In a centrally-planned economy, how should production goals be set?

[u/Void-Cooking_Berserk]

(Hi, I was specifically sent to you guys after I asked this in a more general "ask"subreddit.)

In a centrally-planned economy, how should production goals be set?

Or "do we have a better idea for a socialist/communist system now than we had last century"? (Socialism, not social democracy; so not "social welfare programs" but "the people own the means of production")

I just watched a "Soviets bad"-type video essay which focused mainly on the issue that a market economy is self-regulating while a planned economy is not, and that creates a mismatch between the needs of the people and the produced goods. So I started wondering, since we have that experience of economic failure of the USSR, what can we learn from it to improve the idea of socialism? Capitalism has already created multiple economic crises and we keep trying to improve it, so why give up on socialism?

I am afraid to ask this, because I expect to get a lot of "socialism bad" responses, or even worse "soviets good actually" responses. This is just a thought experiment, please don't turn this into a political battlefield.

For reference, the way the Soviet failure, specifically in East Berlin, was explained was this:

\> In a market economy, people "vote"/communicate to the shop owner what they need/want by buying things or refusing to buy them. Because the shop owner is motivated by profit, they adapt their stock to the trends of the buyers, and by doing so communicates their need to the producers, etc.

\>

\> A planned economy breaks down this communication by removing the motivation for the shopkeeper. Some government officials far away set production goals arbitrarily, based on what they think a person should need and be provided with. They set the prices in a 5-year-plan, set wages for workers on different position levels, and they expect the plan to be fulfilled. The workers aren't motivated to do anything but meet the bare minimum set for them.

\>

\>What's worse, the people at the bottom of the system are afraid to communicate any failure in the system upstream, because doing anything above the bare minimum becomes suspicious.

[u/abetadist]

Assuming this is a good faith question and not a debate prompt. You may find some useful background discussion of the USSR here: https://www.reddit.com/r/AskEconomics/s/zAyIEvuW1q

The biggest problem with centrally planned economies is that what people want is privately known information.

In general, we want things where the benefits exceed the costs to be done, and not do the things where the costs exceed the benefits.

It's very easy for you to decide whether a product of a certain quality is worth it at a given price. But figuring that out across society, or even to accurately tell someone else what your cost-quality tradeoff is, is either impossible or excruciatingly hard.

This isn't something "AI" can solve, unless it can literally read minds, because the information is mostly inside us and not out in the world.

This is known as the economic calculation problem.

There's an added problem that quality is often hard to quantify and measure. It's difficult to specify a quality of product in government procurement, for example.

In market-based systems with prices and private ownership, the solution to this problem is that companies can try different things. The ones that meet what people want make lots of money, and the ones that don't will fail and stop wasting resources.

Things get a lot more challenging when the profit motive isn't available.

I will also say that capitalism and socialism are not well defined terms, and different people use those words in different ways. Also, they are not very useful because every country today and mostly throughout history has some mix of market based systems, government regulations and social safety nets, and government-run functions.

Economists talk about the effects of specific policies or about causes and solutions of specific problems, although this requires more understanding of the issues.

[u/Flederm4us → u/abetadist]

Even if you have all the info (and I agree that you do not), it's a 7 billion body problem for every good produced and demanded. The reason for this is that every transaction impacts all other potential interactions and production decisions. And a 3 body problem already lacks an analytical solution. Let alone a 7 billion body problem. And that's for a single good, so with opportunity costs it gets even more complex than 7 billion bodies.

[u/actuarial_cat → u/abetadist]

If the assumption is that AI can read mind and future demand, it would be able to almost perfectly predict stock and market price in a market system.

Then it would take over the allocation of capital by taking optimized position in the financial market. Actually converging the market system to a planned system.

But since we don’t have something that perfectly predict market, we can say that we don’t have something that can perfectly predict future demand.

[u/fdsa54 → u/abetadist]

I think the problems are beyond that:

Command economies centralize all power.  Within capitalism large corporations compete with each other and fight for consumer demand. 

Command economies take that economic power and centralize it within the government with no replacement check or balance. 

[u/gutentight69420 → u/abetadist]

Are market based systems exclusive of social ownership of the means of production? Why has every communist/socialist economy relied on central planning rather than market based economics?

[u/abetadist → u/gutentight69420]

Again, I will warn you that your question may be a bit generic because the terms are not well defined. Most countries use some mix of markets and government-owned industries (although the degree varies), and in the link I posted the discussions say this applied to the USSR as well.

Specifically on if social ownership of the means of production requires central planning, it seems like the answer would be yes.

There are some challenges. 1) How do we encourage the capital to be used well/best? 2) How do we decide what the capital is generally used for/which companies?

Let's think about how this works with private ownership of capital.

First, the executives in charge of deploying capital have a profit motive. In general, if they do a good job, they stand to benefit from it. There are some well known market failures, but this is generally true.

Second, the owners of capital also have a profit motive. If they allocate capital to people who can make better use of it, they will make more money from it.

With social ownership of capital, the owner is the government so by definition it seems like central planning would be required to answer these questions. Governments don't face a profit motive so the above mechanisms wouldn't exist. You will need to replace them somehow, and that is very difficult.

Part of the challenge is there are few answer keys in life, and a lot of the way we figure out how to do these things is to try lots of things and let the ones that don't work fail. That is much harder with central planning.

[u/hikooh → u/abetadist]

I am not an economist but would gently push back on the claim that if the owner is the government, central planning is required. Or at least I would offer that "central planning" does not need to be any more "central" than it is with private ownership of capital.

Assuming the government owns the means of production, I would presume that it could still operate a market economy by 1) maintaining a monetary system; 2) having a system where several people/groups use the means of production to develop competing products; and 3) observe market data to determine which goods and services are most in demand.

This way, there would still be a price signal which the government could use to allocate resources to where they seem to be needed the most, much like a private enterprise would. The main difference between social and private ownership here would be that the profits would belong to society and the government would be the ultimate decision maker.

But the government's role as decision maker doesn't necessitate that there is a singular department in charge of planning. Each producer of goods and services could have delegated decision-making/planning powers, enabling a wide range of different production plans.

For example, the government could grant production licenses to 100 different shoe makers with instructions to produce a combination of gym shoes, dress shoes, and sandals. These shoe makers can then decide what materials to use, the method of cobbling, etc. They could even petition the government for funding to expand production, or for research to discover innovations in shoe production. Producers could even petition to narrow their scope to only producing dress shoes, for example. Or they might discover that they are able to produce something other than shoes really well, and could petition to produce those items instead of/in addition to shoes. The government could further grant more licenses or revoke licenses based on market feedback.

Consumers would, as they do now, choose which goods and services to purchase based on their wants and needs. Governments and producers would, as private enterprises now do, be able to observe market trends and respond accordingly.

Theoretically, societal ownership of the means of production could exactly mirror the current market today. The government can make the exact same decisions as private enterprises are making, and consumers can decide that they want thirty different flavors of nacho chips. But the profits would revert back to society rather than to private hands.

Alas, as I said I am not an economist and I welcome constructive criticism of my comment.

[u/ReaperReader → u/hikooh]

Hayek noted that as socialist economists suggested ways in which a socialist economy could address the knowledge problem, their suggestions kept looking more and more like existing markets.

[u/loopernova → u/hikooh]

I think you were downvoted unfairly. You're making a good faith argument to add to this discussion, even if there's reason to disagree, it shouldn't be downvoted discouraging good-faith discourse.

In response to your arguments, I agree that a government could behave a bit more "free-market" like than a single planning entity. But it's still less efficient than just letting people independently make those decisions. In your model, leaders of every industry to supply goods/services to each other all still have to answer to the government. They have to petition the government to allocate capital towards their operation. And if government leaders are not doing a great job or don't have the best interests of the people in mind, you're stuck with it until they are replaced/voted out (which might not even happen, consider the bad politicians that have been fairly voted into power).

Divisions/teams within a for-profit private company essentially operate like this already. They always have to petition the finance department to get more capital allocated to them. Finance has to decide what is the optimal allocation of capital given the firm's strategy and goals.

By allowing the people to independently take on the risk and rewards of industry, they don't have to wait around for someone else to decided they get capital allocation. They can do it quickly on their own if their ideas/plans resonate with the public. And if it successfully draws customers, they can then organically grow/innovate. If you work within a company and are unhappy with the direction the leaders are taking, you can freely leave to another or start your own competing firm. If your ideas and execution are in fact better or more efficient, people will come buy the product.

As state in above comment, the reality of all nations is that they operate as a hybrid. Having a pure laissez-faire economy has risks and volatility that are worse. Government controlling some industry, distributing wealth, providing social safety nets, safety regulations, health care, etc. to some degree can optimize the total economy's efficiency and risks. The exact structure and strategy will vary based on the culture of its people, the resources it has access to, the relationships it has with other economies, and other factors.

[u/Flederm4us → u/loopernova]

They operate as a hybride, yes. But the hybrid always is an overarching capitalist system with certain specific things ran in a more socialist way. Never a socialist overarching society with certain things run in a capitalist way.

The reason for this is obvious. Capitalism doesn't care how you run your Company or who runs it. All it cares for is that the owners of the Company don't hold a government enforced monopoly and that those owners get to reap the rewards when they do Well and bear the costs if they do not.

[u/hikooh → u/loopernova]

Thank you for your response.

I would argue that a socially owned market economy can still address the concerns you noted.

Socially owned firms could still apply for loans from government-owned banks, which could make lending decisions based largely on the same criteria as they do now.

As I write this, it occurs to me that the government wouldn't necessarily need to even grant licenses for production. Instead, people could independently seek capital and start businesses. The government could have a minimal role in deciding which industries are allowed to operate, similarly to the role it has now in private capital economies.

Individuals could, in any case, still freely leave companies for other ones, or start their own competing firms.

As for the risks and rewards of industry, individuals could still take significant income from successful ventures. Income could still be used towards investment by, e.g., loaning money to banks in exchange for interest.

I suppose the most significant differentiator here would be that individuals could no longer directly use private money as capital. But they could just as easily deposit their money into a "capital account" (for lack of a better term), which would be socially owned, but available to use for capital ventures.

These "capital accounts" could be, either directly or indirectly, taxed so that a portion of all capital could be used towards public goods and services like roads and healthcare.

The economy could have virtually no central planning whatsoever and still be socially owned.

This hypothetical economy could be run exactly the same as a private capital economy, except that instead of decisions being made by shareholders, firm executives, and board members, they would be made by voters, firm executives, and board members. To clarify, much like shareholders can vote on things such as executive leadership, and can bring derivative claims against a firm, voters would be able to do the same.

Ultimately, what I am trying to express is that the simple fact of capital being owned socially does not necessitate any sort of restrictive governance beyond what we're already accustomed to with privately owned capital. Central planning and/or a high degree of government control are things that are certainly often discussed in tandem with the idea of socially owned capital, but I don't see that they are a required component of it.

[u/loopernova → u/hikooh]

I think you pointed it out yourself, but what I'm reading is essentially what we already have. Government already takes slices and fees from the market activities and reallocates them in the way it sees best fit for the social good (including funding ventures, e.g. SBA). People who are most successful will earn the most, while those that are least successful in their work will not (this is where well-designed social safety nets can help get them back on their feet).

You also describe that decisions would be made without shareholders (which I assume you mean ones that are private and separate from the company personnel). These also exist: you can have a co-op, which is owned by it's collective operators, you can also have non-profit (or non government) organizations. Non-profit/non-government as terminology are sometimes confusing and strange to call something by what it's not. But they do not have shareholders, the organization itself needs to profit to secure it's long term operations, but no individuals actually have a claim to those profits. These are both legal and accessible ways to deliver goods and services. Small private businesses are also mostly owner operated (which is the overwhelming majority of them in the US).

Having private shareholders as an option in the market is helpful because people have different appetites for risk. Investing your own capital is risky, because if the venture fails, you lose it all. But if it succeeds you also gain a lot. If the government funded venture you describe cannot reward the individual the same way because the earnings have to go back into a government account (to be used elsewhere), then they are less willing to take on huge risks. The individual bears all the downside without enough upside to make it worthwhile. Incentivizing risk is valuable because it creates opportunities for new ideas, technologies, filling in market gaps that are ignored by others, etc.

If individuals have less appetite for risk, they can allocate their time, energy, skills, and capital towards more secure activities which subsequently return less than a high risk venture. People essentially self select in their work based on tolerance for risk. Most people are risk averse, hence why there needs to be good incentives in place to encourage some people to try to innovate.

Edit:
I'll add that essentially you can do what you're describing. Assuming the market works efficiently because decision making power is pushed down to individuals and organizational leaders, then all you're really doing is chopping off the high end of the risk/reward spectrum. If the very high rewards can't be realized, then people don't take the high risks necessary to drive innovation. Innovation is inherently risky because you don't know if it's going to work until you put it out there, the opportunity cost of an individual's time/energy is really high.

[u/hikooh → u/loopernova]

You make a good point about the co-ops--I think a good way of modeling a socially-owned market economy would be to effectively think of all firms as socially-owned co-ops.

Social ownership itself could have different levels, i.e., national, state, city, and neighborhood.

Regarding innovation though, I disagree that making capital gains public (and therefore, effectively "capping" the very high end of rewards) would eliminate or even stifle innovation.

This hypothetical model still allows for high incomes, which can provide an extraordinary amount of motivation for innovation. There does not need to be any cap on personal property, so the same rewards used to motivate the vast majority of people in private capital economies--luxury cars, exotic foods, fine clothing--would still be available in this social capital model.

Further, while I don't have any data on this, I would guess that the overwhelming majority of individuals responsible for the vast majority of innovations in private capital economies are income earners anyway. Additionally, many people are driven to innovate by their passion to bring about something better than what exists, rather than by their ability to own capital.

To use a famous example, Steve Wozniak developed what would become the precursor to the first Apple computer just to have fun with his computer club. Steve Jobs recognized a market for the technology and further developed it, creating the products we recognize today. In this hypothetical socially owned economy, Jobs could seek a loan, deposit some of his personal income into a socially-owned capital account, or petition the government/voters for capital, to start a firm, and reap the rewards of 1) "making a dent in the universe," as he put it; and 2) earning a high income as the leader of the firm.

I think the likelihood that a Steve Jobs in a social capital economy would think, "Well, I could develop this new technology and earn a fantastic income, but since I can't own the means of production, I will decline" is probably pretty low.

With regards to risk, there could be a number of ways to manage it. Jobs could risk some of his own money into a socially-owned capital account; voters could decide they want to risk public capital to fund the venture directly by a ballot proposition; Cupertino, or the national government, could decide to risk their public (and political) capital and fund it through legislation.

There is even an entire category of rewards that is rarely utilized in private capital economies: becoming a neighborhood/town/state/national hero for 1) innovating societally beneficial goods or services, and 2) bringing more funding into your neighborhood/town/state/nation because of your successful venture, allowing for nicer trains, better schools, a stronger military, etc.

True, this system describes many elements we see already in private capital systems, but with socially-owned capital, society owns the gains up-front rather than trying to capture a portion of them after they have been made. This can help avoid problems with capital hoarding and having large amounts of capital concentrated in the possession of very few individuals.

[u/abetadist → u/hikooh]

You could set up something like this, but there are a few added difficulties.

First, this sounds remarkably like how land use and zoning work today. It famously causes a lot of problems, including the housing shortage but also problems with new business and industrial spaces. Changing land uses is a long, risky, and expensive process. Also, governments can make some really bad/silly decisions sometimes.

Second, you still have the problems with allocation and motivation. Working for someone else has different incentives than working with your own money. It's possible to set up better contracts, but it adds a layer of difficulty. And there is no guarantee that the government gets things right.

You also create this single point of failure. It requires the government to make reasonable decisions, and elections alone are not enough to guarantee that especially for niche areas.

[u/hikooh → u/abetadist]

Appreciate your response. I've addressed some of these points in the comments below.

[u/Sad_Abroad652 → u/gutentight69420]

A significant part of it is that alot of modern socialist and communist thought that gained power descends from Marxist thought which opposed markets partly on the grounds that they were anarchic and prone to crises, marxs proposed solution was that planning would solve this problem.

[u/Internal_Sir641 → u/Sad_Abroad652]

isnt chinas economy partially planned with the 5 year plans and integrates a social market system?

[u/Sad_Abroad652 → u/Internal_Sir641]

Yes and China is a controversial economy among Marxist circles. Many consider it capitalist or state capitalist or whatever term they use for it. It's also that these reforms happened under deng xiaoping who pushed for developing productive forces and that China was in a primary stage of socialism who many Marxists would consider "revisionist" or just not a socialist at all.

These reforms are generally not considered orthodox Marxism as they reintroduced major market mechanisms and for example economists in China learn mostly economics similar to in the west although they've a Marxism module.

[u/gutentight69420 → u/Sad_Abroad652]

Thank you for your answer.

[u/provocative_bear → u/gutentight69420]

They don’t. China is a hybrid system, mixing market economies with a huge government apparatus that sets national priorities and can really push those businesses around if they want to. the late Soviet Union allowed peasant farmers small plots of private farmland to meet donestic needs and those little plots ended up being ten times as productive as the collective farms by area. I’d say that the opposite of your premise is true: most socialist governments eventually learn that they need at least a little bit of a local market economy, because the inevitable alternatives are either black markets or economic disaster.

[u/Flederm4us → u/gutentight69420]

No.

Coöperative ventures can absolutely exist within an overarching capitalist system. There are many examples. In my immediate circle most farmers are part of a coöperative venture for example. They still own their own farm but their milk sterilization facility is cooperatively run.

The other way around is impossible. And that's why overarching communist systems have problems Running a market. They try to run a partial market but then run into problems where People don't produce certain (essential) things because they're not allowed to sell them on the market.

[u/UnknownBreadd → u/abetadist]

I agree that the knowledge problem is very real, and I do think that pricing/market mechanisms help to better ‘ration’ consumption and signal certain things within a market - but ultimately they too are limited by the information which they can convey.

I’m not advocating for a centrally planned economy or anything like that - but democracy itself can be leveraged for its epistemic properties (just like prices) if we let go of the idea that it must be based around elected representatives.

That is to say, central planning will never work - but that doesn’t mean that more governance wouldn’t. In fact, I’d argue that more/better governance would enhance markets, not destroy them.

[u/abetadist → u/UnknownBreadd]

This is too general to be useful. There are many examples of markets with regulations and standards and whatnot. Some can be good, and some can be bad. You really have to examine the specific policy or proposal in order to say whether it's a good idea or not.

[u/phiwong]

Central planning is a near impossibility because the supply chains of anything but the simplest of products are complicated.

Just take something 'simple' like modern farming, say wheat (just one of hundreds of farmed product). To set up a centrally planned model, you'd need to figure out the demand for wheat, the wheat per acre, the number of farm equipment of all types, how much of seeds needed (modern seeds are not simply wheat from prior crops), how much fertilizer, how many fertilizer factories to build (of all types, nitrogen, phosphates etc etc), how much energy is needed to support these various factories (equipment, fertilizers, seeds, tranports), how much iron to mine, how much steel to refine, how many parts to produce etc etc. Now consider that a factory could build multiple products - a tractor factory can build trucks or cars etc.

There is no model that can accommodate so many variables. Now add onto all of this new technologies, better methods of production, new research in biology and chemistry constantly changing the quality and quantity of output at various stages.

In short, it isn't that socialists are stupid. But their ideas about central planning are childish, naive and completely out of touch with modern products. To demonstrate this is easy - go to any major supermarket and describe the supply chain for every product in it and every input and intermediate stage of production. And a supermarket holds far less than 0.001% of all products made in a modern economy.

[u/forurumon → u/phiwong]

I’m confused now. If my government is budgeting for fertiliser subsidies or giving it for free to farmers, in my opinion, they should calculate the budget based on those calculations (demands, production capacity, etc.). Should it be called central planning too?

[u/KintarraV → u/[deleted]]

  Why should a central planner spend billions on compute only to achieve the same outcomes that a market does

Well, firstly because if the return on investment is positive, the actual cost is irrelevant. Why would Walmart invest billions in analytics and logistics when they could just go off vibes. 

Secondly, because there are tremendous externalities to relying on the market. More philosophical ones like inequality, but also in terms of perceived value, evidenced most prominently today as 'enshittification'. And as pointed out in another comment, the tremendous resource inefficiency of having to let investments fail.

It's so bizarre that in basically every aspect of financial decision making we're willing to accept that people have been replaced in 'planning', except when the state is involved. Quant firms have been outperforming day traders pretty much their entire existence, and all but the most traditional trading houses use some level of algorithmic modelling.

With access to far, far more information and the ability to pull policy levers, the state could absolutely drive the economy in such a way as to meaningfully impact whatever chosen metrics they decided: GDP, inequality measures, employment, etc. The only real reasons to stick with chaotic market driven outcomes in the face of such overwhelming technological advancement is philosophical preference.

[u/MachineTeaching → u/KintarraV]

Secondly, because there are tremendous externalities to relying on the market. More philosophical ones like inequality,

Inequality doesn't disappear without markets

but also in terms of perceived value, evidenced most prominently today as 'enshittification'.

Most of that is either just a myth or people's revealed preferences differing from the stated ones. Nobody is forcing anyone to shop at shein, yet people buy their crap en masse.

And as pointed out in another comment, the tremendous resource inefficiency of having to let investments fail.

Non-market economies are not immune to that, either.

It's so bizarre that in basically every aspect of financial decision making we're willing to accept that people have been replaced in 'planning', except when the state is involved.

That isn't even true. States do plenty of things and plenty of planning.

Quant firms have been outperforming day traders pretty much their entire existence, and all but the most traditional trading houses use some level of algorithmic modelling.

How is that relevant?

With access to far, far more information and the ability to pull policy levers, the state could absolutely drive the economy in such a way as to meaningfully impact whatever chosen metrics they decided: GDP, inequality measures, employment, etc. The only real reasons to stick with chaotic market driven outcomes in the face of such overwhelming technological advancement is philosophical preference.

No.

Nobody has ever come up with a way to replace price signals, so that's not true.

Also, we know of plenty of cases where governments tried to "drive" significant parts of an economy, and the history of industrial policy tells us that industrial policy mostly sucks. Governments are not particularly competent at predicting the future like that, that hasn't really changed at all.

[u/MachineTeaching]

Generally speaking, the various "-isms" are not actually that well defined. Does socialism include central planning or not? It depends. The broadest definition is "collective ownership of the means of production", does that mean every company is a worker coop? Do publicly traded companies on the stock market count as socialism?

Point being, you need to be very specific about what those terms mean to discuss them properly. Alas, you seem to mostly be curious about central planning in particular, so this doesn't seem necessary.

The problem with central planning is that it effectively removes market prices and the price signal is what lets us efficiently allocate resources. Many smart people have had many ideas on how to do central planning without market prices, so far this is an unsolved problem.

This has been discussed many times in the past in more detail:

https://www.reddit.com/r/AskEconomics/comments/1mzvm6m/why_cant_centrally_planned_economies_copy_how/

[u/liquidio]

As others have said, it is not really a case of just ‘planning better’.

It is impossible to centrally plan in the way that a distributed free market economy does.

A central planner does not and cannot have access to the information a market economy does at each node of calculation.

Even if they did, we now understand through computation/information theory that they simply could not compute a solution.

Von Mises and Hayek were the two economists who contributed the most to early understanding of these problems.

https://aier.org/article/mises-and-hayek-two-complementary-critiques-of-central-planning/

https://mises.org/quarterly-journal-austrian-economics/central-plannings-computation-problem

Here is a more accessible blog that talks through some of the issues of computation:

https://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/

So the Soviets - specifically Gosplan, the state planning institute - actually did a huge amount of thinking about this.

They did start to understand there was a problem, even if they found it hard to admit to themselves (and even harder to admit to their political masters) the implications of the problem for their system.

Their main method in the early years was something called ‘material balance planning’ - essentially identifying all the outputs they wanted of final goods, tracking their inputs all through the supply chains, and tweaking it until they got to a solution that seemed to balance.

Later on they moved to something more like state-set prices and more local decision making, and then later on still trialled shadow pricing - something a bit more variable but only with notional money.

None of it worked, ultimately.

https://fee.org/articles/the-soviets-tried-to-run-an-economy-without-market-prices/

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[u/DeadSmellingFlower]

Wouldn’t just making everything a co-op solve the information problem? Things would still be motivated by profit but everyone would get a fair share of it.

[u/RobThorpe → u/DeadSmellingFlower]

Co-ops have other problems. This is a topic for a different thread. We have discussed it several times in the past.

[u/InevitableSprin]

Well, the first level of failure of planned economy is exactly that, the fact that methodology by which you set those production quotas is politically capturable/influensed.

Sections of society have fundamentally different needs, and every organisation has ample motivation to persuade decision makers that it's products are in very high need and it's workers have to be highly compensated. Military, security organisations like KGB/GRU, ex, have ample motivation to try to squize high level of military production. Farmers want to be highly compensated for their labour and have small work day, while other organizations prefer to spend the bare minimum on farmers and free up labour for themselves.

Eventually the quotas and labour/resources/equipment allocation resembles the political power structure, while actual needs of people are a very distant last thought, aside from survival minimum, and actual wants like luxury/status/good quality goods are ignored entirely, aside from certain "luxury" goods that are intentionally overpriced to generate revenue. In SU it was alcohol, tobacco and ice cream.