Joining COP 24 in Katowice – – was a wonderful experience. I learnt many aspects of environmental problems, met many people, and witnessed the difficulty of reaching a binding agreement on how to really apply the provisions of the Paris Agreement.The positive aspects of the Conference have been that for the first time ─ and despite a strong opposition by the US, Russia, Brazil, Saudi Arabia and Kuwait to make steps for decarbonising their economies ─ (i) a more substantial pressure has been made by the COP24 Delegation for attaining a more stringent agreement; and (ii) a number of significant results have been so obtained (there are various opinions on this aspect, some believing the glass almost full and some others the glass almost empty). Perhaps the glass is around 65% full (like a good pass in an exam) in the sense that ─ by reaching, after arduous negotiations, an agreement on the Rulebook to make operational Paris Agreement’s objectives ─ the environmental cart has been put on a sustainable track. However ─ and also in the face of the strong counter action of the pro-carbon lobbies ─ a better social and political awareness is necessary for getting the cart moving fast along such track.  The weaker aspects of the Conference have been, in my view, a partial lack of awareness of: (i) the urgency to counteract climate change; (ii) the incompatibility of neo-liberal agenda with the attainment of an equitable and sustainable economy.


The latter point raises a central question on the type of public intervention more suitable for attaining environmental objectives. As underscored by many contributions, the neo-liberal conception of the market system as a perfect and optimising mechanism is a kind of wishful thinking. What comes about in real economies is that markets are flawed by many imperfections and are most often oriented by the stronger groups. Furthermore, various types of public goods cannot be delivered by the market and then require a direct public action. For these reasons, some form of economic planning is necessary for attaining the objectives of policy action and for the very working of the market system. I shift then to a related question, namely, as to what kind of economic planning is preferable. In this respect, a useful taxonomy has been provided by Original Institutional Economists (for instance, William Dugger, Allan Gruchy, Marc Tool, Harry Trebing), which identify three types of economic planning:

(I) The first type is “corporate planning”, which is ─ in spite of much neo-liberal fanfare ─ the reality of modern capitalism. In this system, the working of “free market forces” is heavily conditioned by the interests of big corporations. Corporate planning is highly hierarchical, since the key decisions are made by top managers with little involvement of workers and citizens at large.

(II) The second form is totalitarian planning, characterised by a public purpose which is pursued through a highly hierarchical structure. Government members are appointed by the ruling (and most often single) political party. In such instances, there is no guarantee that, (a) the party is organized democratically and expresses the needs of all the groups and classes of society; and that, (b) government members and public officials are really accountable for their behaviour.
Such system ─ no matter how good its abstract ideals can be ─ is flawed by a lack of accountability and democratic representation.

(III) The third form is democratic planning. This alternative, although it does not always work miracles, is definitely more promising. By allowing a more complete expression of the experiences, motivations and conflicts of the involved subjects, such system improves the process of social valuation, and then the capacity of policy action to respond to the profound needs of society.

One central difference of democratic planning in respect to corporate and totalitarian systems resides in the capacity to self-correct ─ by a process of trial and error ─ its own shortcomings. For this reason, a better policy coordination can be reached between the various policies (macroeconomic and structural) needed to attain an equitable and sustainable economy. In such system, “public” and “private” action ─ with all the “intermediate cases”, like cooperatives of production and consumption ─ are not in opposition but tend to work together within a principle of subsidiarity.  In this respect, democratic planning can find application in a number of central issues: in particular, the building of peaceful relations, the reduction of gross inequalities between persons and economic areas, and, as a central theme traversing the previous aspects, the solution of the environmental problems. These goals demand a profound transformation of our way of producing and consuming, and constitute but a synthesis of the objectives of the Paris Agreement and of the Agenda 2030 for sustainable development. In dealing with these issues, original institutional economics can usefully interact with other heterodox fields of economics─in particular green economics,  post-Marxist and post-Keynesian theories, and the various strands of eco-socialism.

Arturo Hermann