Essays on Economic Planning, Information and Computers

In light of recent developments in computer science, big data, and artificial intelligence (AI), interest in economic planning is re-emerging. These technologies are increasingly applied in economic and managerial domains, with multinational corporations using algorithms to optimize supply chains and global networks (Phillips & Rozworski, 2019). Such applications suggest that similar computational methods could also be used for public sector or non-profit planning (Cockshott & Cottrell, 1993; Morozov, 2019). Beyond the corporate world, contemporary global challenges, such as the COVID-19 pandemic and the climate crisis, highlight the need for coordinated, large-scale economic interventions that go beyond market mechanisms (Sapir, 2022; Groos, 2021). These crises have revived debates on the role of economic planning, as markets alone have struggled to effectively allocate resources in times of emergency and foster an energetic transition in time to meet climate goals. This study attempts to contribute to the discussion, by looking at the historical debates on information and computers in economics, more particularly in planned economies. Historically, economic planning was a central issue in 20th century debates on economics, politics, and development. A main theme of this study is the idea that planning is intrinsically linked to information, as any system of resource allocation, whether market-based or planned, as to deal with gathering, processing, and use of information. The first chapter begins with a discussion of the socialist calculation debate. This debate, initiated with Mises (1920) and later developed with arguments by Hayek (1935, 1945), focused on the issue of whether a planned economy could allocate resources as efficiently as a market economy. That question quickly turned into a discussion on how market economies deal with information and how planned systems have problems in efficiently using it. Hayek’s "knowledge problem" argued that economic knowledge is inherently dispersed across individuals and firms, making it impossible for central planners to efficiently collect and process the necessary information (Hayek, 1945). In contrast, neoclassical marxist authors (Lange, 1936; Dickinson, 1939) argued that rational planning could be achieved through the application of the general equilibrium model, where prices and quantities were determined mathematically rather than through markets, presenting the model of market socialism. Later on, Hayek and other Austrians reassessing the debate, turned the discussion into the question of efficient discovery of information and adaptability of a constantly changing economic system. Despite these critiques, planning was widely implemented throughout the 20th century. The Soviet Union provides a particularly rich case study in the intersection of planning and information, which are the subjects of chapter 2 and 3. The Soviet economy was built on a foundational belief in the possibility of rational economic management through planning, yet throughout its history, it faced persistent difficulties in collecting and processing the immense amounts of data required for effective coordination. From the early use of material balances and national income accounting (Ellman, 1973) to the later attempts at automating economic management through projects such as the OGAS (Peters, 2016), Soviet policymakers continuously grappled with the challenge of information processing. Led by Viktor Glushkov in the 1960s, the OGAS aimed to create a nationwide computer network to optimize economic planning, through improving communication flows and mathematical methods (Glushkov et al., 1964). However, these projects never fully materialized, with explanations ranging from institutional resistance to technical and bureaucratic constraints (Peters, 2016; Safronov, 2022).This story reflects both the ambitions and the limitations of planned economies: the ambition to achieve an optimal allocation of resources and the reality of bureaucratic and institutional constraints (Nove, 1983). Beyond the Soviet Union, various models of planning emerged throughout the world, reflecting different historical and institutional conditions. Yugoslavia, for example, pioneered workers’ self-management (Horvat, 2016), where enterprises were run collectively by employees rather than by central bureaucracies. In post-war Europe, indicative planning represented a hybrid model, where state planning guided industrial strategy without fully replacing market mechanisms (Sapir, 2022). In India, planning was used as an essential tool for economic development and consolidation of democracy in the post-colonial period (Menon, 2022) . These variations highlight that economic planning is not a rigid, monolithic system but rather a flexible set of tools that can be adapted to different political, economic, and technological conditions. Examining these historical experiences provides valuable lessons for contemporary discussions on state-led economic coordination in the era of AI and big data. A central objective of this study is to connected the topics of economic planning, information and computers, situating them historically and in a broader global context. Regarding computers, most histories of computing focus primarily on Western Europe and the United States, emphasizing how computers both shaped economic theory and were themselves shaped by the needs of businesses and economists (Beniger, 1997; Ceruzzi, 2003). However, these histories overlook an equally significant but less studied chapter: the history of computerization in the Soviet Union. While the Soviet Union sought to use computers to optimize central planning (Gerovitch, 2008), Western economists and policymakers applied similar computational tools to forecasting, logistics, and market regulation (Mirowski, 2002; Backhouse & Cherrier, 2017). The contrast between these approaches illustrates how different economic systems conceptualized and managed information, revealing deeper structural differences in their respective governance models. By bridging the history of economic thought with the history of technology, this thesis provides a comprehensive account of how planning and information have co-evolved. It reconstructs both theoretical debates and practical applications of planned economies, while also offering insights that may be relevant for the ongoing transformations of economic governance in today’s increasingly data-driven society. With the new revival of the calculation debate, the focus point on the question of economic efficiency turned to the process of information discovery. For Austrians, a planned system highly constraints the discovery procedure performed by entrepreneurs, by removing their access to property and incentives for engaging in discovery. Answers to Hayek, particularly those proposing participatory planning systems, have argued that discovery can be performed by citizens and workers involved in collective participatory processes, engaging a much higher number of people than entrepreneurial processes. Thus, I argue, in chapter 1, that besides more work on epistemological clarity about how each type of knowledge (subjective/objective) is relevant to economic efficiency is necessary; the main question turns to who should control discovery processes. Should these be centralized in entrepreneurial activity or decentralized in widespread citizen participation? To answer this question an important contribute would be to study historical concrete cases and practices of worker and citizen participation, and their results. In the same way that there is not a homogeneous market system, the same holds true for planning. In Chapter 2 we see planning as a variate and flexible system adapted to practical needs and historical contexts. Preceding, and during, the implementation of planning methods and systems, many rich theoretical debates reflected on important topics such as economic growth, economic organization, mathematical methods and political economy, and were significant for the development of economic science. The variety of planning experiences and debates throughout the 20th century originated a rich body of literature, still mostly unexplored or forgotten. Our work in this study barely scratches the surface of this corpus, which is important to understand 20th century economics and economic development. Finally, a takeout from Chapter 3, analyzing the experiences with computerization of economics in the Soviet Union, is the importance of users in appropriating technology to their needs, resulting in situations greatly diverging from initial aims. The story of computer planning in the USSR puts in evidence the complex interaction between technology and society, with technology being far from a neutral exogenous force, but rather one with impacts mediated by political, economic, and institutional factors. The case of computerization in the Soviet Union shows that technology can be shaped to reinforce existing power structures, or that power structures can shape how technology is implemented. A lesson bearing relevance for future technological implementations, particularly for the future of artificial intelligence. An overall general conclusion to this thesis is that the discussion on planning is still relevant as current societal challenges facing humanity demand global, coordinated and oriented solutions. The problems of dealing with information in economics, of implementing new methods of allocation of resources and new technologies are nowadays as relevant as ever. The aim of this work is to contribute to a more solid historical background in that discussion.