Chapter 4.5.

Chapter 4: Standard Principles of Planning

4.5. Material Balance -part2- :Local production for local consumption

If the supply and demand adjustment in the material balance is the comprehensive standard principle, then local production for local consumption is its branching standard principle. Local production for local consumption is the principle of consuming locally produced goods locally, and the same term is sometimes used in capitalist societies as a slogan, mainly regarding the production and consumption of agricultural products.

The purpose of local production for local consumption as presented in capitalist societies is often unclear, but the common denominator seems to be a vague mixture of consumer psychological purposes such as a sense of security due to local pride in locally produced agricultural products with a clear producer and place of production, and agricultural policy purposes such as the defense of local agricultural infrastructure exposed to international competitive pressures due to free trade.

However, under a capitalist system that is fundamentally premised on a free market, local production for local consumption is merely a slogan that is left to the discretion of producers and consumers, and it is not actually possible to enforce local production for local consumption in a normative way, such as by banning wide-area long-distance distribution, including international trade.

In contrast, local production for local consumption in a sustainable planned economy is a principle that governs normative consumption plans developed by each local level. Therefore, the items covered are not limited to agricultural products, but extend widely to everyday necessities related to food, clothing, and shelter.

It also serves as an indicator of local material balances in comparison with the overall supply and demand adjustment of material balance, so from the perspective of economic planning, it results in the decentralization of economic planning. Therefore, local production for local consumption itself contains the principle of supply and demand adjustments at the local level, and here too, production capacity is calculated strictly according to the environmental balance.

However, unlike the formal decentralization attempted in the former Soviet Union as part of the reform of the inefficient planned economy system, this is a substantial decentralization aimed at ensuring the essence of a sustainable planned economy. In fact, the planned implementation of local production and local consumption limits long-distance transportation, which is one of the major sources of carbon dioxide emissions, and contributes greatly to environmental sustainability. From this perspective, local production for local consumption in a sustainable planned economy can also be said to be the standard principle for distribution and allocation.

Thus, local production for consumption in a sustainable planned economy is not a policy slogan for defending local industries against global capitalism, nor a technical measure for reforming the planned economy system, but rather it is positioned as one of the essential material balance standards that stems from the essential requirements of a sustainable planned economy.

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 4.4.

Chapter 4: Standard Principles of Planning

4.4. Material Balance -part1- :Supply-Demand Adjustment

In a sustainable planned economy that places emphasis on environmental sustainability, environmental balance is the overriding standard principle for planning, but because economic planning means the planned adjustment of the entire economic process of production, distribution, and consumption, the principle of material balance is essential.

Material balance means the overall prior balancing of demand and supply in the entire economy. This prior balancing of supply and demand has been emphasized in planned economy theory as the biggest difference from a market economy, which leaves supply and demand to the results of random transactions in the market, resulting in undisciplined economic cycles, including depressions, due to the whims of supply and demand.

In this respect, supply and demand adjustment remains an important principle in a sustainable planned economy, but unlike traditional planned economy theory, sustainable planned economy theory has a two-stage approach in which the standard of environmental balance is first applied, and then supply and demand adjustment is applied within that framework.

As a result, supply and demand adjustment will be limited to environmentally burdensome industrial sectors - which generally overlap with key industrial and mining sectors, including the energy industry - and will not be expanded to cover all industrial sectors, as was the case in the former Soviet-style planned economy. In other words, non-environmentally burdensome industrial sectors will not be subject to supply and demand adjustment, and will be left to free production.

When supply and demand adjustment is applied, production plans are usually drawn up based on predicted demand, but in a sustainable planned economy, this process is reversed, and demand is regulated according to the production volume and production method permitted based on environmental balance standards.

In other words, production volume is not determined based on raw demand, such as "we want this much," but rather demand is determined according to the production volume and production method permitted by environmental balance standards. To that extent, demand is no longer directly linked to human consumption desires, and is, so to speak, environmentally normed.

In this respect, unlike the former Soviet-style planned economy which placed emphasis on economic development, where production targets (quotas) to be achieved were normatively determined and demand was stimulated accordingly, the environmentally acceptable production capacity will be normatively determined and demand will be derived accordingly.

However, demand will not be determined automatically. If the limit at which humans can live a culturally fulfilling life is not guaranteed, it could lead to the enforcement of poverty. Therefore, production capacity must be adjusted so as not to fall below this cultural limit of survival.

👉The papers published on this blog are meant to expand upon my On Communism.