HUD Releases Introduction to AFFH and the New Rule Webcast
See new training video and be amazed at the similarity to planning in the early U.S.S.R., click “Encyclopedia Britannica article”, then click “New AFFH Rule Webcast”, (55 min.) video (below) training participants will learn:
- The legal basis for AFFH
- Requirements under the recently released rule
The following excepts are from the Encyclopedia Britannica:
Economic planning, the process by which key economic decisions are made or influenced by central governments. It contrasts with the laissez-faire approach that, in its purest form, eschews any attempt to guide the economy, relying instead on market forces to determine the speed, direction, and nature of economic evolution.
Planning in the early U.S.S.R.
The kind of economic planning that was practiced in the Soviet Union and in most other communist countries until the 1990s had developed during the 1920s and ’30s in the struggle to industrialize the U.S.S.R. The Bolsheviks had seized power in 1917 without any clear notion as to how an economy should be run. No guidance was to be found in the writings of Karl Marx other than the assertion that a socialist society would operate the economy for the common good, which suggested that it would create organs of economic administration to replace the market system of capitalism.
The First Five-Year Plan
The First Five-Year Plan (1928–1932), which was later said to have been carried out in four years, called for immense investments in heavy industry; for example, steel output was to be more than doubled by 1932. Amid great confusion, the planning mechanism was overhauled, and gradually a “command economy” was established. In this system, subordinate units of the economy (e.g., industrial enterprises) operated in accordance with administrative instructions, and they did not decide their inputs or outputs by negotiation with other enterprises, these being determined by the planners. The sole effective criterion of management decision became conformity to plan—i.e., to the instructions issued by the central administrative planning organs. In this way, the political authorities achieved a high degree of control over resource allocation and were able to enforce their priorities. Consequently, when the First Five-Year Plan ran into trouble, the government was able to insist on the fulfillment of most of the plans for key sectors of heavy industry, at the cost of a drastic fall in availability of consumers’ goods.
Planning in other communist countries
In other communist-ruled countries the Soviet system was extensively copied, even in minor details, until 1956. After that date much depended on choices made by the party leadership of each country. Both Yugoslavia (in the 1960s) and China (in the 1980s) decentralized control over major sectors of their economies and introduced individual incentives on a significant scale. The Soviet Union’s satellites in eastern Europe, by contrast, maintained fairly rigid centralized controls until 1989–90. At that time, the Soviets abandoned their political-military control over the region, and most eastern European countries used the opportunity to begin moving toward a free-market economic system, however haltingly and even painfully.