Nathan Tankus: Centralized Planning in the United States

By Nathan Tankus, a student and research assistant at the University of Ottawa. You can follow him on Twitter at @NathanTankus

Discussions of centralized planning in the West often take it for granted that the Soviet Union and similar social systems are the only ones with centralized planning. This is a basic (albeit ideological) confusion that results from the belief that markets and centralized planning are incompatible. This is not the case. In fact, markets are a great tool for planning in that they provide easy access to all sorts of inputs required for implementing a plan. David Graeber makes a good case in Debt: The First 5000 Years that markets generated by money taxation were crucial to implementing the states plans for large scale, long wars. It is true that the interests between individual firms conflict on some issues, but there are general areas where they agree and share an interest in implementing a common plan. Mortgage companies may have fought over market shares in the early 2000s, but they all had an incentive to invest in preventing adequate regulation and the imposing of minimum requirements for credit assessments. The difference between this type of competition and competition among different factions of the Politburo has been greatly exaggerated.

New York City is an excellent example of this. As the late Robert Fitch lays out in his essay “Planning New York”, FIRE began organizing around reorganizing New York in its own interest in the early 20th century (the entire essay, as well as the collection, is excellent and copies are relatively cheap). They eventually organized themselves into the Regional Planning Association, which still exists and still puts out recommendations to this day. What did they want? The elimination of industry in Manhattan and generally rising land values and rents. As we’ve seen in the past decade, the prosperity of the FIRE sector is crucially dependent on continuous growth in debt (especially mortgage debt) and large rises in land prices and rents. This isn’t an accidental process.

The largest industry in New York City in the mid 19th century to early 20th century was the garment workers’ industry. As of 1929, 3/4 of ladies’ garments manufactured in the United States were manufactured in New York City (Fitch 1977, pg 262). These small manufacturers were located as close as possible to the clothing shops they supplied. As Fitch describes it:

This led to a problem seemingly more characteristic of Hindu than American society: the indignity high-caste customers had to suffer by coming in close contact with large numbers of garment workers, many of them Jewish. (ibid, pg 256)

This industry’s location was crowding the subways, taking away customers and, most disturbingly of all (from the FIRE perspective), redirecting land away from the uses most profitable to FIRE while preventing rises in land values.

The solution was planning the garment industry out of existence through rezoning Manhattan, freezing manufacturers were they are and putting more onerous restrictions on the firm’s use of their lofts. A quick trip to the lower west side (where I grew up and live) will tell you that they succeeded. Yet this process is almost completely ignored in mainstream conversations about the history of American manufacturing. As Fitch says:

…what makes this neglect so striking is that the plan has been largely realized in actual physical terms. The proposed highway system, designed like sculptor’s armature to serve as infrastructural support for the desired suburbanization and decentralization of the region- this system, complete with tunnels, bridges, grade separations, was imposed on the region in almost precisely the form specified by the planners. And the same can be said, to a lesser extent, of the post-1929 development of the park system. (the proponents of the Robert Moses Theory of History notwithstanding). (ibid, 246)

Interestingly, Robert Moses was not among the Robert Moses Theory of History proponents:

The finance is a tremendously important phase of the whole thing. My experience has been that many of the people, by no means all, who call themselves planners are people who make pretty pictures;They draw things; They present a plausible and often dramatic, melodramatic program, but they’re not people who get anything done.

Seen from this perspective, globalization emerges not so much as the natural progression of market forces but as a logical response from corporations being deliberately squeezed out geographically and politically by regional FIRE sectors. When they lose more and more access to the capital budgets of local, state and federal governments it becomes cheaper to buy access to the capital budgets and geography of developing countries with smaller, weaker capitalists of all stripes. Indeed many of these countries were and are still interested in industrial planning even where the US has largely abandoned it. Additionally, it’s much easier to get support for free trade policies that facilitate outsourcing since the FIRE sector often has interests in free trade (mostly because copyright, patent and financial sector agreements are part and parcel with free trade agreements). “Cheap labor” is simply an added perk. As Michael Hudson has so forcefully argued, industry could have cheapened labor domestically by shifting the burden of taxation from wages to land and financial wealth, but that would involve fighting the FIRE sector in ways that they simply aren’t capable of doing (not to mention industry’s increasing integration with the FIRE sector).

Joan Robinson famously said “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. A similar dictum applies to Planning. The misery created by having your society planned by capitalists is nothing compared to the misery of not having it planned at all. It isn’t recognized as such, but the best example of this principle is Flint, Michigan. Its a city that, for all it’s problems, was heavily planned. Robert Moses again provides a lot of insight – some of it unintentional – into this issue in an interview with the NBC Wisdom series in 1959:

The interesting thing about flint is… it’s a city that has leadership. It’s largely industrial leadership. it’s a General Motors town, primarily a Chevrolet town with some Buick overtones. And the president of General Motors, the last recent president, lived there….some of them [wealthy elites] have survived 50 years. Mr. Martin, for example, is, as I recall it, the largest single stockholder in General Motors. He’s 83 or 84 years old and still as lively as a cricket. And he’s interested in the civic center, He’s interested in having a cultural center, having a branch of Michigan university,an opera house, running track, a philharmonic, and all the other things that you can think of. And they have provided real leadership in that town. And when that group of top industrialists and the labor leaders get together they decide what will be done and it is done. I don’t say there’s been a complete lack of political leadership, but it has been a town that has acknowledged leaders and they get together to decide to do something and they do it.

If you’ve ever seen Michael Moore’s Roger & Me, you know how this story ends. The industrial elites became increasingly financialized and detached from the urban areas in which their industries were based. As that happened, they moved away, personally and economically. Without local elites interested in the local area and with weak local politicians. places like Flint have deteriorated remarkably. Those left behind have at best had small visions that futilely attempted to recapture yesteryear, If you’re interested in knowing what market forces unshaped by conscious planning look like, I’d recommend you go to Flint.

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  1. Middle Seaman

    Planning the reduction of the deficit through reduction, and probable elimination, of the safety net reincarnates the 5-year plans of the Soviet Union. As its original, it enjoys an almost unanimous support in the paid for by the 1% congress.

    Bush and Obama envisioned an ideal society where the governing elite works to transfer societal resources from the middle class and the poor to the nomenclature we usually call the 1%.

    Who claims that the Soviet Union and its planned economy have died?

  2. mN

    I think USA,EU,UK are centrally planned economies but more efficient than USSR.
    No business transaction between international companies,countries can proceed without involving american authorities.If this is not centralization,then what it is?
    Commodity producers can not sell,ship their good without consulting international insurance,shipping firms.
    Why all the credit in world originates ONLY in USA and EU?
    Do other countries ever had any independence in monetary matters?
    Besides there are international bodies like UN,IMF,WB,BIS which inherently tilt scales to west.They ,too,are tools of central planners.
    The only cleverness shown by western central planners compared to communists was that institutions were allowed to have some independence and their powers were kept separate.These institutions were also helped by some good institutional discipline and good talent.

    1. AbyNormal

      + WTO
      “The United States decided to defy the WTO system by introducing a form of sanctions which has no WTO authorization whatsoever. What the United States has done is therefore unacceptable and unlawful.”
      Sir Leon Brittan
      (too bad…we’re busy exporting financial weapons of mass destruction)

  3. diptherio

    …it has been a town that has acknowledged leaders and they get together to decide to do something and they do it.

    Right, like moving shop down to Mexico…

      1. from Mexico

        You might find this interesting if you haven’t already seen it:

        “The Nazi Behemoth: Book Review of Franz Neumann’s Behemoth: The Stucture and Function of National Socialism 1933-1944” by C. Wright Mills:

        To define “capitalism” as consisting of the “free competition” of a large number of independent entrepreneurs with freedom of contract and trade is, of course, to speak of the past… Powerful corporations demand guarantees and subsidies from the state. Thus, in the era of monopolization “the administrative act” and not “the contract” becomes “the auxiliary guarantee of property.” Intervention becomes central, and: “who is to interfere and on whose behalf becomes the most important question for modern society.”


        Neumann has shown that profit motives hold the economic machinery of the Reich together. But given its present monopoly form, capitalism demands the stabilizing support of a total political power. Having full access to and grip upon such power is the distinctive advantage of German capitalism. Profits in a situation of great demand and with plant expansion improving the competitive position and thereby profits—this is the motivating force of the set-up. Gottfried Feder is quite dead. Those who, in the face of Neumann’s documentation, would accept Feder’s “anticapitalist” mumbling as a true characterization of Germany have many facts to deny.


        War gives National Socialism not only glory but a stabilization of its power; to industry it gives profits, conquers foreign markets and accumulates booty capital.


        In contrast with the profits and the self-manned organizations of business, labor’s wages are near-stabilized, and it has no organizations of its own. From 1932-1938 wages and salaries rose 66 per cent, whereas “other income” rose 146 per cent; at the same time production nearly doubled. Neumann’s experience with labor organizations in Germany make his detailed statement of the conditions of labor and of labor policy definitive. The labor market is authoritatively controlled to the limit of human recalcitrance. The working class is regimented and fragmented in order to prevent any common basis for movements, and the individual workman is isolated and terrorized. The “interference” of the party and the “State” in “economics” has again helped old dreams to come true.

        1. Generalfeldmarschall Von Hindenburg

          The Nazis are not a great example of anything, as they’re pretty much a one off. They consciously sought to do a lot of totally contradictory things, at the changing whim of their leader. Hitler cited Rome, the United States and the British Empire as things he emulated, but only in what we now see as the negative aspects of all three of those.

  4. from Mexico

    Nathan Tankus said:

    Discussions of centralized planning in the West often take it for granted that the Soviet Union and similar social systems are the only ones with centralized planning. This is a basic (albeit ideological) confusion that results from the belief that markets and centralized planning are incompatible.

    Adam Smith’s myth that nature is an embodied rational will and that the social world is governed by an “invisible hand” that almost miraculously produces a just, fair and equitable distribution of goods and services is one of the most successful mind fucks ever perpetrated on humankind. It allows those who are really pulling the levers of power to hide behind a curtain, creating the perception that it is nature and not them manipulating the levers. One of the most fabulous debunkings of the myth of free markets was from the Wizard of Oz:

    Also, Timothy Y. Fong included this in a comment yesterday that is most germane (emphasis mine):

    It was all about the tyranny of structurlessness.

    As Jo Freeman wrote, over 40 years ago:

    Contrary to what we would like to believe, there is no such thing as a structureless group. Any group of people of whatever nature that comes together for any length of time for any purpose will inevitably structure itself in some fashion. The structure may be flexible; it may vary over time; it may evenly or unevenly distribute tasks, power and resources over the members of the group. But it will be formed regardless of the abilities, personalities, or intentions of the people involved. The very fact that we are individuals, with different talents, predispositions, and backgrounds makes this inevitable. Only if we refused to relate or interact on any basis whatsoever could we approximate structurelessness — and that is not the nature of a human group.

    This means that to strive for a structureless group is as useful, and as deceptive, as to aim at an “objective” news story, “value-free” social science, or a “free” economy. A “laissez faire” group is about as realistic as a “laissez faire” society; the idea becomes a smokescreen for the strong or the lucky to establish unquestioned hegemony over others. This hegemony can be so easily established because the idea of “structurelessness” does not prevent the formation of informal structures, only formal ones. Similarly “laissez faire” philosophy did not prevent the economically powerful from establishing control over wages, prices, and distribution of goods; it only prevented the government from doing so. Thus structurelessness becomes a way of masking power, and within the women’s movement is usually most strongly advocated by those who are the most powerful (whether they are conscious of their power or not). As long as the structure of the group is informal, the rules of how decisions are made are known only to a few and awareness of power is limited to those who know the rules. Those who do not know the rules and are not chosen for initiation must remain in confusion, or suffer from paranoid delusions that something is happening of which they are not quite aware.”

  5. from Mexico

    Deindustrialization and the concomitant murder of labor are two of the Ten Commandments of neoliberalism.

    As Paul Cooney notes in “Argentina’s Quarter Century Experiment with Neoliberalism: From Dictatorship to Depression” (emphasis mine):

    Despite mainstream economists being in denial, the drive toward a neoliberal economic model, as advocated by both the Argentinian elite and the IMF, has had a clear class bias and thus led to a marked decline in the standard of living for the majority of Argentinians. The particular type of neoliberalism, which Argentina pursued, promoted agro-industry and finance at the expense of manufacturing, and thus produced two waves of deindustrialization and therefore a greater vulnerability of the Argentinian economy to globalization in the 1990s.


    During the period between 1930 and 1976, Argentina, as well as a number of other countries, pursued the economic policies known as import substitution industrialization (ISI). This approach is associated with policies designed to protect nascent industry through tariffs and other trade or investment regulations, and to promote diversification into both light and heavy manufacturing, as opposed to just exporting agricultural products. From the middle of the 1960s, Argentina was experiencing a new phenomena — the growth of industrial manufacturing exports. In fact, they had reached over two thirds of all exports in 1973 (Kosacoff and Azpiazu, 1989: 109). However, when the military junta came to power in March 1976, the new government had a change of plans, and the importance of Argentinian industry would never be the same. This was evident in the economic policies implemented by the junta with its new Economics Minister, Martinez de Hoz. These neoliberal policies reflected a shift toward a laisseiz-faire approach, and were strongly associated with economists from the University of Chicago, such as Milton Friedman and Robert Lucas.4 The dictatorship carried out a transformation called the Process of National Reorganization (El Proceso de Reorganización Nacional), which was a reactionary political and economic agenda.


    The economic and social policies pursued by the military government had a very negative impact on Argentinian industry, especially manufacturing. Between 1975 and 1981, the manufacturing share of the GDP declined from 29 to 22%, industrial employment declined by more than 36%, and industrial production as a whole went down by 17% (Smith, 1989: 251-253). The result of the neoliberal policies of the junta began the first wave of deindustrialization in Argentina, which would not seem to be in the best interests of the Argentinian bourgeoisie. However, that is based on the idea that the interests of the Argentinian bourgeoisie are strictly tied to the expansion of Argentinian industrial capital. The reality of Argentina is that many individuals of the Argentinian bourgeoisie have more and more of their investment portfolio in finance and agro-industry.


    As a result of the two waves of deindustrialization, Argentina went from over 1.5 million manufacturing jobs in 1974 down to roughly 763 thousand jobs in 2001, a loss of 50%.


    Throughout the decade of the 1990s, as manufacturing jobs were declining, the growth of informal jobs grew significantly. For example, informal work in Buenos Aires and surroundings (Gran Buenos Aires) grew to reach 38% of all employment by 1999, and such jobs are estimated to have incomes 45% lower than formal employment (Rapoport, 2000: 1,021). As increased numbers of people competed for fewer jobs and the better-paid manufacturing jobs were being lost, the growth of the informal sector resulted in a decline in real wages for the majority of the Argentinian “working” class. The clearly negative impact on industrial real wages over the last 40 years can be seen in figure 2. Nevertheless, the level to which real wages overall have declined has been even more significant for the reasons just mentioned.

  6. Max424

    When I think central planning my mind doesn’t necessarily turn to the Soviet Union. Oh don’t get me wrong, of course it usually does.

    But not always. Quite often, when I’m on the road say, taking the 90 turnpike, going from Buffalo thru Rochester with a one-to-eight-hour pit-stop for some poolroom coffee (depending only upon how good it is), on to Syracuse for 2 days and nights of semi-upscale corpo food and relaxation (Olive Garden, IHOP, Starbucks\Timmy Hoes,* regal accommodations at the …take-a-pick… Red Roof?…) and lots more poolroom room coffee, then high-tale it back to Buffalo –with maybe a 30 minute, gotta rest, sida-da-pike pitstop for Bucks\Hoes* and blitzkrieg meditation– on the lickety-split, my thoughts turn to Robert Moses.

    Old Bobby Mo, the name MY MIND most frequently turns to when I look around me and I see, the same f*cking sh-t, wherever the f*ck I go.

    The centrally planned and never ending –yet unsustainable– inter-suburban sprawl and corpo sameness blight.

    *Never Dunkin’ Donuts for this black-with-half-sugar, coffee drinking man. I’d rather sip and consider, unfiltered sewer water. Hell, I’d rather drink Denny’swill. Plus I hear they’re more foreign owned than the chain named after the Maple Leaf great (go T-Hos!**), which is well-nigh impossible. And they use the word Munchkin, which I suspect to have racist overtures and undertones.

    **Tim Horton created a palatable brew. Plus he played stellar late-career defense for my hometown team, the Buffalo Sabres –up till he was killed doing 160 k on the QE at a still young 44.

    I open root for the Tim Horton’s local/regional chain over the Dunkin’ Donuts (who knows who owns em. Aliens?) international corporate colossus. In fact, I hear proclaim, I hope they erase those monolithic f+ckers right off the map, and become THE monolithic f+ckers themselves.

  7. from Mexico

    There’s a magnficent video documentary that portrays New York City as it is today:

    Park Avenue: money, power and the American dream

    Many people in New York consider themselves to be holier than thou and look to the southern United States for examples of social and economic backwardness and injustice. They don’t have to look nearly so far from home however. As the film points out, New York City is home to the richest neighborhood in the United States, but it is also home to the poorest congressional district in the United States, and they’re side by side, separated only by a river.

  8. Max424

    That should read, halfasuger.

    Pronounced, havahzoogerrr. From the German. I vill hahf von coffey block vitt von havahzoogerrr.


  9. rich

    New ‘Game of Thrones’ battlefield is America
    Commentary: Greed of 7 Shadow Kingdoms is killing souls

    3. Federal Reserve Bank’s Shadow Kingdom

    Fed Chairman Ben Bernanke is perhaps the biggest lobbyist among all the new “Lobbyists for Capitalism,” ruling his Shadow Kingdom and its enormous power over printing fiat trillions, competing with both Congress and the White House for money, power, regulations, laws.

    Huffington Post’s Ryan Grim wrote a great piece on the Fed’s incestuous hiring policies, the expanding monetary bubble and looming problems ahead: “How the Federal Reserve Bought the Economics Profession:” Bernanke and the Fed “through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession … This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists,” and why they’re almost certain to miss the next one.

    1. Susan the other

      The Fed wants to continue to be our central bank. To that end it allows Jeffrey Sachs to call Wall Street with all its banksters and tradesters a cess pool of crime. The Fed itself does not say this because Bernanke famously said the big banks were not going to go down on his watch. Nothing ever makes sense. Except people in power dedicated to protecting their own positions. Say by planning for a new monetary system. And for certain they will not even look at functional finance. No profit there.

  10. Lafayette

    It is true that the interests between individual firms conflict on some issues, but there are general areas where they agree and share an interest in implementing a common plan

    This is where MT has got it wrong.

    Companies do not follow a “common plan”, because if they did a FTC would come down upon them like a ton of bricks. Their collusion would be obvious.

    What they do, however, is follow the same rules; that is they try to stay in between the white-lines of regulatory authorities. When they can, they try to influence where those white-lines are placed. And, far too often, they succeed to their benefit and not that of the consumer.

    Because what they are all trying to do is follow the Learning-Curve slope downward in order to obtain a price competitive advantage. And they can do this most easily by:
    1) Getting regulations to be not voted, or those voted lifted or, better yet, obtain state/Federal laxity in market oversight, and
    2) Consolidate markets (by mergers and acquisitions) like there were no tomorrow, because money can buy a company its ticket down the Learning-Curve faster than outright competition.

    Which is precisely what has been happening in the US over the past half a century. Why are HealthCare costs so very high? Because there is no real competition in HealthCare services. (See here.)

    How much competition do we see in the M-I-C? Or within broadband services. Not much in either. The US has some of the highest interconnect costs in the modern world.

    Are all markets like the above mentioned? Of course not. Car manufacturing is fairly competitive – but only since the end of WW2 when the Japanese started exporting to the US in the 1950s.

    Can American markets be made more competitive? Yes, if we had at the Justice Department a smart set of economists studying market competition and making a solid case to Justice lawyers when competition did not exist in any given market. Why haven’t we done that in the past?

    Because with money as the final arbiter of how market oversight is enacted in LaLaLand on the Potomac, a little of it goes a long way towards putting competition sleuths to sleep.

    MT is right to insist that centralized planning incorporating advanced market-competitiveness techniques could benefit the nation. But neither does he say that explicitly in this article.

    1. Nathan Tankus

      I laid out a concrete case of industry coming together and implementing a common plan. if you disagree with my case-please explain. In general, there is nothing in U.S. law that prevents rich people from forming “non-profits” and foundations to implement their plans for society.

  11. allcoppedout

    The most centrally planned place I’ve been is Japan. The old Soviet Empire was often too inept for the word planning to make any sense.
    What do we suppose the advantages of not centrally planning to be? I’m in agreement with the argument in the excellent post, but find I have lost the plot generally. The really crap things behind the Iron Curtain were sexism, the ‘Zil Chill’ factor of oppression, corruption, thieving, violence and cheating to get status and favours. No one I met believed the ideological bull – much as I assume PR and damage limitation specialists don’t believe what they say either. Some of the poverty in the soviets was dire. In another use of central planning the USSR reformed its war production to take on Germany – so is central planning always useless?
    I’ve long agreed with Hudson that unit costs could be brought down other than by wage cuts and unemployment. I think we may be missing part of the argument in the very term ‘central planning’. You couldn’t vote against the Soviet kind (except technically) and how long is it since we could vote against FIRE (other than by protest vote)?

    Good central planning might be a good thing – what usually makes it intolerable is oppression – something we are now getting from the banksters and corporations instead of anything we can vote against. The best sports games rarely feature the referees much. Players play honestly because the penalties for transgression cost your team more than advantage gained. Levels of scrutiny of refereeing decisions are high. I’d trust the average rugby league player far more than any banker. Better men probably, but the fair play is mostly because cheating is made impossible by regulation.
    One has to suspect that the deregulation of FIRE was not really deregulation at all, but regulation against fair play, including who is allowed to play.
    Most of us are regulated out of being in business – banks won’t lend to us unless we second mortgage the house to contribute – our coffee shop can’t compete with Starbucks and its Irish Double-Dutch offshore accounting (part of which is the transfer of royalties on patented coffee to avoid tax) – or we have to fund a bad patch on credit cards.

    I’m finding it hard to make my point – sorry. Something similar has taken place in financial services to what we might expect after disestablishing the cops – banditry. Deregulation easily lapses to regulation by those who can muster illegitimate authority. We don’t need rocket science to recognise this, so why do we let so much talk on ‘free trade’ suggest itself as a cure rather than a problem?

    1. Susan the other

      Free trade is just the last island for arbitrageurs in a high tech world that no longer needs trade. No longer needs old fashioned banking. Or deal making.

    2. banger

      I think you made some good points. Indeed, the de facto central plan is to reward criminal behavior as long as the criminals are rich enough to employ armies of lawyers. One of the things that stops both federal prosecutors and, even more, local prosecutors are the army of lawyers with upper six figure and seven figure salaries against lawyers that barely make into six and on the local level, less. Even if these government were interested in prosecuting corporate crime they can’t anymore than Grenada could stop a U.S. invasion.

      Also, part of this system is the elimination of competition, again, de facto not de jure from small business. The playing field has been utterly gamed to give every competitive advantage to the big players. Once a small player does find a profitable new field he/she is bought out very quickly by a big player and they have to sell or face punitive action by the big player or even combination of players. That’s reality. Small business can fiddle around in low-profit areas and be left alone.

      My point is that central planning is always going on–there is no such thing as a “free market” never was and never will be–it is a good theoretical construct but that’s it.

  12. Calgacus

    This is a basic (albeit ideological) confusion that results from the belief that markets and centralized planning are incompatible.

    So far from being incompatible, markets need money. And money is a creature of the state. Markets presuppose central planning. Markets are a kind of central planning.

    If you’re interested in knowing what market forces unshaped by conscious planning look like, I’d recommend you go to Flint.
    Oh, Flint and all the other neoliberal dystopias were very consciously planned.

  13. Susan the other

    Speaking of central planning (and global warming as well): A week or so ago on a link from here to and from there to their back stories I found these tidbits: That it is irrelevant how much new oil is discovered because the “decision has been made” not to use it. (whoa) – And: That the Saudis are busy trying to establish a non-oil domestic market because their own reserves will be depleted fairly soon. The Saudis made the comment at their trade fair thing that US shale and tar sands are nothing. The oil from these big deal developments won’t amount to a drop in the bucket. Tell that to the Kochs please. So if these two things are more-or-less true (I think they are) then it is indeed central planning that our economy is dead in the water. We have to redesign it from a new source of energy as soon as possible. And Chairman Bernanke recently said that the blame for unemployment lies with Congress and Obama, not the Fed. Finger pointing?

  14. Dr. Pitchfork

    “This is a basic (albeit ideological) confusion that results from the belief that markets and centralized planning are incompatible. This is not the case.”

    Great working assumption.

  15. banger

    The problem of central planning is not whether it works or doesn’t work–it works. The question is who plans? What are the desired results?

    Americans don’t trust each other so no central planning is even theoretically possible, as we know it, at this point. The one possible way it can be resurrected is through implementing AI solutions locally. For example, there are, in various fields and industries “best practices” which become established eventually as if they were centrally planned–but that planning emerges from the bottom-up.

    I believe, if we as a society are indeed interested in best practices, i.e., finding the most efficient means of running any system (which as of this writing the evidence is that most people are not interested in the efficient operation of any major system) then these methods will evolve from the bottom and be applied and create a network of best practices which can, at some point, be merged into a centralized system for easier reference and application and that system will evolve as a virtual central planning agency, if you follow me.

    As I indicated, the fly in the ointment is that most people do not want efficient systems because either it will lose them money, privilege, status and jobs. If we use the technology we have now to pragmatically reform our major systems we would be able to live in a world of amazing and unprecedented abundance and lower carbon emissions and even save the whales, cure poverty and all that. But we, collectively, don’t want that. Take the health-care “debate” in this country. There was no appeal to reason from any side. There was no comparison of various systems already in place today in a number of countries to our own and what aspects of those system could be applied here. There was little appeal to evidence or science–as such we reformed a system that cost almost twice the OECD average to one that would cost, probably, even more. Why? Because the major industries that control health-care dominated the political discussion and, most significantly, because the mainstream media is corrupt, dishonest and mainly acts as a PR public address system for the corporate elite whether they are Fox news or NPR. So what we’re left with is a lot of worst practices but that leaves the oligarchy virtually untouched.

    If we want to deal with the issues we face, we must establish some vision of how we want to live and agree to something not just drift along headed towards any of the looming disasters we face.

    1. nobody

      I’m not so sure about identifying “best practices” with “efficiency.” Maybe we need systems that are less “efficient,” and more resilient.

      Nassim Nicholas Taleb:

      “We live in a world that is way too complicated for our traditional economic structure. It’s not as resilient as it used to be. We don’t have slack. It’s over-optimized… Let me tell you what is happening in the ecology of the banking system. They’re swelling to large banks, OK, because it’s vastly more optimal to have one large bank than 10 small banks. It’s more efficient… [C]onsolidation is what’s putting us at risk, because we are — when one bank, large bank makes a mistake, OK, it’s 10 times worse than a small bank making a mistake.”


  16. Jeff N

    re: clothing – the term “sweatshop” applied to clothing workers working out of their tenement apartments around the turn of the century.

    This guided tour is a lot of fun if you’re ever in NYC

  17. Paul Tioxon

    Local central planning, in Paris under Haussmann, in NYC under Moses and in Philadelphia under Bacon, are all driven by the same political force and financing it, bringing the money to bear to not only tear down the old, and assemble the parcels, but actually have something,including the financing to put in its place. David Harvey’s book, “Paris: Capital of Modernity” devotes an entire chapter to financing the urban transformation that moved the narrow, inefficient streets of old, Mideval Paris into the wide boulevards and grand palaces of consumption and commerce. Not only was Paris outmoded but also, the old banking of the families like Rothschild. The Credit Mobilier not only made Paris modern, but the foreign markets for the goods of France were built up to facilitate the trade with the newly industrializing continental power.

    NYC and Philadelphia faced similar dilemmas, faced with a industrial pocked marked urban center in a world where the newly emerging service economy would overtake economic growth from the rusting smokestack economy. And they had similar planners. Urban planning, as opposed to central planning for the political economy are two, entirely different animals, due to scale and of course, access to money. Just as the family household is at a disadvantage to the nation state, so is the local or regional entity.

    The studies which revealed what was going on at the local level showed local elites, organized around local growth, real estate development. Think big time enclosed sporting event/concert venues, which every city now has. Big time convention centers and hotels, restaurants and shopping and or culture as commodity museums. Of course, grand boulevards after Paris via Haussmann are standard issue. Parks, parks and more parks, big and central, small and pocket, it all about value added to the land. And the real estate taxes that can be charged. Factories are pretty miserable. Don’t inflate into bubbles like trophy office developments, luxury condo towers and other valuable appreciating real estate for rental income to what ever is hot: retail, coffee shops, designer boutiques, banks branches, etc.

    Industrialization solved the problem of saturating the market with the satisfaction of human need. But it crowded into cities which became more valuable for the rising middle class and wealthy who profited from industrialization and wanted to move onto more speculative ventures with the piles of cash made from factories. I mean, how many leather tanning and dye works can you build on spec? On the other hand, offices can be rented to any one of the creative services sector. And all of the other stuff, opera houses, art centers, yada yada can follow.

    Donald Trump can be a major figure in NYC, but nationally, he isn’t really that necessary, or taken seriously. Real Estate developer are a dime a dozen. And Urban Planning has been little more than that with traces of artsy vision thingy.

    Political Science and Urban Planners have always had to describe the local power brokers, and there are so many, but it is such a local affair and real estate collateral from the banks and other funding sources almost dictates real estate development over business incubation and start ups. That is another story, the rise of University Science Parks as the new centers of business start ups. But the local real estate speculators drives almost all local business and political campaign war chests.

    Again from William Domhoff for further reading and studies:

    Power at the Local Level: Growth Coalition Theory
    by G. William Domhoff
    April 2005

    Power structures at the city level are different from the national power structure. They are not junior editions of the national corporate community.

    That’s because local power structures are land-based growth coalitions. They seek to intensify land use. They are opposed by the neighborhoods they invade or pollute, and by environmentalists.

    To the shock and dismay of land-based elites, the workers who poured into the cities between 1870 and 1920 challenged elite rule through Democratic Party machines and the Socialist Party. So the growth elites created a “good government” ideology and a set of “reforms” that literally changed the nature of local governments and took them out of the reach of the upstarts.”

    Finally, anyone a fan of “BOSS”, about the mayor Chicago?

    1. Nathan Tankus

      I think you missed the point of the post somewhat. Robert Moses’s role in New York is very overblown. as Robert Fitch says “‘just about every highway and bridge credited to Robert Moses was conceived and planned by the RPA. Moses simply poured the concrete on the dotted lines indicated in the plan’.” If you want to understand who planned New York you need to read the Regional Planning Association documents not repeat fantasies about Robert Moses. As i point out, even Robert Moses disagreed with that narrative.

      1. Paul Tioxon

        I’m sorry if my mention of Moses emphasizes his role. I really don’t know anything about the particulars of his role other than he had one. How important he was I’ll leave to you. My main point was the drive to remake cities since the rise of capitalism in Europe and in the USA. I don’t think that is in dispute. Certainly I restated the general idea that building new structures and tearing down the old has become the mainstay of economic vitality for many cities. Urban renewal, the need to reinvent oneself as economic change demands it will need a coordinated effort to rationalize the new built spaces. Railroads out, highways in. Smokestacks out, highrise apartments in. And certainly, in Philadelphia, while Bacon is a person given much credit, he earned it in his capacity of the Director of The City Planning Commission of Philadelphia, a very potent arm of the municipal government at that time.

        He also had institutional help of planning agencies that correspond to the NYC Planning agency you mention that did the planning. Here, the Delaware Valley Regional Planning Commission was a NJ/PA pact for regional planning of transportation. But the city was armed for a powerful institution under state law, The Redevelopment Authority (1945) and the Philadelphia Industrial Development Corporation, (1958). No one man in Philadelphia can be credited with its makeover, but certainly Bacon’s role was critical. He had the power of the law behind him with those two agencies. The similarities I am representing are not about personalities, although they can stand in as symbols of the changes forced by government authority based on design and intent, not simply the force of personality or political charm of one man.

  18. Jim

    I don’t get the message of this post.

    If the evolution of the market (in, for example, the creation of Big Capital in the US) and the state(in, for example, the creation of Big Public bureaucracy in the former Soviet Union) both lead to centralized planning then aren’t we left with a conclusion which says that there is a powerful tendency within our own country to follow the Soviet Union towards systemic crisis and continued social breakdown.

    And doesn’t such a conclusion indite both those political forces with deify the market as well as those political forces which deify the State?

    And if both the Market and the State are contributing to social breakdown then isn’t it our responsibility to look beyond these two forces for a way out of our crisis?

    1. Nathan Tankus

      the short answer is yes. the long answer is it’s complicated. I actually don’t think centralized planning has “failed” in any meaningful sense. It hasn’t produced the outcomes I would want, but it has produced the outcomes the original planners wanted, especially in the united states. the traditional Austrian-Hayekian critique of central planning is that it fails because the planners don’t have access to enough information and implicit knowledge from local actors. this has turned out to not impede the realization of plans, especially in economies opening to use markets as a tool for planning.

      To me the important thing is taking the creation of planning out of the hands of the FIRE sector, non-financial corporations and special interests generally. elite planning has been successful. I don’t see any reason why popular planning wouldn’t.

      1. Jim


        From the Market/libertarian side– their political/economic theology centers around the assumption of a Protestant God which unmediated by the Church turns into an anonymous market whose grace and providence is supposedly transubstantiated into the hidden hand constantly fine-tuning the economy.

        From the State/Progressive side– their political/economic theology centers around the assumption that the divine State is somehow just and rational especially when guided by well-intentioned and wise professionals, at the local, regional and federal levels, who are only interested in serving the public interest in their constant fine-tuning of the economy.

        I would argue that both faiths have been hegemonic at different historical time periods and now are intimately intertwined–with the end-result today being increased nihilism, corruption, community disintegration, substance abuse, high crime rates, family instability and greater and greater personality disorders, all of which have contributed collectively to the present collapse in democracy and systemic crisis.

        Both economic faiths are failing substitutes for genuine cultural traditions which may be the pathway out of our crisis—and this latter idea is extremely uncomfortable for both of these economic faiths.

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