On Democratic Economic Planning and Macroeconomic Transformation

Introduction

A dynamic academic debate has emerged around the possibilities and conditions of democratic economic planning (see e.g., Groos/Sorg 2024; Laibman/Campbell 2022; Vettese/Pendergrass 2022; Jones 2020). In the current phase of the organic crisis of global capitalism and its transformation, this debate is of central importance for critical political economy. On the one hand, forms of capitalist planning are developing in this crisis phase, and approaches from the planning debate can contribute to a better understanding of the current development tendecies of capitalism (Daum/Nuss 2021; Decker 2022). On the other hand, forms of democratic and post-capitalist planning are becoming increasingly urgent in the context of the authoritarian shaping of this capitalist planning and the intensification of crises—especially the ecological crisis—and require scientific grounding (Alami et al. 2023; Albert 2020).

Meanwhile, a qualitative advancement is observable in the "new planning debate," for instance, when theoretical foundational problems are defined, more complex models are developed, and important gaps are identified and addressed, such as regarding the social organization of care work (see e.g., Heyer 2024; Laibman 2022; Sorg 2023; Lutosch 2024). Simultaneously, the debate primarily revolves around fundamental questions and models of economic planning. The question of how—or through which instruments—a democratic and post-capitalist planning system, embedded in a broader agenda of macroeconomic transformation, can be developed remains underexplored. To better discuss this "transformation gap" in the planning discourse, I proceed in three steps. First, with a side glance at the existing debate on (socio-ecological) transformation, general frameworks for a theory of post-capitalist transformation are discussed. In a second step, fundamental conceptual considerations regarding a transition to a post-capitalist planning system are developed. Building on this, a third step provides a more concrete presentation and systematization of transformation instruments.

What is Transformation?

The macroeconomic transformation toward a post-capitalist planning system has been little scientifically investigated and elaborated, although the concept of transformation is hardly dispensable in both political and academic debates. As an example, an empirical study of several thousand scientific articles, government documents, and media texts by Linner and Wibeck (2020) can be cited, distinguishing sectorally limited and gradual approaches from systemic and rapid transformation approaches. The UN Agenda 2030 for Sustainable Development is considered a rapid and systemic transformation in this schema—a comparatively radical variant of the transformation concept (ibid.: 223). As the critical transformation debate rightly notes, the mainstream of transformation, transition, sufficiency, and sustainability debates lacks an explicit engagement with the institutions and mechanisms of the capitalist mode of production and its overcoming (see e.g., Feola et al. 2021; Brand et al. 2019; Brie 2016). Generally, (collective) actors as subjects of transformation and macroeconomic systems as objects of transformation are underexplored (Brand 2016). Transformation is only post-capitalist transformation if it addresses the central institutions of capitalism—such as the institutional separation of wage labor and capital, capitals among themselves and the totality of capitals, and the state—and transforms them (Decker 2020; 2024; Callinicos 2007).

Moreover, many transformation approaches are structured along sectors and "building blocks" of the economy (Linner/Wibeck 2020; Engler et al. 2024). This tendency toward reductionism fundamentally differs from an emergence-theoretical approach, in which the properties or dynamics of the economy as a complex overall system are not directly reducible to its individual components (Foster/Metcalfe 2012). Emergence is an ontological premise of political economy based on Marx (Pahl 2008: 121). In this view, the properties of the system to be generated within a transformation would not primarily be achieved through changes at the level of the system's elements (i.e., individual sectors or building blocks of the economy) but at the level of the macroeconomic mechanisms permeating the system and its framework conditions.

Furthermore, the transformation discourse lacks an explicit and conscious differentiation between the goals, instruments, and strategies of transformation (see e.g., Wright 2010; Klein 2021). Instruments contain aspects of the goal or are intended to realize parts of the goal; simultaneously, they include aspects of strategies in the sense of an ends-means relation. Nevertheless, instruments are not identical with goals and strategies. Price controls, for example, embody an aspect of the goal of a democratically coordinated economy and that of a specific reform strategy; however, they have an independent materiality relative to this goal and strategy and should therefore be understood as transformation instruments in their own right. There is a lack of concrete description of institutional transition policies and their connections and contradictions with system goals on the one hand and implementation strategies on the other.

Finally, the importance of a dynamic understanding of transformation must be emphasized. While a linear understanding of transformation implies a clear and straightforward progression from an initial state to an end state, a dynamic or dialectical understanding highlights the complexity, contradictoriness, and interactions that can arise in a transformation process (Decker 2020; 2024). In this conception, changes or interventions in the political-economic order lead to dynamic feedback effects that force further, potentially radical changes or the reversal of changes (Patnaik 2010: 6). Gradual and abrupt elements of transformation are conceived as part of a contradictory whole in this dialectical view. Rosa Luxemburg (2018 [1899]: 22) pointed to this internal connection between reform and revolution as "different moments in the development of class society."

Building on these fundamental considerations on the understanding of transformation, the question arises of how an emergence-theoretically grounded theory of dynamic transformation and its instruments can be more concretely formulated. For this, basic conceptual considerations are necessary, discussed in the following section.

Political Economic Planning under Capitalism

Under capitalism, economic planning takes place at private and public levels (Sorg 2023: 3f.). Enterprises plan with the goal of extracting surplus value or profit from the production process; states plan to secure overall accumulation. Public economic planning is a highly contradictory and complex undertaking, since economic activity under the dominance of the capitalist mode of production arises from the sum of countless isolated investment decisions in a system of separate private production alongside universal interdependence. In this systemic uncertainty, emergent system dynamics ("market forces") arise, to which enterprises and states in turn respond through public and private planning (ibid.; Heyer 2024; Devine 2002).

Post-capitalist planning overcomes this fundamental uncertainty and coordinates investment decisions through central-decentral coordination mechanisms. Emergent market forces are to be overcome, and public planning can thus be genuinely directed toward political goals (ibid.). A post-capitalist economic system would abolish private and uncoordinated control over capital to the extent that it would no longer dominate economic activity, and the economy would in this sense no longer be capitalist.

For the question of establishing a post-capitalist planning system—the question of transformation—a distinction is necessary, alongside the fundamental distinction between post-capitalist and capitalist planning, between general public planning and political economic planning in the narrower sense under capitalism. Public planning presupposes a "relative autonomy" (Poulantzas 2002: 47f.) of the state apparatuses from the interests of the private planning of enterprises. For the stable framework, so important for private capitalist planning, which the state provides through mediating various capital interests and compromises with wage earners, would be unthinkable with a political structure immediately tied to capital interests and thus necessarily volatile and conflict-laden (ibid.; Offe 1972: 69ff.; Jessop 2002: 40). In the relative autonomy of the state apparatuses, public planning is fundamentally in tension with the level of private planning of individual capitals, whose interests it must balance within a complex overall context. Nevertheless, public planning is capitalist insofar as it operates within the capitalist framework and to secure overall accumulation. Simultaneously, it can stand in a growing contradiction with the level of private planning when public planning is subordinated to political goals and thereby set against the interests of individual capitals and capital factions—though this has limits due to the fundamental dependence of state apparatuses on the surplus value extraction of individual capitals. Nevertheless, forms of political economic planning under capitalism can be distinguished, through which the degree of subordination of capital interests to political interests is definable. Depending on the extent and concrete design of political economic planning under capitalism, one can speak of a transition or an internal transformation toward a post-capitalist planning system.

However, the full realization of a post-capitalist planning system requires a fundamentally different constitution of the political-economic order than under capitalism, which must be established through the creation of corresponding institutions (constitution, political apparatuses and mechanisms). This can occur in several steps and is not necessarily conceived as a one-time revolutionary act in the sense of a shorter, condensed process. Nevertheless, this constitutes an institutional reordering of the political-economic constitution of society. The implications of this reordering for the concrete "constitution" in the sense of the central state legal document raise complex and concretely discussable questions. For example, the German constitution is not explicitly fixed on the capitalist economic form; on the other hand, central institutions of capitalism (e.g., property rights) are enshrined in the constitution or guaranteed by prevailing jurisprudence (Krölls 1988; Decker 2021). Political economic planning under capitalism aimed at transformation toward a post-capitalist planning system would seek to politically control and steer the investment dynamic to a significant degree. In this internal transformation, massive conflicts would arise, particularly with the political institutions in which capital interests are articulated. These conflicts would need to be defused and sustainably stabilized to create an institutional framework in which a planning system can be further developed. For this, private control over capital would need to be replaced by public coordination of investment decisions within corresponding institutions, and a financing basis for these institutions independent of private capital accumulation would need to be created.

Thus, regarding a transformation toward a democratic planning system, one can think in three phases: first, the intensification of political economic planning under capitalism; second, the establishment of a post-capitalist institutional framework enabling advanced forms of economic planning; third, the further development of a planning system within post-capitalism.

Instruments and Transition Phases of Transformation

The abstract description of the transition or transformation to a post-capitalist planning system can be concretized by elaborating the instruments for political economic planning under capitalism. Public economic planning, on which political economic planning in the narrower sense builds, can classically be distinguished into fiscal and monetary forms. Fiscal policy concerns the steering of state revenues and expenditures and pursues generalized goals to secure overall accumulation (e.g., economic growth, high employment levels). Political economic planning begins where public planning moves away from these general macroeconomic goals and aims at a stronger influence on investment structures. Here, more direct and more indirect forms of influence can be distinguished. Indirect forms aim at the political influencing of private investment decisions by changing the information environment of enterprises and generally through political communication (including indicative planning) (Devine 1988: 40ff.). Private investment decisions can also be influenced by economic instruments (tax incentives, favorable credit conditions, etc.); insofar as the return-risk profile of enterprises changes here and state fiscal policy becomes directly effective for surplus value production, the influence on investment decisions takes on a more direct character. This increases through public contracts and procurement or procurement guarantees, state-organized or funded research and development, regulation or capping of prices, and culminates in the immediate provision of investment funds for private investments through direct subsidies (ibid.: 54ff.). Private investments can also be very effectively influenced by legal regulation, for instance, when certain products (e.g., combustion engines) are banned or when financial instruments, credit lending, trade, or competition are newly regulated.

The described instruments partially come into play within the framework of the new industrial policy (Bulfo 2022). Here, capital interests are not subordinated; instead, a complex reconfiguration of state and private business interests takes place (Abels/Bieling 2022). One can speak of a first stage of political economic planning, in which investment decisions are politically influenced but no systematic subordination of capital interests occurs. The publicly planned change in investment structures must be reconciled with the private planning of capitals and their search for profitable investment opportunities. Depending on how tax incentives are financed (e.g., through taxation of capital and private wealth) and how the investment structure concretely changes (e.g., through the destruction of fossil capital), it can—even if the subsidy policy is in the interest of certain capital factions—simultaneously come into conflict with capital interests.

However, an internal transformation toward a post-capitalist planning system only begins at a second stage of political economic planning, which moves beyond the mere public influencing of private investment decisions and brings the investment decisions themselves under a form of public control. Fully realized, this occurs through comprehensive nationalization and socialization of private capitals, especially including the banking sector and thus the direct influencing of the credit structure of the entire economy. The comprehensive socialization of capitals necessarily entails the development of central-decentral planning mechanisms and a corresponding transformation of the state.

Milder forms of this second stage of political economic planning under capitalism are conceivable, where investment decisions are still partly made privately but are nonetheless dominated by public investment decisions. The "National Enterprise Board," proposed by the British Labour Party in 1974, envisioned nationalizing a leading enterprise in every leading sector of the British economy so that its market power could be used to set prices and investment conditions for its private competitors (Labour Party 1974; Warner 2022). Comprehensive investment programs through public investment funds or direct central bank investments can also, in interaction with other instruments of the first stage of political economic planning mentioned above, collectively lead to dominating the investment dynamic. Public "control" or "domination" of the investment dynamic is not solely determined by ownership structures but also by the institutions and instruments of macroeconomic coordination and by powerful public narratives.

The two "stages" of political planning and the establishment of a post-capitalist planning system within a new economic form are not to be thought of as two linear, successive stages. As Rosa Luxemburg (2018 [1899]: 61) elaborated in "Reform or Revolution," a "peculiarity of the capitalist order" is that "in it, all elements of the future society initially take on a form in which they move not closer to but away from socialism." Even if one does not adopt the definitive character of this statement, it makes the contradictory character of political economic planning under capitalism more understandable. Public planning, for instance to subsidize geopolitically relevant enterprises, strengthens capitalist principles by securing the profits of the respective enterprises and driving imperialist competition; simultaneously, it raises questions about the private constitution of capitals amid their increasing public financing and generally about the political goals of the economy.

To critically analyze the character of political economic planning and distinguish a transformation policy of capitalism from a policy of internal transformation toward a post-capitalist planning system, three interconnected dimensions can be analyzed: first, the extent of public control over investment decisions; second, the extent of subordination of private capital interests in investment decisions; and third, the extent of democratic determination of investment decisions (both at the enterprise and overall economic levels).

Political economic planning under capitalism is fundamentally contradictory because the state apparatuses, which are to be transformed to produce political planning, remain dependent on the private surplus value production of enterprises, which they simultaneously undermine. Policies against capital interests lead on a material level to capital flight and capital strike—that is, the relocation and systematic withholding of investments and credit (Sorg 2023: 4). Controlling capital flows to address this problem, and finally the comprehensive socialization of enterprises and the political steering of credit structures, would then be steps that can be considered a transition to a different economic form and that leave internal transformation behind. In this process, the intra-state conflict between the political structure and capital would transform into an inter-state conflict between different political-economic systems (Decker 2024; Elias-Pinsonnault et al. 2023). At the second stage of political economic planning under capitalism, the question of a transition to a new economic form (Phase Two of post-capitalist transformation) can thus arise—pointedly or generally—which cannot be considered independently of the international dimension. At which concrete points this question arises and on which levels or in what interplay between levels this transition takes place is an extremely complex question that would need to be discussed based on concrete scenarios.

Summary

This article analyzed the "transformation gap" in the planning debate and attempted to lay conceptual foundations for a theory of transformation toward a system of democratic economic planning. For this, it fundamentally advocated for an emergence-theoretically based, dynamic theory of transformation, placing the transformation instruments at the center. Subsequently, it introduced the distinction between general public planning and political economic planning under capitalism and distinguished between three phases of transformation and two stages of political economic planning under capitalism. Concrete transformation instruments were named, while simultaneously reflecting on the contradictory and dynamic character of transformation within capitalism.

A more concrete understanding of dynamic transformation processes toward a post-capitalist planning system would require a more detailed description and elaboration of the mentioned and further instruments, as well as of their combined application and intended and unintended effects. A more concrete transformation model could focus on the instruments of internal transformation while simultaneously examining which conflicts emerge with the existing legal framework and at which point alternative foundational policies and political institutions would likely need to be created. This connects to the question of the transformation of the state and post-capitalist political institutions. Moreover, the transformation instruments focused on in this article would need to be discussed more strongly in connection with transformation goals (i.e., planning models) and transformation strategies (i.e., the question of actors and power relations).

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