The limits to participatory planning : A reply to Adaman and Devine

Fikret Adaman and Pat Devine (2001) responded to an article in which I criticized proposals by socialists to give markets marginal role (Hodgson, 1998). This present essay continues the debate, raises some additional issues and considers some later works by Adaman and Devine. A central problem in any economic system is the existence of conflicting plans, and some partial use of the market is required to deal with this problem. In particular, the Adaman and Devine proposal for participatory planning lacks clear and operational criteria to distinguish those cases where (according to them) markets should, and should not, be deployed. Their reference to the M-form firm does not help them in this regard. This reply further considers the inadequate treatment of tacit knowledge and innovation in that proposal. Their proposal also has the serious weakness that it allows little separation of powers and requires all but the most trivial of decisions to be submitted to an all-encompassing, unitary system of decision-making. Legitimate individual or group autonomy is thereby endangered.