Question

Bring out the arguments against planning.

Answer 1

The arguments against planning are discussed below.
(a) Loss of freedom:

1. The absence of freedom in decision-making may act as an obstacle to economic growth.
2. Regulations and restrictions are the backbones of a planned economy.
3. Economic freedom comprises freedom of consumption, freedom of choice of occupation, freedom to produce, and the freedom to fix prices for the products.
4. Under planning, the crucial decisions are made by the Central Planning Authority.

(b) Elimination of Initiative: Under centralized planning, there will be no incentive for initiatives and innovations.

1.  The absence of private ownership and profit motive discourages entrepreneurs from taking bold decisions and risk-taking. Attractive profit is the incentive for searching for new ideas, new lines, and new, methods.
2.  As all enjoy equal rewards under a planned economy irrespective of their effort, efficiency, and productivity.
3. The bureaucracy and red-tapism which are the features of a planned economy, cripple the initiative as they cause procedural delay and time loss.

(c) High cost of Management:

1. No doubt the fruits of planning such as industrialization, social justice, and regional balance are good.
2. But the cost of management of economic affairs outweighs the benefits of planning.
3. Plan formulation and implementation involve the engagement of an army of staff for data collection and administration.

(d) Difficulty in advance calculations:

1. Price mechanism provides for the automatic adjustment among price, demand, and supply in a Laissez-Faire economy.
2. The producers and consumers adjust their supply and demand based on price changes.
3. The arguments against planning are mostly concerned with centralized and totalitarian planning.
4. Democratic planning, planning by inducement, and decentralized planning especially under mixed economies give equal roles to the private sector and public sector.