Part I: PRINCIPLES OF SUSTAINABLE PLANNED ECONOMY
1.1. Planned economy and market economy
When thinking about a planned economy, it is first necessary to establish what a planned economy is, but in reality, this is not easy.
When you hear the word "planned economy," you may think of "socialism," but planned economies and socialism are by no means synonymous. In fact, today's China advocates a "socialist market economy" and is trying to combine socialism and market economy, and all modern socialist systems, to varying degrees, aim to adapt to the market economy.
Additionally, planned economy and controlled economy are sometimes equated, but this is also not an appropriate understanding. A controlled economy is often introduced in times of war for the purpose of centrally procuring materials necessary for the war effort, going beyond the system's slogan, and the fact that a wartime controlled economy is possible even within the framework of the capitalist system. For example, we can see this in the wartime controlled economy during World War II.
However, since production and distribution are usually regulated in a planned economy based on economic plans formulated by the government, it cannot be denied that the "control" factor is stronger than in a market economy, but a distinction must still be made conceptually between a controlled economy and a planned economy.
On the other hand, although market economy is considered the opposite of planned economy, the two are not as opposed to each other as is usually thought. Even if an economy advocates a market economy, if the government's authority to intervene in the economy is widespread, it will take on the role of planning, and a planned economy modified by market principles is also possible.
An example of the former - a planned market economy - is the aforementioned socialist market economy. Although the government's economic plan is maintained here, it lacks the normativity of the original planned economy, and its significance remains as a general guideline for economic activities. Furthermore, up until a certain point, the postwar Japanese economy had a strong character of "guided capitalism" through government economic planning and administrative guidance, but this was also a variant of a planned market economy, although it was looser than a socialist market economy.
Although there are not many examples of the latter type of market-based planned economy, the "self-managed socialism" of the former Yugoslavia can be counted as an example. Here, a certain competitive relationship was observed between self-managed enterprises in which workers themselves were said to be involved in management. Furthermore, the economy of the former Soviet Union, in which the profit principle was partially introduced in economic reforms after 1960, was also a variant of a market-based planned economy, albeit to a more limited extent than Yugoslavia.
Thus, the conceptual distinction between a planned economy and a market economy is by no means strict, but one essential requirement for a planned economy is that economic management is based on a formal and normative economic plan. The reason why the above-mentioned planned market economy is a market economy and not a planned economy is because the economic planning or guideline does not have normativity.
However, it is a matter of policy choice as to whether economic planning with such norms extends to all economic activities - a comprehensive planned economy - or whether it is limited to basic industrial sectors - a focused planned economy.
👉The papers published on this blog are meant to expand upon my On Communism.
