In the analysis of environmental issues much attention has been paid to the urgency of realising a green and equitable[1] economy. However, less attention has been directed (and less agreement exists) to the economic systems (and to the policies and economic theories underlying them) more suitable for moving concretely towards such objective. For instance, in our real time, what system is more suited for realising a green economy? Deep ecology (living in a simple and natural way like our ancestors), neoliberal capitalism, reformist capitalism, democratic socialism, authoritarian socialism? And in these systems which role should play public and private action? In this short essay we highlight the role of democratic planning in helping to achieve effective sustainable and equitable policies.

The Main Issue

As many of us would agree, the idea of a perfect and optimising market, conceived of by mainstream economics as an exogenous and self-equilibrating mechanism, is a kind of wishful thinking. As analysed by various strands of heterodox economics, what comes about in real economies is that: (i) markets embody various micro and macro “imperfections” that tend to grow with their complexity; (ii) markets are created and maintained by an evolving set of law, institutions and policies often oriented by the stronger groups; (iii) various kind of public goods cannot be delivered by the market and then require a direct public action.

For these reasons, a kind of economic planning is always necessary for attaining the objectives of policy action. We shift then to the issue, namely, as to what kind of economic planning is preferable. On that account, Original Institutional Economics (OIE) provides an interesting analysis. It identifies three kinds of economic planning:

(I) The first is corporate planning, which is the reality of modern capitalism. In this system, the operation of “free market forces” is heavily conditioned by the interests of big corporations. They possess a wide array of instruments to influence the structure of all relevant markets in which are engaged. In William Dugger’s words,

“The corporation is privately efficient [in the pursuit of its goals], but it is not socially efficient because its low-cost, high-productivity performance benefits those who control it, generally at the expense of those who depend upon it but frequently also at the expense of the society at large.”, (Dugger, 1988: 239).

Corporate planning is highly hierarchical, since the key decisions are made by the top managers with little involvement of workers and citizens at large.

(II) Then comes totalitarian planning, which is a system characterised by a public purpose which is pursued through a highly hierarchical structure. Such organizations ─ although have sometimes achieved important results in building infrastructures and poverty alleviation ─ are flawed by a fundamental lack of accountability and democratic representation.
Government members are appointed by the ruling (and single) political party. In such instances, there is no guarantee that, (a) the party is organized democratically and expresses the needs and experiences of all the groups and classes of society; and that, (b) government members and public officials are really accountable for their behaviour.

This system, then, by acquiring a marked self-referential character, makes it impossible any objective and pluralistic assessment of the policies adopted and the results achieved.

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


Democratic planning, unlike corporate and totalitarian arrangements, has the capacity to self-correct ─ by a process of trial and error ─ its own shortcomings. In this regard, one key objective of democratic planning (see Dugger, 1988, Tool, 1986) is overcoming the dichotomy, first identified by Veblen, between the objectives of profit and serviceability related to the production of goods. This can be attained by reducing the artificial scarcity and the “invidious distinctions” stemming from market power and ceremonial status[2], and by making better and more participatory use of the community’s existing knowledge. All this is related to the fulfilment of John Dewey’s democratic principle, namely, that people affected by decisions must have a say in the decision-making. It is this aspect that makes “participatory processes dynamic and authoritarian processes so stultifying”, (Dugger 1988: 245). This course can help address a wide array of contemporary issues that are at the heart of the UN 2030 Agenda for Sustainable Development and its related SDGs. These include the building of peaceful relations, the reduction of gross inequalities between persons and economic areas, and, as a pivotal theme traversing the previous issues, the real solution of the environmental problems.

Arturo Hermann


Dugger, W.M. (1988), “An Institutionalist Theory of Economic Planning”, in Evolutionary Economics, vol.II, edited by Marc.R.Tool, New York, Sharpe.

Lӧwy, M. (2015), Ecosocialism, Chicago, Haymarket Books.

Pepper, D. (1993), Eco-Socialism, London and New York, Routledge.

Tool, M.R. (1986), Essays in Social Value Theory: A Neoinstitutionalist Contribution, New York, Sharpe.

Tool, M.R. (1988)(ed.), Evolutionary Economics, 2 volumes, New York, Sharpe. 

Wallis, V. (2018), Red-Green Revolution, Toronto and Chicago, Political Animal Press, distributed by the Toronto University Press.

Hermann, A. (2015), The Systemic Nature of the Economic Crisis: The Perspectives of Heterodox Economics and Psychoanalysis, London and New York, Routledge.

Hermann, A. (2018), United Nations Agenda 2030 for Sustainable Development between Progress and Problems: Insights from Environmental and Heterodox Economics, Reading (UK), Green Economics Institute.

Hermann, A. (2020), “The Psychological Contributions of Pragmatism and of Original Institutional Economics and Their Implications for Policy Action”, Economic Thought, 9(1): 48-71.

[1] See, for an excellent comparison of the “Red” and “Green” theories, Pepper (1993). For more recent contributions on these issues refer, among others, to Lӧwy (2015) and Wallis (2018).

[2] As also addressed in other works, we highlight (i) the role of neurotic conflicts in the formation of these predatory tendencies, (ii) how these tendencies harden into individual and social habits, and (iii) how all this runs against the building of an equitable and sustainable society. On that account, an improvement of the social valuing process, by rendering persons more aware of these conflicts, can contribute to their overcoming and so contribute to a better expression of the bright side of personality.