Economic planning and the science of economics

An analytic treatment of a planned economy must proceed on the basis of some kind of philosophy of science and must be predicated upon a theoretical framework. A theoretical model may provide a provisional construction for illuminating the relations between phenomena or it may serve as a blueprint for something to be constructed. Requisites and conditions for economic action can be defined, but this does not give the content of the concepts. To be usable they must be implemented. A logical model can deal with only the mechanically economic aspects of human behavior and can solve only a formal problem. This is inadequate as a presentation of the processes of human behavior. To serve as a basis for reconstruction, the model must be integrated with the political structure and must deal with the management of resources in the light of existing technology. The fixing of output where marginal cost equals price is a relation limited to the production of homogeneous units under assumptions of perfect competition or its regulatory equivalent. Monopolies, product differentiation, joint and non-allocable costs make this "rule" inapplicable. Depreciation adds further to the difficulty. The theory of socialist planning categorically denies evolution in social and economic processes. It predicates a state of finality the conditions of which can be determined in advance of achievement. The limitations of mechanistic and universalistic theory eliminate it as a foundation for a planned economic order.