Economic Planning - An Insight

Economic planning refers to taking vital decisions on the use of resources for the growth of the economy.

Socialist Economic Planning

Different types of economic planning have been practiced within the ambit of socialism. This includes decentralized planning system, where all vital decisions are taken collectively. Centralized planning is done by technical experts who use the collected information to come up with production plans. The whole economy in a socialist setup develops in an equal manner. All departments of production are inter-related with one another. But the most significant relations within these departments of a nation's economy are between production for means of production as well as for consumer goods. Consumer goods to a great extent are dependent on the means of production for tools, fuel, equipments and other vital items for production process. The production of consumer goods depends to a great extent on the means of production which only the former can provide. But for the creation of the means of production, certain essential consumer goods are essential. Therefore, the progress and development of the means of production to a great extent is dependent on the growth in production of these specific consumer goods. The very foundation of the national economy depends upon heavy industry which is the means of production. But it can only grow with the help of small scale industry and agriculture.

Planning in capitalism

Capitalist planning is more decentralized in comparison to socialist economic planning. In a capitalist setup, there is no central authority which can control the production and planning process. All economic activities taking place as per the decisions taken by the private sector. The state's major functions are confined to the collection of taxes and defense. Today, capitalist economies play a major role in creation and execution of monetary, trade, fiscal policies and developmental plans, ensuring necessary facilities like education, transport, health and recreation to workers. Ensuring the welfare of the workers, and creating anti-monopoly laws are vital aspects of capitalist planning at present.

Economic planning in practice

However, both socialist as well as capitalist economic planning have their own grow backs. Therefore, economists advise policy makers to opt for a mixed approach to decision making and allocation of available resources. In a mixed economic set up, the consumer's freedom and individual ownership of private property are ensured. The public sector also works in close coordination with the private sector.

Conclusion

In mixed economic planning, the government provides short term loans to farmers. It also imports farm machines for their convenience. The government also adopts measures to reduce environmental pollution and also unhealthy working atmosphere in offices and factories. These measures, coupled with individual ownership of resources and sovereignty of consumers ensures inclusive growth for everybody.