“Planned Chaos”: Industrial Waste Recycling in Communist Economies by Pierre Desrochers M ost advocates of “sustainable devel- opment” assume that traditional market incentives, such as the price system and private property rights, lead to wasteful and environmentally harm- ful practices. Not surprisingly, some propo- nents, such as bestselling authors Paul Hawken, Sim Van Der Ryn, and Stuart Cowan, have suggested that central planning might prove more effective at coordinating industrial waste recovery. 1 Substituting central planners for sponta- neously evolved market transactions to increase industrial recycling is not only an old idea, but also one that failed abysmally when it was tried on a large scale in commu- nist economies. The results, to use Ludwig von Mises’s term, was “planned chaos” on a scale that sustainable-development theorists can hardly imagine. 2 By several contemporary accounts—and contrary to now-widespread belief—past entrepreneurs and industrialists did a fairly good job at creating wealth out of industrial waste. 3 Nevertheless, the turn of the twenti- eth century saw the emergence and eventual dominance of an intellectual perspective that attempted to substitute “rational” planning and large-scale enterprises for anarchic mar- ket competition. Accordingly, many authors indicted markets for their inherent wasteful- ness and environmental destruction. 4 For example, “scientific management” theorist Frederick Winslow Taylor, a man for whom the laissez-faire economic model held no sway, wrote in 1911 that when look- ing at America one could not avoid seeing “our forests vanishing, our water powers going to waste, our soil being carried by floods into the sea; and the end of our coal and our iron . . . in sight.” 5 Taylor and others ushered in the idea that the economic revolution of industrialization both enabled and required the replacement of “mere profitability” by objectively devel- oped measures of efficiency. They declared a “war on waste” that occurred because of the failure to implement the principles of sci- entific management and that resulted from the anarchic and uncoordinated market- place. It was the marketplace, they said, that brought about unnecessary duplication of productive units, the production of unneces- sary goods, and the large discrepancy between supply and demand. These efforts culminated in the early 1920s when Secretary of Commerce Herbert Hoover convinced the Federated American Pierre Desrochers (pdesrochers@iedm.org) is a research associate at the Montreal Economic Insti- tute (www.iedm.org). JULY/AUGUST 2003 25