While never reaching the heights of Sputnik-mania, the fear that the Soviet Union could succeed by replacing capitalism with a cybernetic network was real and pressing to many in the U.S. in the 1960s.
The proclamations of Soviet cyberneticians caused considerable alarm in the West. ‘If any country were to achieve a completely integrated and controlled economy in which “cybernetic” principles were applied to achieve various goals, the Soviet Union would be ahead of the United States in reaching such a state,’ wrote an American reviewer of Cybernetics in the Service of Communism. ‘Cybernetics,’ he warned, ‘may be one of the
weapons Khrushchev had in mind when he threatened to “bury” the West.’
The CIA set up a special branch to study the Soviet cybernetics menace. It issued numerous reports, pointing out, among other strategic threats, the Soviet plans to build a ‘Unified Information Net.’ Based on CIA reports, in October 1962 President Kennedy’s top aid wrote in an internal memo that the ‘all-out Soviet commitment to cybernetics’ would give the Soviets ‘a tremendous
advantage.’ He warned that ‘by 1970 the USSR may have a radically new production technology, involving total enterprises or complexes of industries, managed by closed-loop, feedback control employing self-teaching computers.’ If the American negligence of cybernetics continues, he concluded, ‘we are finished.’ (Source)
Chile also experimented with a combination of a state controlled economy and cybernetics. See Viable System Model