Why we must reconnect with planning | Economic Alternatives

Is the recent re-emergence of the idea of ​​planning a sign of a perception in society that it is no longer time to rely on the market to deal with uncertainty? Because the pandemic crisis, but also, beyond that, the acceleration of the effects of climate change (fires on a continental scale, much faster than anticipated melting of the Arctic sea ice, more intense and destructive hurricanes, etc.), show how powerless markets are in the face of uncertainty. Didn't Nicholas Stern 1 call climate change “the greatest market failure of all time”?

However, the virtue of French planning appeared as "anti-chance" according to the expression of the Commissioner of the Plan Pierre Massé at the beginning of the 1960s, in agreement with President de Gaulle who made the Plan "a burning obligation". It is therefore useful to understand the original logic of French planning, before reflecting on how strategic planning could be adapted to the challenges of our time.

The originality of French planning

French planning stems from the program of the National Council of Resistance, adopted unanimously on March 15, 1944. After the Liberation, structural reforms were imposed from the beginning of 1946 under the aegis of the provisional government. Nationalizations in the key sectors of energy, public transport and finance have been means of eradicating the power of lobbies over the direction of the economy. The second component was the set of social measures for an economic democracy: restoration of trade union freedoms, creation of social security and pensions according to the principle of distribution 2.

The principles of French planning

The French five-year plans were established in 1946 with the creation of the General Planning Commission (CGP), the first incumbent of which was Jean Monnet 3. This original experience was based on the development of quantitative and qualitative objectives between social partners to guide investments in priority reconstruction sectors.

From the outset, French planning sought ways in which the State could intervene to deal with the shortcomings of the market. It was a social project directing economic policy over a multi-year horizon. The preparation of the Plan mobilized macroeconomic forecasting from the departments of Insee and the Ministry of Finance. On this basis, the issue was a broad consultation of public services and social partners in the Plan commissions to achieve a perspective of general interest.

The implementation itself was closely concerted in the different areas where the objectives were deployed, because it mobilized significant public resources in the service of the priorities that had been defined 4.

Evolution and decline

The first two plans – until 1957 – were called modernization and equipment plans. The objectives were gigantic: to make up for France's economic backwardness in the interwar period, to reconstitute public and private tools and equipment in six basic sectors (coal, electricity, cement, steel, agricultural machinery, transport), eliminate the shortage to raise the standard of living of the population. From the second plan, the number of basic sectors expanded and multi-year public investment programs extended to education and health. R&D and vocational training for the reconversion of enterprises were aimed at increasing productivity.

The Treaty of Rome of 1957, the tensions caused by the war in Algeria and the entry into activity of the baby boomers changed the situation of the IV ^th and V ^th plans until 1970. The principles of planning took on scale to guide strong growth while respecting macroeconomic balances. Public facilities have increased twice as fast as GDP to correct social and regional inequalities 5.

From the ^Fifth Plan (1966-70), under the influence of the expansion of international trade, the concern was to pursue social progress and industrial development. After the political and social shock of May 1968, industrial competitiveness became an obsession that would never leave French economic policy 6.

After the first oil shock of 1973, the Plan proved unable to manage uncertainty in a hostile international environment. This first oil shock also coincided with the creation of the Ministry of the Environment in France, which signaled an institutionalization of environmental concerns. The inadequacy of the industry to international competition became a nagging problem at the very moment when the ecological consequences of the postwar boom were entering the political debate.

In the 1980s, the lack of competitiveness of companies and their financial fragility were aggravated by the entry into force of the single market, then the transition to the euro. At the same time, the Anglo-Saxon neoliberal wave was sweeping all over Europe, while Germany was absorbing the shock of political unification. The National Plan was abandoned from 1993.

The eclipse of planning

Under the ideological influence of neoliberalism, the role of the state in the economy was thought to be limited to safeguarding the rights of private property. Markets, set in motion by the rational expectations of individual economic agents, are supposed to make the adjustments leading, without further intervention, to an equilibrium of optimal growth. However, the evolutions of the last twenty-five years have shown the failure of this pattern of thought.

Certainly, the great inflation of the 1970s gave way to the great moderation of prices, which could be attributed to market deregulation. But the imbalances observed in prices have actually shifted into finance. Increasingly large financial cycles ultimately caused the great financial crisis of 2008, with a particularly disastrous sequel in Europe starting with the Greek crisis of 2010. The total absence of coordination in the euro zone led to the simultaneous pursuit of restrictive fiscal policies, while the private sector sought to deleverage. There followed two years of recession, then a period of very low growth, called secular stagnation 7. This lasting deterioration brought to light the structural characteristics of neoliberalism.

The structural characteristics of neoliberalism and their consequences

Neoliberalism has created a rentier capitalism through the concentration of capital: financial rent, favored by low-cost debt and the total opening of capital accounts; digital rent by capturing Internet platforms and free appropriation of individual data; rent from spatial agglomeration in metropolises which disarticulate both near and far territories; rent of influence on the public power which feeds on tax evasion.

Let's briefly review these different types of annuity. First, the financial rent. The economic and social consequences can be observed in several dimensions. The distortion of income distribution causes a chronic lack of demand. At the national level, we are witnessing an explosion of inequalities, social fragmentation and an increase in poverty, linked in particular to the dismantling of labor law. At the same time, corporate debt has become very high in several countries including France, creating chronic vulnerabilities in balance sheets. After the extreme extension of value chains, allowing multinational companies to optimize costs on a global scale, a new tendency towards trade war between nations is today splitting these value chains, this time threatening the emerging middle classes in developing countries. International relations have deteriorated in an unprecedented way, causing a rise in nationalism and distancing forms of coordination on global common goods.

Next, the spatial agglomeration rent. Territorial disparities are on the rise, because of territorial fractures due to the concentration of capital. The expansion of sprawling megacities causes the desertification of certain rural areas and the decline of medium-sized towns. As a result, territories are becoming more and more heterogeneous, with high income disparities that are no longer corrected by territorial planning policies. Metropolises are hotbeds of increasing returns through agglomeration effects, network externalities and information-intensive activities. They are also sources of social costs, discrimination and exclusion due to uncontrolled land prices, but also environmental costs associated with urban sprawl and dependence on individual cars, in imitation of the American model. . This results in a loss of social well-being through congestion, waste of time, physical and mental wear and tear, pollution.

The digital revolution could be the source of a new long cycle of innovations, but its transformation into a cash flow, through the private preemption of platforms and the free appropriation of individual data, is currently hampering social and economic performance in the West. promised by these innovations. The announced 5G revolution would only increase private income, where the same revolution in China benefits the Party-State which has managed to retain control of its technology companies. In either case, this revolution shapes a new individual, a homo numericus, by mediating an ever greater part of his social interactions. Beyond the exponential energy consumption of this technology, this irruption of the market in the field of social relations and imaginaries will a priori make the emergence of a political ecology and the collective imaginaries that could be attached to it more difficult.

Finally, the rent of influence is the product of a “plutocratization” of democracies. The neoliberal state has gradually put itself at the service of the other three rents, financial, agglomeration and digital. Concomitantly, the neoliberal state freed itself from original forms of coordination, between partners, allowing the emergence of a general interest that planning actively contributed to building. The model of independent administrative (or public) authorities was deployed when the State had to regulate a specific sector. Independence has in fact established itself vis-à-vis the government as well as the Assembly, but often much less vis-à-vis the companies or sectors to be regulated. Beyond the capture of the regulator, the overall coherence of public action has certainly suffered, a defect which is being felt tragically in this year 2020.

The Covid-19 pandemic, a symptom of the bankruptcy of neoliberalism

The outbreak of the pandemic in March 2020 in Europe caught most governments off guard. The lack of equipment and qualified medical personnel led to panicky political decisions that precipitated a deep recession, particularly in France. We have seen in a chemically pure way how damaging the disappearance of any planning device could be. The report submitted to the government by General Lizurey, former Director General of the National Gendarmerie, with the support of Amélie Puccinelli, Inspector of the Administration, on the course of the public reaction to the first wave of the epidemic, is severe, at least for what has been able to filter through the press. to local initiatives, the massive dysfunctions in inter-ministerial coordination, the vague circuits for sharing information and decision-making, or quite simply the initial absence of adequate video-conferencing equipment in the ministries.

While it may seem easy to recount this strange defeat of an inoperative state after the fact, its structural causes can be traced back to the characteristics of neoliberalism, so that this defeat is ultimately not so strange as that. An obvious aspect concerns the amputation of public hospital resources, which play a direct role in controlling the pandemic of course, but also in restoring confidence in the economic sphere, as Robert Boyer has clearly shown. 9. The decisions to be taken urgently have required the establishment of emergency laws which set aside the usual instances of democratic deliberation and put fundamental freedoms on hold. Finally, the destructuring of public action institutionalized by neoliberalism, by destroying its power to coordinate social objectives, public financial means and industrial capacities, in other words the disintegration of any capacity for planning, clearly appears to be an essential source of the country's failure in the face of the pandemic.

We should probably qualify the statement to take into account the diversity of institutional forms taken by capitalisms, to include the best reaction of German ordo-liberalism from the first wave, or even the learning capacity of Italian Mediterranean capitalism during the second. In France, the recommendations of the Lizurey/Puccinelli report seem for the most part not to have been implemented. The expertise accumulated and the reinforcements assembled during the first wave were demobilized, without the possibility of a return having been foreseen. The government injunction to "live with the Covid" serves as a strategy for the moment, in the absence of the capacity or the will to initiate the necessary material interventions with the required anticipation. As the sociologists Henri Bergeron and Olivier Borraz write: "This unprecedented crisis is also that of inorganization: the formidable paradox of an overorganized society, that is to say saturated with organizations of all kinds, but which encounters so many difficulties in organizing these organisations, that is to say in organizing their cooperation. » 10

Planning, and no doubt strong forms of solidarity and discipline, have enabled Asian capitalisms to manage to control the epidemic in the objectively most effective way to date. These countries do not, however, form a homogeneous block in terms of governance, from China to Japan via South Korea or Vietnam. It is therefore not a question of pure authoritarianism or a single party, but of building an active consensus that binds together political leaders and social and economic actors.

These countries (with the exception to date of Vietnam, which also remains the poorest country in the group) have also recently been committed to a goal of carbon neutrality by 2050, or 2060 for China, which their planning abilities could achieve. After their relative success in managing the pandemic, these recent announcements sign, if confirmed, a desire to switch to an entirely new mode of development, which is not the reproduction of any other, probably for the first time since the Revolution. industrial. The European Union and the United Kingdom, formally committed to such a horizon of carbon neutrality, would thus aim to create the conditions for closer and constructive dialogue with this Asian bloc in a group of countries committed to carbon neutrality. The United States could join them under a Biden presidency reinstating the Paris Agreement. What planning mechanisms should therefore be established to deal not only with the urgency of the epidemic situation, but also with the long-term degradation of the climate and ecosystems?

What planning for political ecology?

The changes to be made to transform the growth regime towards a political ecology concern production structures, lifestyles and territories. They are part of the long term and, consequently, come up against "the tragedy of horizons"11: the horizons of decision and expectation of most economic, financial, but also political actors, in Western democracies subject to electoral cycles, are much shorter than those of the strongest impacts of climate change and especially those of the benefits to be expected from climate action. One could double this tragedy of temporal horizons with a tragedy of spatial horizons. Indeed, many effects of climate change are already very present and clearly perceptible, but are somehow rendered invisible because they occur elsewhere, whether this elsewhere is purely an effect of spatial distance or an effect of social and media distancing.

Rebuilding the political pact

This tragedy of horizons results, in Western capitalisms, from the continuity of a neoliberal-type political orientation beyond electoral cycles. The limit of the decision-making capacities of these political regimes of representative democracy is understood, not as proof of an intrinsic limit of democracy, but as a blockage of a higher order with regard to the institutionalization of collective belonging, and therefore an inability to adequately rebuild the constitutional order. Faced with the environmental challenge, only a political pact based on a superior principle of preserving the intergenerational permanence of societies can do so. Such a pact is the political basis for long-term planning.

This political pact must go beyond partisan rivalries to ensure the continuity of strategies for the production of public goods, capable of involving the private sector. Today, it is a question of pursuing coherent policies over thirty years to achieve carbon neutrality by 2050, while facing repeated situations of tension and urgency such as the Covid-19 pandemic crisis. Such a change in politics must lead to reforming finance. Today pure rentier activity dedicated to a tiny minority, marked by the dictatorship of liquidity and risk aversion, it would become an activity allowing to build a bridge between the present and a future oriented by the collective challenge of sustainability.

Mobilize financial actors

Public investment and development banks are already driving this break, provided they make further progress in the ecological conditionality of their activities and extend them, beyond the climate, to forms of biodiversity restoration. . Indeed, the public development banks or other public financial institutions, such as the KFW in Germany or the CDC (Caisse des dépôts et consignations) in France, are closely linked to the public authorities, collect large amounts of savings and have a public capital. They have the expertise to help select innovative industrial projects and invest in carbon-free productive structures. Europe has the advantage of having public development banks in many countries. The main thing would be to involve them in a coordinated way in the European Commission's project for political ecology. Their networking by the European Investment Bank (EIB), itself backed by a guarantee from the European budget, would constitute a basis for the Next Generation EU project.

But these institutions do not constitute, by far, all of the financial activity which, today, has to deal with the consequences of transition and climate impacts. Another type of key player is made up of institutional investors (insurance companies and pension funds). These players collect long-term savings and are therefore concerned by the return on their liabilities over fifteen or twenty years. But they are hampered in their mission of long-term investment by the pressure of the financial markets through the asset managers to whom they delegate their management. They are also affected by the IFRS accounting standards which transmit the short-term volatility of the financial markets in their balance sheets and by the post-crisis financial regulations of 2008 which discourage long-term investment. These investors need regulations adapted to their mission. Through their long-term investments, they can avoid sudden climate transmission, causing a disorderly devaluation of carbon capital. These institutional investors are involved in corporate governance and can therefore reorient their strategy to ensure compliance with environmental, social and governance criteria (ESG criteria). To have a macroeconomic impact capable of changing productive structures, these investors are already meeting in clubs at European level, which has begun to change the structure of real assets in Europe.

The third category of financial actors is, of course, the European System of Central Banks (ESCB) of the euro area. The essential link with political authorities is through carbon pricing, which must be planned over the long term to guide all economic and financial players towards a long-term horizon leading to carbon neutrality by the middle of the century. It is up to the ESCB to redirect bank refinancing collateral towards decarbonized assets and set an example in their own asset portfolios, as has been done with public debts so as to preserve the consistency of spreads between member countries of the euro area.

A precautionary principle in radical uncertainty

Climatic phenomena have non-linear dynamics of great amplitude and extreme intensity. They bear the seeds of all the characteristics of a new type of systemic risk for financial systems 12, between degraded economic conditions and unpredictable economic policies. The approach to these new risks must obey a generalized precautionary principle to deal with radical uncertainty, because there is no rational basis for estimating probability distributions of future events of this type. The new planning thus takes the concrete form of an application of this generalized precautionary principle.

The transition towards sustainable development will give rise to policies whose non-linear interactions with financial systems will create "transition risks" on the achievements compared to expectations (this is the risk, for example, of radical depreciation of so-called stranded assets or stranded assets). This precautionary principle must therefore guide market values, but also bank credit: it must lead to an increase in the cost of financing carbon activities and to place quantitative limits on the credit of companies that exceed a carbon threshold, a threshold that should evolve according to a planned rhythm of decarbonization induced by a parallel industrial policy. It involves the creation of intermediary institutions between the central bank, the public authorities (legislative and executive) and the commercial banks, like the National Credit Council set up immediately after the war 13. The approach The precautionary measure also concerns monetary policy, which should modify its credit ratings by incorporating transition risk, so as to steer credit. This is to give clear direction to the financial system on the need to strengthen its resilience to climate change. The principle of market neutrality in monetary interventions must be followed by a precautionary principle 14, coordinated with the rest of public action.

Territorial innovation systems and urban models

The new planning must make it possible to rebuild a territorialized industrial base, by means of coordination mechanisms that we will discuss in the following section. The first dimension consists of building territorial competitiveness clusters as bases for innovation policies. These are networks of firms in a territory that internalize external effects through tacit exchanges of information and skills, pooling of research investments and mobilization of dedicated support functions. Cooperation must extend to relations between industry and the education system for the training of transferable skills and to joint participation in investment programs involving public and private financial players. Finance must adapt to the stages of the innovation chain, from fundamental research whose long-term funding can only be public, to start-ups which require contributions from venture capitalists (public or private) and to marketing which can benefit from more traditional private or public funding. This adaptation of the forms of financing makes it possible to avoid the extreme centralization of a rigid planning such as the scattering or the duplication of private initiatives without guidelines.

The other essential dimension of territorial renewal is undoubtedly the urban economic model. In the context of an ecological transition, mobility becomes a common good, both a vector of a freedom that has become fundamental (but not without limits) and a major potential source of greenhouse gas emissions and ecological degradation. A new economic model of mobility is undoubtedly at the heart of the reconciliation between abundance and freedom 15. It implies a profound change in lifestyles compared to the model based on the ownership of individual vehicles. The multimodal transport offer on a territory requires companies that are mobility operators, and public authorities capable of optimizing intermodality to reduce greenhouse gas emissions. The optimization of transport flows goes through digital platforms, gathering traffic data in real time and processing it with the help of artificial intelligence. The carbon footprints of the different means of transport are crucial parameters of this new conception of mobility, which implies a complete carbon and ecological accounting, taking into account the indirect costs of investment in new means of transport.

Finally, territorial planning must promote the circular economy as a principle for integrating ecology and economy, so as to increase the productivity of the use of material flows. The creation of value chains where waste becomes inputs also enables import savings. Regulation is essential here to force producers to take responsibility for their waste.

Levels of political responsibility

The transformations envisaged above require a strategic view of the future, which the new social contract can provide, but this must materialize and adapt as closely as possible to citizens. For this dimension of planning, the effective political authority is at the regional and metropolitan level, implying a transfer of competences from the State to the local authorities to deepen democracy. The State then acts to coordinate the decentralized projects of economic players. Public decision-making must be informed by democratic debate and taken at the organizational level where choices of activity must be made. The coordination between the territorial levels, the social partners, the agencies of the national State and the dialogue with the European Commission can be inspired by the originality of the mechanism of debate and orientation in the old French planning.

The regional and metropolitan levels must then be thought of as living spaces, which signals the return of active, but more decentralized, forms of land use planning. The infrastructures must be financed with a view to serving the populations and catching up with disadvantaged areas. Collective interest cooperative societies (SCIC), which can bring together stakeholders from various origins (employees, users, service providers, local governments, financial players), thus institutionalize joint management of services essential to a living space. The SCIC must preserve the citizen dimension of the projects, while guaranteeing the public commitment and that of the other stakeholders of the territory.

We can finally summarize the forms of planning for a political ecology by political conditions (recasting of the social contract around ecological objectives and increased decentralization of competences to achieve them in common), financial (financial institutions which are organized around the principle ecological precaution, while financing territorialized innovation) and technical-industrial (through the transformation of mobility, lifestyles and consumption). Une telle planification devra aussi être résiliente face à des chocs climatiques ou plus largement écologiques qui seront dans un premier temps toujours plus nombreux avant que la neutralité carbone globale soit atteinte. « Il faut imaginer Sisyphe heureux », disait Camus, en se représentant un héros que l'éternel retour vers le labeur rendrait supérieur à son destin. La clé de la planification pour l'écologie politique est peut-être là : nier les dieux du marché ou d'ailleurs et construire un univers sans maître au prix d'une volonté collective obstinée.

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