The impact of Zero-Sum Thinking on the failure to implement a “Soviet Internet” and its lessons.

Submitted for the “Failure” assignment as part of the Human Factors course of the Strategic Foresight and Innovation Program at OCAD University in Toronto.

Introduction

In this paper, I will be relating the failure of implementation of the “Soviet Internet” to a potential primary cause: the psychological human factor of Zero-Sum Thinking. The Soviet Internet is a cumulative term, coined by Benjamin Peters, for the various attempts between 1959 and 1989 to electronically network the productive capacity of the Union through an existing network of telephone wires. The data gathered and networked would be used to plan the economy efficiently and effectively with computers. This would create the conditions for ‘electronic socialism’ and “Red Plenty” (Spufford, 2010). This topic will be discussed here in four major parts: this introduction which will reveal some of the rationale for and theory behind the topic, a history of the Soviet Internet, a summary of Zero-Sum thinking, and that an analysis correlating the two.

I chose to pursue this topic as I have had a long standing (Evamy Hill, 2014) interest in the economic/socialist calculation problem (Hayek, 1945). I am interested in the opportunities to explore the debate in order to offer new solutions to having a fair, sustainable and growing economy. I firmly believe that there are ways to compensate for market failure and pursue fair and sustainable economic diversification and growth (Hidalgo, 2016) through the creation and implementation of digital and likely democratic-crowdsourced economic planning. This is not impossible with today’s technology, as for instance Walmart is one of the largest economies in the world and is, effectively, planned. (Phillips & Rozworski, 2019) It seems to be a matter of reorienting metrics that are attempted to be optimized.

I therefore have identified the human factor of Zero-Sum Thinking as the key barrier to the adoption of new, promising economic mixed-market-planning technologies based on the failure of the Soviet attempts. Zero-Sum thinking is a fallacy of false competition and scarcity. This type of thinking led to the sequestering of state resources into personally elevating projects of corrupt politicians and bureaucrats, instead of into the promising “Soviet Internet” visions. In this paper I will conclude that future attempts for digitally-driven economic reform must create shared-value while also, initially, strongly favouring the incumbents in terms of value proposition to allow for the implementation of the technology. If this is not done, the opportunity to allow the non-zero-sum or increasing returns conditions to grow will be “nipped in the bud” by the zero-sum psychology of the incumbents.

Context/Failure

In this section, I will be discussing: a basic lesson about the Soviet Economy, the promise of the cybernetic-electronic socialism as a solution, and the failure to implement that solution.

“Every year [the Soviet economy] produced goods that less and less corresponded to human needs, and whatever it once started producing, it tended to go on producing ad infinitum, since it possessed no effective stop signals except ruthless commands from above, and the people at the top no longer did ruthless, in the economic sphere. The control system for industry grew more and more erratic, the information flowing back to the planners grew more and more corrupt. And the activity of industry, all that human time and machine time it used up, added less and less value to the raw materials it sucked in. Maybe no value. Maybe less than none. One economist has argued that, by the end, it was actively destroying value; it had become a system for spoiling perfectly good materials by turning them into objects no one wanted.” (Spufford, 2010, p. 268)

This quote from Francis Spufford’s novel Red Plenty illustrates the overarching problem with the Soviet planned economy system. While the book is fictitious in its approach, it introduced myself and many others to the attempted application of cybernetic planning in the Soviet Union. The failure I will discuss in this section, the “Soviet Internet” (Peters, 2016) was an attempt to remediate the failure of the planned economy. It was an attempt to network the nation’s factories to it’s planning apparatus, while upgrading the whole planning process with advanced mathematical economics and computers.

The definition of cybernetics from its founder, Norbert Wiener, is “the study and application of control and communication in the animal and the machine.” (Wiener, 1948) The opportunity of this transdiscipline is to understand and potentially design complex systems effectively. Work on this subject involved a “summary set of cybernetic sciences – operations research, systems theory, game theory, and information theory” (Peters, 2016, p. 16) with a common vocabulary for understanding across sub-disciplines. As we will see in this paper, Soviet intellectuals saw cybernetics insights as a way to compete with the west in terms of abundance. They believed that the USSR could create conditions of Red Plenty​ through cybernetic planning.

How did the Soviet Planning process actually work? The problem with the initial promise of communism from Marx is that he left much to the imagination about how economic planning, while necessary, would be achieved. (Miller, 1987) The Soviet state interpretation and implementation ofcentral planning was trifold, including three entities: Gosplan (State Planning Commission), Gosbank (State Bank) and Gossnab (State Commission for Materials and Equipment Supply). Effectively, Gosplan would create the overarching plans for the economy while Gossnab would implement them, and Gosbank would supply “financial” resources. (Peters, 2016) Planning consisted of setting targets and quotas at the highest level of Gosplan based on statistical modelling. (Cockshott & Cottrell, 1993) Soviet planning had been remarkably successful in building up heavy industry and creating astounding 7% annual GDP growth rates into the late 1950s – but then declined and eventually stagnated. (Peters, 2016) The cyberneticians of the Soviet Union recognized the failures of traditional planning.

The vision of the cyberneticists of the USSR was to use central planning to beat the West at its own game: abundance. Premier Nikita Khrushchev envisioned that the USSR would overtake the US economically by 1970. (Spufford, 2010) The USSR, through advanced planning, would “reach aspects of the fully equal, post-scarcity society of luxurious abundance and ever-shrinking requirements of labour promised by Marx – from each according to their ability, to each according to their need – by 1980.” (Phillips & Rozworski, 2019, p. 187) Red Plenty would be achieved by solving the Soviet and period problem of planning: of fundamentally insufficient, poor-quality and non-interoperable data, and the inability to process the data and information available – not to mention the uncertainty of what optimality consisted of. (Phillips & Rozworski, 2019) (Rittel & Webber, 1973) Overall, these problems would be solved through economics and computing (under the umbrella of cybernetics). Below is an example  of one of the competing approaches:  

“Applying the results of game theory to the Soviet economy, economic cyberneticians argued that the central government did not need to impose specific output quotas on individual enterprises; instead, it could set “optimal” prices and investment efficiency norms, then allow individual enterprises to make their own decisions. If the criteria of economic performance were properly formulated, the independent activity of individual enterprises should lead to the fulfillment of the national plan.” (Gerovitch, 2002, p. 274)

In this case, the information to form prices would be set through information gathered from across the economy, processed and modeled with computers. It would have revolutionized planning, and solved the problem of the reality of the old Soviet Joke: “Mathematicians have calculated that in order to draft an accurate and fully integrated plan for the material supply just for the Ukraine for one year requires the labor of the entire world’s population for 10 million years.” (Phillips & Rozworski, 2019, p. 189)

 

The first proposal in the world to create a national computer network for civilian use was the brainchild of military research Anatoly Kitov. In 1952, he serendipitously discovered Norbert Wiener’s seminal ​Cybernetics​ in a secret military library. (Peters, 2016) He adapted cybernetic thinking into the Soviet context, and conceived it as a “hi-tech toolkit for Marxist governance” (Peters, 2016) just as the Khrushchev thaw was happening. By 1959, Kitov was director of a secret military computer research centre where he attended to devoting ‘unlimited quantities of reliable calculating processing power’ to solving the information-coordination problem of better planning the national economy. (Peters, 2016) Essential to this plan, the Economic Automated Management System (EAMS), was the idea that the calculations would use Red Army mainframe computers during their downtime overnight. (Peters, 2016) The proposal, with this essential concept, was sent to Khrushchev but intercepted by the Red Army. (Peters, 2016) It did not sit well with the military, who saw the idea of sharing Red Army resources with civilian economic planners as potentially treacherous. (Peters, 2016) A secret military tribunal was convened which stripped Kitov of his Communist Party membership for a year, and dismissed him from the military forever. (Peters, 2016) This was the end of the proposal for the first national civilian computer network.

Now, we come to OGAS, or the All-State Automated System, first proposed in 1962 by Viktor Gluskov. OGAS would, in its ideal form, span most of the Eurasian continent, connect every factory and enterprise through telephone wire to a three-level pyramid control scheme. (Conyngham, 1980, p. 438) A central computer centre in Moscow would connect around 200 mid-level computer centres in major or important cities, which would link to as many as 20,000 computer terminals in key production sites. (Peters, 2016) Interestingly, the system would have had a decentralized design allowing users to contact any other users – thus leveraging local knowledge. (Peters, 2016) However, politics got in his way. The reform mentality of the Khrushchev era, passed by the mid 1960s, and bureaucrats and politicians saw the need to protect the funding of their own ministries as paramount to funding new projects (Peters, 2016). As it happened, “Glushkov indeed admitted that his project for a nationwide network of computation centers would cost more that the space program and the atomic project put together.” (Gerovitch, 2002, p. 278) The particular barrier was the minister of finance, Vasily Garbuzov, who threatened economic-reform-minded prime minister Alexei Kosygin before the October 1, 1970 Politburo approval gathering – the final decision point for funding for the OGAS project. (Peters, 2016) The top secret OGAS Project was then left to languish with the rationale for its cancellation of funding being that it was ‘too much, too soon’. (Peters, 2016).

 

Human Factor

The human factor I will be looking at to analyze the failure of implementation is “Zero-Sum Thinking”. This is the belief that there is a fixed sum of an available resource in any given situation, and that the sum cannot be increased. A more detailed definition is below:

“A general belief system about the antagonistic nature of social relations, shared by people in a society or culture and based on the ​implicit assumption​ ​that a finite amount of goods exists in the world, in which one person’s winning makes others the losers, and vice versa […] a relatively permanent and general conviction that social relations are like a zero-sum game. People who share this conviction believe that success, especially economic success, is possible only at the expense of other people’s failures.” (Różycka-Tran, Boski, & Wojciszke, 2015, p. 526)

This is a psychological factor that falls under the behavioural economics ‘heuristics and biases’ purview and game theory. It has been studied in terms of hypothesis prediction, where people believe in a situation that potentially suggests two winners – that one winner must confirm a loser. (Pilditch, Fenton, & Lagnado, 2018) ​There seems to be a correlation with short-termism (the bias of attention or focus on the short term but not the long term), as the bias might be that something subjectively appears to be zero-sum in the short run, but is objectively not in the long run. (CFA Institute, n.d.). An opposite interpretation of the belief in positive feedback or increasing returns. (Bonnett, 2013) Overall, this thinking class limits thinkers to taking a purely competitive, conservative approach even when opportunities present themselves for significant gains for themselves in the long term.

Analysis

The failure of the Soviet Internet was not a failure of the imagination. In fact, there have hardly been any attempts at as an imaginative approach to economic cybernetics since Project Cybersyn in Chile in the early 1970s. (Beer, 1972) The failure came down to the antagonistic, short sighted and unproductively zero-sum competitive nature of the Soviet politicians and bureaucrats in whose hands the decision to impede and then cancel EAMS and OGAS was made. This failure is the result of the psychological feature of zero-sum thinking, which seems to have emergent cultural effects which then influence other minds with this type of thinking. For the purposes of this paper, I will be focusing on the individual psychological aspect.

 

Fundamentally, my claim is that, at least in theory, the implementation of these economic planning systems could have led to a much larger, more diverse, higher quality, and more powerful Soviet economy – asynchronously disconfirming zero-sum thinking. It seems as if this was evident to the reformers, but that is ‘preaching to the choir’ – so to speak. It should have been evident to opposing minister Garbuzov as well. He was concerned about the cost and the proportion of the budget of the OGAS project and its relation to his own budget priorities. However, perhaps due to zero-sum short-termism, he did not, could not or wished not to realize that the implementation of the OGAS project could have led to a ‘bigger pie’ that could have increased his budgets, or the budgets of his successors. A cooperative approach towards OGAS, in line with the ideal of Marxist ideals, may have significantly reduced the conditions of scarcity. While it is uncertain how the OGAS or any form of advanced economic planning might have competed in the modern innovation economy, it still begs a foresight question amongst zero-sum thinking politicians. Zero-sum ​short-termism, especially in the context of Soviet Union’s demise 20 years later, potentially implicates the failure to implement AEMS or OGAS as a direct contributor to the fall of the Soviet Union. This demonstrates how short-termist, zero-sum thinking actually was – in a via negativa perspective (view from the opposite) (Taleb, 2012, p. 301)- a factor at play.

The case of EAMS and its dissolution by military tribunal, is again an unfortunate reality of zero-sum thinking. The military of the Soviet Union, despite its massive information processing capabilities for the time and its significant downtime, saw its capacities as strictly for their own use. Even assuming the possibility of security concerns, there appears to have been no attempt to find a workaround in the spirit of the greater good for the country. Ironically, while we cannot predict an alternate reality, the failure of this early reform might have been a cause to the eventual demise of the Soviet Union and its impressive military. Zero-sum thinking, by not being open to the possibility of increasing the size of the pie, led to their own downfall.

There were other reasons besides behavioural zero-sum thinking that could have been alternate explanations for the cancellation of the project. Econophysicists Cottrell and Cockshott identified that other issues would have halted OGAS or any other implementation of electronic socialism. These included the antiquated ‘material balances system’, lack of standardized product information, the lack of free flow of information, and the antiquated pricing system philosophy. Perhaps the Soviet cyberneticists were before their time, as even the most ardent electronic socialists admit that at the very least it appeared to them that “effective detailed economy… requires the sorts of computer and telecommunication technology available in the west as of, say, the mid-1980s” (Cockshott & Cottrell, 1993, p. 80) From a contemporary American perspective: “Computerization is a long-term structural change. It occurred so quickly in the United States because of the pressures of the marketplace to keep up with the competition, because of corporate autonomy, because of considerable marketing pressures from the major vendors, because small vendors have filled the most varied niches, and because the vendors have generally delivered sufficient equipment for the tasks at hand.” (Central Intelligence Agency, 1987)

Structurally, “The Soviet leaders also realized that the OGAS project, unlike the space program and the atomic project, had direct political implications, which threatened the established hierarchy of power.” (Gerovitch, 2002, p. 281) Computerization requires a great deal of reform and optimization to prepare inputs and implement outputs. This was apparently not possible within the Soviet state, though ARPANET was emerging in the American context for entirely different reasons (military and not primarily economic), as discussed below. Fundamentally, computerization in the US has led to economic expansion. (Brynjolfsson & Hitt, 2003) Could it have in the Soviet Union? The focus of leadership on framing in terms of zero-sum thinking excluded the potential of an alternative model abundance that could have emerged. The potential for non-zero-sum growth that might have enriched everyone, including themselves, was in front of the leaders of the Soviet Union – yet they failed to see it.

Overall, I identify Peters’ as having said it best in his pioneering book on the Soviet Internet. He says that it was “surprisingly informal forms of institutional misbehaviour” or “socialists behaving like competitive capitalists” and in the American context the reverse, which led to the failure. (Peters, 2016). This means that “global computer networks took root in the US thanks to well-regulated state funding and collaborative research environments, while the contemporary (and notably independent) national network efforts in the USSR floundered due to unregulated infighting among Soviet administrators.” (Peters, 2016) I believe this is the best summary of the situation that is available. It reflects the emergence of zero-sum thinking from the psychological, to the team, to the organizational, to the political. (Vicente, 2003, p. 61)

 

In terms of Vicente’s Human-Tech fit (2004), it seems that the psychological focus of this paper is appropriate but that zero-sum thinking emerges to be society wide. It would be interesting to do a deeper study of the overall culture of the Soviet Union and if there was a general zero-sum thinking phenomenon. This seems to be the case intuitively, but this top-down/bottom-up relationship in relation to the Soviet Internet should be examined more carefully. The role of reformers and the political dimensions must also be considered. Perhaps, in contrast to the rest of this paper, the Soviet whole power structure, society and economy was truly structured as a zero-sum game. Risk assessment as a behavioural and collective factor must also be considered. A criticism might be that this essay puts too much faith in the potential of the Soviet Internet project.

Conclusion

In summary, the proposed reforms towards a Soviet Internet had the potential to lead toward a bigger pie, giving everyone a bigger slice of the economy. Unfortunately, due to zero-sum thinking and its accompanying short-termism, the reforms were terminated. Perhaps this was also due to the uncertainties which any change in the structure of power could have had on the ruling elite (though many were reformers).

It is important to know the story of the Soviet internet (and its contrast with the American ARPANET) to understand how we might implement significant economic reforms in future. Through comparative economics, we can gain insights about behaviour and implementation that might not otherwise have been achievable otherwise. I selected zero-sum thinking behaviour because I am interested in the implementation of new economic concepts, based on the rethinking of traditional economics in an transdisciplinary context. New thinking could lead to a new type of abundance for the whole of humanity while mitigating impacts to and integrating with environmental cycles. This is the potential desirability of rethinking planning today: to correct for market failures and externalities to close the equality gap and ensure our collective survival and ability to thrive with regard to the environment while encouraging serendipity, diversity, and quality. How might we democratically crowdplan the economy?

This resurgence of planning must be toned through mixed methods: a balancing of the humours (so to speak) of ​Communities, Democracies, Hierarchies, and Markets (Malone, 2018) in the frame of Collective Intelligence Design (Mulgan, 2018) in order to create a well functioning, data driven (Mayer-Schönberger & Ramge, 2018), fair economy. This must be a fusion of Red Plenty, Blue Plenty (the conventional western market approach to abundance) and silicon plenty (the emerging digital, silicon valley approach to abundance). I call this approach ​Purple Plenty Paradigm (P3),​ or an integration of mixed methods (of red, blue, and silicon) democratic, data driven approach to balancing the advantages of markets and the advantages of missions and planning. If this type of thinking takes root in Canada, the exercise may also be called the ​Maple Plenty Project.​ If this approach is to be successful, we must understand how those in power and decision making roles may be persuaded to embrace reforms in the Purple Plenty Paradigm. Understanding and contravening zero-sum thinking, in combination with short-termism, will be an essential part of the Purple Plenty Project in making rhetorical interventions that facilitate the enactment of modular but systemic reforms. We must anticipate what comes next so it is implemented with thought and foresight. Purple Plenty is a potentially helpful model if the economy is indeed a coordination, or information processing, problem.

 

*Abridged from 12 pages.

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