👉The table of contents so far is here.
Chapter 8: Planning Organization Theory
8.1. Overview
A planned economy differs from a market economy in which there is no overall plan other than a business plan for each individual company. Planned economies are run over time according to an overall economic plan, and therefore require a planning organization involved in the formulation and operation of the plan. Planning organization theory explores the nature of this planning organization.
No matter what type of planned economy it is, it cannot run on the principles of planning alone unless it is supported by a rational planning organization. On the other hand, if a rational planning organization is made too complicated, it can cause problems in its operation. The planning organization in the former Soviet Union is a good example of such a lesson learned.
The Soviet Union was a unique super-large federal state made up of 15 non-sovereign republics, and as such the planning organization was split into two, one for the entire federation and one for each republic. In addition, the administrative agencies of both the federation and the republics were also involved in planning, and state-owned enterprises in each sector were involved in the front lines of planning, making it a complex system with many layers. Moreover, the Communist Party, which was the dictatorial ruling party, set the direction for the entire plan.
When formulating plans based on a basic five-year period, the Communist Party leadership's policy was the supreme command, but the numerous planning agencies each asserted their own interests and often found themselves in a competitive relationship, making the planning process unstable.
It is almost miraculous that the Soviet Union managed to run a planned economy for over half a century under such a complex and unstable planning organization and survive as a superpower to rival the United States, but it is also true that this planning organization was already on the verge of collapse before the Soviet Union was ultimately dissolved. There are various factors that contributed to this, but one may assume that planning organizations had become too complex, with a great deal of time and effort being spent on formulating plans, which hindered the smooth running of the economy. The lesson to be learned from this is that it is desirable for planning organizations to be as simple as possible. In principle, it would be good for a single planning agency to be responsible for all plan formulation, but in reality it is not possible to simplify to that extent.
In this respect, a sustainable planned economy based on a World Commonwealth is a system in which the planning organizations of each of the Zones that make up the World Commonwealth work together to formulate and implement plans, with a world institution at the core that formulates a common economic plan for the world. Moreover, since there are no political organizations such as governments or political parties, and the planning organizations are constituted as deliberative bodies of the business organizations that are the targets of the plans, the structure of the planning organization is much simpler than that of the Soviet Union.
👉The papers published on this blog are meant to expand upon my On Communism.
