Stop talking about the economy! Cyber-planning is the only way out.

By Elena Veduta
April 5, 2021

The management cyber-system of the economy that was not implemented in the USSR, which allows avoiding the destructive socio-economic consequences of scientific and technological progress, remains the only real alternative to the madness of “inclusive” capitalism, which presupposes the establishment of total digital control over people and the collection by the world financial oligarchy of a “green” climate tribute from all countries without war.

The international conference “Planning in a Market Economy: Memories of the Future”, dedicated to the 100th anniversary of the State Planning Committee of the USSR, was held online on March 25-26, 2021. The conference was attended by scientists from the leading research and educational centers of Russia (MSU, St. Petersburg State University, RAS), experts from the UK, Canada, China, Cuba, the USA, France and other countries, representatives of the legislative and executive authorities, business and civil society.

As moderator of the event, Alexander Buzgalin correctly noted in his opening speech that planning in our country is an international phenomenon, it is the beginning of a new era in economic development, especially in terms of coordinating relations between producers and consumers and maintaining proportionality.

However, as it became clear from the reports of the conference participants, scientists and experts give different meanings to the concept of “planning”. It was expected that the event would make concrete proposals for the country’s and the world’s recovery from the global economic crisis. However, the participants’ speeches were limited to the theoretical foundations of planning, discussion of its advantages and disadvantages, and unfounded criticism of Soviet planning with the cliché of directive planning.

It is worth to note that literally only a few scientists-economists touched on practical proposals for the introduction of planning models for economic management. The exception was the report of MSU Professor Elena Nikolaevna Veduta. In her report, she outlined two projects for the transition from a liberal economy to a mobilization model of economic management to overcome the current global crisis.

The first project is currently being implemented — global fascism, which implies the totalitarian management of people for the “peaceful” destruction of social production, impoverishment and death of the population with losses significantly exceeding the losses of the Second World War.

Elena Veduta offers an alternative project — the project of effective economic management to improve the quality of life and comprehensive personal development. The alternative project is based on a dynamic model of interbranch-intersectoral balance, created by the Soviet cybernetic scientist Nikolai Veduta (see Veduta N. I. “Socially effective Economy” – Moscow: REA Publishing House, 1999. – 254 p.).

IA REGNUM publishes a transcript of Elena Veduta’s report “Alternative to the coming Decade: Crisis techno-acceleration or cyber-planning of the economy” at the international conference “Planning in a market economy: memories of the Future”, dedicated to the 100th anniversary of the State Planning Committee of the USSR on March 25-26, 2021.

I absolutely support the point of view that requires paying attention to the flows of real, actual products and understanding that finance only serves the very material flows that should ensure the development of production in the desired direction for us. Therefore, I support the point of view of Sergey Tolkachev, who stressed in his report today that finance is just a service of the economy, the movement of its material flows. I remember perfectly the words of my former head of the Department of National Economy Planning at the Plekhanov Academy, where I worked for almost 20 years, Vladimir Bashmakov, who said to the director of the Institute of Finance of the Academy: “You are happy today, but the time will come when economic planning will take its rightful place, otherwise the country will not survive.” I subscribe to these words.

But I would also like to draw everyone’s attention to the fact that we have entered a very dangerous time. This is a time when technologies are rapidly developing, and we will not be able to keep up with them if we just talk about strategic planning, which will come in 30-50 years. Today, everyone is talking about the coming decade, in which there will be so many changes that some countries will be unable to adapt to them. This is what Bank of America Merril Lynch says in its latest report: “The 2020s will be a decade of “techno-acceleration” – unprecedented progress in the field of cybernetics, artificial intelligence and weapons technologies.” 

Therefore, in the era of the digital revolution we cannot afford not to use its achievements in the planning of the economy. And as a graduate of the MSU Department of Economic Cybernetics, I fully understand the importance of a cybernetic approach to managing the economy for the sake of improving life in our country. Today, we are not the only ones looking for a way out of the crisis. The whole world is turning to the search for a planning model, to the choice of how the state should intervene in the economy. There is debate about whether the economy will be open or protectionist. The vast majority of scientists in their research say that everything is moving towards the closing of the national economies, and COVID-19 showed that countries intend to develop their own production rather than rely on remote suppliers of products.

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As a member of the editorial board of the international Bandung Spirit movement, which includes many representatives from developing and developed countries, I am working with my colleagues to prepare a newsletter that will reflect our vision for the future of this movement, what are the prospects for globalization and what we can offer to the world. The bulletin pays great attention to all the models of economy that existed after the Second World War.

It should be noted that before the collapse of the Soviet Union, when we were a large country defining the bipolar world, developing countries had a choice: to either use the model of financial stabilization, conducted under the leadership of the IMF, or to take the path of industrialization, studying the experience of the USSR for this purpose. Such countries rose up technologically, people in these countries loved their rulers, who allowed them to quickly develop their country’s economy and paid due attention to social problems.

After, for various reasons, our country abandoned its model, switched to a policy of financial stabilization and entered an open liberal economy, it immediately took the place of a commodity outsider and shared the fate of ordinary developing countries. We began to destroy our production, greatly lost ground technologically. Like all developing countries, we receive speculative flows of financial capital that are not backed up by material resources. In exchange for these fictitious capital flows, we give away our material resources. Since our country is not able to repay its debts on time, we devalue our currency, real incomes of citizens fall, and in fact, the policy of financial stabilization that we have followed for more than 30 years has shown that it is no longer possible to live like this, something needs to be done. And today, all developing and developed countries think so.

The situation that occurred in the 20s of the XXI century and which will develop in the next decade, showed that the world was carried away by digital transformation. We know that the Vatican issued its Manifesto of the ideology of inclusive capitalism, and that this manifesto was signed by the largest corporations (note-not representatives of states). The manifesto does not contain the principles of the necessary algorithm of actions that will lead the signatories to the realization of their goals. In fact, the Vatican does not have an algorithm.

The question arises: if the capitalist practice that we follow today shows that the world is heading for a catastrophe in which totalitarian management of people is established using digital technologies, then where is the alternative? The only alternative in the world that was opposed to the spontaneous organization of capitalism was the practice of economic planning in the USSR. Therefore, the study of this experience is extremely important and necessary. Unfortunately, both in our literature and in the speeches of many speakers on this topic, great mistakes are made. Mistakes are made by people who do not understand what economic planning was like, especially in the first five-year plan.

Simultaneously with the policy of war communism, we launched the greatest GOELRO plan, which became the prototype of our Gosplan. At that time, the country was learning to draw up the first economic balances, was concerned about how to feed the population, how to overcome the food crisis, how to electrify the country. It was difficult to obtain reliable information from all economic entities, and the experience in planning interrelated balance sheet calculations was still small. As a result, we went to the NEP, which was the right thing to do at the time. We continued to learn how to make our plans and reached the target figures. But then the plan was made mainly as a forecast based on the prevailing development trends. This was not the plan that came in 1928 with the policy of industrialization.

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It is this plan that we should pay special attention to, since many believe that this plan was directive. I must say at once that this plan was drawn up by the method of successive approximations (iterations): at the top was the order for the production of a final product needed to fulfill the strategic objectives of the country, and all enterprises calculated the material, labor and financial resources in order to fulfill the state order. If there were not enough production capacities, the enterprises ordered capital investments to expand their production capacities, which, in turn, required again to carry out successive stages of calculations of the plan, since the creation of additional production capacities also requires appropriate material, labor, and financial resources. If we do not understand this and say that the plan was just a directive, it means immediately denigrating it and not allowing us to see the prospect of using the experience of economic planning by the method of successive approximations. That plan, at its core, was really cybernetic, with feedback from manufacturers.

Today we are talking about plans, fantasies, 30, 50 years and beyond in the future, without having any idea about what is going on in our production. Thus, we lobby for so-called growth points or allocate investments for some projects. This is the directive approach to the distribution of investments among producers, since this approach does not calculate the alignment of the plan with our production capabilities in the direction of the growth of the public good, but there is a capitalist alignment of interests that serves economic chaos. This is the voluntary” plan ” inherent in manual management, without any evidence that with such a distribution of production investments, we can reach the trajectory of increasing the quality of life.

Therefore, the strength of our planning, which allowed us to become a world industrial power in a short time, to win the Second World War, to restore the post-war economy and to become one of the two countries of the bipolar world, is precisely that the plan was drawn up via the method of successive approximations through a series of iterations, which led us to the right planned balance for our movement towards achieving our strategic goals, observing the principle of proportionality of economic development.

At the same time, in the 30s, all the main reforms were carried out: organizational, credit, tax, taking into account the calculation of prices, cost. All the reforms were brought under the plan, under the improvement of its development and for its practical implementation. There was no such thing as a “sweet talk” about reforms without any evidence-based calculations that would supposedly lead to happiness. Then, after their inevitable failure, the instigators of the reforms look for “enemies” in the power structures that prevented the “democratic” reforms, and organize color revolutions against them. We often hear from our liberals: let’s make reforms, and then a miracle will come. First, you need to prove that you have a plan — a clear algorithm that improves people’s lives, and that’s what reforms should be carried out under. But since the liberals are not able to give such a plan, it is safe to say that they are following another plan — the destruction of the future of Russia.

The surrender of a great country to its enemies began in the 50s. Even then, in the 50s, the task arose to turn the military course of the economy to a peaceful course. This was a difficult task due to the increased production volumes and the existing production relationships, since the iterations to coordinate the planned calculations were carried out manually. Therefore, even then it was necessary to pay attention to the science of cybernetics that emerged in the United States, to its principles of modeling our plan for the growth of the public good for using the new computers in improving the efficiency of management decisions. And if we had realized then that the number one task is to automate the management of the economy to improve people’s lives, we would all be living in a different country today, and the world would be different.

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And today we are the victims of those very mistakes — the vicious economic theory that academician Ostrovityanov forcibly imposed on the country in 1956-57, completely overturning the Marxist theory. It was this theory that became the basis for all subsequent reforms in the country to dismantle the planning of the national economy and transfer more and more rights to enterprises, with their subsequent transformation into private producers independent of the center.

Another serious mistake of the country was the costly attempt to create a nationwide automated control system (OGAS) under the leadership of an outstanding specialist in the field of technical cybernetics, Academician V. Glushkov. The country became a victim of what the OGAS did, not thinking about which planning algorithms should have formed the basis of the software of the distributed network of computers. Any hardware, any artificial intelligence requires a program, and behind the program there are algorithms, and behind the algorithms there is an optimization problem that these algorithms solve. So, the number one task was to move from manual control to automated control, based on a model that is an economic integrator, which allows us to coordinate the interrelationships of our industries, so that we, as a well-coordinated orchestra, direct our economy in the right direction in such a way that real incomes of citizens grow, and therefore the real solvency of the ruble. And there would be no loss to the dollar. But we, alas, were busy reforming the country, destroying it in 1991. Unfortunately, the same trend is still in fashion today — to talk about economic problems, but not to solve them, and to persist in reforming the economy, which is already leading to the disintegration of Russia, with huge costs for the digital transformation, turning us into a digital colony of leading states under the flags of color revolutions.

In conclusion of my report, I want to say that our Scientific School of Strategic Planning of Nikolai Veduta has such a dynamic model of cybernetic planning in the form of a system of algorithms that develops the same approach of cybernetic planning by the method of successive approximations with proof of the movement of the economy in the direction of growth of the public good, with calculations, with a software. With the help of this model, we can really start planning the country’s economy for the wonderful goals that were discussed by the speakers at today’s round table.

Therefore, I believe that at the end of our conference, this proposal should be formulated: there should be no monopoly in economic thought. Let there be competition. Our Scientific School of Strategic Planning Nikolai Veduta is ready to create artificial intelligence in economic management (management automation), the core of which is a dynamic model of intersectoral balance, using the information of digital counterparts for the harmonious development of the economy in the direction of improving people’s lives. And let the other groups do the same, we’re all for it. If we just talk about the economy, then we will only talk about it. Let’s move on to cybereconomics-where we are able to back up words with rigorous and evidence-based calculations, and show where to get information from. And then we will help the president, and our country, really move forward. If we do not move away from talking about the problems of destructive economic reform to its cyber planning, then after ten years of technological acceleration, we will no longer have anything to talk about — we will live in another, terrible country.