Part 6/17:
Flawed Central Planning and Quota Systems
One of the fundamental issues of communist economies is central planning. Mao’s policies relied heavily on unrealistic quotas that ignored the knowledge problem—an inability of centralized authorities to accurately gauge economic needs and production. This led to irrational practices such as melting tools into steel and fabricated accusations to meet impossible grain targets, pushing society into chaos and inefficiency.
The result was near-zero economic growth during Mao’s rule. By the time of his death in 1976, hundreds of millions lived in poverty—roughly half of all global poverty at the time was concentrated in China.