The People's Republic of Walmart

by Leigh Phillips

  A public, universal health service can amalgamate costs. In this system, hospitals do not have to charge for individual procedures (or their components, like anesthesia); instead, costs are absorbed into a common budget from which surgeons are hired and supplies purchased. Resource control can still occur without the mediation of internal pricing: for example, through simple service prioritization. The complexity of modern medicine (and the increase in preventative care) means that isolating costs is not only difficult, but largely arbitrary. But despite it being hard to draw a straight line between small packets of health spending and health outcomes, the internal market requires that services be divided into such “products” to be priced. Administering the resulting network of contracts is not only inefficient; it cuts against the socializing tendencies of public healthcare.

  Markets in healthcare are not only costly, but also far from the simple models described in economics textbooks. What economists call “costs of entry” are very high: building new hospitals is an option available only to the state or to the few large healthcare corporations. And without the state, these corporations end up dominating the market, leading to scant competition but widespread waste and duplication. Consultants and marketers, for example, have flourished under the NHS internal market. Socialists have long pointed out that marketing is a major waste of resources and human energy under capitalism, but it’s especially jarring in healthcare: resources that could go toward saving lives or curing diseases end up wasted on enticing doctors to pick one clinic over another for a referral.

  Have all of these additional costs created new benefits? At best, it’s hard to tell. Every patient comes into treatment with their own personal history, including all the social determinants of health, making comparison very difficult. On an aggregate level, recall that as England moved further along the market path, Scotland decided in the late 1990s to return to a more public NHS, where patients are not just consumers of healthcare but owners of the healthcare service itself. Since then, the Scottish NHS has improved more rapidly on important indicators, such as wait time for a hospital bed or an ambulance. On other measures like life expectancy, the gap between relatively poorer Scotland and its southern cousin remains steady, as well.

  Difficulties in gauging quality haven’t stopped market boosters from pretending it’s simple. As part of its reforms, New Labour even created a three-star rating system—like Uber driver reviews but for hospitals. This went about as badly as you’d expect. For example, under the star system, cardiac surgeons in London hospitals were less willing to perform high-risk but life-saving operations because they could damage their hospital’s rating. The free market fanatics, who complained that perverse incentives let quality languish under planning, thus created perversions all their own.

  So, if competition cannot claim to be more efficient or to deliver higher quality, can it at least give patients that elusive “voice”? In fact, it turns out that having a choice in one’s medical provider is a fairly low priority. In a recent UK survey, 63 percent of people ranked fairness as their most important value in healthcare. Choice in services, however, was last. What’s more, where conditions become more life threatening and treatments more technologically advanced, people demonstrate even less desire to give input into medical decisions. And surveys have also found that people would rather have a greater say over the kind of treatment they receive than over who delivers it. People clearly desire a voice in healthcare decision making, but realizing this requires different and deeper democratization than that provided by the shallow market version. Involving patients by treating them as if they were consumers choosing shampoo at the drugstore is very different to giving patients more informed autonomy over their own health.

  The Planned, Democratic Alternative

  Today, after nearly three decades of market reform, each year the NHS manages healthcare less, while managing competition more. It plans by proxy. Less room for strategic planning means decisions are made by smaller, independent units that are enmeshed in growing webs of contracts. Of course, before the 1990s, the NHS still planned too little, and planning was not democratic enough. And it was also chronically underfunded. The slow extension of the internal market—Margaret Thatcher’s dictum that “there is no alternative”—to healthcare was one way out of the impasse at the end of the 1970s—an antidemocratic one, and inefficient for the system, but lucrative for private providers.

  But there were, and are, alternatives. In the place of today’s commissioners or the earlier ministry-appointed technocrats, we can imagine community health councils that combine representatives elected from the general public, members of local health advocacy groups, and experts in medical science and provision of medicine, as well as representatives elected by medical workers themselves. People elected from the community could go through basic training in health policy and health science. We could imagine a council of councils, which could handle questions of priorities, of preventative health and of system-wide rationing. In some matters where technical knowledge is more important, votes could be weighted. For the patient in the doctor’s office, there is also space for genuine participation in decision making. The results of the aforementioned patient survey show that people want not specific healthcare services from specific providers, but simply to be healthy. A healthcare system that has sufficient resources and distributes them equitably could start down this path by at least giving doctors more time with patients, thereby encouraging relationships to be less paternalistic. Further down the line, health could be integrated into planning outside the healthcare system—plans for neighborhoods and workplaces—integrating formal healthcare with democratic planning surrounding the social determinants of health.

  Deeper, democratic planning would unite healthcare workers with patients, and entire communities, as active coproducers of health and collective owners of a healthcare service. The very idea of an NHS, even as it is being undermined and partly dismantled, represents the possibility of this new economy. A public, universal system—free at the point of service and paid out of taxes (as was Bevan’s goal), but embodying humanist, bottom-up democracy, rather than paternalistic, technocratic state charity—is also one that builds its own constituency and creates a different kind of people—more willing to cooperate and to see their own destinies cooperatively tied up with those of others.

  “Free market” capitalists, as we have seen, end up planning more than we realize. The example of the NHS shows that even the planning of ostensibly public sector endeavors is not always fully democratic—and, to the extent that it exists, it is constantly under threat of marketization. Thus, decommodification (the elimination of market provision of a good or service) is only a necessary condition of democratization of the economy; it is not a sufficient condition.

  The seeds of rational, democratic, emancipatory and planned public services were certainly sown in the NHS. But for healthcare as much as any other sector, nationalization is not enough.

  7

  DID THEY EVEN PLAN

  THE SOVIET UNION?

  “This business about Walmart and Amazon, even the NHS, seems all well and good,” we can imagine you grumbling. “But there was this thing called the Soviet Union. Perhaps you’ve heard of it? Nasty business. Gulag. Secret police. Millions killed. Trousers came without zippers. No pineapples or Elvis. And the collapse of the USSR sort of irrefutably demonstrates the impossibility of planning, don’t you think?”

  Left critics of the Soviet Union typically seek an explanation for its failure in the backward, essentially feudal nature of the prerevolutionary economy, in the pressures of the ever-present existential military threat from the West, in the alleged democratic lacunae of Leninist organizational structures, or in the class interests of the formerly Tsarist bureaucrats upon which the inexperienced workers’ state had no choice but to depend.

  These left explanations of the rise of Stalinism are not necessarily incorrect. But here, we are interested more specifically in
the theory marshaled by conservatives, for whom ineluctable totalitarianism can be traced directly back to a planned economy. Equally, we are interested in how the broader public became convinced of this explanation—that the Soviet Union shows not only that planning does not work, but that it is inherently authoritarian.

  Our argument is that while the replacement of the market with planning is a necessary condition for an egalitarian society, it is not a sufficient condition. Planning must be democratic. Mises and Hayek have it backwards: it is not that degradation of economic information as a result of planning leads to authoritarianism, but that authoritarianism drives degradation of information, which undermines planning.

  A library’s worth of books have been written on the failure of the Bolshevik experiment, and to rehearse these arguments would be as tedious for us as it would be burdensome to our reader. Nevertheless, any book discussing planning cannot avoid history’s largest-ever attempt—or at least, the largest-ever attempt before Walmart. Whether we like it or not, the history of the Soviet Union courses through economic ideologies across the political spectrum. Our aim, then, is to provide as concise a narrative as possible, freed of the worst examples of the last century’s scholasticism and sectariana on the subject, that locates the place of planning—and lack of it—in the Soviet tragedy.

  Making It Up as They Go Along

  It is odd, but no less true for being so, that even though the Bolsheviks would engage in the most radical economic experiment of the last century, they did not actually come to power with a specific economic strategy. They had no real blueprints lying around illustrating how socialism could be implemented. Karl Marx and Friedrich Engels may have expertly described the political economy of the capitalist mode of production, but they left few specific descriptions of what their hoped-for replacement would look like.

  Returning to Petrograd in April 1917 from Swiss exile, Vladimir Lenin also skimped on all but the broadest strokes of an economic program. His “April Theses,” a pair of speeches aimed at his fellow Bolsheviks, list the need to immediately end the war, to confiscate the big landed estates, and to transfer the entirety of state power over to the soviets—the councils directly representing the workers that had sprung up over the course of the revolution that overthrew the Romanov dynasty. This was to include the immediate union of all banks into a single national bank controlled by the Petrograd Soviet. But that’s it. And the eighth thesis warns: “It is not our immediate task to ‘introduce’ socialism, but only to bring social production and the distribution of products at once under the control of the Soviets of Workers’ Deputies.” Unlike Neurath’s detailed theorization of how socialist industries would have to be organized, Lenin and other Bolsheviks had given little attention to how the economy would be run after the seizure of power.

  In his June address to the very first congress of all the soviets from across the country, Lenin declared that the program responding to the economic crisis then ravaging the country was to immediately make the profits of the capitalists public, “arrest fifty or a hundred of the biggest millionaires,” and to pass “control” over to the workers. In his 1969 economic history of the USSR, Russian Scottish economist Alec Nove notes, however, that the Russian word “kontrol” does not mean “takeover” per se, but instead has more a sense of inspection and checking similar to the French “contrôle des billets”: “[Lenin’s] emphasis was on the prevention of sabotage and fraud by the capitalists. Yet now and again, ‘kontrol’ shades into control, developing into complete regulation of production and distribution by the workers, into the ‘nationwide organisation’ of the exchange of grain for manufactured goods, etc. But how this was to happen was left undefined.”

  As 1917 progressed, as the railways broke down, employers sabotaged production, famine threatened, and a general disorganization metastasized, the question of what is meant by workers’ “control” began to impose itself less abstractly. Whether performed by the state or the workers, it became increasingly clear that some sort of coordination of production and distribution was required to overcome the fast-spreading chaos.

  On the eve of the October Revolution, Lenin wrote that capitalism had already created within itself an excellent mechanism of coordination whose “capitalistic mutilation” could simply be lopped off: a useful accounting apparatus in the form of the banks, the “syndicates” (effectively groups of businesses) and the postal service. This apparatus could be taken “ready-made from capitalism.” We begin to see Lenin alight upon the same need for economic planning that Otto Neurath had proposed: “A single state bank, the biggest of the big, with branches in every rural district, in every factory, will constitute as much as nine tenths of the socialist apparatus. This will be country-wide bookkeeping, country-wide accounting of the production and distribution of goods. This will be, so to speak, something in the nature of the skeleton of socialist society.”

  However, the Bolsheviks did not come to power in October and then nationalize the entirety of the economy the very next day. Centralized planning arrived in drips and drabs, on an ad hoc basis—often in reaction to the disruption or collapse of normal market relations and acute shortages as civil war spread throughout the country—rather than through the stepwise rollout of a comprehensive strategy for replacing the market. The winter of 1917–18 was a severe one. As workers left the city in search of food, factories had to close due to labor shortages, further compounding shortages, while the government attempted to ration food and other essentials through the state or cooperatives. It was necessity, not ideology, that drove the prohibition of private trade in consumer items. As supplies ran out, not only of consumer necessities, but of raw materials and fuel, there was, according to Nove, “a fatally logical escalation in the degree of state control, state operation and finally also state ownership.”

  On November 27, the Congress of Soviets issued a decree on workers’ control, giving greater powers to the factory committees. They could now “actively interfere” with all aspects of production and distribution, and their decisions were binding on the factory owners. However, the decree was less a green light for factory committees to take over production than it was legal imprimatur of what had already been happening for months. As Nove wonders, was this kontrol or control?

  The scale and timetable on which nationalization was to be achieved were likewise vague. Soviet scholars from the period disagree whether the party even had a basic plan for nationalization of all major industrial sectors.

  Nevertheless, in December 1917, the Supreme Council of National Economy, or VSNKh (Vesenkha), was established to elaborate the general norms for regulation of the economic life of the country. It had the right of requisition and of effecting compulsory “syndication” of various branches of industry. In these early days, various sections of the Vesenkha even included managers and owners, often overlapping with the sectoral business syndicates (trade associations) that had existed prior to the revolution. As Nove notes, even the offices and much of the staff remained the same.

  If the essence of socialism is the generalization of the democratic principle to all economic areas that are currently superintended by the unelected owners of private companies, then what difference does it make to workers—or indeed to anyone in society—if economic decisions are made by unelected bureaucrats instead of unelected bosses? Democracy is the beating heart of socialism, and as we shall see, it is the crucial check against economic inefficiency.

  So at the time of the October Revolution, it is likely that there were at least some currents that recognized that while nationalization was a necessary measure, it was not supposed to represent the end goal. This was certainly the case among the more libertarian socialist elements, even as others argued that an immediate withering-away of the state was an ultra-leftist delusion. While the entirety of the merchant fleet was formally nationalized in January 1918, some nationalizations were even due to the refusal of employers to accept rule by workers’ councils, and their preference
for state takeover as the less intolerable option.

  The chaos and extent of unauthorized nationalization of industry unnerved central authorities; that same year, they decreed that no expropriation could occur without the say-so of the Vesenkha. By June, however, a wholesale reversal of the effort to apply the brakes came with the adoption of a decree nationalizing all factories, inaugurating the period commonly called “war communism.” Foreign trade, urban distribution of food and other items came under direction of the state, while food requisition from peasants (which would prove to be brutal) was introduced in an attempt to come to grips with the threat of famine. The move was made less in support of nationalization from below, or to advance the cause of socialist democracy, than it was to impose some order to chaotic conditions amid growing civil war, which had spread to much of Russia, between the Bolshevik Red Army, the “Whites”—monarchist, conservative and proto-fascist forces supported by Britain, France, the United States, Japan and ten other foreign armies—and various non-Bolshevik socialists. Supplies of materials and food were cut off and communications were disrupted, exacerbating the crisis as shortages became ever more acute. Atop all this, in March, the terms imposed by Germany in the Treaty of Brest-Litovsk to bring the Great War on the Eastern Front to an end had been punitive, with Russia losing great swaths of arable land and productive industries to the Central Powers, and the Western nations as a whole were enforcing a naval blockade against the nascent workers’ government.