This is a marvelous and unusual book. It sits in a remarkable way in between science popularisation, social history and fiction. The author describes it variously as a novel whose hero is an idea and a fairytale.

The hero idea is that of optimal planning. The idea of running a planned economy in just such a way as to ensure that resources are optimally used in order to deliver the ’red plenty’ of the title.

Combining real and imagined characters, politicians like Khrushchev, mathematicians and economists like Kantorovich and Nemchinov with fictionalised minor characters, it gives a gripping and apparently realistic picture of life in the USSR during the 50s and 60s. It is not a single narrative as one expects from historical fiction. Instead it gives us a series of snapshots from the lives of individuals, separated by years. The common link is the project of the Cybernetic economic reformers, and the ambitions of Khrushchev to attain communist plenty.

The author shows real skill as a science populariser, explaining such diverse topics as how the Pentode valve logic of the early BESM computers worked, to the molecular mechanics of the carcinogenesis mechanism that eventually killed its designer. He vividly portrays the enthusiasm and self confidence of the USSR in the late 50s when Khrushchev’s boasts that they would overtake the USA by 1980 and achieve communism seemed plausible. He gives a good didactic account both of the basic mechanisms of the Soviet Economy, and, through the lives of incidental characters paints a picture of its real operation that is more detailed and convincing than any academic history.

He traces the idea of cybernetic economic management from the hope of the 50s and early 60s to its sidelining under Kosygin, and the eventual relegation of Kantorovich to the less ambitious task of optimisating steel tube output for the oil and natural gas industry. Ironically, says Spufford, as growth rates slipped in the 70s, it was only the exploitation of petroleum for export that allowed Soviet living standards to rise.

This is a book that should be read by anyone who is seriously interested in the possibility of a different sort of economy from the one we now have. It shows both the strengths, and the hidden weaknesses of the most serious attempt so far to construct an alternative to capitalism, an attempt that was born when the idea of a communist future was taken very seriously by a whole society. To read it is to be convinced that whatever the truth of standard leftist criticism of the USSR as being undemocratic and bureacratic, there was much more than that at issue in this tragedy.

It raises real political and philosophical issues that would have to be faced by any future socialist project, and draws attention to a forgotten history that today’s socialists ignore at their peril.

The bulk of what we read and hear about the USSR focuses on the 20s and 30s. The remaining 50 years of its history fade before the glamour, grandeur and horror of the early years. But the early 1960s, when Russia was already an industrial country, with many areas of internationally competitive technology in aviation, space, computing holds more relevant lessons for the European left than its early years.

It is clear what lesson orthodox economists will draw: "It’s a timely exploration, now so many people have gone off the idea of markets, of why the alternative is worse."

But such conclusions betray an unjustified and callous smugness. It is a smugness not justified by the elegaic last paragraph of the book. The restoration of the market mechanism in Russia was a vast controlled experiment. Nation, national character and culture, natural resources and productive potential remained the same, only the economic mechanism changed. If Western economists were right, then we should have expected economic growth and living standards to have leapt forward after the Yeltsin shock therapy. Instead the country became an economic basket-case. Industrial production collapsed, technically advanced industries atrophied, and living standards fell so much that the death rate shot up by over a third leading to some 7.7 million extra deaths.

If you were old, if you were farmer, if you were a manual worker, the market was a great deal worse than even the relatively stagnant Soviet economy of Brezhnev. The recovery under Putin, such as it was, came almost entirely as a side effect of rising world oil prices, the very process that had operated under Brezhnev.

But this does not excuse us from seriously considering the problems so vividly raised in the book. Spufford recounts how the attempt to follow the reformers’ recomendations and raise the price of food to provide more income for farmers provoked strikes by industrial workers, which were suppressed with great brutality. The same scenario played itself out in Poland in the 70s and 80s, when any attempt to raise the ridiculously low subsidised meat prices led to strikes.

Spufford brings out the disconnection between the recomendations of the reform economists and the real lives of the people that the reforms would impact on. Food subsidies were the bad conscience of inequality. They were necessary because without them, those on the lower wage rates could scarcely have survived. Marx had advocated that in the first stage of communism everybody would be paid in labour vouchers not money – 1 hour’s work getting 1 hour’s vouchers. Goods would be directly priced in terms of the labour required to make them and social expenditure would be met out of a tax or time-levy on incomes. Soviet prices deviated considerably from labour values for two reasons: the well known subsidies on essential foods and housing.

The turnover tax was, I think, calculated on the basis of total turnover not just wages, as such it was similar to the fixed percent markup Marx posited for prices of production. Given that due to subsidies, wages underestimated the real value of labour power, this sort of markup would mean that the deviation of prices from labor value would actually have been bigger than under capitalism.

To have furthered Khrushchev’s avowed aim of communism, Kantrovich would have had to propose egalitarian pay rates and a shift in state finance from turnover taxes to income taxes, before prices could be rationalised.

Spufford gives greatest emphasis to the policies of those around Kantorovich and Nemchinov, who were advocating price reforms as part of a programme to allow optimal operation of the economy. Kantorovich argued that these prices – objectively determined valuations – arose out of the objective technical structure of the economy. If actual prices corresponded to objectively determined values, then the signals that these prices provided would guide individual factories to produce in accordance to what the plan needed.

There is of course a strong similarity between this argument and that put forward by Western economists about the role of prices in guiding resource allocation in a market economy. It is probably no accident then that Kantorovich was the only Soviet economist to get a Nobel Prize for economics.

But there was a fatal paradox in this whole notion, one that Spufford brought out in a meeting between Kosygin and a leading reformer: how were these optimal prices to be calculated? The maths was well understood, but the technical problems of handling that much data with 1960s computers were vast. And if Gosplan could concentrate the information and could have done the computations, then the indicative prices would have been unneccessary – the whole process of calculation could have been done in-natura with the Objective Valuations only having a fleeting existence as coefficients within the matrices of the planning computers.

So the programme of Kantorovich ended up requiring the same level of computing resources as that of his rival cyberneticist Victor Gluschov who apparently advocated the complete abolition of money – something superficially closer to Krushchev’s vision of communism. In this context it is worth reading InterNyet: why the Soviet Union did not build a nationwide computer network by Slava Gerovitch. It would have been interesting had Gluschov appeared as a character in the book, rather than just as someone who is refered to indirectly. In the afterword it becomes clear why Gluschov remains such a shadowy figure to Spufford. Spufford reveals that he relied entirely on English language sources. What he knew of Gluschov came from Gerovitch’s brief account.

All in all, let me say again, this is a book that should be read by anyone with a serious interest in economic alternatives.

Red Plenty by Francis Spufford. London: Faber & Faber, August 2010