17 Economic Planning

Krahé

Planning—the setting of economic priorities via non-market means—must be distinguished from a command economy. A command economy, in contrast to planning, is one particular way of injecting plans into the division of labor, namely with command and control measures.16 As France, Sweden, Japan and other mixed economies demonstrated in the wake of WWII, there are many other ways to introduced plans into an economy: from direct public investment, via taxes and subsidies, to banking regulation, credit guidance, and foreign exchange allocation, to name but a few.17 The advantage of planning is its ability to focus resources, create and channel energies, and reduce uncertainty. Pierre Massé, former General Commissioner of Planning in France, called it l’anti-hasard.

When the Monnet Plan was introduced in France in 1946, its goal was to reach the nation’s pre-war production level by 1948, and then surpass it by 50 percent by 1950. Under the slogan “modernization or decadence,” it prioritized investment over consumption, allocated scarce US dollar reserves to their most important uses, and channeled resources into sectors identified as crucial for restarting and growing France’s economy. “Bottlenecks were broken during the early days,”19 and while not all targets were reached, the plan provided “discipline, direction, vision, confidence, and hope.”20

The Monnet Plan navigated a situation not entirely unlike our own. In the postwar moment, both domestic funds and foreign exchange were scarce. Since dollars and francs were not freely exchangeable at the time, they had to be budgeted for separately, acting as a double budget constraint. Today, we again face a double budget constraint: economic and ecological.

The Monnet Plan navigated this tightly binding double constraint through prioritization. Instead of attempting to plan for all sectors, the Plan focused on six strategic industries: electricity, steel, coal mining, transport, cement, and agricultural machinery.21 The lesson for today is obvious. Focus on the five sectors driving climate change, land use, and biodiversity loss today: energy, transport, industry,22 housing, and agriculture.

The process of sectoral planning was led by a core staff in the Commissariat général du Plan, numbering around 100. This core staff cooperated with a number of so-called modernization commissions, composed of representatives from the state, employers, and trade unions, which tackled either specific sectors or cross-cutting themes like finance or labor.

Krahé (2002) The Whole Field - Markets, planning, and coordinating the green transformation