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P LANNING P ARADIGM ning, Durbin, an academic, and a Labour Member of Parliament of the United Kingdom, wrote in The Economic Journal stating that ‘in this country, we have no need to fear the development of a centralized administration. We have a long tradi- tion of increasing democracy combined with the growing activity of the State.’ 19 Durbin offered a distinct approach to economic planning as an alternative. Durbin did this by clarifying as to what planning was not, and having done that stated as to what the term economic planning meant. Planning, then, ‘does not in the least imply the existence of a plan – in the sense of an arbitrary industrial budget which lays down in advance the volume of output for different industries. Planning does not, and should not, imply any dog- matism about the future. It is not possible to tell in detail what will happen to human tastes, to technical invention, to general standards of security and well being. It would therefore be foolish in the extreme to attempt to lay down plans which could not be amended quickly in the light of changing social requirements.’ 20 As re- gards what economic planning was, Durbin pointed out that, ‘We use that term to indicate a principle of administration and not an infl exible budget of production.’ 21 Economic planning also meant ‘a change in direction of responsibility‘, and whereupon, ‘Instead of looking towards small and unrepresentative mi- norities of shareholders, the persons or Corporations directing production would look upwards, or towards a Central Economic Authority, for guidance on the larger questions of output, prices, investments and costs.’ 22 The appeal to benevolent executors for execut- ing economic planning as seen earlier was perceptible here to. The arrangement 40 THE IIPM THINK TANK prescribes that the matter would be carried forward with due responsibility associated with such activities. As in the earlier instance where Keynes noted the possibilities of things not going fully right as expected, so it was here too. Durbin pointed out that with ‘centralising of responsibility’ it was not that problems in the economic sphere would not be there. ‘It is certain’, Durbin wrote ‘that great mistakes will be made in experimenting with new institutions’. 23 That, however, need not be a deterrence for it was expected that economic planning carried out under this arrangement would quiet surely be an effective one. Economic Planning — Debate Pointers and Current Validity The early debates on economic planning referred here were carried out over nearly three decades and this during a period of time when new nation states were coming into being. These debates were instructive because these took up issues that were fundamental to the economy and the polity of nations. In the Indian instance it was of bearing given that the political independence of the country came in at a time when the debates had reached a peak level. The approach taken up in these debates had been broadened to include many a relevant aspect of economic planning and political form associated with planning. In other words, the debate pointers were well formed. Economic planning in the Indian context did involve the role of the State and while the political economy was not entirely a centrally administered one national planning impacted a signifi cant part of the economy. The format of economic planning had an infl uence of that used in Soviet Russia. Economic planning strategies, for that reason, did include an important role for investment Regulatory measures directing economic activities were introduced as part of the economic planning planning with investment targets being outlined as part of the period bound economic plans made for the economy. A part of the reason to promote investment planning was also to avoid market failures occurring from inadequate accessibility of infrastructural facilities required for the economy. In addition to investment planning, regulatory measures directing economic activities were introduced as part of the economic planning scenario adopted. These confi gures were part of methodologies related to allocation of resources.
I NTEGRATED PLANNING The experience of the economy since independence has been reviewed extensively, and explanatory thesis forwarded to explain the effi cacies of economic planning and consequent economic development that has ensconced. 24 In a study of economic performance carried out in the backdrop of development initiatives carried out in India, Datta-Chaudhuri points out that the ‘important question for developing societies is how to develop a mutually supportive structure of market and non-market institutions, which is well-suited to promote economic development. This makes normative development economics a diffi cult art.’ 25 nomic planning is to be carried out suggests such a revisit. Endnotes and Additional Thinking 1 “World Bank Data on GNI” available at http://data.worldbank.org/indicator/ NY.GNP.PCAP.CD (accessed 25 That is also a reason as to why debates of the type referred to about economic planning bring in their relevance. The issues that were raised about economic planning retain their validity even as some time has elapsed from then when these were fi rst raised. In the years that made up the closing decades of the century, there has been evaluation of the pattern that economies with centralized planning planned their economic development and following which methodologies in use have been changed. These have happened for both large economies and as also smaller ones. Such changes have occurred as a consequence of debates on the processes in use and economic planning has been one of these that have garnered attention. Revisiting early debates on economic planning in the context of the State and the market does provide a learning platform. The point of note is that issues raised in these early debates retain their validity. It is for this reason that revisiting these earlier debates retains relevance. An informed choice about options available on this date amongst the manner in which eco- th August 2010). The South Korean State (Republic of South Korea) had adopted state planning for the economy beginning the early sixties (1962). The GNI per capita was $16,900 in 2005. It grew to $21,530 in 2008. The comparative data for India was $740 and $1,040 respectively for these two years. 2 Hayek, F. A. (September 1945), “The Use of Knowledge in Society”, The American Review, Vol. XXXV, No. 4, pp. 520-530. 3 Ibid., p. 520. 4 Ibid., p. 520. 5 Ibid., p. 520. 6 Ibid., pp. 520-521. 7 Ibid., p. 524. 8 Ibid., p. 525. 9 Ibid., pp. 526-527. 10 Ibid., p. 526. 11 Hayek, F. A. (1944), ‘The Road to Serfdom’, University of Chicago Press, Chicago, p.70. 12 Ludwig Heinrich Edler von Mises (1881-1973) was an infl uential economist of the Austrian School. 13 Mises, L. E., ‘Economic Calculation In the Socialist Commonwealth’, available at http://mises.org/pdf/econcalc.pdf (accessed 23rd XXVII: Activities, 1940-1946, pp. 385, 387, 388 referred to in Friedman Milton. (Spring 1987), John Maynard Keynes, Federal Reserve Bank of Richmond, Economic Quarterly, Volume 83/2, p. 20. 16 Ibid. 17 Friedman, Milton. (Spring 1987), Op cit., p. 20. 18 Friedman, Milton. (Spring 1987), Op cit., p. 20. 19 Durbin, E. M. F. (December 1945), “Professor Hayek on Economic Planning and Political Liberty”, The Economic Journal, Vol. 55, No. 220, p. 370. Evan Durbin who taught at the London School of Economics during 1930-1945 was a contemporary of Hayek who was at the School during 1931 and till 1950. Durbin was the Labour MP (United Kingdom) for Edmonton Constituency during 1945-1948. 20 Durbin E. M. F. (1935), “The Importance of Planning’, New Trends in Socialism, pp. 149-150, referred to in Durbin, E. M. F. (December 1945), Op cit., p. 360. 21 Durbin, E. M. F. (1945), Op cit, p. 360. 22 Durbin, E. M. F. (1945), Op cit, p. 362. 23 Durbin, E. M. F. (1945), Op cit, pp. 366-367. 24 Bardhan, Pranab. (1984), ‘The Political Economy of Development in India’, Basil Blackwell, Oxford. August 2010), p.17. 25 Datta-Chaudhuri, Mrinal. (1990), 14 Boettke, Peter, J. (1995), ”Hayek’s The “Market Failure and Government Fail- Road To Serfdom Revisited: Governure”, Journal of Economic Perspectives, ment failure in the argument against Vol. 4, No. 3, p. 38. socialism”, Eastern Economic Journal, Vol. 21, No. 1, p. 15. (The views expressed in the write-up are per- 15 Donald Moggridge, ed., John Maynard sonal and do not reflect the offi cial policy or Keynes, The Collected Writings, Vol. position of the organization.) THE INDIA ECONOMY REVIEW 41
Page 1 and 2: THE INDIA ECONOMY REVIEW Volume VII
Page 3 and 4: IIPM: THE FUTURE IS HERE Since its
Page 5 and 6: CREDITS Founder Dr. M. K. Chaudhuri
Page 7 and 8: P LANNING P ARADIGM In the State of
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Page 23 and 24: proximately 25% of the then global
Page 25 and 26: process of economic growth. Newly d
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Page 31 and 32: in such times. The other institutio
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P LANNING P ARADIGM A Tale of Two C
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P LANNING P ARADIGM The Road to Pro
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P LANNING P ARADIGM The road to hig
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P LANNING P ARADIGM From State to D
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P LANNING P ARADIGM began by taking
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P LANNING P ARADIGM Unhealthy Plann
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P LANNING P ARADIGM too failed. The
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P LANNING P ARADIGM Also, a good nu
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P LANNING P ARADIGM sectors which a
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THE HUMAN FACTOR OTHER IIPM JOURNAL
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“Thank you very much for sending
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