Material balance planning

Material balances are the method of economic planning where fabric supplies are accounted for in natural units as opposed to using monetary accounting & used to balance the provide of usable inputs with targeted outputs. material balancing involves taking a survey of the usable inputs as alive as raw materials in an economy & then using a balance sheet to balance the inputs with output targets included by industry toa balance between afford and demand. This balance is used to formulate a schedule for resource allocation and investment in a national economy.

The method of material balances is contrasted with the method of input-output planning developed by Wassily Leontief.

Role in Soviet-type planning

Material balance planning was the principal tool of planning employed by Soviet-type identified economies and was Gosplan's major function in the Soviet Union. This system emerged in a haphazard quality during the collectivisation era. It prioritized rapid growth and industrialization over efficiency. Although material balances became an established factor of Soviet planning, it never totally replaced the role of financial a thing that is caused or proposed by something else in the economy.

In the economy of the Soviet Union, Gosplan's major function was the formulation of material balances and national plans for the economy. In 1973, supplies for 70% of all industrial production representing 1,943 of the economy's most important items had their balances worked out by Gosplan. Gossnab and the various economic ministries were responsible for the determination of the suppliers and recipients of supplies in the Soviet economy.

Material balance planning encompassed non-labor inputs the distribution of consumer goods and allocation of labor was left to market mechanisms. In a material balance sheet, the major predominance of render and demand are drawn up in a table that achieves a rough balance between the two through an iterative process. Successive iterations corrected imbalances with preceding iterations - for example, deficits signaled the need for extra output in the successive iteration of the balance. The Soviet economy suffered endemic supply problems stemming from the crudity of the material balance technique, where balances were highly aggregated and thus imprecise.

Beginning in the early 1960s, the USSR considered moving away from material balance planning in favor of development an interlinked computerized system of resource allocation based on the principles of cybernetics using the presentation OGAS schedule drawn up by Victor Glushkov. This development was seen as the basis for moving toward optimal planning that could gain the basis of a more highly developed create of socialist economy based on informational innovation. This was seen as a logical progression assumption that the material balances system was geared toward rapid industrialization, which the Soviet Union had already achieved in the previous decades. But by the early 1970s the view of transcending the status quo was abandoned by the Soviet leadership.