Horizontal Economic Planning or Decentralized Economic Planning is is a type of economy in which the investment and allocation of resources and goods is done accordingly to an economy-wide plan built and coordinated through a distributed network of disparate economic agents (ie community assemblies and confederations) production units (self-managed workplaces).
Theory
Calculation in Kind
Supply and Demand
Investment and Growth
From An Anarchist FAQ:
In a communist-anarchist society, things would be slightly different as this would not have the labour notes used in mutualism and collectivism. This means that the collectives would agree that a certain part of their output and activity will be directed to investment projects. In effect, each collective is able to draw upon the sums approved of by the Commune in the form of an agreed claim on the labour power of all the collectives (investment “is essentially an allocation of material and labour, and fundamentally, an allocation of human productive power.” [Cole, Op. Cit., pp. 144–5]). In this way, mutual aid ensures a suitable pool of resources for the future from which all benefit.
How would this work? Obviously investment decisions have implications for society as a whole. The implementation of these decisions require the use of existing capacity and so must be the responsibility of the appropriate level of the confederation in question. Investment decisions taken at levels above the production unit become effective in the form of demand for the current output of the syndicates which have the capacity to produce the goods required. This would require each syndicate to “prepare a budget, showing its estimate of requirements both of goods or services for immediate use, and of extensions and improvements.” [Cole, Op. Cit., p. 145] These budgets and investment projects would be discussed at the appropriate level of the confederation (in this, communist-anarchism would be similar to collectivist anarchism).
The confederation of syndicates/communes would be the ideal forum to discuss (communicate) the various investment plans required — and to allocate scarce resources between competing ends. This would involve, possibly, dividing investment into two groups — necessary and optional — and using statistical techniques to consider the impact of an investment decision (for example, the use of input-output tables could be used to see if a given investment decision in, say, the steel industry would require investment in energy production). In this way social needs and social costs would be taken into account and ensure that investment decisions are not taken in isolation from one another, so causing bottle-necks and insufficient production due to lack of inputs from other industries.
Necessary investments are those which have been agreed upon by the appropriate confederation. It means that resources and productive capacity are prioritised towards them, as indicated in the agreed investment project. It will not be required to determine precisely who will provide the necessary goods for a given investment project, just that it has priority over other requests. When a bank gives a company credit, it rarely asks exactly where that money will be built. Rather, it gives the company the power to command the labour of other workers by supplying them with credit. Similarly in an anarcho-communist society, except that the other workers have agreed to supply their labour for the project in question by designating it a “necessary investment.” This means when a request arrives at a syndicate for a “necessary investment” a syndicate must try and meet it (i.e. it must place the request into its production schedule before “optional” requests, assuming that it has the capacity to meet it). A list of necessary investment projects, including what they require and if they have been ordered, will be available to all syndicates to ensure such a request is a real one.
Optional investment is simply investment projects which have not been agreed to by a confederation. This means that when a syndicate or commune places orders with a syndicate they may not be meet or take longer to arrive. The project may go ahead, but it depends on whether the syndicate or commune can find workers willing to do that work. This would be applicable for small scale investment decisions or those which other communes/syndicates do not think of as essential.
This we have two inter-related investment strategies. A communist-anarchist society would prioritise certain forms of investment by the use of “necessary” and “optional” investment projects. This socialisation of investment will allow a free society to ensure that social needs are meet while maintaining a decentralised and dynamic “economy.” Major projects to meet social needs will be organised effectively, but with diversity for minor projects. In addition, it will also allow such a society to keep track of what actual percentage of resources are being used for investment, so ensuring that current needs are not sacrificed for future ones and vice-versa.
As for when investment is needed, it is clear that this will be based on the changes in demand for goods in both collectivist and communist anarchism. As Guilliame puts it, “[b]y means of statistics gathered from all the communes in a region, it will be possible to scientifically balance production and consumption. In line with these statistics, it will also be possible to add more help in industries where production is insufficient and reduce the number of men where there is a surplus of production.” [Bakunin on Anarchism, p. 370] Obviously, investment in branches of production with a high demand would be essential and this would be easily seen from the statistics generated by the collectives and communes. Tom Brown states this obvious point:
As a rule of thumb, syndicates that produce investment goods would be inclined to supply other syndicates who are experiencing excess demand before others, all other things being equal. Because of such guidelines and communication between producers, investment would go to those industries that actually required them. In other words, customer choice (as indicated by individuals choosing between the output of different syndicates) would generate information that is relevant to investment decisions.
As production would be decentralised as far as it is sensible and rationale to do so, each locality/region would be able to understand its own requirements and apply them as it sees fit. This means that large-scale planning would not be conducted (assuming that it could work in practice, of course) simply because it would not be needed.
This, combined with an extensive communications network, would ensure that investment not only did not duplicate unused plant within the economy but that investments take into account the specific problems and opportunities each locality has. Of course, collectives would experiment with new lines and technology as well as existing lines and so invest in new technologies and products. As occurs under capitalism, extensive consumer testing would occur before dedicating major investment decisions to new products.
In addition, investment decisions would also require information which showed the different outcomes of different options. By this we simply mean an analysis of how different investment projects relate to each other in terms of inputs and outputs, compared to the existing techniques. This would be in the form of cost-benefit analysis (as outlined in section I.4.4) and would show when it would make economic, social and ecological sense to switch industrial techniques to more efficient and/or more empowering and/or more ecologically sound methods. Such an evaluation would indicate levels of inputs and compare them to the likely outputs. For example, if a new production technique reduced the number of hours worked in total (comparing the hours worked to produce the machinery with that reduced in using it) as well as reducing waste products for a similar output, then such a technique would be implemented.
Similarly with communities. A commune will obviously have to decide upon and plan civic investment (e.g. new parks, housing and so forth). They will also have the deciding say in industrial developments in their area as it would be unfair for syndicate to just decide to build a cement factory next to a housing co-operative if they did not want it. There is a case for arguing that the local commune will decide on investment decisions for syndicates in its area (for example, a syndicate may produce X plans which will be discussed in the local commune and 1 plan finalised from the debate). For regional decisions (for example, a new hospital) would be decided at the appropriate level, with information fed from the health syndicate and consumer co-operatives. The actual location for investment decisions will be worked out by those involved. However, local syndicates must be the focal point for developing new products and investment plans in order to encourage innovation.