The centralised road to mediocrity

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The common sense belief that central coordination and direction and the uniform implementation of best practice are bound to improve performance remains ingrained despite contrary evidence. It is however, disciplined pluralism which is the true genius of the market economy.

Fifty years ago Nikita Khrushchev delivered a secret speech in which he denounced Stalin’s terror and personality cult and proclaimed a new way forward for the Soviet Union. The Communist party’s central authority would be maintained but in future its decisions would be based on careful analysis and collective decision-making. Khrushchev was not the only socialist revisionist. Fifty years ago Anthony Crosland published a manifesto for Britain’s Labour party, The Future of Socialism, rejecting class warfare and demands for further state ownership of business, in favour of social and economic planning based on careful analysis and collective decision-making.

The two men heralded an age of rationalism. In the 1950s governments and business deployed the first commercial computers. The world would be transformed by information technology. The achievements of Russian technology and planning would enable that country to match, even overtake, western economic achievements. In western Europe, governments could simultaneously promote social and economic order.

As a young agricultural official, Khrushchev had supervised maize production. When later, as general secretary, he visited the US, the luxuriant fields of the Midwest made an enduring impression. Maize, he thought, was the US economy’s backbone, and would also be the means by which the Soviet Union would catch up. Large tracts were converted to maize. The programme was not a success.

As British education minister in the 1960s, Crosland masterminded the move to comprehensive secondary schools, ending selection of pupils by ability. Education was key to economic and social progress and the comprehensive schools would allow high and uniform standards to be achieved universally. The programme was not a success.

Neither Khrushchev’s experiment with maize nor Crosland’s experiment with comprehensives was inherently foolish. What was wrong in both cases was the scale of the experiment and the absence of honest feedback on progress. The agricultural bureaucrats who reported the success of the conversion programme to the Kremlin were paralleled by the educational bureaucrats who reported the success of comprehensives to Whitehall. But Soviet agriculture production fell and the economic setback that followed was a principal reason for Khrushchev’s removal from office in 1964. The widening gap between the self-congratulation of the educational establishment and the everyday experience of parents propelled educational reform to the top of Britain’s political agenda.

There are many differences between Soviet planning and west European social engineering. But the belief that wise political direction can determine and implement universal policies is common to both, and the reasons such policies fail are common to both.

The problems that destroyed Khrushchev’s reputation and the Soviet economy – the lurching fads and fashions that go with centralised decision-making, assessment that is self-justifying rather than objective and reluctant recognition of failure – were not unique to Soviet communism. Yet the common-sense belief that central co-ordination and direction, and the uniform implementation of best practice, are bound to improve performance remains ingrained despite the contrary evidence derived from the failures of planning in both government and business organisations around the globe.

In an uncertain, changing world, most decisions are wrong, and success comes not from the inspired visions of exceptional leaders, or prescience achieved through sophisticated analysis, but through small-scale experimentation that rapidly imitates success and acknowledges failure. This disciplined pluralism is the true genius of the market economy.

As the British government this week publishes another education reform bill, the ruling Labour party is split between those who want to give head teachers and governors more autonomy and those who emphasise the importance of continued central direction and control. Khrushchev’s philosophy was rejected definitively in 1989. Crosland’s influence lingers on.

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