Daily Archives: September 9, 2017

Fifty Five Years Ago Today …

Evsei Grigorievich Liberman published “Plan, benefit, and prisms” in Pravda, a dissertation which proposed new methods of economic planning based on democratic centralism.

Democratic centralism is a method of leadership in which political decisions reached by the party (through democratically elected bodies) are binding upon all members of the party. His main proposal was that profits should be made the index of performance for Soviet planning, as well as the basis for bonuses to the personnel and directors of Soviet enterprises. This article stimulated a large debate and two years later, the Supreme Economic Council of the USSR converted some of the resulting conclusions into law, after some enterprises began to functionally experiment “on the basis of profit”. (Source: International Socialist Review, Vol. 26, No. 3, Summer 1965, pp 75 to 82 as transcribed by Einde O’Callaghan and found on the Ernest Mandel Internet Archive)

How is this relevant? It seems that no matter what the political climate, or what the governing structure, in the world of business, profit always seems to be top of mind for at least one party, especially when that party believes it’s their key to personal profit.

This means that there’s always going to be a stakeholder interested only in the bottom line and what it means to him, and that if you don’t keep this in the back of your mind, and come up with a decision that increased profit at least slightly, you’ll have a hard time getting it accepted, even if it is the most sustainable decision, the most corporately responsible decision, or the best long term decision from a value, and cost, perspective.

If profit can rear its ugly head in an environment governed by communism mindset, it can rear its head anywhere. Even in procurement which is supposed to focus on value creation and cost reduction. Keep this in mind when trying to ascertain, and balance, the desires of multiple stakeholders.