Economic Planning In

Economic Planning In

Economic Planning, in present-day, fashionable usage, means national or regional Government direction or 'guidance' of the economy, directly or through agencies. It entails centralized decisions on what ought to be produced and in what quantities, and may require decisions about prices, costs, location and the development of productive capacity. Such 'economic planning' differs from the use of general fiscal and monetary policy to regulate total money flows in the economy without conscious discrimination, and from other forms of Government intervention in the economy e.g. redistribution of capital wealth or income by taxation and legal restrictions on monopoly power. Some economists say that the creation of a legal and institutional framework for an otherwise free market economy is no less a form of planning. Individual consumers or business men may also be said to plan in so far as they try to assess future wants and the means of fulfilling them and act accordingly.

AU the advanced industrial countries 'plan' in these several senses in varying combination. Plans may vary in extent, detail and status. The extent of Government planning may be only a narrow public sector. Even here, in planning the future mileage of roads or output of atomic power stations, the planners have to make a broad assessment of the prospects of the economy as a whole, and the decisions taken centrally on output, prices and capacity in the public sector will affect decisions taken in the private sector of the economy. Central planning may be carried out in more or less detail, leaving less or more decisions to be taken by those concerned with day-to-day management The formal and the effective powers to take decisions need not coincide. Where a very large number of decisions are in theory taken by a small group of planners 'at the top', it is in practice likely that effective decisions will be made lower down because human capacity to control large units is limited. The status of a plan also varies. The French Commissariat du Plan tries to co-ordinate general Government plans and those of private firms whose rewards are determined not by their adherence to the plan but primarily by the market, although they may be encouraged or induced by tax incentives and access to capital to 'toe the line'. Soviet planning, on the other hand, takes the form of directives or commands that are binding on all citizens; the rewards of state enterprises depend officially on fulfilment of the plan, although in practice it may be circumvented by private arrangements between their managers.

If you have enjoyed this you may be interested in Economic Times - Epaper Economic Times

Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

Economics is in the last resort a technique of thinking. The reader will therefore need to make an intellectual effort, more substantial for some web entries than for others, to get the most interest and value out of this website.