Economic Planning

Typology

Arturo Hermann:

“Original Institutional Economics (OIE) provides ─ along with other heterodox contributions, for instance the theories of democratic and ecological socialism ─ an interesting analysis. It identifies three kinds of economic planning:

(I) The first is corporate planning, which is the reality of modern capitalism. In this system, the operation of “free market forces” is heavily conditioned by the interests of big corporations. They possess a wide array of instruments to influence the structure of all relevant markets in which are engaged. In William Dugger’s words, “The corporation is privately efficient [in the pursuit of its goals], but it is not socially efficient because its low-cost, high-productivity performance benefits those who control it, generally at the expense of those who depend upon it but frequently also at the expense of the society at large.”, (Dugger, 1988: 239).

Corporate planning is highly hierarchical, since the key decisions are made by the top managers with little involvement of workers and citizens at large. (II) Then comes totalitarian planning, which is a system characterised by a public purpose which is pursued through a highly hierarchical structure. Such organizations ─ although have sometimes achieved important results in building infrastructures and poverty alleviation ─ are flawed by a fundamental lack of accountability and democratic representation.

Government members are appointed by the ruling (and single) political party. In such instances, there is no guarantee that, (i) the party is organized democratically and expresses the needs and experiences of all the groups and classes of society; and that, (ii) government members and public officials are really accountable for their behaviour.

This system, then, by acquiring a marked self-referential character, makes it impossible any objective and pluralistic assessment of the policies adopted and the results achieved.

(III) We switch then to the third alternative, democratic planning. This system, although it does not always work miracles, is definitely more promising. By allowing a more complete expression of the experiences, competences, motivations and conflicts of the involved subjects, such system can improve the process of social valuation, and then the capacity of policy action to respond to the profound needs of society. One central difference of democratic planning in respect to corporate and totalitarian systems resides in the capacity to self-correct ─ by a process of trial and error ─ its own shortcomings.” (https://together381.wordpress.com/2019/11/20/democratic-planning-in-the-original-institutional-economics-perspective/?)