THE ECONOMY & THE CITY
Planning Under Fire
By NICHOLAS DAVENPORT
'HE idea,' writes Professor lewkes, of Oxford.
'that governments possess the knowledge and power positively to determine the rate of economic growth through the technique of cen- tral economic planning will be revealed as one of the most widespread. tenacious and harmful of errors.'* What he was really lilting at on this occasion was bad planning. We all know that the doctrinaire planning of an authoritarian state like Russia has been so much off beam that the economists there are now advocating a return to profit incentives. Professor Jewkes thinks that bad planning in India has been re- sponsible for a tragic misdirection of resources into grandiose schemes of heavy investment to the relative neglect of the primary task of feed- ing the population. And he is scornful of the Conservative 'Neddy' plan of 4 per cent growth which led to excessive capital spending by the nationalised industries and the balance of pay- ments crisis of 1964. Bad planning of this sort, he says, encourages the trade unions to think in terms of excessive annual wage increases. The cure for bad planning, he adds, is not better planning but no planning.
It is not only in Oxford that professors of economics can be mischievous. The cure for bad 'Planning is to have your head examined. One cannot embark on a housing programme or on any other form of social investment like schools and hospitals without calling in the econo- metricians and working out a five-year plan. If You are a builder or contractor or even a furni- ture manufacturer you could not safely plan your factory extension and labour force without find- ing out what the government planners intend to do. You do not suppose that General Motors decide upon their vast five-year capital spending Programme without consulting the director of the budget in Washington. The great merit of Mr. George Brown's plan was that it compelled the industrialists—through NEDC—to sit down at a table with the government experts, compare Mans and discuss investment programmes jointly. This has never happened .before and it should enable private enterprise investment to be less haphazard and more intelligent than before. nut it has one great danger in its initial stages. The industrialists get carried away by their own enthusiasm when brought in by the Government for discussion. When asked to state their potential °Input they are inclined to put on a bold brag-. Bing front and exaggerate. So they all tend- ooth experts and businessmen—to succumb to a Mlle de grandeur with the result that the growth target is raised too high. The present Plan for a 25 per cent increase in national out- put between 1964 and 1970 demands such a °'g increase in productivity and such a vast re- deployment of labour—in other words, such a sweeping revolution 'in social habits—that I can- not believe that it will be realised on time. t r. Brown may say that this is a mere teething be orderly MLthle, that no one supposes that growth can `'..! orderly while the Treasury is applying a policy °I restraint for the righting of the balance of Payments. But even if financial policy and plan 12 P.°Iicy could be co-ordinated the implementation national plan usually runs into more and *THE THREE BANKS REVIEW. (June, 1965.)
more difficulties as its planners gain greater ex- pertise and control. The reason is that a plan is a policy of perfection and society is imperfect. We all hate to be dragooned into perfection. The French have been playing the planning game much longer than we have—and have often hit their targets---but a great row has developed over their fifth national plan (1966-70) recently presented by its brilliant Commissaire-General. M. Pierre Masse. The finance minister has ob- jected to it and the Conseil Economique et Social has damned them both and the plan in par- ticular. The hot question is the fundamental one—who is running the country? The bureau- crats of the Commissariat au Plan or the gov- ernment through its instrument, the finance minister? Or General de Gaulle as head of an authoritarian state? It is bvious that if the plan is properly and obediently carried out the bureaucrats of the plan will be the rulers of France. It is also obvious that this will never be tolerated.
Much light is thrown upon the social and political problems of planning by a dazzling monograph on the French fourth plan (1962-65) by Professor Perroux, of the Institut de Science Economique Appliquee of Paris, a translation of which has just been published by the National Institute of Economic and Social Research. This fourth plan was presented as an 'indicative' plan, the only sort of plan considered practicable in a capitalist, market economy of the West. Pro- fessor Perroux is very conscious of its limita- tions and contradictions and favours more inter- vention by the government towards 'correcting' the spontaneous functioning of markets and sectors. But although he describes the plan as of `quasi-liberal inspiration,' he insists that 'it acts on society and the economy continuously and so transforms them.' It creates, in fact, something new. An industrialised society is usually charactetised by large units of produc- tion working `within a framework of monopo- listic competition' and the Professor claims that their economic plans cannot be made consistent with the collective good by the action of price alone. They need to be enlightened and guided as much as possible. As their long-term plans and programmes often overlap with public de- cisions, organised discussion between public and private interests becomes essential. So there emerges under the plan 'an economy of dis- cussion,' a new type of organisation of the market economy. The plan, concludes the Pro- fessor, is the instrument of a new French society `which for the most part would probably not at the moment accept a coercive mobilisation of men and resources for a collective goal.' How-, ever, the Commissaire-General, M. Masse, does not altogether agree: he would like to move much more quickly towards coercion : The plan,' he says, `is a substitute for the market in all cir- cumstances where the latter is impracticable, inadequate or out-of-date.' But who is to decide when the market is 'impracticable, inadequate or out-of-date'? The Commissaire-General? Not while M. Giscard d'Estaing is minister of finance or General de Gaulle head of the state. But in Britain it will clearly be Mr. George Brown. When the 'early warning' system for prices and
wages becomes statutory it will be the First Secretary of State who will decide when the mar- ket economy needs correction. And the trade unions are much more likely to object than the CBI. As our social revolution proceeds the planners are bound to come more and more under fire.
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