100 years after the Russian Revolution: central planning with big data?

100 years after the Russian Revolution: central planning with big data? Buzludzha Monument (Bulgaria). Photo: Montecruz Foto (CC BY-SA 2.0). Elcano Blog
100 years after the Russian Revolution: central planning with big data? Buzludzha Monument (Bulgaria). Photo: Montecruz Foto (CC BY-SA 2.0). Elcano Blog
Buzludzha Monument (Bulgaria). Photo: Montecruz Foto (CC BY-SA 2.0).

At a time when the centenary of the Russian Revolution is being commemorated, it is worth asking what (even greater) degree of control and repression would the system have been able to attain had it had access to the instruments that the Internet and associated technologies now provide? In its early days the Web was seen as an instrument of liberation and citizen empowerment. But it has also become an instrument of control, and not only of totalitarian dictators –suffice to recall Snowden’s revelations about the modus operandi of the US National Security Agency–. Guessing what Stalin might have done with such resources is pure speculation, although it is perhaps not so outlandish if one looks at the capacity of the Chinese system –a purportedly communist country with plans to establish itself as the world leader in artificial intelligence– to control its citizens, not only manipulating the equivalents of Twitter and other social media but also, for instance, demanding that mobile users in the province of Xinjuang, where many Muslims live, install an application that enables their whereabouts to be constantly monitored.

Historians continue to debate the reasons for the failure of the Soviet system. One of them was central planning. Yuval Noah Harari, author of Homo Deus, argues that ‘Capitalism won the cold war because distributed data-processing works better than centralised data-processing’. And, as often pointed out, data is the oil of the fourth industrial revolution we are currently witnessing.

But whereas central planning –not authoritarianism or statism– is now dead in Russia, that is not the case in China, and it may revive courtesy of big data. Although it is not known what the Chinese leaders think in this regard, two economists from Sichuan, Binbin Wang and Xiaoyan Li, in an article in the World Review of Political Economy, propose ‘reconstructing’ central planning using big data to replace markets in a hybrid economy, ‘based on the market and led by planning’. It is a market that relies on large monopolistic platforms like Alibaba, however. The Alibaba chairman, Jack Ma, believes that artificial intelligence must be applied to big data to achieve ‘a real-time understanding of the world’, thereby achieving a much smarter market. But Ma does not go as far as to defend central planning openly, although he is based in a country where large enterprises, even private ones, are often closely linked to the Communist Party.

Inspired by the theories of the economist Friedrich Hayek, one of the leading figures of liberalism, the two authors of the aforementioned article see various advantages in applying big data to central planning: (1) big data enables so-called tacit knowledge, which is widely dispersed in society, to be found and used; (2) it can improve forecasting and overcome the problem of the time-lag between plans being drawn up and implemented; and (3) it can also serve as a way of implementing mass-production, enabling personalised and diversified supply and demand. In other words, it is a case of managing the market better, in real time.

Another analysis of the subject reminds its readers that some left-leaning authors in the western world, such as Paul Mason in his book Postcapitalism, have already explored this idea, although the Briton is concerned about the resulting size of the surveillance state, which the Chinese economists by contrast view as a potential necessity.

John Thornhill, who has tackled this subject in the Financial Times, sees two problems with the focus on central planning based on big data. The first is that amassing data and using them sensibly are two quite different things, as many failed government IT projects demonstrate. Secondly, he questions the extent to which an economy based on these premises can be innovative. Here it needs to be said that, while China lags behind on innovation, no-one would now say that it does not innovate. And it is also worth mentioning the yearning for freedom –although not so much democracy– that is evident in China.

One hundred years down the line, the dystopia of central planning and total control cannot be written off as extinct. Will they be reborn under what some are already calling a ‘digital Gosplan’? What would Hayek and George Orwell think if they were alive today? The former never imagined that his theories would come to inspire digital communism. The latter anticipated something not dissimilar in 1984.