B Planning becomes necessary for equitable distribution of economic power The

B planning becomes necessary for equitable

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B. Planning becomes necessary for equitable distribution of economic power The price mechanism rewards people according to the resources they possess but contains in itself no mechanism for equalization of the distribution of those resources. There is no wonder, therefore, that there are wide gaps between the 'haves' and 'have nots' which seriously offend against sense of social justice. Shocking economic inequalities are a marked feature of an unplanned economy. Inequalities result in heart burning and social tensions. They also paralyze some of the ablest members of the society. Reduction of inequalities in income, wealth and economic opportunities is, therefore, now the avowed aim of modern welfare States and it is impossible of achievement without the instrument of planning. In the absence of planning, inequalities will not only be perpetuated but accentuated from generation to generation. C. Planning helps to protect labor and harmonize wage relations It has been seen that labor legislation alone cannot protect labor and harmonize wage relations when market mechanism is permitted to operate freely. A planning authority must step to regulate the economic growth of the country as to ensure to the actual workers the fruits of their labor. If there was perfect competition and full-employment, the price mechanism, shorn of its imperfections, would have afforded due protection of labor rights. But this is a big 'IF'. The State is a more effective guardian of labor rights than self adjusting and automatic economic forces. By proper planning, it will be possible to provide perfect social security to all workers. 20 | P a g e
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D. Planning helps to eliminate economic instabilities Planning has also proved to be a powerful instrument for eliminating instability which is necessary concomitant of free market economy. Private enterprise left to it would produce trade cycles, unemployment and misery. As Barbara Wotton remarks "the progress of an unplanned capitalist economy has always been liable to interruptions from the tendency of the system to fall over its own toes, from a certain continued instability in its gait." It is not generally agreed that planning of economic activity goes a long way in smoothening the violent oscillations and swings in business. It is on this ground that planning is advocated even for developed and advanced economies. These countries may not need any further economic development; but they certainly need a mechanism which would prevent violent ups and downs in the movements of business activity and smoothen the course of business. In the 1930s every country suffered from Depression except Russia which was a planned economy. E. Planning helps to make terms of trade favorable to the country Again, it is planning alone which can ensure that the terms of trade remain favorable to a country. The volume and direction of foreign trade of a country admittedly plays a very important part not only in economic development but also in determining the level of general well-being in a community. But handling of foreign trade by the market has proved utterly inadequate. Foreign trade must be thoroughly planned, if fruits of economic development are not to be thrown away. This aspect of economic development has been paid special attention by
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  • Summer '17
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  • Economics, Planned economy

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