Planned Economy and Economic Planning: What "The People's Republic of Walmart" Got Wrong about the Nature of Economic Planning

Abstract

Leigh Phillips and Michal Rozworski’s The People’s Republic of Walmart entered the scene in 2019 with the remarkable idea that mammoth firms such as Walmart and Amazon, by being able to direct huge volumes of resources—sometimes with the capacity of entire countries—without an inner market to signal prices, are living evidence of the viability of a collectively planned economy. Moreover, they argue that the nondemocratic command system that often accompanies the structure of firms is due to their operation in a profit-seeking market system. Using the Austrian arguments propounded during the economic calculation debate, this essay shows that not only are firms, like other organizations, unable to substitute the market in coordinating their economic plans, but that their nondemocratic elements arise precisely from their function as “miniature planned economies,” demonstrating that the authors have misunderstood the nature of economic planning in a market economy. It is further argued that the problems that a planned economy would face without market signals would no less obstruct the efficient and successful operation of private firms if they ever tried to eliminate the market creating them.