Contradiction between planning and neoliberalism in contemporary society

The economic system develops through crises. After the Great Depression, capitalist and socialist countries applied state planning methods of economic development. Indicative and strategic planning was utilized by capitalist countries; directive planning based on the principle of democratic centralism was employed by socialist countries. In capitalist countries, the public sector was increasing, methods of corporate planning were developing; a contract system was formed so that government could directly intervene in market process. The 1970s energy crisis terminated the Keynesian method of economic regulation in capitalist countries; socialist countries began moving towards the market economy by shock therapy or state planning. Dominance of the neoliberal paradigm marked an end to government intervention in the market economy and state planning programs. The 2008 financial crisis challenged neoliberalism and deprived it of some influential advocates: Jeffrey Sachs, Paul Krugman and George Soros. Prolongation of economic recovery has led to neoconservative reaction across the globe. The analysis of the period when capitalist and socialist countries' economies were regulated by state planning as well as comparison of this period achievements (economic miracles of the golden age of capitalism, USSR planning experience) with neoliberalism achievements demonstrates comparatively poor performance of neoliberalism from both economic and humanitarian perspectives. The reason for the ineffectiveness of neoliberalism is hidden deep in the fundamental principles of capitalism derived by Marx. Development of machines eventually leads to automation of production, which diminishes labor measured by labor time, or abstract labor. Since abstract labor is a substance of exchange value, market relations and capitalist mode of production itself deteriorate. Abstract labor erosion is a sign of the crisis of capitalism as a system. The 20th century demonstrates that planning is a practical alternative to the market. However, to avoid mistakes of the past, government functions should be delegated to civil society by developing direct democracy.