Economic Planning

Economic planning can be defined as the making of major economic decisions: what and how much is to be allocated by the conscious decisions of a determinate authority on the basis of a comprehensive survey of the economy as a whole. It is deliberate governmental attempt to coordinate economic decision making over the long run and to influence, direct and in some cases even control the level and growth of a nation's principal economic variables [ income, consumption, employment, savings, exports, imports etc.] in order to achieve a predetermined set of development objectives.

Classical socialists and Marxists define economic planning as directing production to maximize use-values and coordination of production, and consider this to be a fundamental element of a socialist economy. For Marxists in particular, planning also entails control of the surplus product (profit) by the associated producers in a democratic fashion.

State-oriented and technocratic socialists hold the view that in a socialist society based on economic planning, the primary function of the state apparatus will change from one of political rule over men (via the creation and enforcement of laws) into a scientific administration of things and a direction of processes of production; that is the state would become a coordinating economic entity rather than a mechanism of class or political control

Other socialists, such as Libertarian socialists, Syndicalists and democratic socialists, advocate de-centralized democratic planning. In a de-centralized planned economy, economic decision-making takes place in a democratic manner in every cooperative enterprise in the economy.

In some socialist theories, economic planning completely substitutes the market mechanism and supposedly renders monetary relations and the price system obsolete. In other theories, planning is utilized as a complement to markets. Polish economist Oskar Lange and American economist Abba Lerner proposed a form of market socialism where a central planning board would adjust prices of publicly-owned firms to equal marginal cost to enhance the market mechanism by achieving pareto efficient outcomes.

In general, the various types of socialist economic planning listed above exist as theoretical constructs that have not been implemented fully by any economy, partially because they depend on vast changes in social and economic development on a global scale . In the context of mainstream economics, socialist planning usually refers to the Soviet-type command economies, regardless of whether or not they actually constituted a type of state capitalism.