Lindblom - The Market System - Afghan Journalists' Committee

Alternative to the Market System? 269Absent a market system, central planners either makedecisions without regard to prices or guide their decisionsby arbitrary prices that do not represent costs. In the market-systemsociety, central planners, like individual consumers,face a set of efficiency prices (again, more precisely,approximations to efficiency prices), hence maketheir decisions in response to the cost information that theprices provide. In short, efficiency prices guide marketsystemcentral planning but not the alternative form ofplanning.A third difference separates the two systems. Centralplanning without efficiency prices requires an enormoushierarchical structure of decision-making to coordinate themany lines of production decided on by the planners. Havingdetermined what to produce, the centralists have tocarry out its production and make an allocation of inputs toeach line of production by issuing commands that reachdown to all levels of an administrative hierarchy. Not so inplanning through the market system. In the market systemplanning decisions are limited to raising or lowering pricesto call for more or less of a product. Hence market planningleaves in place a multitude of entrepreneurs who produce inresponse to the planned prices just as they do to the unplannedprices of a market system without planning. At thecenter of market planning is the price-watching entrepreneur,not a production planner, not a government official.Market System as Planning InstrumentThe market, of course, is not primarily a governmentalplanning system, and many people applaud it for just thatreason. Yet when we say, as in the preceding chapter, that itis the major administrative instrument of the state, we are