1. Imperative Planning

The planning process followed by the state economies (i.e., the socialist or communist) is known as the imperative planning. Such planning is also called as directive or target planning. Such planning had two main variants. In the socialist system, all economic decisions were centralised in the hands of the state with collective ownership of resources (except labour). In the communist system (i.e., China of the past) all resources were to be owned

and utilised by the state (including labour). Thus, communist China was the purest example of such planning. In the case of the Soviet Union a little bit of ‘market’ did exist—even after the collectivisation of agriculture was enacted by Stalin in 1928 only 94 per cent of Soviet peasants could be included in the process.12 Basic features of such planning are as under:

(i) Numerical (i.e., quantitative) targets of growth and development are set by the plan. As for example, five lakh tonnes of steel, two lakh tonnes of cement, 10,000 kms of national highways, 5,000 primary schools, etc., will be produced/built in the coming 5 or 6 years.

(ii) As the state controls the ownership rights over the resources, it is very much possible to realise the above-cited planned targets.

(iii) almost no role for the market, no price mechanism with all economic decisions to be taken in the centralised way by the state/government.

(iv) no private participation in the economy, only the state plays the economic role.

The Command Economies followed this kind of planning. That is why such economies are also known as the Centrally Planned Economies—the USSR, Poland, Hungary, Austria, Romania, etc., and finally China. Basically, it was the migration of some of the great economists from the Soviet Bloc countries to Britain and the USA that a proper study and discussion started on the very nature and purpose of planning in the command economies. Many of these economists went back to their countries of origin after the Second World War to serve and in some measure, suffer the revolution there.13 It was their articulate and contemporary economic thinking which formed the basis for the idea of mixed economy in the post-War world. One among them was Oskar Lange, the famous Polish economist, who after returning home to serve as the Chairman of the Polish State Economic Council (as India has the Planning Commission) suggested and coined the concept of ‘market socialism’ in the 1950s. His ideas of market socialism were cancelled by not only Poland but also by other state economies of the time.14‌

The peak of this type of planning was reached in China after the Cultural Revolution (1966–69), which led to an economic slowdown in the country, which had adopted a soviet-style central planning system after 1949. Under

Deng Xiaoping (1977–97), China decentralised a great deal of economic power with its announcement of the open door policy in 1985 to save the economy. The Chinese open door policy was an initiative in the direction of ‘market socialism’ under the communist political design (a popular student demand for political reform in favour of democracy was ruthlessly repressed in Tiananmen Square in 1989). Similarly, the Soviet Union under the leadership of Mikhail Gorbachev began a process of political and economic reforms, called prestroika (i.e., restructuring) and glasnost (i.e., openness) in 1985 to save the failed economic experiments in the state economy. Other East European economies followed similar economic reforms from 1989 onwards. Thus, the whole world of the state economies had moved towards market economy by the late 1980s. Since then none of the countries have followed imperative planning.