National economic planning in the capitalist system
This article aims to present: 1) the differences between national economic planning in system of market economy and national planning in economy system planned by State; 2) the national economic planning in a mixed capitalist economy state and private system; 3) the outline of a rational and democratic governance of economic system of a country; and, 4) how to manage the chaos in the dynamics of the capitalist system.
Published on: Mar 3, 2016
Transcripts - National economic planning in the capitalist system
NATIONAL ECONOMIC PLANNING IN THE
PLANEJAMENTO ECONÔMICO NACIONAL NO
This article aims to present: 1) the differences between national economic planning in system of market economy and
national planning in economy system planned by State; 2) the national economic planning in a mixed capitalist
economy state and private system; 3) the outline of a rational and democratic governance of economic system of a
country; and, 4) how to manage the chaos in the dynamics of the capitalist system.
Este artigo tem por objetivo apresentar: 1) as diferenças entre o planejamento econômico nacional em sistema de
economia de mercado e sistema econômico planejado pelo Estado; 2) o planejamento econômico nacional em sistema
econômico misto estatal e privado; 3) o esboço de um sistema racional e democrático de governabilidade econômica de
um país; e, 4) como administrar o caos na dinâmica do sistema capitalista.
Keywords: National economic planning. System of economic governance of a country.
Palavras chaves: Planejamento econômico nacional. Sistema de governabilidade econômica de um país.
1. The national economic planning in system of market economy
The market economy is the social system based on division of labor and private property of the
means of production. All economic agents act on their own. This system is driven by the market
that guides the activities of economic agents in ways that enable better serve the needs of investors.
The State uses its coercive power solely for the purpose of preventing people undertake detrimental
to the preservation and proper functioning of the market economy. Thus the State creates and
preserves the environment in which the market economy can function safely. The Marxist slogan
that characterizes the capitalist system as anarchic correctly depicts this social structure.
Fernand Braudel (1982) said that the global capitalist economy consists of a top layer of a structure
on three levels: a lower layer, a wider, of an economy extremely elementary and basically self-
sufficient that he called material life, the layer of non-economic, soil where capitalism plunges its
roots, but which can never penetrate. Above this layer is the field of market economy, with its
Fernando Alcoforado , member of the Bahia Academy of Education, engineer and doctor of Territorial Planning and
Regional Development from the University of Barcelona, a university professor and consultant in strategic planning,
business planning, regional planning and planning of energy systems, is the author of Globalização (Editora Nobel, São
Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto
para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de
doutorado. Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos
Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social
Development-The Case of the State of Bahia (VDM Verlag Dr. Muller Aktiengesellschaft & Co. KG, Saarbrücken,
Germany, 2010), Aquecimento Global e Catástrofe Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia
Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio
Pardo, São Paulo, 2011) and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV,
Curitiba, 2012), among others.
many horizontal communications between the different markets in which there is an automatic
coordination linking the supply, demand and prices. After this layer and above it is the zone of anti-
market where circulating large predators and the law of the jungle prevails. This - today as in the
past, before and after the Industrial Revolution - is the real home of capitalism (Alcoforado, 2005).
What is termed usually a market economy incorporate, considering the approach of Braudel, also
the anti-market which is composed of large corporate monopolies that exert domination of national
and global markets.
In the market economy, the majority of economic output (goods and services) is following the
decision by private companies controlled by private citizens in industry, commerce, infrastructure
and service delivery. In the market economy, the state interferes in economic activity primarily to
regulate and in some countries, provide services in sectors such as energy, security, education,
health, among others. The state planning of the economy is only indicative. The desired
performance standard of a nation is measured in a market economy, basically by its performs in the
economy using as benchmarks of progress the size and growth of GDP (Gross Domestic Product)
and inflation rate. The absence of an effective planning framework and state control in a market
economy causes it to become very large deviations between the occurrence of the desired standard
of performance and the achievements of the economic system. This explains why the world
capitalist system is always subject to crisis of local and global character, such as occurred in 1870,
1929 and 2008.
2. The national economic planning in economy system planned by State
The planned state economy is an economic model that includes the state control over the economy.
The economy is planned when the state interferes in the commercial affairs of a country, deciding
issues such as production and planning of this production. This model became known after its
application for more than 70 years in the former Soviet Union. In planned state economy, most
companies operating in the state's economy, ie, belongs to the state. Unlike what happens in a
market economy where the capitalists dictate trade laws, in planned state economy is for the
government to take decisions about production and distribution.
In planned state economy, economic production is directed by the State. The factories, the trade and
services are controlled by state companies. The workers are state employees. Only the state owns
the means of production. In this system, the economic output of the country is planned by a central
organ of the State, to meet the social needs that clearinghouse planned. There are no private
companies competing in the market, selling its products.
In planned state economy, the government prepares plans that, in the Soviet Union, were called
"five year plans" having the function of promoting economic growth through the expansion of the
productive sector. With the planned economy, the government sought to raise levels of production
and at the same time, ensuring full employment and income distribution for the population.
Currently, only China, Cuba, North Korea, Vietnam and Myanmar adopt the planned economy. The
decline of this model at present is connected to the end of the USSR.
In all countries that adopted socialist planned state economy, the formation of a class or ruling elite,
linked to the State, which held greater social privileges was observed. This coupled with the fact
that the populations of these countries have been marginalized from decisions of dictatorships
situation as well as the failure in planning their economies, led to the demise of the Soviet Union
and the socialist system in Eastern Europe. With their economies in decline, to avoid the same fate
of the Soviet Union and the socialist system in Eastern Europe, China and Cuba opened their
economies to international capital, especially China. Despite the opening of these countries to
international capital, their economic systems continue to be designed in which the state acts as
regulator of private and state economic activity.
It can be concluded from the above that a major difference between the market economy and state
planned economy comes down to the level of regulation as the economic and productive activity is
carried out by the State. If the State takes an interventionist position it relates to a planned economy,
while the State only controls and collects taxes resulting from economic activity, would be referring
to a market economy. Another major difference lies in the fact that in market economies not be
possible to achieve rationality in the operation of the economic system of a country because the
state does not exercise with effective planning and control of the economy, while in state planned
economies this rationality can be performed in the formulation of objectives (performance
standards) either in the correction of deviations between what was planned and what was achieved
through the action of the State. However, despite this, in the planned state economies, socialists,
they sinned because did not provide civil society participation in government decisions.
3. The national economic planning in a mixed capitalist economy system state
The market economy or capitalism, as it is commonly called, and the socialist economy are
mutually exclusive because, at first, capitalists are holders of the means of production and in the
second, the means of production belong to the State. There is no possible or imaginable mixture of
the two systems. Is not there something that can be called a mixed economy, a system that would be
partly socialist and partly capitalist. The production is directed by the market or is by State. If, in a
society based on private ownership of the means of production some of these means are company
owned and operated by a public entity, whether by the government or one of its agencies, this does
not mean there is a mixed system combining socialism and capitalism. If, based on a majority state
ownership of the means of production, ie, the government or one of its agencies, some of these
means of production are owned and operated by private entities, it also does not mean there is a
mixed system combining socialism and capitalism.
The fact that the State own and operate some kind of industrial facility does not alter the essential
characteristics of a market economy. These public companies are subject to the sovereignty of the
market. Have to adjust as buyers of raw materials, equipment and labor, and as sellers of goods and
services to the dynamics of the market economy. They are subject to market forces and therefore
depend on the consumers who can give them or deny preference. Must strive for profits or at least
to avoid losses. The government can cover the deficit of their companies by using public funds. But
this does not eliminate or diminish the supremacy of the market. Therefore, it is the market that
determines the functioning of these public companies. Nothing that is somehow related to the
functioning of the market can be called socialism. This means that China, for example, isn´t more a
socialist country and not a country of mixed economy. In China prevails the State capitalism.
It is clear that in a capitalist mixed economy predominantly state or predominantly private, the
rationality in the operation of the economic system of a country can only be achieved in formulating
goals (performance standard) and correction of deviations between what was planned and what was
achieved if the State act in the governance of the system as a regulator of economic activity and as a
mediator between the capitalists and civil society ensuring its participation in government
4. The outline of a rational and democratic governance of economic system of a
It can be stated that every country is possessed of 5 major systems: 1) science and technology; 2)
economic; 3) social; 4) environmental; and, 5) political and moral. At present, the desired
performance standard of a country is measured by what is accomplished only in the economy using
as reference the size and progress of the growth of GDP (Gross Domestic Product) ignoring the
other systems. This is a big mistake because the desired performance of each of the five systems
described above should take into account the five patterns described below:
The standard of scientific and technological performance required to consider should be the
following: 1) increase of the productivity of the economy that is measured by the relationship
between global GDP and sectoral GDP and resources used in production processes (raw materials,
supplies and labor); 2) reduction of the costs of agricultural, industrial production, and services; 3)
increase in investments in R&D; 4) innovation of new products and processes that is measured by
its advance over previously used products and processes; 5) increase of the durability of products /
services; 6) increase of physical safety of products / services provided to people and users; and, 7)
decrease in the levels of technological dependency of the country from the outside. These indicators
allow to evaluate if the performance of scientific and technological system is contributing to the
increase of wealth and well-being of the population.
The standard of economic performance required to consider should be the following: 1) increase in
the growth rate of GDP; 2) reduction in the rate of inflation; 3) reduction in the relation Public Debt
/ GDP; 4) increase in the balance of trade and balance of payments; 5) decrease in the tax burden; 6)
increase of the investments in infrastructure of energy, transport and communications; 7) decrease
in the levels of economic dependence of the country from the outside; and 8) increase in the
indicator of the Genuine Progress (GPI indicator - Genuine Progress Indicator), which takes into
account the parameters welfare and the environment using the same methodology for calculating
GDP, but unlike this, the calculation adds items such as housework and voluntary and subtracts the
costs arising from factors such as crime, pollution, environmental degradation and commitment of
resource and natural systems (See GPI posted in the website
aginaID=26&conteudoID=324>). These indicators allow assessing whether the economic system is
contributing to the increase of its wealth, the fall in its public debt, reducing levels of inflation, the
generation of surpluses in the trade balance and balance of payments, the decrease in tax burden, the
conquest of independence or reduction of economic dependence of the country on the outside and
the achievement of a genuine economic progress.
The standard of social performance required to consider should be the following: 1) the
achievement of full employment or reduction in the unemployment rate; 2) increase the income
distribution measured by the Gini index; 3) reduction of the levels of crime in society; 4) increase in
service levels of education, health, housing and transport to the population; 5) increase of the
investment in infrastructure, education, health, housing and sanitation; 6) increase in the HDI-
Human Development Index, used by the United Nations, which takes into account GDP per capita,
the longevity of people and their education (measured by illiteracy rate and the enrollment rates at
various levels of education); and 7) increase of GNH (Gross National Happiness) indicator, which
analyzes 73 variables that contribute most to the goal of achieving the well-being and satisfaction
with life (See GNH posted in website <http://www.grossnationalhappiness.com/>). These indicators
allow to evaluate if the social system is contributing to the achievement of full employment and
reducing unemployment, increasing income of the population, the decline in indicators of crime,
increased provision of educational services, health, housing and transportation of the population and
the increase of human development and their well being.
The standard of environmental performance required to consider should be the following: 1) the
elimination or reduction of emissions of greenhouse gases; 2) increase of basic sanitation services
provided to the population; 3) the elimination or reduction of deforestation and burning of forests;
4) reduction in the consumption of fossil fuels; 5) increase of the share of renewable energy in the
energy mix; 6) the elimination or reduction of land pollution, air, ocean and water; 7) increase of
energy efficiency or energy saving in agriculture, industry and transportation in general; and 8)
increase of recycling of materials. These indicators allow to assess whether the system is
contributing to the defense of the local and global environment for the benefit of its people and their
The standard of political and moral performance required to consider should be the following: 1)
increase of solidarity among the inhabitants of the country; 2) increase in the practice of social
justice by organs of government and civil society; 3) increase in the distribution of income and
wealth among the population; 4) increase of measures to preserve and care for nature; 5) increase
in policies for integral development of education in accordance with the highest human values; 6)
advances in the realization of the collective will of the citizens; 7) improvement of political
institutions; 8) success in combating corruption measured by its reduction; 9) increase in the
exercise of citizenship with the effective participation of citizens in government decisions and fight
for expansion of their rights; and 10) increase of contribution of public and private organizations to
the political, economic, social and environmental development of the country. These indicators
allow to evaluate if the political and moral system is contributing to the inhabitants are mutual
solidarity, economic and social justice is practiced, education contributes to form true citizens, civil
society participation in decisions of government and corruption is eradicated in the country.
The achievement of the desired standard of performance for each of the 5 systems (scientific,
technological, economic, social, environmental and political and moral) of a country requires the
existence of a structure for planning and control associated with them which allows to make the
results of their activities correspond to the desired standard of performance for the country.
Compete with that structure planning and control: 1) to determine the level of resources needed to
achieve the desired standard of performance of each system in terms of raw materials, supplies,
labor, financial resources, etc.. 2) to exercise control of work processes for each system to identify
differences between its implementation and the desired standard of performance and, if necessary,
decide on the corrections to be made in processes and / or the input of resources necessary to
operation of the system; and, 3) to exercise performance monitoring of the results obtained at the
output of each system to identify differences between its implementation and the desired standard of
performance and, if necessary, decide on the corrections to be made in the work processes of each
system and / or the input of resources necessary for the operation of each system.
Figure 1 shows how scientific and technological, economic, social, environmental and political and
moral systems must operate on a rational basis to reach your goals or a desired standard of
Figure 1 - The organization as an open system in an environment
It can be seen from the above, that the purpose of planning and control structure would be to
prevent or minimize the occurrence of deviations between what was planned (standard system
performance) and what was done (the output of system execution). This would be the "modus
operandi" of the structure of planning and control that can streamline operations and ensure good
governance of the scientific and technological, economic, social, environmental and political and
moral systems of a country. However, to be democratic, it would be necessary, however, that the
governance of these systems count on the active participation of the population and civil society
organizations in formulating goals (performance standard) to be pursued, as well as in policy or
decision rules seeking to correct deviations between what was planned and carried out.
5. Managing chaos in the dynamics of the capitalist system
Capitalism is a complex, dynamic, adaptive and nonlinear system because it has elements or agents
that interact in large numbers together forming one or more structures that arise from interactions
between such agents. Complex systems are systems that are characterized by being dynamic as key
features that have their sensitive dependence on initial conditions for which, minimal differences at
the beginning of a process whatsoever, can lead to completely opposite situations over time.
Ervin Laszlo (2006) said that "a dynamic system, whether occurring in nature, in society or in a
computer simulation, is governed by attractors. These define the 'phase portrait' of the system: how
it behaves over time. Stable attractors pull the trajectory of system development into a recurring and
recognizable pattern, taking it to converge at a given point (if the system is governed by point
attractors) or describe cycles through different states (when it is under command of periodic
attractors). However, dynamical systems can also achieve a state in which the attractors that emerge
are not stable, but 'strange'. Are chaotic attractors".
It should be noted that an attractor is the set of points in phase space to which a system tends to go
as it evolves. The attractor can be a single point, a closed curve (threshold cycle) which describes a
system of periodic behavior, or a fractal (also called strange attractor), when the system presents
chaos. In chaotic systems the motion never repeats itself, though often having to occur within
certain limits. Thus, only an infinitely complex figure - a fractal - can handle represent this
trajectory that never repeats itself in phase space. Change and time are the two fundamental aspects
Chaos mainly refers to something that evolves over time. Chaos theory explains the operation of
complex and dynamic systems. In such systems, many elements are interacting in unpredictable and
random. This is the case of the capitalist market economy because there is no effective governance
of the economic system. Note that, Ilya Prigogine (2002), commenting about bifurcation points in
chemical reactions, states that "they demonstrate that even in our macroscopic level prediction of
the future mix determinism and probability. At the bifurcation point, the prediction is probabilistic,
whereas among the bifurcation points, we can speak of deterministic laws.
It´s the thesis of Ervin Laszlo (2006) that "the systems go into a state of chaos when fluctuations
that were until then corrected by negative feedbacks self-stabilizing get out of control. The
development trajectory becomes nonlinear: prevailing trends collapse and in its place various
complex developments arise. Rarely chaos is a prolonged condition; in most cases is only a
transitional period between more stable states. When the fluctuations in the system reach levels of
irreversibility, the system reaches a critical point where it collapses into its individual components
stables (collapse) or undergoes a rapid evolution toward a resistant state fluctuation that destabilized
(breakthrough). If this path of breakthrough is selected, the system evolves to a state in which it has
a processing capacity of intensified information and more efficient use of free energy as well as
more flexibility, greater structural complexity and additional levels of organization".
Figure 2 below shows what happens to a dynamic system such as the economic system of a country
when it is subject to "fluctuations" that leads to a bifurcation point from which the system reaches a
new dynamic stability (forward revolutionary) or collapses. Figure 2 shows that the bifurcation
point of the system has to be restructured or will collapse. When is subject to "fluctuations", a
dynamic system such as economic system of a country leads to a bifurcation point from which the
system reaches a new dynamic stability (breakthrough) or collapses. At the bifurcation point, the
system has to be restructured or collapse.
This is the situation faced by many countries, including Brazil, which, after the crisis that erupted in
2008 in the United States and spilled over the planet, where there wasn´t a restructuring of the
national economy systems. The path of breakthrough that would lead to overcoming the global
economic crisis that erupted in 2008 and was not resolved until today, require the restructuring of
the world economic system by turning it into an open complex system, self-organizing and sensitive
feedback that, contributing for the exchange of input or energy with the environment, become the
system susceptible to changes resulting from feedback, adapting to the new environment and
learning through experience.
Figure 2 - Dynamic Systems
Instead of breakthrough that would lead to overcoming the global economic crisis, the scenario of
the global economic collapse was predicted by the great thinker and French economist Jacques
Attali (2010) who predicts the occurrence of four steps to the unfolding economic crisis that erupted
in 2008 in United States and that spilled over the world: 1) the public debts become heavier; 2) the
failure of the euro and the global depression; 3) the failure of the Dollar and the return of global
inflation; and, 4) the depression and ruin of Asia. Currently, the world economy is facing step 1 in
which public debt swelled worldwide.
According to Jacques Attali, the international financial system no longer works. The neoliberal
model that ruled the world in the last 40 years died and there will be depression that will last many
years. Given the existence of chaos that dominates the world economy, it is time for each country
and humanity equip themselves as urgently as possible the tools necessary to take control of your
destiny. To have control of your destiny mankind must exercise their governance of the national
economic systems and of the world economy. This is the only means of survival of the human
ALCOFORADO, F. (2005). Globalização e Desenvolvimento. São Paulo: Editora Nobel.
ATTALI, J. (2010). Tous dans dix ans Ruines - Dette publique: La dernière chance. Paris: Artheme
BRAUDEL, F. (1982). The Wheels of Commerce. New York: Harper & Row.
LASZLO, E. (2006). O Ponto do Caos. São Paulo: Editora Cultrix.
PRIGOGINE, I. (2002). As leis do caos. São Paulo: Editora da UNESP.