Editing Planned economy (section)

=== Disadvantages ===
==== Economic instability ====
Studies of command economies of the [[Eastern Bloc]] in the 1950s and 1960s by both American and Eastern European economists found that contrary to the expectations of both groups they showed greater fluctuations in [[Output (economics)|output]] than market economies during the same period.<ref name="Economic Reforms in Polish Industry">{{cite book|last=Zielinski|first=J. G.|title=Economic Reforms in Polish Industry|location=New York|publisher=Oxford University Press|year=1973|isbn=0-19-215323-4}}</ref>

==== Inefficient resource distribution ====
Critics of planned economies argue that planners cannot detect consumer preferences, shortages and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a [[market economy]], a [[free price system]] is intended to serve this purpose). This difficulty was notably written about by economists [[Ludwig von Mises]] and [[Friedrich Hayek]], who referred to subtly distinct aspects of the problem as the [[economic calculation problem]] and [[local knowledge problem]], respectively.<ref name="Mises">{{cite book|title=Economic calculation in the Socialist Commonwealth|access-date=8 September 2008|last=Von Mises|first=Ludwig|author-link=Ludwig von Mises|year=1990|publisher=[[Ludwig von Mises Institute]]|url=http://library.freecapitalists.org/books/Ludwig%20von%20Mises/Economic%20Calculation%20in%20the%20Socialist%20Commonwealth.pdf|archive-url=https://web.archive.org/web/20141216200523/http://library.freecapitalists.org/books/Ludwig%20von%20Mises/Economic%20Calculation%20in%20the%20Socialist%20Commonwealth.pdf|archive-date=16 December 2014|url-status=dead}}</ref><ref name="AER519-30">Hayek, Friedrich A. (1945). "[[The Use of Knowledge in Society|The Use of Knowledge]]". ''American Economic Review''. XXXV: 4. pp. 519–530.</ref> These distinct aspects were also present in the economic thought of [[Michael Polanyi]].<ref>{{Cite journal|last=Biro|first=Gabor|date=2022|title=From Red Spirit to Underperforming Pyramids and Coercive Institutions: Michael Polanyi Against Economic Planning," History of European Ideas, 2022.|journal=History of European Ideas|volume=48|issue=6|pages=811–847|doi=10.1080/01916599.2021.2009359|s2cid=225260656|url=https://www.tandfonline.com/doi/abs/10.1080/01916599.2021.2009359?journalCode=rhei20|access-date=2022-08-16|archive-date=2022-08-16|archive-url=https://web.archive.org/web/20220816094159/https://www.tandfonline.com/doi/abs/10.1080/01916599.2021.2009359?journalCode=rhei20|url-status=live|url-access=subscription}}</ref>

Whereas the former stressed the theoretical underpinnings of a market economy to [[subjective value theory]] while attacking the [[labor theory of value]], the latter argued that the only way to satisfy individuals who have a constantly changing hierarchy of needs and are the only ones to possess their particular individual's circumstances is by allowing those with the most knowledge of their needs to have it in their power to use their resources in a competing marketplace to meet the needs of the most consumers most efficiently. This phenomenon is recognized as [[spontaneous order]]. Additionally, misallocation of resources would naturally ensue by redirecting capital away from individuals with direct knowledge and circumventing it into markets where a coercive monopoly influences behavior, ignoring market signals. According to [[Tibor Machan]], "[w]ithout a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals".<ref name="tibor2001">{{cite book|last=Machan|first=Tibor|chapter-url=http://media.hoover.org/documents/0817929428_xi.pdf |archive-url=https://web.archive.org/web/20061031225531/http://media.hoover.org/documents/0817929428_xi.pdf |archive-date=2006-10-31 |url-status=live|title=Liberty and Research and Development: Science Funding in a Free Society|chapter=Some Skeptical Reflections on Research and Development|publisher=Hoover Press|year=2002|isbn=0-8179-2942-8}}</ref>

Historian [[Robert Vincent Daniels]] regarded the [[Stalinist]] period to represent an abrupt break with Lenin's government in terms of economic planning in which an deliberated, [[scientific socialism|scientific system]] of planning that featured former [[Menshevik]] [[economists]] at [[Gosplan]] had been replaced with a hasty version of planning with unrealistic targets, bureaucratic waste, [[bottleneck (production)|bottleneck]]s and [[shortages]]. Stalin's formulations of national plans in terms of physical quantity of output was also attributed by Daniels as a source for the stagnant levels of efficiency and quality.<ref>{{cite book |last1=Daniels |first1=Robert V. |title=The End of the Communist Revolution |date=2002 |publisher=Routledge |isbn=978-1-134-92607-7 |pages=90–92 |url=https://books.google.com/books?id=ZKeJAgAAQBAJ&dq=stalin+abortion+criminalised&pg=PA94 |language=en |access-date=2023-10-30 |archive-date=2023-11-07 |archive-url=https://web.archive.org/web/20231107190548/https://books.google.com/books?id=ZKeJAgAAQBAJ&dq=stalin+abortion+criminalised&pg=PA94 |url-status=live }}</ref>

==== Suppression of economic democracy and self-management ====
{{Main|Socialist democracy}}

Economist [[Robin Hahnel]], who supports [[participatory economics]], a form of [[socialist]] decentralized planned economy, notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom.<ref name="Hahnel, Robin 2002">{{cite book|last=Hahnel|first=Robin|title=The ABC's of Political Economy|location=London|publisher=Pluto Press|year=2002|isbn=0-7453-1858-4|page=262}}</ref> Furthermore, Hahnel states:
<blockquote>Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential [[economic power]] grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power.<ref name="Hahnel, Robin 2002"/></blockquote>