Full text: Study week on the econometric approach to development planning

somehow or other to foresee plans and responses of the administra 
tors of other sectors of the same economy. Any genuine economy 
is too large and intricate to be globally planned and globally directed 
from one center. I think in fact that it may be easier for a project 
planner to predict the consequences of his plans in a competitive 
context, such as is afforded by a mixed economy, than to do sc 
where the sectors over which he has no control are other depart 
ments of a centralized economy. The problems of economic coor 
dination are always severe, collectivization does not obliterate or 
solve these problems rather it places them candidly on the doorstep 
of the planners and deprives them of the assistance of decentralized. 
on-the-spot, decision makers. 
On the last comment of Professor DORFMAN I should like to say 
that in a centrally-planned economy you could approximate the 
competitive equilibrium probably better than you can in a capitalistic 
economy with many monopolies. In saying this, I am not expres- 
sing any political views. I just want to stress my first point about 
the difficulty which you may face in a private or free economy 
because it is really not competitive. I agree that if a private or 
free economy is fully competitive then it has its advantages. I also 
agree that there are some difficulties for a centrally-planned economy 
to realize something which would be similar to a good state of com- 
petitive equilibrium. It is the question of imperfection of competi 
tion which is of concern to me 
I think that we now understand each other fully The effective- 
ness of economic coordination in a mixed economy certainly does 
depend on the extent of the distortions introduced by monopolies 
Dorfman - pag. 23

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