of competition. It may be true that within the cartels the overproduction of commodities maybe hindered (a matter which plays no decisive part). Still the cartellization does not hinder competition between the cartels. Nor does it hinder the overexpansion of the productive apparatus; such overexpansion is facilitated by way of monopoly profits, since each of the cartellized enterprises improves and expands its plants in order to make differential gains and raise its production quota. Capital-formation and control can never be attained from a planning station so long as production remains in private hands. The enterprises as well as the individual monopolies can cross the plans of the central bureau in hundreds of ways and, as a matter of fact, it has been shown in practice that ways have been found for getting around the plans as fast as they were made.

And so, in the face of these numerous contradictions, the planners take refuge in the illusion of a stationary capitalism. However senseless such a demand may be, it is nevertheless the logical consequence of all capitalist planning, which thereby, though of course ruefully, establishes its impossibility. A stationary capitalism is only another name for the permanent crisis: and even here the term fails to hold water, since any permanent crisis can only lead to collapse and is accordingly not stationary. But it is only with a stationary, i.e. illusionary, capitalism that planning is possible, since any revival promptly throws all planning overboard. And if the planners endeavor, nevertheless, to make the impossible possible and, for example, believe that in spite of technical advance it will be possible to hold on to an accepted price level-that is, if they fancy that prices can be juggled with like balls-there is concealed behind these dreams nothing but a total ignorance of the real nature of prices. Technical progress, which changes all values, obviously changes also the prices to be deduced from values; a matter which, in view of the decline of prices which has accompanied the whole of capitalist development is hardly worth mentioning.

As a proof of the possibility of capitalist planning, we are often referred to the control of economy in countries at war. However, the monopolist economy of war time was only a means to capitalist accumulation, to perpetuating planlessness. A man takes castor oil in order to get well. But it will not occur to him, merely because he can, to live on caster oil exclusively. And yet such mental derangement is actually attributed to capitalism. During the war, the national economy was not subjected to the military necessities, but the military necessities, i.e. the necessities of the strongest capitalist groups interested in the war, subjected all other groups to themselves and forced their will upon them. Here also the technical possibility of planning was not proved, since this economic dictatorship remained tied up with the market mechanism.


Even though individual theoreticians of planning go so far as to raise the demand for a “World Economic Council,” most of their theories stop short with autarchy. The national economy is to be made independent of the movements of the world market. Capitalist society is, however, bound up with international trade, as of course the whole capitalist development is identical with the creation of the world market. From division of labor within the separate nations arose international division of labor, and the latter can no more be got away from than the first. It may be objected here that individual countries, such as the United States, are capable of a self-sufficing economy by reason of their manifold natural wealth and are to be distinguished from countries less blessed. Nevertheless the very possibility of autarchy at the same time precludes it as an actuality. The very diversity of the geographic, climatic and cultural conditions of the United States are an obstacle to their unified coordination, for this diversity, under capitalism, is nothing other than a multiplicity of mutually hostile interests which are not very distinguishable from those of the continent of Europe, even though their forms are different. However small may be the part of foreign trade in statistics, it is nevertheless a question of life and death to whole social groups. However decisive may be the domestic market, when over-accumulation sets in the imperialistic compulsion becomes the dominant factor, for the insufficient profit at home compels to the conquest of additional sources of profit. While as regards industry, autarchy is impossible even in “war manufacture,” so as regards agriculture, as the best experts bear witness, it is quite out of the question. Planned economy and capitalism are irreconcilable contradictions; the one excludes the other. If an economy is planned, then it has also ceased to be a capitalist economy.