Alan Budd in his section on economic planning in Britain in The Politics of Planning distinguishes three positions on planning: 1) Liberal: Belief in corrected markets, 2) Keynesian: Government has responsibility for overall management of the economy, 3) Socialist. The justifications for governmental intervention in the market, according to standard economic theory are: 1) provision of public good, 2) correction of externalities, 3) curbing of monopoly and collusion, 4) uncertainty as to the future.

In Britain liberal means in favor of laissez faire economic policy wherever possible. Budd distinguishes between two brands of British conservatism; the liberal-conservative tradition and the Tory tradition. The liberal-conservative tradition seeks market solutions through competition and has a mistrust of planned rationality as a guide for human action. Tory tradition emphasizes unity and cooperation and plays down conflict and competition. This tradition can be labeled corporatism. Corporatism is based upon the idea of reasonable people combining to find rational solutions to problems through cooperation and negotiation rather than competition. Tory conservatives are much more likely to favor planning than the liberals and the Tory tradition dominated the Conservative Party from the 1930s until the Thatcher era. Within the corporatist philosophy Budd distinguishes state and pluralist corporatism. State corporatism emphasized overall regulation of the economy and state planning of new industry. Pluralist corporatism encourages the creation of cartels with price fixing and division of the market. The Conservative-dominated National Government of the 1930s initiated planning in transportation and electrical power and cartelized agriculture, iron and steel. Harold Macmillan rejected socialism but advocated state control of all investment, subsidization and investment in industry, manipulation of interest rates, deficit financing and nationalization of the Bank of England.

The Labour Party adopted a non-Marxist program for socialism in 1918. Budd suggests that this was to distinguish itself from the liberal tradition. The Fabian socialist program was implemented by the Labour government in 1945-51. The Labour Party's philosophy rejected the market economy and advocated the promotion of the general well being and a so called equitable distribution of income through rational planning and the social ownership of industry.

Planning was generally believed to have worked efficiently and equitably during World War II and the Labour Party attempted to set the scale and pattern of industrial development. This goal was abandoned by 1951 in favor of Keynesian demand management. ,The Conservatives were voted into power in 1951 under a slogan of set the people free but they did not alter the Labour strategy of demand management very much. The effect of this Keynesian policy was usually referred to as stop-go.

The Conservative Party under Harold Macmillan announced in 1961 that they were going to introduce planning and they established the National Economic Development Office and Council (NEDC) which then produced a five-year economic plan. Economic growth was given increased priority and coordination of private and public plans emphasized. NEDC was to have membership drawn from business, government and labor unions. Planning had come to mean attention to the large decisions--matching saving with investment, imports with exports, spending with production and jobs with workers. The target annual growth rate of output was 4% but between 1961 and 1966 the actual rate was 2.9%.

The new Labour government in 1964 established a Department of Economic Affairs which produced the National Plan. This National Plan targeted growth at 3.8% per year. The National Plan was abandoned in 1966 before it had time to influence policy.

Stuart Holland in The Socialist Challenge presented an argument that multinational corporations were responsible for the failure of previous planning efforts. According to Holland the size of the multinationals allows them to avoid the constraints and pressures of both market competition and the policies of national governments. Multinational, again according to Holland, do not invest because they lack confidence in the ability of the government to stabilize the economy. Transfer pricing allows multinationals to avoid the payment of taxes. Administered pricing by the multinationals is blamed for inflation. Holland advocates acquisition of 20-25 multinationals through a National Enterprise Board and control over the private sector through planning agreements between government and corporations. Major elements of Holland's proposals were incorporated in the Industrial Strategy of 1976. Public concern has developed as to a possible trend of de-industrialization of Britain.

Sources:

• Alan Budd, "Economic Planning in Britain" from The Politics of Economic Planning , 1978.
• Stuart Holland, The Socialist Challenge,