MIA: Encyclopedia of Marxism: Glossary of Terms



Planned Economy

Planned economy means the conscious organisation of the productive activity of all members of society, in contrast to all human history hitherto and the normal condition of bourgeois society in which people’s activity and the division of social labour is governed as if by superhuman forces like Adam Smith’s “invisible hand” or Hegel’s Absolute Spirit:

“That which is willed happens but rarely; in the majority of instances the numerous desired ends cross and conflict with one another, or these ends themselves are from the outset incapable of realisation, or the means of attaining them are insufficient. Thus the conflicts of innumerable individual wills and individual actions in the domain of history produce a state of affairs entirely analogous to that prevailing in the realm of unconscious nature.” [Ludwig Feuerbach]

But today, with the overall development of culture and the high level of self-organisation among the mass of the working population, the prospect of overcoming this domination by alien, market forces is conceivable. The only barrier is the anarchy of capitalist production.

Such a prospect becomes a real possibility when the working class takes political power:

“The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the state, i.e., of the proletariat organised as the ruling class; ... When, in the course of development, class distinctions have disappeared, and all production has been concentrated in the hands of a vast association of the whole nation ...” [Communist Manifesto]

Marx left open the form such a “planned economy” would take. For Marxists, the problem of planned economy is purely and simply the problem of the organisation of the proletariat. Planned economy means the working class raising the level of its organisation to the point where it is able to organise production. Trotsky put it this way:

“The working out of even the most elementary economic plan-from the point of view of the exploited, not the exploiters-is impossible without workers’ control, that is, without the penetration of the workers’ eye into all open and concealed springs of capitalist economy. Committees representing individual business enterprises should meet at conference to choose corresponding committees of trusts, whole branches of industry, economic regions and finally, of national industry as a whole. Thus, workers’ control becomes a school for planned economy. On the basis of the experience of control, the proletariat will prepare itself for direct management of nationalised industry when the hour for that eventuality strikes.” Transitional Program, 1938]

The way in which the proletariat goes about managing the production of society’s needs is certainly the greatest problem of organisation, but it is not in principle different from the problem of forming a trade union, organising a strike or making a revolution. Just as the feudal nobility ran the economy by means of traditional rights and duties, and the bourgeoisie runs the economy by means of capital, the working class will run the economy through its own form of organisation – proletarian democracy.

Nevertheless, the capacity of the working class to do this depends on the level of self-organisation that the proletariat has attained, and the meaning of “planned economy” must vary accordingly.

On the eve of the Russian Revolution, Lenin sketched his notion of the planned economy in a future Communist society thus:

“Accounting and control – that is mainly what is needed for the ‘smooth working’, for the proper functioning, of the first phase of communist society. All citizens are transformed into hired employees of the state, which consists of the armed workers. All citizens have become employees and workers of a single country-wide ‘syndicate’. All that is required is that they should work equally, do their proper share of work, and get equal pay. The accounting and control necessary for this have been simplified by capitalism to the utmost and reduced to the extraordinarily simple operations – which any literate person can perform – of supervising and recording, knowledge of the four rules of arithmetic, and issuing appropriate receipts.

“When the majority of people begin independently and everywhere to keep such accounts and exercise such control over the capitalists (now converted into employees) and over the intellectual gentry who preserve their capitalist habits, this control will really become universal, general and popular; and there will be no getting away from it, there will be ‘nowhere to go’.

“The whole of society will have become a single office and a single factory, will equality of labour and pay. ...”

“The state will be able to wither away completely when society adopts the rule: ‘From each according to his ability, to each according to his needs’, i.e., when people have become so accustomed to observing the fundamental rules of social intercourse and when their labour has become so productive that they will voluntarily work according to their ability. ‘The narrow horizon of bourgeois law’, which compels one to calculate with the heartlessness of a Shylock whether one has not worked half an hour more than anybody else – this narrow horizon will then be left behind. There will then be no need for society, in distributing the products, to regulate the quantity to be received by each; each will take freely “according to his needs”. [State and Revolution]

Due to the degeneration of the Russian Revolution under Stalinism, this vision was never actualised. In his article, The Art of Planning, written in 1932, Trotsky lists three elements of planning in a workers’ state:

“(1) special state departments, that is, the hierarchical system of plan administration, in the centre and locally; (2) trade, as a system of market regulation; (3) Soviet democracy, as a system for the living regulation by the masses of the structure of the economy.

“If a universal mind existed, of the kind that projected itself into the scientific fancy of Laplace – a mind that could register simultaneously all the processes of nature and society, that could measure the dynamics of the union, that could forecast the results of their interconnections – such a mind, of course, could a priori draw up a faultless and exhaustive economic plan, beginning with the number of acres of wheat down to the last button for a vest. The bureaucracy often imagines that just such a mind is at its disposal; that is why it so easily frees itself from the control of the market and of Soviet democracy. But, in reality, the bureaucracy errs frightfully in its estimate of its spiritual resources. ...

“The innumerable living participants in the economy, state and private, collective and individual, must serve notice of their needs and of their relative strength not only through the statistical determinations of plan commissions but by the direct pressure of supply and demand. The plan is checked and, to a considerable degree, realised through the market. The regulation of the market itself must depend upon the tendencies that are brought out through its mechanism. The blueprints produced by the departments must demonstrate their economic efficacy through commercial calculation. The system of the transitional economy is unthinkable without the control of the rouble. This presupposes, in its turn, that the rouble is at par. Without a firm monetary unit, commercial accounting can only increase the chaos.

“The processes of economic construction are not yet taking place within a classless society. The questions relating to the allotment of the national income compose the central focus of the plan. It shifts with the direct development of the class struggle and that of social groups, and among them, the various strata of the proletariat itself. These are the most important social and economic questions: the link between that which industry obtains from agriculture and that which it supplies to it; the interrelation between accumulation and consumption, between the fund for capital construction and the fund for wages; the regulation of wages for various categories of labour (skilled and unskilled workers, government employees, specialists, the managing bureaucracy); and finally the allotment of that share of national income which falls to the village, between the various strata of the peasantry. All these questions by their very nature do not allow for a priori decisions by the bureaucracy, which has fenced itself off from intervention by concerned millions.

“The struggle between living interests, as the fundamental factor of planning, leads us into the domain of politics, which is concentrated economics. The instruments of the social groups of Soviet society are, should be: the Soviets, the trade unions, the cooperatives, and in first place the ruling party. Only through the intersection of these three elements, state planning, the market and Soviet democracy, can the correct direction of the economy of the transitional epoch be attained. Only thus can be assured, not the complete surmounting of contradictions and disproportions within a few years (this is utopian!), but their mitigation, and through that the strengthening of the material bases of the dictatorship of the proletariat until the moment when a new and victorious revolution will widen the arena of socialist planning and will reconstruct the system”. [The Art of Planning, The Soviet Economy in Danger, Trotsky, 1932]

The notion of planned economy that the working class aspires to today would be very different from the type of “command economy” implemented by Stalin in the Soviet Union or even that envisioned by Trotsky.

Just as bureaucratism and command is, generally speaking, no longer tolerated in working class organisations (such as trade unions), nor would it be tolerated in a future planned economy. Planned economy simply means the extension of proletarian (participatory) democracy to all spheres of life.

Engels may have spoken a bit too soon when he said in 1881:

“not only can we manage very well without the interference of the capitalist class in the great industries of the country, but ... their interference is becoming more and more a nuisance.” [Labour Standard]

But in general the extent to which the working class is still tolerating bureaucratism, deception, sexism and racism within its own organisation or is unable to win the support of the majority of the population to its cause, is a measure of the extent to which “planned economy” would be a step forward for society and the extent to which the working class will have to rely on a “mixed economy”.



Pluralism is the political policy supporting a multiplicity of views and allegiances within a single organisation or society.

Pluralism was originally the current of ancient philosophy which asserted the existence of many different substances or kinds of matter, in contrast to monism which asserted that the world was composed of a single matter. The same kind of contrast is found between polytheism and monotheism. These early philosophical currents expressed the general belief that no single explanation or solution is available for any given problem, and historically underpins pluralism in politics.

Marxists support pluralism as necessary to the full development of culture and social cohesion, but recognise that at certain historical moments there are questions on which there is little room for pluralism in relation to actions (as opposed to views or loyalties). When a certain problem reaching crisis point in a society (for example, wasting water during a water-shortage) tolerance turns into intolerance.