Arnold Kling  

Doubts about Planning

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Jonathan Rauch argues that the absence of a plan for post-war Iraq is a feature, not a bug.

In truth, the planning mind-set is exactly wrong for Iraq. Anything might have happened after the war: a flood of refugees, a cholera pandemic, a civil war—or, for that matter, the discovery of an advanced nuclear program. The fact that the Bush administration keeps adjusting its course, often contravening its own plans or preferences, is a hopeful sign...

Only trial and error, otherwise known as muddling through, can work in Iraq. There is no other way. Muddling through is not pretty, but never underestimate America's genius for it.

This description also could be applied to the difference between capitalism and socialism. Capitalism learns by trial and error, by success and failure in the market. Planned economies learn less well, and fail more catastrophically.

UPDATE: for a business-consulting style argument for adaptability rather than centralization in the information age, see this Department of Defense report.

For Discussion. Central planning would seem to reduce the number of experiments. In the short run, this would reduce the number of failures. However, in the long run, it would limit success. Does central planning tend to work relatively better in the short run than in the long run?

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COMMENTS (9 to date)
Newt writes:

Those of you who have really visited the free market instead of making up silly theories know that if you don't have a plan, you don't have a business. If your plan isn't written, it isn't a plan. If your plan has never been good enough to stand up to review by someone else, it's probably no good.

Economists can talk about the impossibility of central planning of an entire economy. But that can't justify utterly failing to plan for public safety and infrastructure. The two cases are simply not comparable.

Ronnie Horesh writes:

Newt: agreed; a plan is a necessary but not sufficient condition for business success in the private sector. The resilience is of the capitalist system, rather than its individual components.

In a free market economy businesses are allowed to fail, and in theory are easy to start up. Diversity and adaptiveness generate viability and resilience - of the capitalist system as a whole.

But western governments tend to favour big business, often at the expense of small and medium sized companies. They do this by subsidising a physical and regulatory infrastructure that favours the large and global at the expense of the small and local. Interest groups that receive government largesse are created, and become rich enough to resist change. Western capitalism is becoming more and more similar to central planning; with the largest companies increasingly beholden to government - and vice versa.

For one small example is look at agricultural subsidies. Their major beneficiaries are the richest farmers, agribusiness, bureaucracies and fraudsters. Governments know this, but keep on pumping the subsidies in. The victims are the small farmers, consumers, taxpayers, the environment and third world would-be exporters. By intervening government has undermined the resilience of the agriculture sector, and its own independence from the campaign contributions of agribusiness.

Arnold Kling writes:

"Those of you who have really visited the free market instead of making up silly theories know that if you don't have a plan, you don't have a business. If your plan isn't written, it isn't a plan. If your plan has never been good enough to stand up to review by someone else, it's probably no good."

I never had a written business plan for the business that I started in 1994, and which I sold successfully in 1999. Any written plan would have been preposterous relative to what evolved eventually.

I believe that attempting to plan is helpful. In some sense, planning to be flexible and adaptive is the most difficult type of planning that can be done.

David Thomson writes:

You can only "plan" in a very limited fashion. There are simply too many factors beyond one's control. This is why Ludwig Von Mises and Friedrich Hayek laughed at Soviet 5 Year Plans. Socialism is premised upon the fallacy of planning everything to the utmost degree---and that is a central reason why its adherents ‘ policies are always doomed to fail. They are nothing more than arrogant, prideful, and power hungry folks who have brought much misery to the world.

Mats writes:

So, if planning doesn't work - how could you then claim that you expected something good in the end from the war you planned?

War is a central planned government activity, I agree with Jonathan Rauch than plans doesn't work that well for complex activities. Hence you sholdn't have gone to war in the frist place!

Lawrance George Lux writes:

The Central Plan failure in Iraq comes in the Bush initiative to introduce American Corporate leadership to govern Iraq. The disparity in American and Iraqi political constraints, the disparity in American and Iraqi technological levels, financial funding institutions, and social customs insist there will be American failure. I wrote an Analysis before the Iraq War which stated a designated Iraqi government should be in place, before the invasion.

It would be nice if Bush could capture Saddam before turning Iraq over to a Iraqi government, but I believe American Military evacuation is the only viable recourse. lgl

Ray Gardner writes:


Planning for public safety and infrastructure is not “central planning.”

You seem to be confused as to what Central Planning actually means. Even the freest of markets supplies its citizens with protection from force and fraud, namely of which, an infrastructure to protect personal property rights, the rights that make a free market possible.

The point of the article is that a plan drawn up in Washington D.C. and set in stone would most likely fail in its application because of the lack of adaptability.

Go to and browse their international study on economic freedom. The more free the economy, the more adaptable it is with a corresponding higher standard of living (and higher level personal liberty).

Going to war on a trial and error basis?
Disgusting way of thinking. I'll remove my link to your site!

David Foster writes:

A *rigid and centralized* plan is indeed inappropriate for a situation like Iraq; but *contingency planning,* combined with decentralized execution, is entirely appropriate. Here's an example:

In dealing with Iraq's electrical supply, most of the effort has been spent on repairing/improving the grid. Much more effort should be spent on the deployment of portable generators for point loads (water and sewage treatment plants, critical factories, etc)--this would allow problems to be solved independently and would be less vulnerable to sabotage. Such a policy would require extensive decentralized decision making: regional authorities (American and/or Iraqi) would have to decide on generator priorities.

But the process also could be improved by a form of centralized planning: someone in the Pentagon should have sat down with the senior executives of Caterpillar, Cummins, GE, and other relevant companies, and told them to expect large orders for standby generators. (It appears that this still needs to be done).

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