Planning In An Economy Of Abundance
Walter Lippmann
[Originally published in The Atlantic, 1937]
War provides an excellent climate for the administration of a planned
economy. For, in wartime the control of economic activity is feasible
because the plan is calculable. It is calculable because there is a
specific purpose to be achieved, the supply of a military force of
known size with known requirements out of known resources, and to this
concrete objective all other needs must conform. The planners know
definitely what goods are needed and in what amount. There is no
problem of how much can be sold. There is only the problem of how much
can be produced. There is no worry about the varying tastes of
voluntary consumers; the consumer is rationed. ~here is no such thing
as a choice of occupation; labor is conscripted. Thus, though war
economies are notoriously inefficient, they can be administered by the
method of overhead planning and control because, theoretically at
least, there are no unknown factors, and there can be no resistance;
it is possible, therefore, to calculate the relation of the means to
the end and execute a plan whether people like it or not.
But the question whether an economy can be planned for abundance, for
the general welfare, for the improvement of the popular standard of
life, comes down to the question of whether concepts of this sort can
be translated into orders for particular goods which are as definite
as the "requisitions" of a general military staff The
general staff can tell the planner exactly how much food, clothing,
ammunition, it needs for each soldier. But in time of peace who shall
tell the planners for abundance what they must provide?
The answer given by Mr. Lewis Mumford, in Technics and
Civilization, is that "a normal standard of consumption"
can be defined by biologists, moralists, and men of cultured taste;
that the goods necessary to support it can be "standardized,
weighed, measured"; that they should be supplied to all members
of the community. Re calls this "basic communism." It is not
quite clear to me whether he believes that the goods listed in this
normal standard are to be furnished as they are to soldiers out of a
public commissariat or whether he proposes to guarantee everyone a
basic money income sufficient to buy a "normal" quantity of
goods. If he has in mind the providing of rations of standard goods,
then, of course, he has considerable confidence in his ability to
determine what is good for the people, small respect for their varied
tastes, and an implied willingness to make them like what they ought
to like. Conceivably this could be done. But I should suppose it could
be done only under the compulsion of necessity: that is, if goods were
so scarce that the choice lay between the official ration and noth mg.
On the other hand, if he has in mind a guaranteed minimum income which
may he spent freely, then he has no way of knowing whether the
consumers will have his own excellent tastes, and go to the stores
demanding what he thinks they should demand. But if they do not wish
to buy what he would like them to buy, then his planners are bound to
find that there is a scarcity of some goods and a glut of others.
The difficulty of planning production to satisfy many choices is the
rock on which the whole conception founders. For, as productivity
rises above the level of necessity the variety of choice is
multiplied; and as choice is multiplied the possibility of an overhead
calculation of the relation between demand and supply diminishes.
We may approximate an idea of the order of magnitudes in this field
by remembering that during the year 1929 the American people spent
approximately ninety billion dollars. Now, of the ninety billions
spent, some twenty billions went into the purchase of food. This meant
a highly varied diet. But even assuming that food is the most nearly
calculable of human necessities, the one that can, by simplifying the
public bill of fare, be rationed successfully among large bodies of
men, there would have remained in 1929 variable expenditures of about
seventy billions.
By what formula could a planning authority determine which goods to
provide against the purchases of thirty million families with seventy
billions of free spendable income? The calculation is not even
theoretically possible. For, unless the people are to be deprived of
the right to dispose of their incomes voluntarily, anyone who sets out
to plan American production must first forecast how many units of each
commodity the people would buy, not only at varying prices for that
commodity, but in all possible combinations of prices for all
commodities.
Let us suppose that the planning authority wishes to make a five-year
plan for the production of automobiles, and that by means of the
familiar mathematical curves used by economists it determines that at
$500 a car the people will buy ten million new cars in five years. The
planners could then calculate the amount of steel, wood, glass,
leather, rubber, gasoline, oil, pipelines, pumps, filling stations,
needed to manufacture and service that many additional automobiles.
This would be theoretically feasible. The problem would not differ
essentially from planning to supply an army; the industrial system
would be planned to produce ten million automobiles. There would be a
single, specific quantitative objective as the premise of the plan.
But such a planned economy would be for monomaniacs.
So let us suppose that the authority has also to plan the
construction of houses. The task immediately becomes more complicated.
For now it is no longer possible to stop at determining how many
houses the people will buy at, let us say, $3000 a piece. It is
necessary also to decide how they will choose, and in what
proportions, between a new car at $500 and a new house at $3000. With
cheap houses available, some will prefer them to cars; others will
prefer cheap cars to houses. The planners would have to predict the
choice. They would then find, of course, that since houses also
require steel, wood, glass, they would have to recalculate the plan
drawn up when they had only automobiles in mind. Even if we make the
fantastic hypothesis that the planning authority could draw up
reliable estimates of what the demand would be in all combinations of
prices, for all the thousands of articles that Americans buy, there is
still no way of deciding which schedule would fit the people's
conception of the most abundant life.
Out of all the possible plans of production some schedule would have
to be selected arbitrarily. There is absolutely no objective and
universal criterion by which to decide between better houses and more
automobiles, between pork and beef, between the radio and the movies.
In military planning one criterion exists: to mobilize the most
powerful army that national resources will support. But civilian
planning for a more abundant life has no definable criterion. It can
have none. The necessary calculations cannot, therefore, be made, and
the concept of a civilian planned economy is not merely
administratively impracticable; it is not even theoretically
conceivable.
All the hooks which recommend the establishment of a planned economy
in a civilian society paint an entrancing vision of what a benevolent
despotism could do. They ask -- never very clearly, to be sure that
somehow the people should surrender the planning of their existence to
'~engineers, experts, and 'technologists," to leaders, saviors,
heroes. This is the political premise of the whole collectivist
philosophy: that the dictators will be patriotic or class-conscious,
whichever term seems the more eulogistic to the orator. It is the
premise, too, of the whole philosophy of regulation by the state,
currently regarded as progressivism. Though it is disguised by the
illusion that a bureaucracy accountable to a majority of voters, and
susceptible to the pressure of organized minorities, is not exercising
compulsion, it is evident that the more varied and comprehensive the
regulation becomes, the more the state becomes a despotic power as
against the individual. For the fragment of control over the
government that one man exercises through his vote is in no effective
sense proportionate to the authority exercised over him by the
government.
Benevolent despots might indeed be found. On the other hand, they
might not be. They may appear at one time; they may not appear at
another. The people, unless they choose to face the machine guns on
the barricades, can take no steps to see to it that benevolent despots
are selected and the malevolent cashiered. They cannot select their
despots. The despots must select themselves, and, no matter whether
they are good or bad, they will continue in office so long as they can
suppress rebellion and escape assassination.
Thus, by a kind of tragic irony, the search for security and a
rational society, if it seeks salvation through political authority,
ends in the most irrational form of government imaginable in the
dictatorship of casual oligarchs, who have no hereditary title, no
constitutional origin or responsibility, and who cannot he replaced
except by violence.
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