Modern Economic Planning

Economic Planning

The economic society of the nineteenth century rested upon assumptions which were accepted without question by most economists. One of these assumptions was that the wealth of the community was equal to the sum total of individual material possessions, and therefore as each individual sought to improve his own economic position he would automatically contribute to the wealth of the community. Another of these assumptions was that economic activity was self-regulating; that is, through the beneficial power of competition the pursuit of self-interest by one individual would be automatically checked by the self-inter­est of others. Consequently there appeared no need for external control; indeed, as Adam Smith contended, the dabbling of legis­lators in the problems of business did more harm than good. Events of recent years have called these assumptions into ques­tion. The cut-over forests, the exhausted soil, dust storms and floods are mute but dramatic testimony that the search for private profit does not inevitably lead to greater social wealth. Recurring depressions and the continuing paradox of poverty in the midst of plenty are further evidence that economic activity cannot regu­late itself, that there is no- automatic force organizing' and, direct­ing business interests for the common good. Yet, while individual business enterprises spent ever larger sums on research, planning, and administrative organization, the economic aspects of com­munity life as a whole were permitted to drift without purpose or plan.

Modern Economic Planning

Reaction to these conditions was inevitable. Governments in Europe and America of necessity began to intervene in the eco­nomic life of their people. Not all of these adventures in state con­trolled economy follow the same pattern, or interfere with private enterprise in the same degree. The social and economic planning of the Soviet Union, known as the Five Year Plan, was comprehensive and detailed. It stated the amount of a particular commodity needed, and determined the quota of each factory and field and mine in production. The American "New Deal" developed its plans more gradually, with a minimum of govern­mental interference and regulation.

There are two things which all attempts at economic planning share in common. Each plan must have a socially defined objec­tive. The essence of planning is the recognition that there is a desirable end to be achieved. This must be followed by a conscious effort to organize the available economic resources to accomplish that end. The instruments of direction and control to bring about the* necessary integration of elements of production and distribution are also an important part of planning.