Revision as of 05:50, 30 March 2025

* Sorg, C., & Groos, J. (2024). Rethinking economic planning. Competition & Change, 29(1), 3-16. doi

URL = https://journals.sagepub.com/doi/full/10.1177/10245294241273954

Abstract

"The special issue ‘Rethinking Economic Planning’ contributes to the emerging literature on economic planning in the age of digitalization and climate crisis. This introduction will first situate the new planning debate in the context of the historical socialist calculation debate. We will then provide an overview of the current literature on democratic economic planning, elaborate on the contributions of this special issue and its individual papers against this background, and summarize the six texts. We close with a brief section on gaps in the debate."

Excerpts

Historical Perspectives on the Relationship Between Markets and Planning

Jan Groos et al. :

"The respective strengths and weaknesses of markets and planning and the question of whether economic planning on the scale of an entire economy is possible and desirable have been discussed throughout the 20th century in what has been termed the socialist calculation debate. The debate mainly featured Austrian, Marxist, and neoclassical economic theorists, the latter in turn being divided into socialist and non-socialist neoclassical economists. The traditional narrative of the debate holds that it started when Austrian economist Ludwig von Mises ([1920] 1990) published a critique of the Otto Neurath’s ([1919] 1973) proposal for a form of moneyless (‘in kind’) economic planning based on the experience of war-time economic planning. Von Mises asserted that in the absence of private property and a free market for factors of production, socialist planning would struggle to engage in rational economic calculation. Socialist economists soon rediscovered Enrico Barone’s ([1908] 2012) suggestion that if an economy can be displayed as a system of equations, economic planning could in principle be conducted by solving these equations. The ground of the debate thus shifted from whether planning was theoretically possible to whether it was feasible in practice to solve the enormous number of equations in time. With neoclassical socialists Oskar Lange and Fred Taylor (1938) suggesting that a planning board could set the prices of capital goods and adjust them in response to excess supply or demand, and with the computer on the horizon to ‘obtain the solution in less than a second’ (Lange, 1979), most contemporary economists (e.g. Bergson, 1948) concluded that socialist planning was indeed practical.

In his highly influential 1948 introduction to economics, for instance, neoclassical economist Paul Samuelson (1948: 590ff) used a model similar to Lange’s to illustrate among other things ‘a possible method of attacking the almost unbelievably complex problem of socialist economic planning’. He did not assume that mathematicians will ‘have to be called in to solve thousands and thousands of simultaneous equations’, because ‘the decentralized planners would proceed by successive approximation, by trial and error’ instead (Samuelson, 1948: 602). Joseph Schumpeter (2003: 188) in 1942 argued along similar lines that there ‘is nothing wrong with the pure logic of socialism’, a fact he considered ‘so obvious that it would not have occurred to me to insist on it were it not for the fact that it has been denied and the still more curious fact that orthodox socialists, until they were taught their business by economists of strongly bourgeois views and sympathies, failed to produce an answer that would meet scientific requirements’. Schumpeter claimed that socialist planning was not only theoretically possible, but indeed practically feasible, because a planning agency ‘would command information sufficient to enable it to come at first throw fairly close to the correct quantities of output in the major lines of production, and the rest would be a matter of adjustments by informed trial and error’ (Schumpeter, 2003: 185).

Against the background of the crises of Western Keynesianism, Southern Developmentalism, and Eastern state socialism and the related rise of neoliberalism since the 1970s, Austrian economists (e.g. Kirzner, 1988; Lavoie, 1985) managed to successfully transform this narrative of the debate (Adaman and Devine, 1996; O’Neill, 1996). They argued that socialist neoclassical economists had fundamentally misunderstood the Austrian challenge to planning, which they argued1 had always centred on the discovery and mobilization of ‘tacit knowledge’, most forcefully articulated by Friedrich August Von Hayek (1945). Such knowledge was dispersed among different actors, embodied in time and place and thus could not simply be aggregated by central planners. Instead, they argued, tacit knowledge required free entrepreneurs to act on it. The terrain of the debate thus shifted from what were essentially questions of computation to questions of knowledge, with most economists now being increasingly sceptical about the prospects of encompassing economic planning (on this shift in historiography: Lavoie, 1985; O’Neill, 1996; Adaman and Devine, 1996). Even critics of capitalism grew increasingly pessimistic about planning and instead suggested different models of market socialism (e.g. Roemer, 1994; Schweickart, 2002) as the politics of ‘feasible socialism’ (Nove, 1983). They conceded the market as a superior form of social mediation but maintained that it was possible to combine it with worker self-management of workplaces.

This period constitutes the prelude for the present-day wave of the socialist calculation debate. It was in explicit contrast to market socialist ideas that a series of new models of democratic economic planning emerged, which have only very recently been rediscovered by a broader audience. These models maintained that democratic economic planning as a third alternative to market economies (including socialist ones like in Yugoslavia) and statist command economies remained possible. The first of these models was Pat Devine’s (1988) notion of ‘negotiated coordination’, which stresses the need to replace atomistic decision-making on investment with deliberation by representatives of the major groups affected by a decision. In his model, market exchange between different cooperatives would generate the necessary qualitative and quantitative information for non-market deliberation over societal priorities and investment decisions.

Michael Albert’s and Robin Hahnel’s (1991) ‘participatory economics’ approach suggested a libertarian model of participatory planning, in which worker and consumer councils, respectively, determine societal supply and demand in a bottom-up process. After the councils have suggested plans for societal supply and demand, a technical Iteration Facilitation Board would adjust prices based on these plans and thus facilitate an iterative process of finding an equilibrium between supply and demand. A third and much less libertarian ‘cyber-socialist’ model has been suggested by Paul Cockshott and Allin Cottrell (1993), who argue for computerized central planning. Digitally connected workplaces communicate required inputs and production capacities to a central planning agency, which uses this information to optimize economic production via linear programming and thus produce options for economy-wide plans. These are in turn subjected to referendums. Fourth and final, David Laibman (1992, 2002) has developed a model that he calls ‘multilevel democratic iterative coordination’ (MDIC) in which democratic coordination is achieved through a continuous multilayered feedback process between decentralized units with locally embedded knowledge and a democratically legitimized centre with system-level knowledge of interdependencies. In order to maximize local autonomy of workplaces, he argues that the main task for the centre is to aggregate information and use it to centrally plan prices in a way that aligns the particular interests of workplaces with societal interests."

(https://journals.sagepub.com/doi/full/10.1177/10245294241273954)

Literature on the Digital Transformations in Both Corporate and Public Planning

On the Digital Calculation Debate: "The new debate can roughly be divided into three broader themes: planning in capitalism, digital planning, and ecological planning."

Christoph Sorg and Jan Roos:

"The height of neoliberal hegemony greatly decreased interest in planning and these approaches to democratic planning, developed during the ‘end of history’ (Fukuyama, 1992), were thus only discussed at the margins of social science (Science and Society, 1992, 2002, 2012). However, the escalating polycrisis has recently reignited interest in non-market forms of social mediation and coordination and also in the possibility of democratic economic planning. The new debate can roughly be divided into three broader themes: planning in capitalism, digital planning, and ecological planning.

The first major theme is the observation that ‘planning is already endemic to capitalism’ (e.g. Bensussan et al., 2023; Braun, 2018, 2022; Jochum and Schaupp, 2022; Jones, 2020; Philipps and Rozworski, 2019; Rikap, 2022; Sorg, 2023b). The historical increase of deliberate corporate planning within companies vis-à-vis market competition between them has been observed by a variety of renowned economists and social scientists from different backgrounds (e.g. Coase, 1937; Schumpeter, 2003; see; Simon, 1991; Sorg, 2023a). There have been similar arguments about increases in government size and capacity over time, with regard to the size of hegemonic state formations in different historical periods (Arrighi, 2007) and to the drastic increase in public planning after World War II (e.g. Devine, 1988; Krippner, 2011).

Novel bodies of academic literature have recently observed new transformations in both corporate and public planning. While some more popular work has discussed the emergence of large-scale procurement and distribution networks such as Walmart or Amazon as a significant advance in distributive planning (Jameson, 2009: 420ff; Bratton, 2016: 327ff; Phillips and Rozworski, 2019), work in economic and industrial sociology has discussed related transformations under the banner of intellectual monopoly capitalism (Pagano, 2014; Durand and Milberg, 2020; Rikap, 2022). The decline of mid-20th-century vertically integrated corporations (Chandler, 1977) had created the appearance of a shift from bureaucratic corporate planning to flexible and networked market exchange (Piore and Sable, 1984). However, leading firms maintained firm control over their supply chains (Arrighi, 2007: 170), and new technologies such as logistics and supply chain management software, satellite communications, and the Internet provided new ways for them to meticulously plan along global value chains (Bensussan et al., 2023).

Likewise, the new state capitalism literature has argued that public planning is on the rise across the globe (Alami and Dixon, 2020; Alami, 2023; Alami and Dixon, 2023). However, the concept lacks a common definition and is thus employed quite differently, for instance, to describe a particular variety of capitalism or the expansion of state-owned enterprises, among others (Alami and Dixon, 2020). Despite these conceptual differences, empirical observation of the state capitalism literature strongly indicates a shift in state-market relations towards more public planning via industrial policy, sovereign wealth funds, and public development banks (Alami and Dixon, 2020). Other research has also pointed to an increasing return of industrial policy (Evenett et al., 2014; Wigger, 2023), especially against the background of the US Inflation Reduction Act (Riley and Brenner, 2022), the European Green Deal (Pianta and Lucchese, 2020), and the rise of China (Baltz, 2022). Still other work in financial sociology has pointed to the increasing role of ‘central bank planning’ (Braun, 2018, 2022) and ‘macrofinancial regimes’ (Gabor and Braun, 2023) in shaping public planning (see Sorg, 2023b, in this special issue).

It is important to note here that observations of increasing corporate planning and public planning in capitalism have generally not related one to the other, and neither of them have been generally related to previous and current debates about the possibility of post-capitalist planning (as a notable exception: Bensussan et al., 2023). There thus remains space for research that analyzes these transformations from organizational sociology’s foundational departure point, which is that modernity has been characterized by a huge increase in the size and capacity of (both public and private) organizations (Fligstein, 2021).

A second theme of the new planning debate is the question of whether digital technologies can be of help in making new forms of democratic economic planning possible (Groos and Sorg, 2025; Heyer, 2025; Rief, 2023; Sorg, 2023a). In exploring the possibilities of post-capitalist and democratic varieties of planning, these works have rediscovered the older models of democratic planning elaborated in the previous section against the background of new digital technologies. While early ideas included the use of semi-autonomous software agents for developing economic plans (Dyer-Witheford, 2013), newer approaches explore the potential of forecasting technologies to determine demand (Grünberg, 2023a). While there are still those who work in the centralist tradition of the approach laid out by Cockshott and Cottrell (Dapprich, 2022), most approaches have looked towards digital technologies less in terms of computing power for central planning, but for their capacity as networked media of coordination that could bring about alternatives to market-based solutions.

Situated at the intersection of economics, computer science, and science and technology studies, such scholars have discussed whether information-rich feedback signals in combination with cybernetic principles of organization could promise an alternative to the information-poor price system of the market economy (Bratton, 2016: 327ff; Morozov, 2019; Swann, 2021; Jochum and Schaupp, 2022). Others have developed new models that explicitly make use of new digital possibilities, such as the use of digital platforms to mediate between economic actors (Saros, 2014), or the use of digital technologies to enable a commons-based form of planning (Meretz and Sutterlütti, 2025) that relies on stigmergic signals as an important coordinating mechanism. In contrast to approaches that search for digital methods of mediating between a given supply and demand, Evgeny Morozov argues that the true challenge for digital technologies within the planning debate revolves around the ability to devise alternative mechanisms for producing the new (Morozov and Groos, 2025). In contrast to the notion that digitalization makes encompassing economic planning feasible, the third theme has complemented the debate with the idea that climate disaster and the loss of biodiversity make planning necessary to avoid ecological breakdown (Felli, 2019; Malm, 2021; Saitō, 2022; Vettese and Pendergrass, 2022; Planning for Entropy, 2022; Krahé, 2022; Durand et al., 2023; Foster, 2023; Nishat-Botero, 2024; Dyer-Witheford, 2025; Hofferberth et al., 2025). Some authors have argued that the rapid and substantial price adjustments necessitated by climate change would render market mechanisms dysfunctional and thus require planning (Krahé, 2022). Others have called for ‘democratic planning’ in order to, among other things, ‘scale down ecologically destructive and less-necessary forms of production to reduce excess energy and material throughput in the core’ (Hickel and Sullivan, 2023). Along similar lines Durand et al. (2023) stated that if post-growth economies are to be achieved ‘by design not by disaster’, there will be a need for planning to set ecological limits, share restorative labour equitably, retire entire industries and instead divert resources into sustainable sectors. Other authors have rediscovered war economies as potential models for eco-planning (Malm, 2020; Saitō, 2022).

Of course these three themes are not meant to be either exclusive or exhaustive. Many texts in the new debate on economic planning discuss more than one of these topics, while others cover issues that fit none of the categories. The latter include questions of investment (Benanav, 2022), socialist governmentality (Groos, 2025), trans- and international dynamics (Sorg, 2025, see also Elias-Pinsonnault et al., 2023, in this special issue), post-sovereign planning (Mohammed, 2025), commonist planning (Meretz and Sutterlütti, 2025), reproductive planning in a liberated society (Lutosch, 2025), planning and anarchy (Bernes, 2020), biocommunist planning (Dyer-Witheford, 2025), and more.

The six articles in this special issue (Elias-Pinsonnault, 2023; Grünberg, 2023b; Nardelli et al., 2023; Rochowicz, 2024; Sorg, 2023b; Thompson and Nishat-Botero, 2023) similarly build on and contribute to the existing themes of the new planning debate, while uncovering roads less travelled. The first three papers engage with more traditional themes of the socialist calculation debate such as investment, calculation, and innovation. The second half of the issue then complements this largely economic focus with political, social, and ecological considerations. Throughout the special issue the reader will encounter both forms of planning within capitalism and theories of post-capitalist planning. At the same time, they will find papers zeroing in on single themes that have so far not received sufficient attention in the planning literature. These hitherto underexplored issues include questions of transformation, innovation, international planning, space and the urban, the intricacies of optimization algorithms, and cyber-physical systems."

(https://journals.sagepub.com/doi/full/10.1177/10245294241273954)

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