Decentralized planning (economics)

decentralized-planned economy or decentrally-planned economy (occasionally called horizontally-planned economy due to its horizontalism) is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself.

Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet Union’s command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system.

This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy. Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists.[1][2][3] Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society.[4]

Decentralized-planning has been proposed as a basis for socialism and has been variously advocated by democratic socialists, council communists and anarchists who advocate a non-market form of socialism, in total rejection of Soviet-type central economic planning. Some writers such as Robin Cox have argued that decentralized 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.[5]



The use of computers to coordinate production in an optimal fashion has been variously proposed for socialist economies. The Polish 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).[1]

The 1970 Chilean distributed decision support system Project Cybersyn was pioneered by Salvador Allende’s socialist government in an attempt to move towards a decentralised planned economy with the experimental viable system model of computed organisational structure of autonomous operative units though an algedonic feedback setting and bottom-up participative decision-making by the Cyberfolk component.

Negotiated coordination

Economist Pat Devine has created a model of decentralized economic planning called “negotiated coordination” which is based upon social ownership of the means of production by those affected by the use of the assets involved, with the allocation of consumer and capital goods made through a participatory form of decision-making by those at the most localized level of production.[6] Moreover, organizations that utilize modularity in their production processes may distribute problem solving and decision making [7].

Participatory planning

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 economics, guild socialism and economic theories related to anarchism.

Similar concepts in practice

Decentralized planning in Kerala

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

The United Nations has developed local projects that promote participatory planning on a community level. Members of communities take decisions regarding community development directly.

Political advocacy

Decentralized planning has been a feature of socialist and anarchist economics. Variations of decentralized planning include participatory economics, economic democracy and industrial democracy and have been promoted by various political groups, most notably libertarian socialists, guild socialists, libertarian Marxists, Trotskyists,[8] anarchists 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 decentralized planning resembling the principles laid out by anarcho-syndicalist Diego Abad de Santillan in the book After the Revolution.[9]


  1. ^ Jump up to:ab Lange, Oskar (1979). “The Computer and the Market”. Retrieved 12 September 2012.
  2. ^Cottrell, Allin; Cockshott, W. Paul (1993). Towards a New Socialism. (Nottingham, England: Spokesman. Retrieved 17 March 2012.
  3. ^Medina, Eden (2006). “Designing Freedom, Regulating a Nation: Socialist Cybernetics in Allende’s Chile”. J. Lat. Am. Stud. Cambridge University Press (38): 571–606. doi:10.1017/S0022216X06001179.
  4. ^Kotz, David (2008). “What Economic Structure for Socialism?” (PDF). Retrieved 12 September 2012.
  5. ^Schweickart, David (2006). “Democratic Socialism” Archived 2012-06-17 at the Wayback Machine. Encyclopedia of Activism and Social Justice. “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”.
  6. ^“Participatory Planning Through Negotiated Coordination” (PDF). 1 March 2002. Retrieved 30 October 2011.
  7. ^Kostakis, V. 2019. How to Reap the Benefits of the “Digital Revolution”? Modularity and the Commons. Halduskultuur: The Estonian Journal of Administrative Culture and Digital Governance, Vol 20(1):4–19.
  8. ^Writings, 1932–33 96, Leon Trotsky.
  9. ^“After the Revolution”. 7 January 1936. Archived from the original on 29 August 2012. Retrieved 12 September 2012.

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