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resolving the three-horned planning dilemma

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
June 1972
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Albert Waterston

Three major approaches are discernible in the literature concerned with the theory and practice of planning. The first is the conventional form generally accepted today which seeks to maximize benefits through rational choice of means from among available alternatives to achieve specific objectives; the emphasis is on these objectives. Conventional planning is usually embodied in a global, multiannual plan. The second approach takes as its point of departure available resources, and seeks to optimize benefits from these. It usually relies on sophisticated econometric techniques. The third approach is a partial, frequently intuitive, approach to planning which attempts to achieve results on a piecemeal basis. None of these approaches, in my view, offers a viable resolution of the planning dilemma; I believe that a new conceptual framework is required to meet current needs.

Each of the three major planning approaches has its adherents. The first approach—conventional planning —probably has a majority among planning advocates; the second—planning by optimization—has fewer advocates, but the number is growing as more technicians with the required skills graduate from universities and enter the field; the third—partial planning—has the fewest advocates, although, as anyone who has observed planning in practice can testify, it has many more practitioners than the other two approaches combined. There are good reasons for this.

It is not that partial planning is necessarily better than conventional planning. In theory, it is always worse; it is only in practice that it frequently proves to be better. That is why it persists. In theory, conventional planning provides perspective, comprehensiveness, and internal consistency. These virtues cannot be claimed for partial planning. Yet, when put to the test, conventional planning has often had less success than partial planning.

Conventional planning is frequently criticized, but it goes too far to say, as sometimes happens, that it has failed. Still, it must be admitted that the results obtained from it, at the urban as well as at the regional or national level, are not impressive. Partly, this is because of methodological shortcomings; partly, it is because of the inhospitable environment in which conventional planning often operates; but mostly, it is because conventional planning does not meet social needs. It is in the last connection, perhaps, that it is most nearly right to say that conventional planning has failed; for it is here that the gap between aspiration and achievement often yawns wide. It would be a mistake to interpret this as a case of practice giving the lie to theory, since practice without theory is an absurdity; it is rather a demonstration of persistence in the application of wrong theory.

THE IMPLICATIONS OF CONVENTIONAL PLANNING

The framework of conventional planning is very familiar. On the basis of objectives set by the political leadership, and with planned targets fixed or approved by it, planners (who are usually cast in the role of neutral technicians outside the political arena) derive optimal resource allocations and then select, from feasible alternatives, policies and instruments for achieving planned targets. Implementation of the plan is the responsibility of technical departments and agencies concerned with the different sectors or programs covered by the plan; supervision and control over plan implementation are usually the responsibility of the political authority.

This logically structured approach is defensible if each step in the procedure is rational in itself and is rationally related to the other steps. Specifically, the procedure outlined is justifiable if, first, the conceptual framework or model on which the plan is, based is internally consistent; second, if the variables of the model incorporated in the plan are the crucial ones for the social unit concerned; third, if the data on which the plan is based are reasonably accurate and complete; fourth, if the implicit assumptions in the plan concerning the environment in which the plan is to be implemented are correct; and, fifth, if the plan’s objectives adequately reflect social needs. Examination of these elements exposes serious flaws in the conventional approach to planning.

Internal Consistency

Consider the matter of internal consistency. Because much of what passes for planning is ad hoc and based on hunch, planning specialists understandably put a heavy premium on internal consistency. There is much to be said in favor of the rationality inherent in an internally consistent, integrated plan. Not only does it relate inputs to outputs; it also reveals the interrelationships of factors affecting development. But, it is very difficult to formulate an internally consistent plan. Not surprisingly, therefore, most plans fail on this score.

The Missing Variables

However, even when a reasonable level of internal consistency is achieved, the results are frequently of little practical value because they give only partial answers to planning problems. Because analytical complexity increases with the number of variables used, planners include as few variables as possible, an approach that necessarily constricts the limits of possible answers. By posing questions shielded from outside disturbance or uncertainty, answers are bound to be simplistic; by narrowing the scope of problems, solutions are sure to be circumscribed.

Because they usually stake out and lay claim to a very limited field, planners make it intellectually manageable to deal with; but because they exclude so many variables which enter into actual decision making, they diminish the relevance and usefulness of the results they have obtained. Thus, one might say that while they are somewhere in the stadium, it is not where the game is being played. Planners’ preference for internal consistency over practicality or feasibility also helps explain why, at the national level in most countries, economic planning goes forward without anything like adequate attention to social, political, spatial, and ecological aspects of the choices being made.

The Data Gap

Conventional planning is also especially vulnerable to data inadequacies which, it must now be recognized, are not going to be Overcome soon. All planning requires data, but aggregative, integrated planning of the conventional variety is an insatiable consumer of statistical and other information. Every planner knows that there are always gaps in the data he uses and that available statistics are frequently unreliable. Not only are parameters often little more than guesses, but basic data for population, population growth and migration, households, businesses, production, income, and standards of living, as well as many of the components of national and regional income accounts, are at best suspect and often nonexistent.

The data gap makes it difficult to plan partially or globally; but the danger of compounding errors is greater when inaccurate data are incorporated in a plan which by its nature is required to be internally consistent. What is being made internally consistent in most plans are bad statistics, not realities. Whereas a careful planner is aware of the limitations of his data, and qualifies his conclusions accordingly, most political leaders do not comprehend the low reliability of the data with which planners must work. Usually, therefore, political leaders accept without understanding the figures in the plans they adopt, thereafter giving official sanction to error and incompleteness.

Mistaken Assumptions About the Environment

Deficiencies in internal consistency, in the definition of the planning problem, and in the data used, provide clues about why conventional plans have performed below expectation and need. Even more important clues are furnished by an examination of the assumptions implicit in conventional plans about the environment in which these plans must be implemented. Since such plans say little or nothing about how and who is to start the whole process going by hurdling the political, economic, and administrative obstacles which usually prevent giving effect to the plans’ prescriptions, they cannot be said to be rationally related to the environment which they are presumably designed to change.

The crisis in planning is most apparent when the time comes to implement plans. This does not mean, as many think, that there is a crisis of implementation. On the contrary, it is much more a crisis of plan formulation because relevant means of implementation are not adequately provided for when the plans are being formulated.

When, as in conventional planning, the planning process begins with objectives and targets, and proceeds “from the top down” as it were, to the choice of strategies, policies, instruments, measures, and projects to achieve the targets and objectives of a plan, two assumptions are implicit in the procedure: the first is that once objectives and targets have been fixed, planning can provide a technical or scientific way of realizing them; and the second is that the environment can and should be changed to give effect to the technical solutions proposed.

The Separation of Ends and Means

It is very doubtful whether the imponderables and unstructured complexities which surround most planning problems can be satisfactorily handled by any model (or plan) that takes its rationale from the consistency of numerical relationships. As noted, too many of the variables cannot be satisfactorily measured or weighted. Given objectives, constraints, and time horizon, it is possible for planners to provide technical planning solutions in the limited sense that they can maximize, on paper, outputs for given inputs. But even here, there is the difficulty that precisely defined objectives are hard to come by. Frequently, objectives are vague, ambiguous, or in conflict with one another; and when objectives are uncertain, neat technical solutions are impossible.

“More than any other reason, the separation of the formulation of plans from the provision of the means for their implementation accounts for the wide gulf between what is planned and what is achieved.”

What is more important, although solutions may be produced by technical means, they cannot be applied as technical solutions to a planning problem. Each solution exacts its price and involves certain consequences. The application of one solution may be acceptable politically and socially, while another may not. Hence, it is naïve to assume that the setting of objectives and targets is a political act and the formulation of strategies, policies and measures for achieving objectives and targets is a technical act. Planning ends and means should be inseparable. More than any other reason, the separation of the formulation of plans from the provision of the means for their implementation accounts for the wide gulf between what is planned and what is achieved.

The second assumption implicit in the conventional planning process—that the environment must be reoriented to give effect to the solution prescribed for achieving plan objectives and targets—really rests on the first assumption. For if it is true that the method of implementing a plan has been technically, i.e., scientifically, determined, it is proper that the civil service and the public administration be altered as needed to carry out the planners’ prescription.

But this is easier said than done. Experience shows that major adjustments in the organization of the public administration or in the way civil servants conduct their business take a great deal of effort and time— usually the time of several plans. Thus, any plan whose implementation depends on major reorganization of the public administration or big changes in the way civil servants do things is in trouble before it begins.

Objectives and Needs

Despite what has been said, even the most confirmed critic must admit that conventional plans have often yielded results which could not have been produced without these plans. Indeed, it is partly because of these successes that traditional planners are still in great demand. By pointing to the successes, planners have an easy answer for those who question whether conventional planning achieves its objectives.

But the problem of planning objectives is not answered by occasional success in fulfilling plan targets. For it is becoming increasingly apparent that planning “successes,” even when they conform to plan objectives and targets, too often fail to meet essential needs. Thus, nations with good records for achieving their growth targets have nevertheless made little headway in dealing with basic problems like unemployment, greatly skewed income distribution, malnutrition, inadequate housing, urban and rural slums, and abject poverty of substantial parts of their populations—all of which national development is supposed to ameliorate if not eliminate.

One conclusion seems inescapable: the objectives found in traditional plans are often inappropriate for solving basic social problems. It is not a question of getting political authorities to change the objectives. The real question is whether it is possible for anyone in the center of government at any level to be adequately informed about the precise objectives required to meet the basic needs of different constituencies. Scattered evidence indicates that it may be possible in backward societies, but not in others. In the U.S.S.R. central planning has achieved considerable successes where local needs could be postponed or ignored, but attempts by central planners to predict, or respond to what they thought were local needs have faltered badly. Yugoslavia, with perhaps the greatest experience with planning at different political levels, concluded as long ago as the early 1950s that planners in Belgrade could not inform themselves sufficiently to be able to fix planning ends and means consonant with the differing social needs of the various republics, districts, and communes in the country. The growing regional consciousness visible in many countries also makes it clear that planning objectives and means for achieving them determined in a national capital cannot hope to meet social needs as they are seen and felt within each region.

OPTIMIZATION PLANNING

It is essentially for these reasons that refinements and improvements primarily directed toward overcoming technical inadequacies in plan formulation are unlikely to succeed where traditional planning has failed. And optimization planning is only a refinement of traditional planning. For while traditional planners are content to allocate resources “efficiently” (economists’ jargon for getting the most growth out of the available resources), planners who seek “optimal” results try to allocate resources centrally to obtain the greatest possible satisfaction of wants. The goal of conventional planning is general economic growth; the goal of optimization planning is the satisfaction of a bundle of specific wants.

But there are excellent reasons for doubting the existence of any ideal bundle of society’s collective wants. Nor is it likely that the solution to this problem will be found, as some contend, in future research for improved techniques and planning models designed to permit the use of imperfect data. The difficulty is that it is improbable that logically structured solutions are possible in a situation in which planning problems are almost invariably surrounded by a host of indeterminate and imponderable elements.

This difficulty cannot be overcome by the use of mathematical methods. Mathematics is a form of shorthand logic: it may facilitate logical analysis through the transposition into mathematical symbols of verbal descriptions of what may happen under certain circumstances. But this transposition does not constitute an advance toward proving anything. The use of mathematics in this way merely restates verbal arguments in mathematical terms—no more.

Econometrics goes further, since it involves the application of mathematical and statistical procedures to the explanation, prediction, and control of economic phenomena. Great advances have been made in the use of econometric techniques in the last few decades and the outlook is for further advances. Econometrics can, and will undoubtedly continue to, throw useful light on the interrelationships between variables which enter into the planning process. However, what has been said about the limitations of any approach which seeks to provide formal solutions to problems which are essentially unstructured, prevents one from feeling unduly optimistic about the potentialities of econometrics as a means of solving important planning problems.

PARTIAL PLANNING

We arrive, finally, at partial planning. Partial planning actually includes several variants. At the national level, these may include programs for the public part of an economy; programs for a single economic or social sector; so-called “bottleneck” planning, in which projects are begun only when an acute shortage of an important commodity is imminent or already exists; or where individual projects are selected on an ad hoc basis without any overall framework. Planning of this kind has very obvious defects, and has been described in such terms as “balloon shooting” and “project snatching.” However, it is often resorted to and its continuance shows that it meets some need. That is perhaps all that can be said in its favor.

RESOLVING THE PLANNING DILEMMA

The question therefore arises whether there is another approach which is better equipped than conventional, optimization, or partial planning to deal effectively with the social problems that these do not seem to be able to resolve. It is clear that such an approach has to have a built-in mechanism for identifying and solving these problems. Lack of such a mechanism makes it difficult to connect objectives and targets in conventional plans to basic social problems in need of solution.

Generally, objectives in conventional plans aim to achieve the solution of such problems indirectly. For example, by setting as an objective a rate of growth for the gross national product which exceeds the rate at which the population is growing, national planners hope that higher per capita incomes will be widely realized and not be merely an average that could hide increasing inequalities. At the urban level, planners hope gradually to reduce urban blight by the implementation of a design incorporated in a master plan. But as experience has now demonstrated, these developments fail to materialize so many times that the failures cannot be dismissed as exceptions in a pattern of success.

When the planning process begins with the setting of objectives that are only indirectly aimed at specific social problems, it is uncertain whether the realization of the objectives will in fact meliorate these problems. Any indirect means of resolving problems runs this risk. But there is no sense in trying to solve critical social and economic problems indirectly solely because traditional planning tools of analysis require it. This way of solving problems makes needs serve planning, when planning should serve needs. Furthermore, a direct approach is available. A problem-oriented approach has been tried and has been found to be responsive to the solution of social problems.

If the planning process begins with a rigorous evaluation of all the pertinent information about the environment, without regard for disciplinary boundaries, in the course of which specific problems requiring solution are identified, it becomes possible to select means appropriate to the resolution of the problems. The process by which these means are determined requires an evaluation of the real and financial resources, and the identification of the economic, social, political, institutional, administrative, physical, ecological, informational, and other constraints. Because the means selected to solve the planning problems are keyed to the environment in which implementation will occur, they do not suffer from the incompatibility between means and environment encountered in conventional plans. After the means for dealing with the problems are selected, it becomes feasible to set realistic targets and objectives within a fixed time horizon.

Thus, as the table below indicates, the problem-oriented approach follows a sequence which turns out to be the reverse of the conventional one. A problem-oriented approach to planning, starting, as it were, from the bottom up, ends the plan formulation process with highly specific objectives derived from the problems to be solved (e.g., at the national level, it might be the raising of per capita incomes of those below the national average to the average). This is in considerable contrast to the objectives in traditional plans, which are usually too highly aggregated to meet the varying needs of different constituencies (e.g., at the national level, increasing the national income by a fixed percentage annually). Such over aggregation is almost inevitable in plans made at the center of government since planners there cannot possibly be well enough informed to identify the varying high-priority problems in different localities, as well as the resources available for dealing with these problems.

Steps In The Planning Process
Conventional Planning ApproachProblem-Oriented Approach
1.Setting objectives1.Identifying the essential social problems to be resolved
2.Setting targets (quantified objectives)2.Reconciling these with available resources
3.Devising a strategy for achieving targets3.Selecting projects and policies to help solve the problems
4.Selecting policies and projects4.Devising a strategy for resolving the problems
5.Reconciling resources with requirements5.Setting targets (and time horizons)
6.Solving essential social problems6.Choosing overall objectives based on the social problems to be resolved

Moreover, a problem-finding and problem-solving approach to plan formulation is more promising than other planning approaches because it is purposively multidisciplinary in orientation, thereby making it easier to deal more effectively than a unidisciplinary approach with the social, economic, political, institutional, physical, and ecological facets of problems. While the intrinsically amorphous nature of many planning problems makes the proposed approach more heuristic and unstructured than traditional planning, there is no reason why projects chosen for execution in the various constituencies cannot and should not be integrated into programs for economic and social sectors. These can then be integrated into comprehensive short-term and long-term plans for an entire economy, a region, or an urban or rural area. The suggested approach also provides manifold opportunities for the use of sophisticated planning techniques, including cost-benefit calculations, systems analysis, and program and performance budgeting in the direct identification and solution of high-priority social problems.

In contrast with the use of these techniques to help achieve the characteristically global objectives of planning from the top down, the use of these techniques in conjunction with planning from the bottom up increases their relevance for resolving specific social problems. Because of this, and because of its multidisciplinary nature, the suggested approach can be more truly comprehensive than the traditional approach.

The Need for Decentralization

Planning on the basis of a problem-identification and problem-solving approach requires that the planning process be decentralized. While broad strategies and policies must be centrally determined, the widest authority must be delegated to local communities and bodies to plan for themselves. In Yugoslavia, where success in planning depends greatly on an incentive system which requires the participation of virtually everyone engaged in economic and social activities, it has been established after much experimentation that the commune, the smallest territorial unit in the political structure—and within the commune, the firm—is usually the best judge of its problems and priority needs.

Attempts to delegate planning authority to local communities have often produced unsatisfactory results. But this has almost always been due to a lack of technical skills or resources, or both. Resources by themselves are not sufficient. Without technical assistance to help put resources to productive use (where the skill to do so is not available indigenously), resources are frequently squandered. Where the delegation of authority has been accompanied with enough resources to get a program started and with the appropriate kind of technical assistance to show the local people how to organize themselves to do better what they want to do (and not, as often happens, how to do what the outside technicians think the local people ought to be doing), the results have been good.

Coordination

There is, of course, the problem of coordination, and not only at one level. It is essential to see national, regional, urban, rural, and local planned development as aspects of the same thing, just as countries are beginning to see national development and planning as aspects of international regional development and planning. Coordination is an important task of all planning units. But it should be exercised in a way which encourages maximum participation of those who are affected by the plan. It should be obvious that a planning system which seeks to improve the lot of people can profit from built-in methods for eliciting the fullest possible participation of those concerned. This implies that planners must work closely with existing communal organizations where they exist and to help establish them where they do not.

This article is a condensed and modified version of the O’Harrow Memorial Lecture which the author presented at the 1971 Meeting of the American Society of Planning Officials. The original lecture appears in Planning 1971 published by the Society.

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