Economic and industrial production instability

Uncoordinated production planning

Nature

The magnitude and rate of changes due to restructuring of industrial production is not only enormous but largely unplanned, generating a momentum and direction of its own. The internal dynamics of national growth and the international spread of technology are governed by uncoordinated forces, including ad hoc governmental decisions and the dictates of the market; they encourage the perpetuation of the inequitable distribution of the benefits accruing internationally from the present rapid growth of industry and it is unclear whether they are the most efficient means of promoting such growth per se. As stated in the draft of the Lima Plan of Action on Industrial Development and Cooperation, "the unrestricted play of market forces is not the most suitable means of promoting industrialization on a world scale nor of achieving effective international cooperation in the field of industry".

Background

Economic and industrial production instability emerged as a global concern during the Great Depression of the 1930s, when abrupt declines in output and employment exposed vulnerabilities in interconnected economies. Subsequent crises, such as the oil shocks of the 1970s and the 2008 financial collapse, reinforced awareness of the systemic risks posed by volatile production cycles. Increasing globalization and supply chain complexity have since heightened recognition of the persistent and far-reaching impacts of such instability.

Incidence

Economic and industrial production instability has manifested globally through sharp fluctuations in manufacturing output, supply chain disruptions, and unpredictable market conditions. These instabilities have led to significant job losses, reduced investment, and volatility in commodity prices, affecting both developed and developing economies. The interconnectedness of global trade means that shocks in one region can rapidly propagate, amplifying the scale and impact of production disruptions worldwide.
In 2022, Germany, Europe’s largest economy, experienced a marked decline in industrial production due to energy shortages and supply chain bottlenecks exacerbated by the war in Ukraine. This resulted in factory shutdowns and a contraction in key manufacturing sectors.

Claim

Instability is the essence of capitalist, laissez-faire markets, the results of which are unemployment, poverty, and disease or hunger for millions. Lack of central planning allows market forces to war on each other. Discord and confusion prevail in the economic and industrial system to the detriment of society and labour, but to the benefit of bankers and the privileged classes who move their capital in response to market forces.

Counter-claim

Economic activity is an expression of human behaviour. As such it is inherently unstable. Were it less so, the fact still remains that food production and many essential commodities (such as wood, wood products and natural fibres) depend on the environment as well as on man's efforts, so that their availability is never certain as to specific quantities at specific times.