Why the 'Plan' is making a sophisticated comeback in modern states

Health · Published 18 October 2026 Swipe more like this →

In short: After the collapse of the Soviet Gosplan in 1991, many assumed state-level economic planning was a relic of the past. Yet, a new era of 'indicative' planning is emerging. It isn't about total state control, but a strategic tool to navigate market failures and radical uncertainty.

Modern economic planning is shifting toward 'indicative' or 'decentralized' models. Unlike the rigid, centralized systems of the 20th century, this approach allows the state to concentrate resources on specific objectives that the market might ignore due to a lack of short-term profitability. This is particularly relevant for large-scale transitions, such as decarbonization, reindustrialization, and ensuring pharmaceutical sovereignty. By publishing clear objectives and the means to achieve them, the state creates a predictable universe for independent agents to operate within.

The rationale for this return is rooted in three specific types of market failures. First, planning addresses activities that are socially necessary but not profitable in the short term. Second, it regulates competition during periods of absolute resource scarcity by prioritizing specific users. Third, it manages 'radical uncertainty'—unexpected events that invalidate standard economic calculations. In these moments of surprise, discretionary political decision-making and 'procedural rationality' can be more effective than traditional market mechanisms, which may become paralyzed by a lack of information.

However, the history of planning reveals significant hurdles. In many developing countries, plans often fail because they start with 'politically acceptable' growth targets rather than a realistic assessment of available resources. This optimism can lead to balance of payments difficulties or 'forced saving' through inflation. To be effective, planners must move toward 'realistic planning,' which begins with the supply of available resources to determine the maximum possible growth rate. Success depends on bridging the gap between high-level targets and the practicalities of resource allocation.

While the Soviet Union never fully achieved a system of physical planning—relying instead on financial units—modern systems like India's NITI Aayog maintain structures eerily similar to the previous Planning Commission. Meanwhile, in China, rural development planning is increasingly looking to integrate 'public value' by incorporating the lived experiences of residents to measure the social and economic sustainability of industrial transformations.

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