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Economic Planning is Back



At Open Democracy, economist Cédric Durand and sociologist Razmig Keucheyan argue that the big data technologies used by the likes of Amazon and Google could be redirected towards post-capitalist economic planning. Previously discredited by the Soviet experience, economic planning is making a comeback, they write, thanks to the manifest failures of the market economy such as climate change. Big data has the potential to make economic planning more democratic and responsive than ever before. Here’s an excerpt from the piece:

Three reasons explain this unexpected return [of economic planning]. First, the Great recession of 2008. This crisis of capitalism not only illustrated, once again, the irrationality of the market. But the efforts to contain it came with massive state interventions, financial and regulatory. In the post-2008 world, the victory of the “free and undistorted” market mechanism appears less decisive after all.

Secondly, the ecological crisis. When it comes to thinking about sustainable development, many consider planning without using the word. Nowadays experts rather refer to environmental “scenarios”, that will deliver a carbon-free future. In the “Green new deal” debate sparked by Alexandria Ocasio-Cortez’s endorsement of the project, the word “planning” is rarely used. But the idea of subjecting productive choices and investment to long-term goals other than profit is clearly there. It amounts to economic planning.

The third reason is the rise of information technologies. Historical forms of planning were burdened with the so-called “information problem”. Socialist regimes of the 20th century tried to replace coordination by the price-signal and supply and demand with ex-ante planning. This was meant to allow a more rational allocation of resources (natural resources, labor force) and hence to make economies less crisis and unemployment prone. Among other things, this implied being able to predict in advance which needs to satisfy, and to provide this information to the production units.

Image via the Financial Times.