Decentralized planning (economics)

A decentralized-planned economy or decentrally-planned economy (occasionally called horizontally-planned economy) is a type of planned economy in which the investment and allocation of consumer and capital goods is explicate accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet-type central command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralised planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system.

This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy. Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists.[1][2][3]

Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society.[4]

Decentralized-planning has been proposed as a basis for socialism and has been variously advocated by democratic socialists, council communists and anarchists who advocate a non-market form of socialism, in total rejection of Soviet-type central economic planning. Some writers (e.g. Robin Cox) have argued that decentralised planning allows for a spontaneously self-regulating system of stock control (relying solely on calculation in kind) to come about and that in turn decisively overcomes the objections raised by the economic calculation argument that any large scale economy must necessarily resort to a system of market prices.[5]

Models

Cybernetics

The use of computers to coordinate production in an optimal fashion has been variously proposed for socialist economies. The Polish economist Oskar Lange argued that the computer is more efficient than the market process at solving the multitude of simultaneous equations required for allocating economic inputs efficiently (either in terms of physical quantities or monetary prices).[6]

The 1970 Chilean distributed decision support system Project Cybersyn was pioneered by Salvador Allende's socialist government in an attempt to move towards a decentralised planned economy with the experimental viable system model of computed organisational structure of autonomous operative units though an algedonic feedback setting and bottom-up Cyberfolk component.

Negotiated coordination

Economist Pat Devine has created a model of decentralized economic planning called "negotiated coordination", which is based upon social ownership of the means of production by those affected by the use of the assets involved, with the allocation of consumer and capital goods made through a partipatory form of decision-making by those at the most localised level of production.[7]

Participatory Planning

The planning structure of a decentralized planned economy is generally based on a consumers council and producer council (or jointly, a distributive cooperative), which is sometimes called a consumers' cooperative. Producers and consumers, or their representatives, negotiate the quality and quantity of what is to be produced. This structure is central to participatory economics, guild socialism and economic theories related to anarchism.