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.