How and with what degree of success does Soviet planning attempt to solve the problem of coordinating production that is solved in a capitalist economy by the price system?

In the Soviet Union, a centrally planned economy was implemented, where the government had direct control over the allocation of resources, production, prices, and distribution of goods and services. The primary objective was to achieve economic development and the efficient use of resources, avoiding market failures in a capitalist system. The main coordinating institutions in Soviet planning were the State Planning Committee (Gosplan) and the Council of Ministers, which designed and implemented five-year plans, yearly plans, and target indicators.

In a capitalist economy, the price system determines the allocation of resources, production, and distribution of goods and services based on supply and demand. Prices serve as signals to buyers and sellers, influencing their decisions on what to buy, sell, and produce. In a free market, prices tend to reach an equilibrium, reflecting the optimal production and distribution level for an efficient allocation of resources.

Soviet planning and the capitalist price system are two fundamentally different approaches to solving the problem of coordinating production. In Soviet planning, economic decisions are centralized and driven by government objectives, while in a capitalist price system, decisions emerge from the decentralization and interaction of consumers and producers in the market. The success of the Soviet planning in solving the problem of coordinating production depends on the efficiency of allocating resources according to the planned targets, as well as the flexibility and responsiveness of the system to changes in economic conditions and consumer needs.

The degree of success of Soviet planning in coordinating production can be analyzed by looking at factors such as economic growth, industrialization, resource allocation, and fulfillment of consumer needs. It has been argued that Soviet planning enabled rapid industrialization and economic growth in the early years, with an emphasis on heavy industry, defense, and infrastructure. However, over time, the system faced challenges due to its rigidity, inefficiencies, and lack of incentives for innovation and productivity improvements. Central planning couldn't effectively respond to market fluctuations and consumer preferences. Moreover, the absence of competition and market forces led to production and quality problems.

In conclusion, while Soviet planning succeeded in achieving some of its goals, such as rapid industrialization and economic development, it faced significant challenges in efficiently coordinating production and fulfilling consumer needs in the long term. The degree of success was limited by the rigidity, lack of incentives, and inefficiencies inherent in the centrally planned system. The capitalist price system, despite its flaws, has proven to be more adaptable and responsive in managing the coordination of production, allowing for a more efficient allocation of resources and better satisfying consumer needs.