Dr. Lavoie, assistant professor of economics at George Mason University, argues that planning—whether Marxism, economic democracy, or other designation—must inevitably disrupt social and economic coordination. The problem of how to effectively use knowledge in society to produce the goods and services which the public wants cannot be solved by central planning and control. Lavoie takes on the “radical” spokesmen, such as Robert Reich, Tom Hayden, Michael Harrington, and others who speak for a controlled economy, and makes a powerful argument that “the ultimate [vocalized] ends of the radical movement will almost certainly be frustrated if National Economic Planning is chosen as the means.”

Lavoie begins by directing attention to the problems arising from the conflict between the public and private spheres of social life. The answer is not to extend the democratic public sphere at the expense of the competitive private sphere. The extensions of the power of the government to the economic sphere have not enhanced but have drastically reduced its democratic features. At the same time, they have increased the use of coercion in the necessarily competitive struggles among the members of society. The author then discusses coordination in society, followed by analysis of various proposals for comprehensive and supposedly noncomprehensive economic planning. He concludes that it is the competitive market itself which is the primary source of knowledge about which goods should be produced and which production methods are most feasible. The social function performed by a particular complex of legal and market institutions makes them indispensable tools for the solution of certain unavoidable problems involved in the production and allocation of scarce resources.

Lavoie’s is a self-described “radical” as opposed to a conservative critique. He largely grants advocates of planning the presumption that the origin and essential nature of their ideas are radical, that theirs are sincere attempts to expand the power of the public against privileged elites. He analyzes planning proposals as misguided attempts to attain noble ideals. What Lavoie has provided is a revisionist interpretation of the effects of planning. The failure of radicalism is not in its call for a better society, but in its specific Utopian vision which “happens to be completely unworkable if carried to its logical conclusion, and essentially reactionary if not.”

Lavoie argues that the right’s militarization of the economy and the left’s industrial policy or National Economic Planning are fundamentally equivalent both to one another and to the worst of the decaying regimes of the present world. He maintains that whether “its aim is military or not, its method of organization most certainly is. And whether this militarization of the economy is left naked (Hitler) or is dressed up as progressive reform (Baruch), Marxist Communism (Stalin), or free-market ideals (Reagan), its true nature remains the same: it is National Economic Planning.” He feels that modern conservatism by

. . . its largely rhetorical devotion to the free market and its actual policies of construction of a permanent war economy . . . helps perpetuate the myth that it is the policies of free markets rather than those of planning that have been obstructing peace, and that it is an existing market economy rather than an established system of comprehensive planning which is responsible for our current economic distress. In fact, Reagan’s rapid militarization of the economy, in spite of the rosy pictures of free-market economics . . . is the very essence of National Economic Planning.

Few people, Lavoie writes, remember the Jeffersonian ideals that gave birth to the American Revolution. These ideals once called for a basic policy of nonintervention, both in the lives and economic activities of the American people and the political affairs of other governments. This country, he asserts, was born in the hope of ending foreign military entanglements. These ideals have been steadily eroded:

The United States has debased the dollar that was once the symbol of monetary stability. It has taxed its productive economy to the point where the rapid growth once taken for granted has been stifled. It has . . . sent its marines throughout the globe pretentiously acting as world policeman. It has earned the hatred of millions of oppressed people whose only contact with it is through its support of vicious rulers from Somoza to the Shah of Iran to Marcos. A couple of decades ago all that remained around us of the American Revolution’s original noninterventionist vision seemed to be entombed in the inscriptions on several buildings in Washington.

Radicals, Lavoie asserts, have let their past belief in comprehensive planning, because of its utter failure and their unquestioned aversion to free-market institutions, turn into an irreconcilable conflict with their own goals. In their opposition to unregulated competition and desire to avoid monopoly, they have endorsed policies of government-enforced and protected monopolization. Their restoration to a standpoint of true opposition, he writes, requires that they finally abandon planning in all its guises and reformulate a radical version of the free market and a free society.

 

[National Economic Planning: What Is Left, by Don Lavoie (Washington, DC: CATO Institute) $9.95]