8 of 10: Development Planning for International Trade, Education and the Environment

March 2, 2022

The introduction to part five of the book, which introduces different kinds of participatory long-run development plans for planning horizons covering multiple decades. This is the eighth part of ten extracts from the book Democratic Economic Planning (2021, Routledge) by Robin HahneI.

Introduction to Part V

Part V is concerned with different kinds of long-run, development planning. In all cases we consider planning horizons which cover multiple decades. Up until now we have treated the annual supplies of different categories of labor and different environmental services as givens during both annual and investment planning. These become endogenous variables during education and environmental planning. Up until now we ignored international trade and international investment. It is time to take international economic relations into consideration and explain how a participatory economy can benefit from international trade and finance and engage in strategic international economic planning. And finally, in an appendix we consider special issues related to infrastructure planning. We will discover that many lessons learned in Part IV regarding how to integrate investment and annual planning to update investment plans and improve outcomes apply to development planning as well. But we will also discover that each kind of development planning poses unique challenges.

Education serves three different purposes, only one of which is to teach people skills that enhance their productivity. Education also serves the purpose of preparing students to participate fully in social decision-making, which in our case entails a great deal more participation in economic decision-making for most people than other economic systems allow or require. And of course, education is also a “consumption good,” with particularly strong preference development benefits as well as preference fulfillment benefits. We discuss all this in Chapter 13.

The natural environment provides services necessary for production. But people also value different aspects of the natural environment as “consumers.” So, as in the case of education planning, consumption benefits must be considered along with contributions to production when we engage in environmental planning. We discuss all these issues in Chapter 14.

We also want participatory economies to benefit from opportunities that international trade and investment make available, and in so doing, we want to take both static efficiency gains, dynamic efficiency gains, and long-run strategic goals into account when engaging in international economic planning. While there is nothing analogous to the consumption benefits from education and a healthy and wondrous natural environment, there is a special consideration participatory economies must take into account when they enter into international economic relations: As readers now understand, a participatory economy is based on the principle that economic justice demands compensation commensurate with the sacrifices people make. To apply this principle to international economic relations requires ensuring that the lion’s share of efficiency gains from international trade and investment go to wherever people’s efforts and sacrifices yield smaller economic benefits on average – that is, to whichever country is poorer or less developed. In Chapter 15 we explain how this can be done, while still permitting countries with participatory economies that are more developed to benefit from international trade and financial investment with less developed countries. And finally, in an appendix to Part V we explain how to apply our approach to investment and development planning to investment in infrastructure.

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