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Should central planners with big data be given another chance?

Paul Lewis
Sep 04, 2017
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Three thought-provoking FT articles, on seemingly unconnected subjects, share a common theme: whether a liberal economic order always gives us the best chance of a secure and prosperous society. Such debates increasingly frame our public discourse, one in which business plays an increasingly important role.

John Thornhill, the FT’s innovation editor, writes in The Big Data revolution will not set the planned economy free, that one plausible reason why authoritarian regimes with planned economies such as the former Soviet Union collapsed is because of their failure to process market data. ‘How could any central planner sitting in Gosplan’s offices in Moscow hope to understand all the moving parts of the Soviet economy across 11 time zones?’ he writes. But might the explosion of data now enable central planners to process market information more effectively, allowing a planned economy to ‘rise again in a radically new form?’ China, for example, ‘is developing one of the most vibrant data markets in the world.’ Two Chinese researchers suggest that ‘the freer flow of data could counter many of the ills that disfigured planned economies.’ Would it be so different from, say, the way an airport operates, directing market-driven traffic? But Thornhill counters that accumulating data is a very different proposition to being able to use it effectively (as numerous failed government IT projects attest); and he questions ‘how innovative such an economy could ever hope to be. It is hard for consumers to signal a data demand for a product that does not yet exist.’

Those who believe that, thanks to such potential efficiencies, old-school socialist planning should be given another chance, might read Philip Stephens’ reflections on UK Labour Party opposition leader Jeremy Corbyn. Efficiency is not the issue. His apparent neutrality on many of the world’s nastiest trouble spots suggests an organising ideology that ‘is not pacifism but anti-Americanism’. He adds: ‘For Mr Corbyn, hostility to a US-led liberal order counts above human rights.’

A better case against the principles of a liberal western order, however, is made in this illuminating FT interview of Rwanda’s highly authoritarian President since 2000, Paul Kagame, by FT editor Lionel Barber. ‘In poor countries, democracy is more about access to calories, schooling and healthcare than about periodic voting exercises,’ say Kagame supporters. As the country strives to heal itself following the 1994 genocide, the capital ‘Kigali is now among the safest and smartest cities in Africa. … Growth in gross domestic product has averaged 8 per cent a year, among the best on the continent’ Life expectancy has also soared. But even Kagame supporters fear that these achievements will disappear when he leaves office.

Interestingly, Mr Kagame sees himself as ‘CEO of Rwanda Inc.’ The government is ‘an extremely serious bunch of technocrats, obsessed with collecting data, setting performance targets and fine-tuning policies.’