Decentralized planning (economics)

A decentralized-planned economy or decentrally-planned economy (occasionally horizontally-planned economy) is a type of economic system based on decentralized economic planning, in which decision-making is distributed amongst various economic agents or localized within production units. Decentralized planning is held in contrast to centralized planning where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a central authority.

Decentralised planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system.

Usually this implies some form of democratic decision-making within the economy or within firms, in the form of economic democracy or industrial democracy. Alternatively, computer-based or computer-managed forms of decentralized coordination between economic enterprises have been proposed by various economists and computer scientists.

Recent proposals for decentralized-economic planning have used the term participatory planning to highlight the cooperative and democratic character of this system and to contrast it with centralized planning associated with the former Soviet Union. Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society.

Decentralized-planning has been proposed as a basis for socialism, and has been advocated by democratic socialists and anarchists who advocate a non-market form of socialism while rejecting Soviet-type central planning. Some writers (e.g. Robin Cox) have argued that decentralised planning allows for a spontaneously self-regulating system of stock control (relying solely on calculation in kind), to come about and that, in turn, decisively overcomes the objections raised by the economic calculation argument that any large scale economy must necessarily resort to a system of market prices.

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