Agreeing on a democratic alternative, participatory planning and a democratic economy

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.

This usually 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.[citation needed]

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.[1]

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.[2] 



The use of computers to coordinate production in an optimal fashion has been proposed for socialist economies. The economist Oskar Lange argued that the computer is more efficient than the market process at solving the multitude of simultaneous equations required for allocating economic inputs efficiently (either in terms of physical quantities or monetary prices).[3]

The 1970 Chilean computer-controlled planned economy Project Cybersyn was pioneered by Salvador Allende‘s socialist government in an attempt to move towards decentralised planning with the experimental Cyberfolk component.

Negotiated coordination[edit]

Economist Pat Devine has created a model of coordination called “negotiated coordination”, which is based upon social ownership by those affected by the use of the assets involved, with decisions made by those at the most localised level of production.[4] 

Participatory Planning[editSee also: Parecon

The planning structure of a decentralized planned economy is generally based on a consumers council and producer council (or jointly, a distributive cooperative), which is sometimes called a consumers’ cooperative. Producers and consumers, or their representatives, negotiate the quality and quantity of what is to be produced. This structure is central to participatory economicsguild socialism and economic theories related to anarchism.

Similar concepts in practice [edit

Decentralised planning in Kerala and India[editMain article: People’s Planning in Kerala See also: District planning in India

Some decentralised participation in economic planning has been implemented in various regions and states in India, most notably in Kerala. Local level planning agencies assess the needs of people who are able to give their direct input through the Gram Sabhas (village-based institutions) and the planners subsequently seek to plan accordingly. 

Community participatory planning[edit]

Decentralised planning has been a feature of socialist and anarchist economics. Variations of decentralized planning include participatory economicseconomic democracy and industrial democracy and have been promoted by various political groups, most notably libertarian socialistsguild socialistsMarxistsanarchists and democratic socialists.

During the Spanish Revolution, some areas where anarchist and libertarian socialist influence through the CNT and UGT was extensive, particularly rural regions, were run on the basis of decentralised planning resembling the principles laid out by Diego Abad de Santillan in the book After the Revolution.[5] 


In 1993, Peter Drucker outlined a possible evolution of capitalistic society in his book Post-Capitalist Society.[1] The book stated that knowledge, rather than capital, land, or labor, is the new basis of wealth. The classes of a fully post-capitalist society are expected to be divided into knowledge workers or service workers, in contrast to the capitalists and proletarians of a capitalist society. In the book, Drucker estimated the transformation to post-capitalism would be completed in 2010–2020.

Drucker also argued for rethinking the concept of intellectual property by creating a universal licensing system.[2] Consumers would subscribe, for a cost and producers would assume that everything is reproduced and freely distributed through social networks.

In 2015, according to Paul Mason the rise of income inequality, repeating cycles of unemployment and inflation and capitalism’s contributions to global warming had led both economists and philosophers to begin seriously considering post-capitalistic societies. Post-capitalism is expected to arise with further advances in automation and information sharing – both of which cause production costs to approach zero.[3] 

Technological drivers of post-capitalism[edit]

The emergence of post-capitalist dynamics were made possible through three major changes that were brought by the evolution and increasing sophistication of information technology. A first driver is a new dynamic that information technology brought to the workplace. Through increased connectivity the reachability of employees was improved and the lines between working hours and free time became blurred.[4] In addition to that, the technological era led to an abundance of information that is easily retainable for everyone. While some industries only continued to exist due to information scarcity and secrecy, the market became disrupted by the emergence of new competitors that were able to enter the market and benefit from large sources of publicly-available information.

A result of this was the increase in acquisition activities since the early 2000s which tried to counter decreasing margins through consolidation and monopoly building. A third dynamic that emerged from new technology was crowd-funding and crowd-sourcing. Crowd-funding led to a new option for corporate finance, which was often achieved for socially-accepted innovations. Crowd-sourcing on the other hand challenged the traditional employee-employer relationship under capitalism as people started to voluntarily contribute to product developments with a distinctive skill, such as programming or designing. A major reward for people engaged in crowd-sourcing is not monetary compensation, but the intrinsic reward of having a stake in an active development.[5] 


Socialism often implies public ownership of companies and a planned economy, though it is argued[by whom?] whether either are essential features. In his book PostCapitalism: A Guide to our FuturePaul Mason argues that centralized planning, even with the advanced technology of today, is unachievable.[3] Alternatively, Michael Albert and Robin Hahnel argue that central planning is key to creating a participatory economy.

For post-capitalism to come from a socialist standpoint, a political and cultural transformation would need to occur alongside the economic transformation.[6][7][8]

As Robin Hahnel states:[9]

Our defense strategy—and we will need one—must be centered on organizing for massive resistance and non-compliance since no elite, no matter how well armed, can rule unless we, the people, carry out their orders.

Helpful definitions involving socialism:

Participatory economy [editMain article: Participatory economy

In his book Of the People, By the People: The Case for a Participatory EconomyRobin Hahnel describes a post-capitalist economy called the participatory economy.[10] The book ends with the proposal of the Green New Deal, a package of policies that address climate change and financial crises.

The participatory economy focuses on the participation of all citizens through the creation of worker councils and consumer councils. Hahnel emphasizes the direct participation of worker and consumers rather than appointing representatives. The councils are concerned with large-scale issues of production and consumption and are broken into various bodies tasked with researching future development projects.

In a participatory economy, economic rewards would be offered according to need, the amount of which would be determined democratically by the workers council. Hahnel also calls for “economic justice” by rewarding people for their effort and diligence rather than accomplishments or prior ownership. A worker’s effort is to be determined by their co-workers. Consumption rights are then rewarded according to the effort ratings. The worker has the choice to decide what they consume using their consumption rights. Hahnel does not address the idea of money, currency, or how consumption rights would be tracked.

Planning in a participatory economy is done through the councils. The process is horizontal across the committees as opposed to vertical. All council members, the workers and consumers, participate directly in planning unlike in Soviet-type economies and other democratic planning proposals in which planning is done by representatives. Planning is an iterative procedure, always being changed and improved upon, that is accomplished at the level of either work or consumption. All information and proposals are freely available to everyone, those inside and outside of the council, so that the social cost of each proposal can be determined and voted on. Long-term plans such as structuring public transportation, residential zones and recreational areas, are to be proposed by delegates and approved by direct democracy (i.e. voting by the population).

Hahnel argues that a participatory economy will return empathy to our purchasing choices. Capitalism removes the knowledge of how and by whom a product was made: “When we eat a salad the market systematically deletes information about the migrant workers who picked it”.[11] By removing the human element from goods, consumers only consider their own satisfaction and need when consuming products. Introducing worker and consumer councils would reintroduce the knowledge of where, how and by whom products were manufactured. A participatory economy is expected to also introduce more socially oriented goods, such as parks, clean air, and public health care, through the interaction of the two councils.

For those that call the participatory economy utopian, Albert and Hahnel counter:[11]

Are we being utopian? It is utopian to expect more from a system than it can possibly deliver. To expect equality and justice—or even rationality—from capitalism is utopian. To expect social solidarity from markets, or self-management from central planning, is equally utopian. To argue that competition can yield empathy or that authoritarianism can promote initiative or that keeping most people from decision making can employ human potential most fully: these are utopian fantasies without question.

But to recognize human potentials and to seek to embody their development into a set of economic institutions and then to expect those institutions to encourage desirable outcomes is no more than reasonable theorizing. What is utopian is not planting new seeds but expecting flowers from dying weeds.

Anarchism [edit]

Other [edit]

  • Economic democracy, a socioeconomic philosophy that establishes democratic control of firms by their workers and social control of investment by a network of public banks.[12]
  • Heritage Check System, a socioeconomic plan that retains a market economy, but removes fractional reserve lending power from banks and limits government printing of money to offset deflation with money printed being used to buy materials to back the currency, pay for government programs in lieu of taxes, with the remainder to be split evenly among all citizens to stimulate the economy (termed a “heritage check” for which the system is named). As presented by the original author of the idea, Robert Heinlein, in his book For Us, The Living: A Comedy of Customs, the system would be self-reinforcing and eventually result in a regular heritage checks able to provide a modest living for most citizens.[13]

See also [edit]

References [edit]

  1. Drucker, Peter F. (1993). Post-Capitalist Society. HarperInformation. ISBN 978-0-7506-0921-0.
  2. Schwartz, Peter (1 March 1993). “Post-Capitalist”WIRED. Retrieved 17 March 2016.
  3. a b Mason, Paul (2015). PostCapitalism: A Guide to our Future. Allen Lane. ISBN 9781846147388.
  4. N. Korody. “Architecture after capitalism, in a world without work”. Retrieved 25 Jun 2017.
  5. P. Mason. “Three dynamics leading to post-capitalism”. Retrieved 25 Jun 2017.
  6. Albert, Michael; Hahnel, Robin (1978). Unorthodox Marxism: An Essay on Capitalism, Socialism, and Revolution. South End Press. ISBN 0896080048.
  7. Albert, Michael; Hahnel, Robin (1981). Socialism Today and Tomorrow. South End Press. ISBN 0896080773.
  8. Albert, Michael; Hahnel, Robin (1981). Marxism and Socialist Theory: Socialism in Theory and Practice. South End Press. ISBN 0896080765.
  9. Hahnel, Robin. “What Is To Be Done?”. Retrieved 17 March2016.
  10. Hahnel, Robert (2012). Of the People, By the People: The Case for a Participatory Economy. AK Press Distribution. ISBN 0983059764.
  11. a b Albert, Michael; Hahnel, Robin. “Participatory Planning”(PDF). Retrieved 17 March 2016.
  12. Schweickart, David (2002). After Capitalism. Rowman & Littlefield Publishers, Inc. pp. 22–23. ISBN 0-7425-1299-1.
  13. Heinlein, Robert (2003). For Us, The Living. Scribner. p. 233. ISBN 0-7432-5998-X.

Further reading [edit]

See also[edit]

Notes [edit]

  1. “”What economic structure for socialism?”, by Kotz, David. 2008″ (PDF). Retrieved 2012-09-12.
  2. Schweickart, David. Democratic Socialism. Encyclopedia of Activism and Social Justice (2006): “Virtually all (democratic) socialists have distanced themselves from the economic model long synonymous with ‘socialism,’ i.e. the Soviet model of a non-market, centrally-planned economy…Some have endorsed the concept of ‘market socialism,’ a post-capitalist economy that retains market competition, but socializes the means of production, and, in some versions, extends democracy to the workplace. Some hold out for a non-market, participatory economy. All democratic socialists agree on the need for a democratic alternative to capitalism.”
  3. “”The Computer and the market”, Lange, Oskar. Retrieved March 16, 2011″. Retrieved 2012-09-12.
  4. “Participatory Planning Through Negotiated Coordination” (PDF). Retrieved 30 October 2011.
  5. After the Revolution”. 1936-01-07. Archived from the original on 2012-08-29. Retrieved 2012-09-12.

Further reading[edit]

District Planning is the process of preparing an integrated plan for the local government sector in a district taking into account the resources (natural, human and financial) available and covering the sectoral activities and schemes assigned to the district level and below and those implemented through local governments in a state.[1]

District is the most suitable administrative unit for decentralized planning below the state level as it possesses the required heterogeneity and is small enough to undertake people in planning and implementation and to improve productivity; district planning is an important tool.

With the 73rd and 74th amendments[2] of the Constitution of Indiadecentralization of planning is emphasized and the methodology of district plan was changed. The approach suggested for the preparation of the district plan is as follows:-.[3]

Steps in district planning[edit]

The sequence in the preparation of district plan can be as follows

  • Preparation of district vision, block vision and gram panchayat level vision.
  • Preparation of participatory plan involving Gram Sabha from Gram Panchayats to Zilla Parishad.
  • Preparation of plans by Urban Local Bodies.
  • Consolidation of plans prepared by local bodies by District Planning Committees.

Planning starts with the preparation of vision documents by local bodies.[4]

village visioning[edit]

A vision document is for 10 to 15 years is to be prepared by the district and for each local government based on a participatory assessment. The DPC may hold formal interactions with local governments and other key stakeholders on this and then finalise it. The document should clearly identify the key reasons for backwardness / development shortcomings and address issues impeding development.

District vision document will cover :-[5]

  • Agriculture and allied sectors.
  • Availability and development of water sources.
  • Industries – especially traditional, small industries including food processing.
  • Infrastructure including power.
  • Drinking water and sanitation.
  • Literacy, school education.
  • Health and medical facilities.
  • Poverty reduction and basic needs.
  • Gender and children.
  • Social justice – SC / ST, Persons with disability etc.

To assist the DPC in preparing the vision document (and subsequently to vet the draft plan proposals), a Technical Support Group may be constituted in each district. it may consist of departmental officers nominated for the purpose in addition to their duties or retired persons locally available or a local academic institution or established NGO with a proven record – similarly, technical support as appropriate, may be organized for the urban areas, intermediate panchayats and village

If undertaken in a campaign mode, the preparation of vision documents can be completed in two months time.

Further, if District is to be the economic unit for planning exercise, the scope of vision document could be expanded to include areas of comparative advantage of each district which would be the basis for attracting private investment.

Block vision[edit]

After finalizing the vision document for the district at the district level, the document will be discussed at the block level and a vision document for the block will be prepared with some modifications based on the conditions of the block. The vision document for each block need not be completely different because the agro-ecological conditions of some planning units at this level may be same, particularly when a district is divided into a large number of Inter Mediate Panchayats as in the case of Andhra Pradesh. Even though the same vision is adopted for some blocks / mandals, it is necessary to have the vision owned by the Intermediate Panchayat. This exercise will be done by a team of experts at block level. The same team will be responsible for plans at the GP level. However, the team will take some members like professionals or retired persons belonging to the area to assist the team in the preparation of the plan. The general formats for planning at the lowest unit level viz., GP or ULB will be prepared at the district level and they will be adopted with certain modifications at the block level.

Vision of the Gram Panchayat will also be prepared accordingly. The vision of the GP will be based on the Socio-economic Profile of the GP and views of the GP.

Plan for grama panchayat/municipality[edit]

At the third stage, the plan at the GP or ULB will be prepared. This will be prepared by the team with the help of people’s participation. The will first interact with the GP and prepare a vision on the lines of the district vision. Once the Gram Panchayat vision is approved, the team will conduct several Group Discussions to find out the potentials, needs and constraints of the village economy in Gram Sabha. The felt needs of these communities and the support needed for improving their livelihood conditions will be elicited. Once this exercise is completed, it will be discussed in the Gram Sabha. This approach will help to study the situation thoroughly and prepare the plan. In particular, all the schemes CSS State sponsored schemes will be examined thoroughly with a view to understand their suitability to the area. This can be more easily ascertained from the beneficiaries/stake holders. The plan should also take into account the long term development perspective of the GP and also natural resource management (NRM) aspects.

Plan for block panchayats[edit]

The above three steps followed the top down approach in the preparation of the district plan. After this GP Plan is prepared and no plan is ready at higher levels except the vision. The Plans at the higher levels will be prepared in the next steps. In this step, the GP plans will be consolidated and put before the IP. In the GP plans, the benefits of some of the schemes will go beyond the GP and such schemes may figure in the other GP plans also. Hence, they have to be separated and duplication has to be avoided. Similarly, some schemes which provide benefits beyond the GP level may not be identified in any GP. The Block Plan has to identify those schemes / projects. This exercise will be done at the meetings of the Intermediate Panchayat level.

District plan[edit]

The final stage is the preparation of the district plan. This will be finalized after the Block Plans are finalized in the same way as the Block Plan is finalized on the basis of the GP Plans in the Block. The schemes that will not figure in the Block Plans, but are essential for the development of the district will be identified at this stage. Further, an attempt will have to be made to achieve functional and spatial integration and use the norms for the provision of social infrastructure. The above five steps will help in the preparation of the perspective plan. To work out the annual plans, the financial resources available have to be taken into account. The local government component of the District Plan would emerge from the resource envelope containing the following sources of funds:

  • Own resources available for development
  • Transfers by State Finance Commission for development purposes
  • Twelfth Finance Commission grants passed on by the State Government
  • Untied grants for local planning
  • Grants in respect of Centrally Sponsored Schemes.
  • Grants for State Plan schemes assigned for implementation through local Governments
  • Grants for externally supported schemes assigned for implementation through local governments
  • Estimated contribution by the communities themselves

The document that embodies this statement of resources and their allocation for various purposes is known as the District Plan. It would essentially have three aspects namely.

  1. Plan to be prepared by the Rural Local Bodies for the activities assigned to them and the national / state schemes implemented by them with their own resources and those earmarked for these purposes;
  2. Plan to be prepared by the Urban Local Bodies for the activities assigned to them and the national / state schemes implemented by them with their own resources and those earmarked for these purposes;
  3. Physical integration of the plans of Rural and Urban Local Bodies with the elements of the State Plan that are physically implemented within the geographical confines of the district.

Integration of entire local plans[edit]

In the realization of the district vision, district plans will need to put together resources channelised from all sources including district segments to the State Plan, CSSs, Special Programmes such as Employment Guarantee, Sarva Shiksha Abhiyaan, Rural Health Mission, Grants-in-aid for specific purposes from Finance Commission, Bharat Nirman etc. Therefore consolidation is a task that goes much beyond compilation and connotes a degree of value addition through integration of local plans. There are several aspects of integration of plans that have to be considered in the preparation of the draft development plan. The different dimensions of integration have been discussed very succinctly in the planning guidelines[6] for local bodies in Kerala as detailed below and could be adapted for general use:

  • Spatial integration

This would mean integration of schemes such as roads that run through one or more Panchayats. Such kinds of Multi Panchayat infrastructure projects could be taken up with proportionate contributions from the Panchayats concerned dovetailed into the funding available from above and entrusted to one local government for execution.

  • Sectoral integration

This relates to the integration that takes place within a sector. For instance, an integrated approach to agricultural development would require the integration of several schemes relating to agriculture, such as horticulture, drip irrigation, high yielding varieties and integrated pest management.

  • Cross-sectoral integration

To ensure maximum impact from different interventions, it is necessary to design approaches that draw resources from various schemes. For instance, a good approach to public health would require inputs from water and sanitation allocations and health programme allocations. Again, a typical watershed management programme would comprise soil conservation, water harvesting, micro irrigation, bio-mass generation, fisheries, animal husbandry, agro processing and micro enterprise components, all properly sequenced.

  • Vertical integration

This is based on the precept that District and Intermediate Panchayats ought to perform activities which have the advantages of scale and which cannot be done by the lower tiers of local government. This will require that Block Panchayats have a clear idea as to what the draft plans of Village Panchayats will contain, Similarly the District Panchayats would need to consider the approved plans of Village and Block Panchayats before finalizing theirs.

  • Integration of resources

There are several schemes both Centrally sponsored and State sponsored which Panchayats can utilize, integrate into local plans and to which they can contribute additional resources. This would comprise two aspects, as below:

  • Integration with State Plans

There are several State Plans, which as implemented can be strengthened by increased allocation from Panchayat funds. In some cases a component having a complementary nature could be added to the State Plan Scheme. For instance, the drawing of electric wires to villages could be complemented by the Panchayat taking up the wiring of BPL houses.

  • Integration of CSSs with local plans

It is important that in the interest of efficient use of resources, there ought to be only one development plan for the local government prepared through a common planning process and not a set of separate plans prepared in accordance with the guidelines of each programme. Thus once priorities and works are identified and prioritized through a single planning process, components pertaining to a particular sector could be taken up through schemes, including CSSs while still keeping within the guidelines of those schemes.

  • Integration with local resources

Planning can provide for local investments to be catalysed through local resources or initiatives. For example, village knowledge centers and Rural business Hubs could be catalysed by Panchayats. This is also possible by extending the concept of Pura to encompass the concept of rural business hubs. By this, we do not meant that Panchayats ought to run industry locally, but that it catalogs local skills and natural resource endowments and facilitate the development of business linkages.

  • Rural Urban Integration

Integration of urban-rural plans, which is particularly important in the light of increasing urbanization, is an area where the District Planning Committee could contribute a great deal. The DPC should work out mechanisms of joint programmes to be financed by State government institutions and joint contributions by urban and rural local bodies.

Summary of district planning methodology[edit]

In short, the district planning start with a vision and end up in an integrated plan for the district. Preparation of a district vision is the first significant event in district planning. On the basis of district vision document, a plan will be prepared at the Gram Sabha level. The Gram Panchayat may finalise its plan based on prioritise exerging from the Gram Sabha and earmarking suggestions for the Intermediate Panchayat. Projects and activities which can be implemented at the Gram Panchayat level should be included as “Gram Panchayati Plan”. Those projects and activities which can be implemented only in more than one Gram Panchayat, will be forwarded to the Intermediate Panchayats to be considered for inclusion into the “Intermediate Panchayat Plan”. The Gram Panchayat plans should also provide an estimate of the community contribution that can be mobilized for the purpose of implementing the development plan.

Based on these suggestions received from Gram Panchayats and its own priorities the Intermediate Panchayat should finalise its plan. Projects and activities, which can be implemented at the Intermediate Panchayat level should be included as “Intermediate Panchayat Plan”. Those projects and activities which need to be implemented in more than one intermediate panchayat will be forwarded to the District Panchayat to be considered for inclusion into the “District Panchayat Plan”.

Based on the Gram Panchayat Plans, the intermediate Panchayat Plans and District Panchayat Plans, the District Planning Committee shall finalise the District Plan for the district and will form part of the State plan.[7]

See also[edit]