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This article was downloaded by: [Massachusetts Institute of Technology] On: 26 November 2014, At: 07:22 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Journal of the American Planning Association Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rjpa20 Market Planning, Market Planners, and Planned Markets Tridib Banerjee Published online: 26 Nov 2007. To cite this article: Tridib Banerjee (1993) Market Planning, Market Planners, and Planned Markets, Journal of the American Planning Association, 59:3, 353-360, DOI: 10.1080/01944369308975886 To link to this article: http://dx.doi.org/10.1080/01944369308975886 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http:// www.tandfonline.com/page/terms-and-conditions

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Page 1: Market Planning, Market Planners, and Planned Markets

This article was downloaded by: [Massachusetts Institute of Technology]On: 26 November 2014, At: 07:22Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House,37-41 Mortimer Street, London W1T 3JH, UK

Journal of the American Planning AssociationPublication details, including instructions for authors and subscription information:http://www.tandfonline.com/loi/rjpa20

Market Planning, Market Planners, and Planned MarketsTridib BanerjeePublished online: 26 Nov 2007.

To cite this article: Tridib Banerjee (1993) Market Planning, Market Planners, and Planned Markets, Journal of the AmericanPlanning Association, 59:3, 353-360, DOI: 10.1080/01944369308975886

To link to this article: http://dx.doi.org/10.1080/01944369308975886

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) containedin the publications on our platform. However, Taylor & Francis, our agents, and our licensors make norepresentations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of theContent. Any opinions and views expressed in this publication are the opinions and views of the authors, andare not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon andshould be independently verified with primary sources of information. Taylor and Francis shall not be liable forany losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use ofthe Content.

This article may be used for research, teaching, and private study purposes. Any substantial or systematicreproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in anyform to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Page 2: Market Planning, Market Planners, and Planned Markets

COMMENTARY AND COUNTERPOINT

Marke Planning, Market Planners, and Planned Markets

t

Tridib Banerjee

More than a quarter century ago, the late Jack Dyck- man wrote a commentary for this journal entitled, “Social Planning, Social Planners and Planned Societies.” He spoke about the structural challenges and the moral di- lemmas of deliberate social change faced by Western lib- eral democracies, where the pragmatic conservative ide- ology held that “one, the structure of power cannot be changed from below, and two, behavior and taste cannot be changed from above” (1 966, 73). This article appeared immediately after the 1965 Watts riots, in the middle of a tumultuous decade that saw the escalation of the Viet- nam War, the mobilization of the antiwar movement, growing demands for civil liberties and social justice, and the launching of the War on Poverty and the Great Society programs. Yet by the end of the decade many conservative academics and also some of the key pro- tagonists of social planning had begun to question these social programs. As Dyckman observed, the radical social planners interested in community empowerment were already at odds with the social program bureaucrats who had an abiding faith in the first principle of the conser- vative democratic ideology. This discord would ulti- mately strengthen the position of the critics of social planning. By the end of the 1970s, the programs and policies-and indeed, the field of social planning-began to atrophy, which in the 1980s resulted in the systematic dismantling of the American welfare state (Dyckman 1983; Harrison and Bluestone 1988; Phillips 1990). The Dyckman article foreshadowed the end of an era.

Today the concerns of social planning and social plan- ners are banished from the center stage of public poli- cymaking; they are now the ghosts of a past and forgotten era. Most of the planned societies have collapsed, rather unceremoniously. Some observers have proclaimed the victory of capitalism over socialism (see Fukuyama 1989) and have rediscovered the marketplace. As we marvel at the wonders of the free market economy, we should

now talk instead about market planning, market planners, and planned markets.’ The previous paper by Richardson and Gordon is a welcome contribution to this discourse.

The timing for this discussion is right. The 198Os, the Thatcho-Reaganite decade, saw the beginning of a worldwide affirmation and celebration of the market economy in the context of a transnational and global capitalism. Deregulation, decontrol, privatization, user fees, and market pricing became the new models for de- livering public services, replacing the old order of public goods provision (Dyckman 1983). The state-big gov- ernment and the Weberian bureaucracy-came to be portrayed as corrupt and self-serving; at best, well- meaning, but inept. Today, market protagonists dominate public decision making, buoyed by the collapse of cen- trally planned command economies and the seeming successes of the worldwide economic boom of the 1980s.* Those developing countries that have been slow to em- brace the marketist dogma and are still clinging to the ideals of social justice and reform now find themselves routinely proselytized by the International Monetary Fund, the World Bank, and USAID. Undoubtedly, this trend will continue.

This discussion is also poignant because of the spring 1992 Los Angeles riots, far more devastating and wide- spread than the Watts riot that Dyckman discussed a quarter-century ago. If the 1965 Los Angeles riots bared the tensions and the limits of social planning could it be that the 1992 Los Angeles riots underscored the failed promises of market-based public policy? The arguments of the Richardson-Gordon paper require a response that considers this larger backdrop of changing domestic and world events. For, in many ways, their arguments are a part of the more fundamental and on-going debate on the nature and purposes of the state and the market.

The Richardson-Gordon paper attempts to alert plan- ners to the changing currents of time. Their premise is that planning tends to meddle in the workings of the mar- ket. In their view, planning purports to serve social ob- jectives mainly through regulations and controls, which ultimately encumber private property rights, and more broadly, individual freedom and liberty. Furthermore, they would argue, this type of planning is counterpro- ductive because not only does it lead to inefficiency in resource allocation, but it also fails to achieve equity goals. They argue that in almost all instances, market solutions are far superior to controls and regulations in achieving both efficiency and equity. They exhort plan- ners to plan with the market, not without or against it.

Although it is possible to interpret the Richardson- Gordon paper strictly as a case for the market as an al- ternative to planning qua regulation, it is important not to miss the larger implications of their position. Thus, this paper examines the larger issues concerning planning and the market, especially the question that Richardson and Gordon seem to hedge: Is marketism fundamentally anti~lanning?~ Then it will explore what market planning actually means. If indeed there is such a thing as market

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planning, who are the market planners? How might they be different from other types of planners? Could it be that market planners are those who not just plan with the market, but also plan markets? This leads to the ques- tion of whether planning should be subservient to the market, as the Richardson-Gordon paper would like us to believe, or whether the market will increasingly re- quire the guiding hand of planning. We can also hardly overlook the social, political, and institutional challenges of creating and planning markets-something that the Richardson-Gordon paper ignores-and the recent so- bering experiences with planned markets.

Markets and Planning One of the main aims of the Richardson-Gordon paper

is to establish that markets and planning are not anti- thetical: that the market is not inherently ant i~lanning.~ In one sense they are right. All Western liberal demo- cracies have organized thepe lves with markets as the essential exchange system, although as Lindblom (1 977) has shown, democracy is neither a necessary nor a suf- ficient (as Richardson and Gordon seem to argue) con- dition for the functioning of a market economy. The functions of planning and the roles of planners have evolved within the matrix of market economies. The pre- sumption of a market economy underlies the everyday practice and the schooling of planners. Therefore, isn’t all planning market ~ l a n n i n g ? ~

The presumption of a market economy as planning’s context, however, is not sufficient for Richardson and Gordon. They worry that planning vitiates the market and individual liberty, and that planners are chipping away at the very foundations of the market society. In their anxiety they equate planning with too much regu- lation, too much control, too much of telling people how to run their lives. Planners are de facto regulators, and, in their view, the principal culprits. This is a distorted and unfair view of planning and of planners and one that is especially disheartening when presented by two “pro- fessors in a school of planning.” This view also suggests an incomplete understanding of planning. Planning qua regulation is essentially a reductionist view.

Some of their points about the tyranny of regulations are quite valid. There should be some concern about growing controls and regulations, which have added to the cost of doing business in urban and metropolitan areas. Many different actors, however, typically partic- ipate in the development and formulation of regulatory actions. Planners are but a small part of a team of profes- sionals (often dominated by attorneys and even econo- mists), politicians, and various public interest groups. Planners are often keepers of the rule book, no doubt, but they are hardly the official rule makers. Only the representative body has the constitutional authority to enact a zoning ordinance or to require a linkage fee.

Increasingly, however, these rules are being made outside the representative body as “ballot box” planning

marginalizes not only the planners but also the council chambers. Growth control policies, a major irritant for Richardson and Gordon, are mainly a product of citizen initiatives. Planners’ role in the rule making is shrinking. To suggest that planners are the regulators, in the face of this reality, is patently absurd. Richardson and Gordon give planners too much credit: they ascribe too much power to the planners.

Indeed one of the central themes of their market ad- vocacy is their distrust and distaste for the political pro- cesses in democratic society from which planning (in the public sector) derives its legitimacy. This is expressed in their discussion of the inefficiency of the democratic pro- cess. They assert that since only a small portion of eligible voters actually vote, the plurality actually represents the wishes of a small minority of the public at large. There- fore, planning is not democratic because it is guided, they presume, by these minority interests. Many planners would argue that they have long been aware of the rep- resentation issue, and have sought to democratize the planning process. They point to the legacy of advocacy planning and citizen participation.

The low participation in local elections could suggest a form of consumer sovereignty, since people do have the option to “vote with their feet.” For a population characterized by a propensity to move every five years, and thereby with weak community ties, voting with feet rather than ballots is indeed a viable option. Nonvoting may also suggest a form of consumer choice symbolizing a general satisfaction or apathy. But the fact that there may be many more happy apathetic citizens than polit- ically active citizens does not necessarily abrogate the responsibilities of representative democracy, or those of planning in favor of the market. Political theorists have described many different models of Western liberal de- mocracy: polyarchy (Lindblom 1977), interest group lib- eralism (Lowi 1969), pluralism (Dahl 1961), power elite (Mills 1956). Each of these models attempts to explain political behavior in representative democracies in light of the social diversity and class structure of highly dif- ferentiated advanced capitalist societies. There is no question that the concept of democracy in practice re- mains less than perfect. But what is the alternative? Cer- tainly, Richardson and Gordon are not implying that they are willing to embrace an autocracy or a dictatorship to let the market reign supreme.

Furthermore, since many of their arguments for market-based planning are based on the critique of plan- ning qua regulation, their view constitutes a negative rather than a positive premise of the market. Consider the argument, for example, that market solutions are jus- tified since the costs of government failure are now greater than the costs of market failure. This is at best an empirical rather than a theoretical point. Even its em- pirical validity is not incontrovertible (Colclough and Manor 199 1 : The Economist 1992). This argument begs the question of why government failures occur and how they can be minimized.

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A parallel can be drawn from Amartya Sen’s elabo- ration of Isaiah Berlin’s distinction between negative and positive theories of freedom. According to Sen:

The negative view sees freedom exclusively in terms of the independence of the individual from interference by others including governments, in- stitutions and other persons. The positive view, which can be characterized in many different ways, sees freedom not in terms of the presence or ab- sence of interference by others, but in terms of what a person is actually able to do or to be. The dis- tinction may be quite central to different approaches to the idea of freedom and its implications. If a per- son is not free from hunger and lacks the means and the practical opportunities to feed himself or herself adequately, then that person’s positive free- dom must be seen as having been thoroughly com- promised. On the other hand, his or her negative freedom may be completely unviolated, if this fail- ure to acquire enough food is not a result of his or her having been stopped by interference from others (1989, 770).

Since Richardson and Gordon explicitly link their marketist plea to the idea of liberty and freedom, Sen’s point is apropos. Furthermore their argument for the greater efficiency and equity of market solutions is again negative in the sense that their justification is in terms of instrumental rather than intrinsic roles.

Richardson and Gordon also offer merely technical, rather than theoretical, arguments for the market. Their ideological commitment remains in the background, but the paper offers little positive discussion about how the market can serve as a model of organized diversity,6 and how planning could come to utilize the concept to meet the social and moral challenges of our time. Richardson and Gordon do not even mention the original values of market liberalism-the civilizing effect of commerce- which Hirschman refers to as the “Doux-commerce Thesis” of market ~ o c i e t y : ~

There is here then the insistent thought that a so- ciety where the market assumes a central position for the satisfaction of human wants will produce not only considerable new wealth because of di- vision of labor and consequent technical progress, but would generate as a by-product, or external economy, a more ‘!polished” human type-more honest, reliable, orderly, and disciplined, as well as more friendly and helpful, ever ready to find solu- tions to conflicts and a middle ground for opposed opinions. Such a type will in turn greatly facili- tate the smooth functioning of the market (1982, 1465-66).

If Richardson and Gordon had presented the ideals of market society, particularly in the context of other his-

torical visionary ideals that most planners value, they might have engendered an engaging debate. No one has yet presented this view to planners, who are more likely to hear the contrary position. For example, Hirschman points out that the civilizing vision of market society has not been sustained historically, and that market processes have been a disruptive influence on civil society, inimical to its moral order and to family and community values. Richardson and Gordon do not challenge this conclusion. Possibly today’s staunch marketist would not know how to make the more sublime arguments for market society and the marketplace. In the absence of a deep philo- sophical rationale, marketism merely becomes a political instrument for cleansing the capitalist state of its welfare trappings (see Dyckman 1983).

Other scholars have commented on the constraints the market imposes on deliberate social change and public policymaking. Lindblom (1 982), for example, has spoken of the punishments, in the form of higher unemployment or a sluggish economy, automatically triggered by the market when faced with attempts to reform it. Because these responses are so predictable, the fear of these au- tomatic punishments restrains public action and policy. Thus, he argues, the market “imprisons policymaking, and imprisons our attempts to improve our institutions.” Thus, the Southern California Air Quality Management District (which Richardson and Gordon describe as “the most dictatorial agency in the state, if not the country”) has recently withdrawn most of its strict regulations, as recession worsens and businesses threaten to move out of the region. Most practicing planners would not only agree with Lindblom, they would further assert that the scope of planning has already been tightly circumscribed by the market.

Nonetheless, the academic anxiety over the power of planning and the zeal for the market lingers. To a large extent the ardor comes with the discipline. “Neoclassical economists,” says Swaney, “routinely advocate markets and reject regulations on the grounds that market pro- motes free choice, maintains flexibility, and rewards in- novation, whereas regulations do the opposite” (1 992, 625). Marketism is rooted in modernist thinking, which relies on scientific methodology and positivism (Banerjee 1993). Yet marketists tend to be dogmatic, lacking the intuitions of a true scientist. Their work tends to be de- terministic, based on categorical presumptions about the human psyche and behavior that no behavioral scientist would ever make.

Contrary to the marketists’ belief, there is nothing nat- ural about the market: “It bears no resemblance to the Grand Canyon or the Rocky Mountains,” says Dugger (1989). Says poet Octavio Paz, the market is “a faceless, soulless and directionless economic process.” He asserts:

The market is circular, impersonal, impartial, in- flexible. Some will tell me that this is as it should be. Perhaps. But the market, blind and deaf, is not fond of literature or of risk, and it does not know

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how to choose. Its censorship is not ideological: it has no ideas. It knows all about prices but nothing about values (1991, 1).

Thus, the marketist view rules out conjecture and vision. It is devoid of the values and ideals that go beyond ef- ficiency and have historically guided planning in civil society. It has no sense of history or of the future: it is driven by an abstract notion of equilibrium whose sole validity lies in what the market can bear or clear. Thus, the notion that planning should be solely guided by the market is at once chilling and depressing.

Market Planning: Oxymoron or Red Herring?

What is market planning after all? One definition states that it is simply planning that uses market mechanisms in place of regulations, controls, grants, subsidies, capital improvements, or other forms of public sector interven- tion to implement social objectives. According to this definition the market is simply an artifice, not an ideology. But is this what Richardson and Gordon mean? Unfor- tunately they never offer a formal definition of the terms8

The absence of a formal definition is not simply an oversight. It is symptomatic of the deep and fundamental cognitive dissonance they have with the very idea of planning. It is the market that is commonsensical to them, not planning. I would think that market planning is indeed an oxymoron to them. It is also a convenient red herring.

This becomes eminently transparent in their rhetoric. On the one hand they dismiss the market versus planning discussion as a false one, and suggest a “spectrum of systems rather than bipolarity.” Because of this contin- uum, “the choice between market solutions and planning interventions is irrelevant,” they argue. On the other hand, and contradicting their earlier statement, they ex- press their conviction that “market approaches. . . have much better prospects than command-and-control and regulatory approaches” to planning. Furthermore, their understanding of the scope of planning is based on a strictly economic concept of planning as public inter- vention in the face of market failures. They conclude that “in most cases there is available a pricing alternative to public planning.” This last assertion essentially liquidates the scope of public sector planning. This is basically anti- planning rhetoric. Market planning in this sense is a sub- terfuge.

If, however, we define market planning simply as the use of the marketplace to implement planning objectives, then it makes sense to examine the examples of market- based or market-driven approaches that Richardson and Gordon catalog. They propose three basic categories of market solutions: deregulation, privatization, and the creation of markets for conventional public goods or negative externalities such as air pollution. The first two ideas are more conventional market-based approaches. The last theme is more contemporary, and paradoxically calls for more, not less, planning.

Deregulation In the earlv 1980s. the middle-class tax revolt forced

governmentiat all levels to deregulate and privatize and to seek market-based solutions to negative externalities. In many instances privatization and deregulation worked marvels, but usually with institutional supervision. Where supervision was lax, the results were often disastrous.

The savings and loan debacle is a case in point. The bail-out has put additional burden on massive federal deficits and a severe strain on an already weakened na- tional economy. Even here, Richardson and Gordon gal- lantly come to the market’s defense, ascribing blame to the politicians for not knowing how to deregulate. The deregulation of the airlines, while bringing about some consumer benefits. caused both small and established

~

APA JOURNAL 356 SUMMER 1993

airlines to go under or to the brink of bankruptcy. Trav- elers on low frequented routes often pay high fares. Busi- ness travelers, unable to take advantage of discount fares, pay the premium, which adds substantially to business costs and lowers overall productivity. In the health and insurance industries, which are not regulated, consumer costs continue to skyrocket, defying all claims of market efficiency. Similarly the social and capital costs of un- regulated land markets, where they still exist, have be- come untenable. Houston, the only major U.S. city with- out any zoning regulations-and where powerful oilmen had historically rejected zoning as a Communist plot- is apparently taking its first step toward zoning (Belkin 199 1).

Privatization Privatization of conventional Dublic services and fa-

cilities has increased dramatically in the recent decade. In California, where Proposition 13 resulted in a declining revenue base, public agencies have launched entrepre- neurial ventures, competing in the marketplace with the private sector. In most cases competitive public services have not necessarily led to a diminution of government’s role. It simply gave the agencies autonomy from political accountability (Horton 1991). It is also unclear whether consumers have benefited.

In many instances privatization and deregulation have produced increased market competition, efficiency, and innovation, as economists had predicted. The Gomez- Ibanez and Meyer (1 990) study of deregulation and pri- vatization of the British bus services shows such a re- sponse. The authors also point out, however, that there have been both winners and losers. The British taxpayers clearly gained through a 25 percent cut in the localtrans- portation budget over two years. But the bus riders seem to have lost. In seven metropolitan counties, average bus fares went up 35 percent and the overall ridership de- clined by over 14 percent, even though the service level (in terms of bus miles of service) actually improved by 4 percent. Curiously the authors blame the bus riders’ loss on the subsidy cuts that accompanied deregulation and privatization. They do not say, however, whether or to what extent budget efficiencies-the taxpayers’ gains- could still be obtained if the subsidies were retained.

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Thus, privatization has obvious benefits, but they may replace benefits that existed before privatization took ef- fect. In this instance welfare distribution has changed unfavorably for the bus riders, and possibly for labor. And here is one of the fallacies of the Richardson-Gordon argument: Once privatized the public good may not serve the same public for whom the good was originally in- tended. In a sense the Gomez-Ibanez and Meyer study simply reinforces the original justification for public sec- tor provision of bus services-market failure. What is impressive, however, is their resolute optimism for pri- vatization and deregulation in the face of their own find- ings. They do concede that “public authorities have an important role to play in a deregulated and privatized industry, not only in managing the transition to the new regime but, more important, in maintaining competition in the privatized industry” (Gomez-Ibanez and Meyer 1990, 19). Translation: Markets cannot function without government bureaucracy!

Similarly, a study of privatized downtown open spaces in Los Angeles and San Francisco found that while the corporate plazas there are meant to serve a public func- tion, they are not truly public places. The users and the uses of the space are carefully screened and controlled. Furthermore, these spaces are physically remote from the areas that have a heavy concentration of pedestrians poorly served in terms of open space (Banerjee and Loukaitou-Sideris 1992). Ironically many of these pri- vately produced open spaces in both Los Angeles and San Francisco were paid for by the public in the form of FAR bonuses.

The arguments for privatization of public services and facilities often ignore the enormous public subsidies needed toward capital costs. The city of Fort Worth had to invest over $62 million or 70 percent of the street, drainage, and utility infrastructure improvement costs for the privatized Alliance Airport developed by the Perot Group (Nunn 199 l).’

Planned Markets The Richardson-Gordon paper also advocates the cre-

ation of new markets, a popular notion these days as jurisdictions grapple with environmental quality and waste management. In economic jargon, pollution and waste are social costs and negative externalities. These are the costs of production and consumption that are not presumably accounted for in market exchange and in market prices. Regulations that require mitigation at the pollution source invariably increase the cost of doing business, which is reflected in the price of a product. It is a forced internalization of externalities. The costs of meeting regulations, however, can be prohibitive for small businesses who ultimately sell out, close down, or move out. Also, higher production costs undermine the products’ competitiveness in the national and interna- tional marketplace.

The Southern California Air Quality Management District’s (SCAQMD) plan to experiment with a smog market was widely hailed as a major innovation. A Los

Angeles Times editorial called it a “grand ecological ex- periment: using market forces to reduce pollution.” Of- ficially designated as the Regional Clean Air Incentives Market (RECLAIM), it will include seven hundred busi- nesses that emit nitrogen oxides, two thousand firms that emit reactive organic gases, and one hundred firms that emit sulfur oxides (Stammer and Pasternak 1992). Each of these firms will get an initial entitlement to polluting rights, which will decrease steadily by 6 to 8 percent over ten years. Firms clever enough to cut their emission more than their entitlement quotas can sell their rights to those firms lagging in pollution control measures and exceeding their quotas. Savings in compliance costs will be substantial in the case of nitrogen oxides-close to $1.5 billion between 1994 and 1997-but only very slight in the case of hydrocarbons (Stammer and Pasternak 1992).

Doubting Thomases worry, nonetheless. Some ques- tion the distributive equity, and indeed the morality, of allocating initial entitlements to pollution rights (Cock- burn 199 1). Environmentalists worry about cheating, since emission measurements are not uniformly enforce- able for all businesses and plants. Labor representatives are concerned with the impact on workers as the smog exchange market provides an incentive for businesses to sell their entitlements and move out of the region (Cock- burn 199 1 ; Candaele 1992). Advocates for inner city res- idents worry that RECLAIM will trade in “cancer fu- tures,” since the program does not guarantee control of local pollution (Cockburn 199 1 ; Bernard and Green 1992). Since older, polluting industries typically reside in inner city areas, and the newer, cleaner industries in the suburbs, urban residents may be the last to reap the environmental benefits of the program and the first to be threatened by job loss. Finally, while the program may eliminate regulation, it will certainly increase bureau- cracy to verify compliance. The authority of the air quality district will increase, not decrease. Although the RE- CLAIM program was first announced in mid-199 1, it has yet to be finalized. The program is now embroiled in controversy, not necessarily from its detractors, but among its protagonists-the participating firms. The program will require considerable and careful planning. A May 26, 199 1, Los Angeles Times editorial observed: “Most bankruptcies in a truly free market result from bad planning; creating a market in smog probably is no exception.”

These examples suggest that market-based approaches to social and environmental problems are sometimes ef- fective, but often of dubious value. They do not neces- sarily weaken the need for an administrative bureaucracy. In fact the market approach may require more oversight in some cases. Market approaches may allow greater ef- ficiency in resource allocation, but the distributive effects may be questionable, since these approaches seem to benefit the haves at the expense of the have-nots. Eq- uity goals and other values that underlie the authority of public institutions are typically not met in many of these market approaches. The creation of new property

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rights engenders many serious moral, ethical, and legal dilemmas.

Nevertheless Southern California’s smog exchange is seen as a major market innovation. International agencies are looking to this model to solve environmental prob- lems worldwide. The World Bank, criticized for funding development projects that have devastated the environ- ment, is dedicated to the idea of “sustainable develop- ment.” In urging developing countries to prepare envi- ronmental action plans to guide their development pro- jects, the bank advocates market-based programs over government management. Some World Bank economists are intrigued with the idea of creating an international pollution market where countries can buy and sell pol- lution rights. The idea that poor countries could raise money from the industrialized West by selling pollution rights is an appealing prospect for some marketists (The Economist 1992; Cockburn 1992). After all, if the poor are allowed to sell their body parts to stay alive (Wallace 1992), why shouldn’t their governments be allowed to sell their environments?

Hamilton (1989) has argued that it is premature for countries without fully developed markets and with fledgling governments to use the market to solve envi- ronmental problems. Strong and stable institutions are a fundamental prerequisite for creating and planning new markets (Gomez-Ibanez and Meyer 1990; Colclough and Manor 1991 ; Hamilton 1989; Vernon-Wortzel and Wortzel 1989). The Southern California smog exchange can only be brought about by a strong institution such as SCAQMD, with its many years of air quality manage- ment experience.

Market Planners: Who Are They? Even if we were to accept all of the virtues of the

market-based approach extolled by Richardson and Gor- don, it is increasingly apparent that privatization and the creation of new markets require some form of planning. This insight offers a new meaning to the term market planning: the planning of new markets.

Having established that it is not planning that should be subservient to market, but the market that should be subservient to planning, we might ask Who are the mar- ket planners? Should market planning be considered an- other area of expertise for planners along with transpor- tation, housing, environment, economic development, and urban design? What special tools should market planners carry in their professional valises? Market anal- ysis? Accounting and finance? Expertise about stocks and bonds? Would not a business school graduate be better qualified for that kind of planning and management? After all, some business school faculty might argue that they teach planning too, albeit in the corporate context.

The search for a definition of a market planner reveals another limitation of the Richardson-Gordon paper. Since their critique is of planning qua regulation, the intended audience of their exhortation is public sector planning. Alexander (1 992) recently observed that the market ver-

sus planning debate almost always confines planners to that role. Many planners, however, work for the private sector, not only with consulting firms whose main com- missions come from public agencies (a form of privati- zation), but also with other corporate clients, real estate developers, and nonprofit enterprises. Also, more public sector planners are working with the private sector to develop joint private-public ventures ranging from downtown revitalization programs to major infrastructure improvement projects (Frieden and Sagalyn 1990). Aren’t these professionals, by virtue of their work with and for the private sector, market planners, too?

Yet, the persona of the market planner remains elusive, simply because the notion of market planning is a useless concept, a red herring. If, however, the creation of new markets proves to be an efficient and equitable way to achieve such goals as cleaning up the environment or disposing of toxic wastes, these measures will require considerable planning. If this in turn requires a special- ization within the field of planning, it will have to be reckoned with in the future curricula of planning edu- cation. A new breed of market planners may emerge, but the field will be very different from that implied by the Richardson-Gordon paper.

Society’s Guide In contrast to marketism-the ideology that informs

the market fetish and is unequivocally antiplanning- planning is not antimarket. In all capitalist economies the market is the chosen system of exchange. Planning, even in the limited sense in which Richardson and Gordon choose to define it, is not meant to undermine the market economy or capitalism. Marxist scholars recognize this and criticize planning for its implicit capitalist ideology (Harvey 1986; Dear and Scott 1981). The market is the medium for the conduct of planning in all liberal de- mocracies.

The role of planning increases with the growing com- plexities of technology, society, and the economy. Since the market involves not just prices and exchanges but also rights and welfare-two fundamental concepts that have long preoccupied economic theorists-intervention through planning is often necessary. Richardson and Gordon’s beginning argument echoes the popular neo- liberal position-market failures are less harmful than government failures. They ultimately end up arguing that the only thing planners should worry about is how to protect and enforce existing rights and how to create new property rights. Here they fall back on the utilitarian microeconomic theories of Coase and Pigou and the “contractarian” political philosophies of Locke and Nozick.

The Coasian argument challenges the conventional wisdom that market failures serve as the basis for public goods, and argues that the efficient allocation of all re- sources can be obtained through the market as long as initial rights are properly established, regardless of how they are structured (Coase 1960). This position, however,

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deftly sidesteps the most fundamental political and, some would argue, moral issues about the distribution of power, welfare, and opportunities. Nozick‘s (1 974) elab- oration of Locke’s philosophy of social contracts also argues that once property rights are justly obtained, pro- tection of such rights is paramount in the conduct of civil society. Here also the assumption of fairness of prior accumulation prevails. Yet today’s planners primarily deal with contentions about individual and collective rights, the unfairness of prior accumulation, and the dis- tribution of such rights in a pluralistic society. This point somehow eludes the marketists. Meanwhile, matters about the creation and protection of property rights con- tinue to pose legal and ethical problems, which can only be resolved through judicial and legislative processes, rather than by either the market or planning.

While it would be facile to blame the 1992 Los Angeles riots entirely on the conservative policies of the recent past, they did occur after a decade of market liberalism. The public policies of the 1980s, which were guided by market ideology, devastated the poor and the minorities of inner cities, contrary to their supporters’ claims of efficiency and equity. These policies exacerbated the ex- odus of jobs and industries from the central city, accel- erated disinvestment from inner city neighborhoods, widened an already polarized income spread, and failed to lift the economic underclass from their legacy of pov- erty and despair. Meanwhile, nonchalant marketists con- tinue to celebrate and advocate metropolitan decentral- ization as the incontrovertible outcome of market pro- cesses.

The market can be “blind and deaf,” as Octavio Paz suggests, for it does not have to guide. But society needs a guide. Planning must have eyes and ears for it is the guide.

NOTES

1.

2.

3.

4.

5.

6.

The alliteration in the title is in part inspired by the earlier Dyckman article. But my purpose in invoking it goes beyond mere alliteration, as should be evident. It is not clear if the collapse of communism necessarily meant a victory of capitalism or resulted from a desire for market economy, Fukuyama (1 989) notwithstand- ing. See Heilbroner (1 990), for example. I have defined marketism elsewhere as the unbending faith in the market, which becomes a form of ideology (Banerjee 1993). The Richardson-Go-rdon paper was written in part to counter my earlier argument that marketism (as well as Marxism) are essentially antiplanning. Marxist scholarship sees planning as a state apparatus (Clark and Dear 1984), intended to minimize the con- flicts of a capitalist economy and to help the repro- duction of capital. Planners are characterized as the functionaries of the capitalist state (Harvey 1986). See Langer’s (1 984) discussion of alternative models of organized diversity, one of which is the bazaar, the marketplace in Eastern cities.

This view, popular in the mid-eighteenth century was discredited by the Marxist thesis of the self-destruction of capitalism, and additional sociological critiques of the market economy’s pernicious effect on the social and moral order of the community, and other subse- quent interpretations of capitalism as a weak force in achieving progressive social order (See Hirschman 1982). Richardson and Gordon never use the term in their own text. The only place where the term appears is a quote from my earlier article in which I claimed that market planning is an euphemism for antiplan- ning. The airport has received considerable media coverage as an example of the can do spirit of Ross Perot.

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