We are all familiar with the image of shortages of goods in the USSR. And I’m not so much talking about the particular breadlines of the late 1980s created by the Perestroika, I’m talking about the occassional lack of access to certain consumer goods. This is very often brandished by libs as a weapon against communism or against economic planning vs markets. But what if I told you that, for the most part, this was not just intentional, but I can convince you that it was desirable?

To explain this, I need to introduce a concept: surplus economies (like the USA), and shortage economies (like the USSR). In surplus economies, like most modern capitalist countries, the total amount of goods and services produced is determined by the laws of supply and demand. Opening up a business in a sector of the economy where the demand is stronger than the supply will always ensure profit, which leads to most sectors of the economy being dominated by excessive production, i.e, companies produce more than the total sold. This leads to a given percentage, let’s imagine it’s 5% of all total goods, being wasted after production due to the lack of demand for them, and it leads to companies generally producing under their maximum capabilities, let’s say at 95% of their total possible output (for a given amount of capital and worker-hours bought by the company).

In shortage economies, like the USSR, the production and allocation of goods wasn’t done through markets or through supply and demand, but rather through a centralized economic plan deciding almost exactly how much of each good, whether industrial or consumer, would be manufactured, based on the demands that could in many cases be defined. The communist block, being mostly self-sufficient in resources and labour and having 0% unemployment, operated in such a way that the limitations to production weren’t demand driven, but instead were production given. I’ll give an example: it’s predicted that in the year 1970 there would be 10 tons of steel and 10.000 man-hours of work available, to be allocated in all sectors of the economy that require steel: electric drills, automobiles, screwdrivers… If we overproduce, for example, electric drills, in order to ensure availability of electric drills to everyone at any given time, it means we’re substracting material resources and labour from other sectors of the economy. It means that if we want surplus of drills, this necessitates a big shortage of any other good which requires steel and man-hours to be produced. By producing just below enough drills for everyone who needs a drill, we will make it so that not literally everyone has a drill, but also we make sure that literally every drill will be allocated, and that the drill-production industry will be functioning at maximum capabilities. This leads to a negligible amount of total goods being overproduced and unallocated, close to 0% compared to the (made up) 5% of surplus economies, and to a close to 100% utilization of the production capabilities of the labor and capital in the factories making all the products, since making more products given a slight shortage would always find allocation for these products.

In other words: the shortages of consumer products were, for the most part, a planned feature of a self-sufficient economy without unemployment, to ensure that as close as possible to 100% of production is reached, and that as close as possible to 100% of the goods produced are allocated. Surplus of one good would NECESSARILY mean a reduced availability in other goods. Shortage economies are intrinsically more efficient in the utilization of production and complete allocation of produced goods than surplus economies. So yes, every time that we see the filled shelves of the supermarket, we can be sure that this is only due to an inefficient excess of labor in a given sector of the market, and the lack of it in other sector that might improve our quality of life more (e.g. we suffer a shortage of affordable housing in the entirety of the western world).

I found out about this concept in an episode of The Deprogram podcast (with Second Thought, Hakim and Yugopnik) in an episode about economic planning, “Episode 69: GOSPLANning industrial Funko pop production (Ft. Tomas Härdin)”, I highly recommend The Deprogram podcast, and this particular episode was enlightening given my interest for economics.

Thanks for the long read, I hope you learned something new!