National planning against the crisis

During the Great Depression “Planwirtschaft” (“planned economy, national plan­ning”) became the favourite concept of socialist economists in their search for strategies against economic crisis.

According to Carl Landauer (1931), “planned capitalism” could last only for a limited period. In his view, socialization of corporate enterprises, especially of industry, was the key to transformation of the existing economic order into a socialist economic system. He proposes a gradual take-over of corporate enterprises by the state with full compen­sation of private owners, wherever possible through the purchase of shares on the stock exchange. That the state can draw up an investment programme for the economy as a whole constitutes a decisive advantage of the planned economy over the market system (Landauer 1931: 122).

In his brochure of 1932 titled Planwirtschaft Emil Lederer reflects on the difference between the post-war situation and the situation of the economy in 1932. Lederer argues that partial socialization of certain industries would not have been an impossible task as long as the market economy was functioning reasonably well. In the depression of the 1930s, the capitalist system was paralyzed. A “revival of productive energies” could only be initiated by a comprehensive plan for the economy as a whole - a much more demand­ing task which could be accomplished in a fully planned economy (Lederer 1932: 41). Turning to the planning experiment that was undertaken in the Soviet Union, Lederer did not deny that there could be large-scale investment failures owing to planning errors. Such failures would result in losses of general welfare, which would, however, be less severe than the welfare losses in a capitalist market economy of a depression as severe as the one of the 1930s.