a rudra - economic and political weekly · a rudra the purpose of a perspective plan is to set a...

THE ECONOMIC WEEKLY SPECIAL NUMBER JULY 1959

Perspective Planning A Rudra

T H E purpose o f a perspective p lan is to set a 'perspective' fo r the

short t e r m plans. The short t e r m plans, so w o r k e d out, wou ld be such as to lead to cer ta in long t e r m results. The shor t t e rm plans in themselves m a y f a i l to sat isfy any condit ions of o p t i m a l i t y ; the whole series of t hem would , however, sat isfy some such condit ions appl i -cable to a wider horizon of t ime . I t is clear t h a t such a shor t t e r m p l an should share some of the qual i -ties of both a concrete shor t t e r m plan as we l l as t ha t of a theoret ical long t e r m project ion. The pr inc ipa l feature of a concrete shor t t e r m p lan is w h a t m a y be te rmed i ts hor i zon ta l ha rmony . T h a t i s to say, the schemes and targets for the different sectors are such t h a t they do not cause any bottlenecks fo r each other. On the other hand the pr inc ipa l feature of an abst ract theoret ical project ion i s w h a t m a y be called i ts ver t ica l ha rmony ; t h a t is to say, h a r m o n y as between the projections fo r the different points of t ime. It is obvious tha t a per-spective p lan must exhibi t bo th hor izon ta l as we l l as ve r t i ca l h a r -mony.

Be ing not Just a theoret ical pro-ject ion, a perspective p lan must consider a f a i r l y large number of sectors. At any g iven t ime there must be h a r m o n y between the ac t i -vi t ies in the different sectors, so t h a t the p lan must exh ib i t h o r i -zonta l h a r m o n y at each t ime point , or a t least for each smal l t ime i n -t e r v a l i n to w h i c h the p lan period can be b roken up. At the same t ime there should be ver t i ca l har-mony. Such h a r m o n y should exist not on ly for a l l the sectors t a k e n together bu t fo r each sector ind i -v i d u a l l y . T h a t is to say, the deve-lopment w i t h i n each sector should be such as to sa t isfy some condi-t ions o f l o n g t e r m o p t i m a l i t y .

Experts' Plans In p l a n n i n g l i te ra ture , one comes

across two types of l o n g t e rm plans nei ther of w h i c h satisfies the speci-fications of a perspective p lan as g iven above. There are long t e r m plans w h i c h sat isfy the condi t ion of ver t ica l balance bu t t o t a l l y lack any hor izon ta l dimension. Such plans usual ly deal w i t h only a single sector at a t ime and consequently there cannot be any question of sec-t o r a l balance. These are plans pre-pared by technical experts. The f i rs t example t ha t comes to m i n d is the electr i f icat ion plan of the ear ly Soviet planners wh ich receiv-ed such powerful back ing f r o m L e n i n . In I n d i a there have been var ious such plans fo r the develop-ment of roads, education, hea l th etc.

Whenever one t a lks about a pro-g ramme of e l im ina t i ng m a l a r i a o r do ing away w i t h i l l i t e r acy o r m a k -i n g f u l l use of wa te r resources, one i s t h i n k i n g in terms of long t e r m plans of th is type. The C o m m u n i t y Development and N a t i o n a l Ex ten -sion P rogramme of the Government of I n d i a are also in a w a y long t e r m plans of th is type. The A t o -mic Energy Commission in regard to the development of a tomic power or the Rubber Board in regard to r ep lan t ing of rubber p lanta t ions obviously fo l low s imi la r plans. I f a count ry wants to develop i ts fore-ign t rade in a planned way, t h a t has also, to some extent, to be a long t e r m plan of th is type.

The few examples t h a t have been jus t given leave no doubt about the importance of such specialised long t e r m plans as d i s t inc t f r o m general plans, long t e r m or short t e r m . T a k e e l imina t ion o f ma la r i a . I f such an objective Is to be realised, it is necessary to have a clear cut a n d wel l -planned p rogramme of ac-t i o n spread over a number of years;

i t is not possible to a r r ive at such a wel l -planned programme f r o m a n y general overal l considerations re-ga rd ing income or employment or any other macro-variables. Even if m a l a r i a con t ro l be regarded as a sector in a general frame w o r k , the programme that wou ld result, i f the actions to be t aken in the field were determined ent i re ly as functions of some general overa l l variables, would consist of a series of heterogeneous actions ra ther than a single homogeneous plan.

S imi la r ly , no long t e rm p rog ram-me of development of hea l th ser-vices or educational facil i t ies or a tomic energy for peaceful use can be worked out by mere planners or economists w i t h o u t the help of ex-perts w i t h thorough knowledge and experience in the respective fields. I t is real ly the job of educationists and heal th service officials and ato-mic scientists. B u t precisely be-cause such plans l ay more emphasis and more importance on technical aspects r a the r t h a n economic ones, are made in isola t ion for one sec-to r at a t ime and are the works of specialists and not economists or planners, they cannot serve the pur-pose of perspective plans, even if one has a bunch of such l ong te rm plans d r a w n up for a l l the sectors.

Such a bunch of long t e rm plans w i l l t o t a l l y lack any hor izonta l ha rmony : the condit ions of sectoral interdependence w i l l not be respect-ed, the fundamenta l balances ( tha t between the demand and supply of commodities, tha t between savings and investment, etc) w i l l not be ob-served. Also the techniques used in the different sectors w i l l not and cannot correspond to any no t ion of o p t i m a l i t y for the economy as a whole .

Econometrician's Plan L e t us now consider the other

type of l ong t e rm plan , namely

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Longterm planning and perspective planning are words by now familiar in India. That does not mean that any such plan has been made for India; (if something like that has indeed been made, it has at least not been made public).

Lest there be any misunderstanding, let me make clear what I mean by a "Perspective Plan' . It is a plan for a fairly long period, say 15 or 20 years, less detailed and less concrete than plans actually im-plemented schemewise ( w h i c h are usually of duration between 3 and 7 years) and less abstract than mere statistical projections based on more or less simple econometric models.

It is neither a fully worked out plan nor just a theoretical exercise, but a framework within which concrete short term plans can be fitted.

t h a t of the econometrician. Th i s is on the whole a ma thema t i ca l exercise. The economy is consi-dered in an abst ract f o r m ; i t i s t reated as composed of a finite number of sectors; a large number of equations and relat ions are w r i t t e n down connect ing the levels of output , investment , employment in the different sectors in a given year or a number of successive years. The problem of investment a l locat ion , technological choice and a l l other problems of long t e r m p lann ing is a t tempted to be solved once for a l l w i t h i n the f r ame-work of this model at one s t roke: a l l t ha t is necessary is to solve the sys-tem of equations so as to satisfy sonic o p t i m a l i t y condi t ion or condi-tions. The problem real ly reduces to one of l inear or non-linear pro-g r a m m i n g ,

Several at tempts have been made in I n d i a at this type of long t e rm plan m a k i n g by both I n d i a n and foreign econometricians. As a mat-ter of fact some of the most dis-t inguished econometricians of the w o r l d have t r ied to assist I n d i a in this mat ter . (Let us recall tha t I n -d ian planners have had the benefit of advice f r o m such masters in the subject as Jan Tinbergen and Rag-nar F r i s c h h However this par t icu la r approach does not seem to have led any where, p l ann ing in Ind ia has been left p rac t ica l ly unaffected by a l l these essays. P a r t l y of course i t is accounted for by the unsatis-fac tory condit ions ob ta in ing in I n d i a for prac t ica l appl icat ion of this type of econometric models. The models are usual ly very complicat-ed and in order to use them, it is necessary to use g i an t ca lcu la t ing machines not m a n y of wh ich are avai lable in Ind ia . Then, in order-to obta in pract ical results f r o m these models, it is necessary to feed the ca lcu la t ing machines w i t h data regard ing a l l sorts of technological coefficients, most of wh ich are dif f i -cult to obta in for Ind ia .

Bu t apart f rom these prac t ica l difficulties, there are serious weak-nesses in the approach itself. I t is very much to be doubted whether a set of figures and a set of simple ma themat i ca l relat ions can ever re-present rea l i ty , whether of a p a r t i -cular section or of the whole of an economy. They cannot possibly take fu l l account of a l l the factors t ha t have to be t aken in to consi-dera t ion in the prepara t ion of an experts' plan fo r a pa r t i cu la r sec-

tor . The i r use cannot therefore result in the same ve r t i ca l h a r m o n y w i t h i n each sector as is assured by the expert's plans; as a m a t t e r of fact , i t wou ld be quite possible a n d even l i k e l y t h a t an econometric plan w h i c h wou ld assure the op t i -m u m development of income or em-ployment or some such macro -va r i -able over a period of t ime, wou ld do so at the cost of disharmonious o r deformed g r o w t h w i t h i n i n d i v i -dual sectors. This would mean t h a t despite a l l the theoret ical charms of the model, prac t ica l p l ann ing would not be possible on its basis.

Even i f i t were possible to t ake account of a l l the relevant factors connected w i t h each sector in a complex ma themat i ca l model, the approach would remain open to c r i t i c i sm on the ground of the me-thod used for a r r i v i n g at the op t i -m u m solut ion. The method is tha t of m a x i m i s i n g a par t i cu la r var iable or a 'preference funct ion ' . It is to be seriously doubted t ha t by the m a x i m i s a t i o n of a simple mathe-ma t i ca l funct ion of a number of variables, one can obta in a result t ha t would correspond to the most desirable of the possible courses of act ion. The entire approach is de-signed to y ie ld a result tha t wou ld be object ively op t imum. Rut th is search for an objective o p t i m u m i tself is based on a misunders tand-ing .

No One Single Goal I f in p lann ing one were to have

a single goal l ike the m a x i m i s a t i o n of steel product ion in a given year or t h a t of employment at the end of ten years etc, it wou ld be pos-sible to have a so called preference funct ion tha t w o u l d f a i t h f u l l y t r a n -slate the planners ' preferences. One would , however, be quite m a d to make a long t e r m plan w i t h the single objective of max imisa t ion of any one var iable however i m p o r t -ant , at a pa r t i cu la r point of t ime or over a g iven period of t ime. No par t i cu la r var iable (be i t employ-ment or product ion of steel or t o t a l surplus in the economy), no p a r t i -cular t ime point , no pa r t i cu la r l eng th of period (be it five years, ten years or fifteen years) can have so much importance as to be able to determine in this manner the en-t i r e l ong t e r m plan for an economy.

The planner cannot but have a large number of desirable ends in v iew; he m a y w a n t to increase em-ployment as we l l as income; deve-lop steel product ion as wel l as che-

mica l industr ies; educational f a c i l i -ties as we l l as hea l th faci l i t ies , and so on. To choose any one of t hem for m a x i m i s a t i o n m i g h t resul t i n g i v i n g to the others a t r ea tment t ha t w o u l d not be acceptable to any prac t ica l planner. The econometr i -cian does not of course choose jus t one var iable out of the possible al ternat ives . His solut ion, a false one, is to construct a func t ion of a l l the variables invo lved (the so-called preference func t ion) and maximise i t . The idea is to so con-st ruct the func t ion t ha t i t gives to each var iable jus t the amount of weight i t carries in the planner 's m i n d in re la t ion to the others. Thus a preference func t ion m i g h t look as follows: 5 t imes steel output plus 2.3 t imes number of schools plus 2.9 t imes number of N E S Blocks plus . . . etc.

The econometrician feels t r i u m -phant for being able to get round the problem of h a v i n g a m u l t i p l i -c i ty of desired ends in this elegant manner. An examina t ion however shows that, such a preference func-t i on cannot possibly lead to any object ively op t imum solut ion; for sub-jective considerations enter in to the very construct ion of the preference funct ion itself. H o w in practice to decide upon the weights to be given to the different variables? I t m a y be desired tha t steel product ion be given more importance than open-ing of new N E S Blocks ; but how can one decide t ha t the impor tance should be in the propor t ion of 5:2.9? Such a decision cannot bu t be a purely subjective act. The whole t h i n g therefore does not lead to any more objective results t h a n one would have, if one were to choose f rom among a few r i v a l courses of act ion in a purely subjective fashion: l o o k i n g a t them f r o m differ-ent angles, men ta l l y we igh ing up the pros and cons and m a k i n g a decision in a more or less a r b i t r a r y fashion.

A Unified Approach The expert 's l ong t e r m p lan fails

to provide a long t e r m perspective to the shor t t e r m planner because it lacks the quali t ies of the econo-metr ic ian ' s l ong t e r m plan, namely hor izon ta l balance a n d o p t i m a l i t y f r o m the economic point of view. The econometrician's long t e rm p lan on the other hand fai ls to deliver the goods for l a c k i n g precisely the qualit ies t h a t are the s t rong points of the experts' plans, namely v e r t i -cal h a r m o n y in sectoral p rog ram-

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mes f r o m the technical point of view. I t w o u l d appear t h a t we wou ld have w h a t we are l o o k i n g for if a mar r i age could be effected between the two approaches. We shal l now proceed to invest igate i f and how such a mar r i age could be effected. Le t us assume the eco-

nomy to consist of ' n ' sectors in a l l . The sectors m a y correspond to the different -heads under w h i c h the plan is discussed in I n d i a (e g, I r r i -ga t ion , Power, Indus t ry , Hea l th , Educat ion , Ra i lways , A g r i c u l t u r e e tc} . T h a t is to say the sectors are such as to correspond to the different executive departments of government ra the r t h a n different economically s ignif icant divisions of the society. We shal l imagine tha t a long t e r m plan is d r a w n up for each such sector by experts. Let the plan for the sector ' A ' be designated b y ' A ' = [ A ( t 1 ) A ( t 2 ) A . . . A ( t n ) ] where t1 , t2 tn are suc-cessive t ime in terva ls s t re tching over the p lan period. A(t1 )stands not fo r jus t one or more than one figure but a complex of concrete targets and programmes of act ion to be achieved d u r i n g the i n t e rva l i S imi l a r ly , let (B) - [ B ( t 1 ) , B( t 2 )

B ( t n ) I be the plan for .sector B. As we have mentioned before there are two reasons w h y one cannot merely put together long t e r m plans l ike ( A ) , ( B ) , (C) etc to produce a perspective plan. F i r s t l y , as they have been made independently, there is not to be ex-pected any co-ordinat ion between the programmes A(t ) , B ( t ) , C ( t ) etc w h i c h are supposed a l l to be implemented d u r i n g the same period 't'. Secondly, the technological choices invo lved in the expert 's plans ( A ) , ( B ) , (C) etc may be the best choices possible f r o m the ex-perts ' point of v iew but need not necessarily be so f r o m the overal l economic point of view.

Intersector Balance We sha l l concentrate f i rs t of a l l

on the problem of achieving h o r i -zon ta l h a r m o n y between the para l -le l l ong t e r m plans. As to this there seems to be an easy w a y out. I t is af ter a l l no t necessary to b r i n g in the suffix ' t ' a t a l l ! An expert 's l ong t e r m p lan can be d r a w n up w i t h o u t f ixing defini tely the dates by w h i c h the different stages of the p lan are to be ful f i l led . Such

a p lan w i l l consist of a large num-ber of separate programmes w i t h a cer ta in amount of technical interdependence between them. Also , each p rogramme is capable of d i v i -sion in to a numbr of stages. The t i m e element need enter the prob-l em solely in the capaci ty of o rd ina l

re lat ions among the different stages of each of the programmes. L e t us g ive an example. Consider a l ong t e r m plan for r u r a l e lectr i f i -cat ion. The plan can foe divided in to a number of programmes re-l a t i n g to the different regions to be served. The programmes need not have any da ta m a r k s a t a l l . The engineering details m a y be w o r k e d out in an out l ine fashion for a l l of them w i t h o u t k n o w i n g when each region w i l l be connected up and over w h a t t ime the works w i l l last . Each regional p rog ramme can how-ever be divided w i t h advantage i n -to a number of stages; thus the first stage may be the provis ion of indus t r i a l power alone; the second stage tha t of street l i g h t i n g and the t h i r d stage t ha t of domestic power. S imi l a r l y , the long t e rm p lan for the development of wa te r resources m a y be divided first in to a number of programmes each re-l a t i n g to a par t i cu la r r iver val ley. Each p rogramme can be again divided up in to a number of stages depending on engineering consider-ations. Thus, the plan for sector A may be represented by a m a t r i x as fo l lows;—

when A a , A b , A C etc s tand for the different programmes belonging to the l ong t e r m p lan ( A ) and A a ( 1 ) , A a ( 2 ) , A b ( 1 ) , A b ( 2 ) etc for the different stages of the programmes A a , A b etc.

We sha l l have s imi la r matr ices for each of the sectors, B, C, D etc. The elements of the matr ices are the b r icks w i t h the help of w h i c h a unified long t e r m plan can now be bu i l t up. The w o r k consists in a r r a n g i n g the elements of the ma t -rices in a t ime schedule such t ha t in the bunch so formed of dated programmes, there w o u l d be bo th hor izon ta l as wel l as ver t i ca l ba l -ance. In order to assure ve r t i ca l balance w i t h i n each sector, a l l t ha t

need be done is to observe the s im-ple rule t ha t a la ter stage of a par-t icu la r programme of a par t icu la r sector should not come before an earlier stage of the same p rogram-me. Tha t is to say, a unified long t e r m plan thus bu i l t up wou ld look something l ike th is :

3 A a ( 3 ) , B a ( 4 ) D a ( 3 ) , D b ( 1 ) , E a ( 1 )

I t is to be noted t ha t in any one period more t han one stage of a programme m a y be Implemented, or a par t i cu la r programme migh t not f igure at a l l . As to m a i n t a i n i n g hor izonta l harmony, the arrange-ments over t ime of the long t e rm plans have to be such tha t the diff-erent programmes or the different stages of different programmes be-long ing to different sectors taken up for implementa t ion d u r i n g the same t ime in te rva l satisfy a num-ber of condit ions. (Thus, at each t ime point demand and supply must be approximate ly equal, whether it is for consumer goods or capi ta l goods or r aw mater ia ls ; investment carr ied out in the period must equal savings created d u r i n g the same etc) . If we have to set down here a l l the conditions tha t wou ld have to be satisfied i f hor izonta l ha rmony is to be mainta ined, we could fill the whole page w i t h symbols, coeffi-cients and equations. T h a t is. how-ever, not necessary. It need only be stated here t ha t a l l the variables enter ing into the balance equations can be calculated on the basis of the elements of the matr ices ( A ) , ( B ) , (C) etc corresponding to any g iven t ime point and tha t a solu-t ion to the problem exists; tha t is to say it is not impossible to put together at the same t ime point elements f rom the matr ices ( A ) , ( B ) , (C) etc in such a way as to satisfy a l l the balance conditions.

Technological Choice The rea l ly diff icult as we l l as i n -

terest ing problem is the one of tech-nological choice. In our approach experts are at the first instance asked to make dateless l ong t e rm plans. Bu t they have to be guided in the ma t t e r of preference to be shown in technological mat ters . Otherwise different experts would proceed according to different pr in-ciples, w h i c h could h a r d l y be ex-pected to be such as to conform to the c r i t e r i a the planner would l ike to have in the interest of the eco-nomy taken as a whole. The dis-

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cussions tha t have up t i l l now t aken place on the question of technolo-gica l choice have mos t ly been car-r ied out In a manner as to be appl i -cable to only single elements of the matr ices we have considered. Thus, one considers an element l ike A b ( 3 ) w h i c h stands for a pa r t i cu la r stage of a pa r t i cu l a r programme, e g, t h a t of c rea t ing add i t iona l capacity of product ion of a given quan t i t y in a cer ta in product ive sector. Associated w i t h such a p rogramme is a cer-t a i n capi ta l expenditure and cer ta in potent ials of product ion, employ-ment and surplus. The ends t h a t are sought, however, do not relate to any one p rogramme or even any one sector, but to a l l the sectors taken together; fur ther , they refer to not ju s t a single po in t of t ime but to a long period.

Thus one m a y desire to solve the unemployment problem at the shor-test possible t ime or maximise the level of per capi ta income by the end of a specified number of years. When such are the ends it is of course no use t a l k i n g in terms of a model tha t is applicable to a single programme only, or jus t a stage of a p rogramme. A t t e m p t s have been made not to face the problem by say ing t h a t the same arguments can be used w i t h re-g a r d to the entire economy t a k e n as a whole. Tha t , of course, is correct. B u t the problem remains essentially unresolved. One has f ina l ly to choose techniques for ind iv idua l programmes; the ques-t ion is, how to deduce f r o m results applicable to the whole economy concrete results va l i d fo r specific programmes in specific sectors? No sat isfactory answer has yet been g iven to this question. W h a t can be established very easily is t ha t i t is not sufficient to reproduce the condit ions applicable to the entire economy for ind iv idua l pro-grammes; nor condit ions applicable to an extended period for any g i -ven poin t in t h a t period. Th i s negative demons t ra t ion however does not go fa r enough. There must be found some rules fo r act ion.

Short and Long Run Before deciding upon the rules of

act ion, one has to be clear about one's ends. In the short run , differ-ent results are obtained by m a x i -mis ing output or employment or surplus for a given amount of capi-t a l o r by m i n i m i s i n g capi ta l , any one of the above i tems being given.

The differences, however, van i sh when a long period is considered. The same techniques t ha t w o u l d create a large increase in income wou ld also create a large volume of employment and are the same as those t h a t w o u l d generate a large mass of surplus. Hence, the problem of h a v i n g more t h a n one desired end does not r ea l ly arise. I t i s quite sa t is factory to l ay d o w n t h a t the problem of technological choice should be solved in such a way as to maximise the t o t a l accu-m u l a t i o n o f capi ta l r esu l t ing f r o m surplus du r ing the course of a l ong t e r m period.

We m a y divide the problem in to t w o par ts . F i r s t l y we m a y con-sider the techniques u t i l i sed in the implementa t ion of a p rog ramme; a n d secondly, the techniques em-bodied in the ins ta l la t ions b rought about by the programme. Thus, let us consider the p rogramme of se t t ing up a hydro-electr ic project . The first technique ment ioned is the technique used in the ve ry construc-t i o n stage of the project; the second technique ment ioned is the technique of genera t ing e lect r ic i ty in t h a t period. S i m i l a r l y imagine a telephone exchange. There w o u l d be, on the one hand, a l t e rna t ive techniques tha t could be used in the se t t ing up of the bu i ld ing and i n -s ta l la t ions ; there w o u l d be, on the other, different types of ins ta l l a -tions i n v o l v i n g very different lab-our requirements fo r g e t t i n g the same amoun t of w o r k done. The question of technology in the t w o cases differs in t h a t the results in terms of income or employment or surplus In the first case are of a s t r i c t l y l i m i t e d d u r a t i o n a n d i n the second of a recurrent character. In the case of const ruct ion works , the costs to consider w i t h respect to the fu l f i lment of a g iven p rog ramme are ( i ) the expenditure on works pro-per, and ( i i ) the cost of p rocu r ing mach ine ry a n d other aids to con-s t ruc t ion works w h i c h do not a l l get used up in the fu l f i lmen t of a single p rogramme. The costs to consider in the other case are ( i ) the value of capi ta l i n s t a l l a t i on set up and ( i i ) the recurrent cost fo r u t i l i s i n g the ins ta l la t ions to the i r f u l l capacity.

Minimum Cost Principle I t w o u l d seem tha t the problem

of t r a n s l a t i n g the task o f m a x i m i s -i n g the t o t a l surplus fo r the whole economy over a l ong period of t ime in to technological choices for i n d i -

T H E E C O N O M I C W E E K L Y

v idua l programmes could be t ack led by adopt ing some k i n d of a pr inciple o f M i n i m u m Cost fo r the l ong t e r m programmes t a k e n as a whole. E v e r y long t e r m p lan m i g h t be so d r a w n up as to make Its t o t a l cost a m i n i m u m . By ' t o t a l cost ' we mean the sum of a l l types of cost invo lved in the rea l i sa t ion of a g iven l ong t e r m plan.

Whi l e in the shor t r un , the differ-ent i tems of cost ci ted at the end of the preceding section have to be t rea ted as separate variables, there is the advantage i n , the case of long t e r m plans t ha t such costs may be t reated as addi t ive . L e t us, for example, consider a l o n g t e r m p lan for the development of roads. I t w o u l d d r a w up a picture of road ne tworks as desired to be realised in the long r u n . In i ts cost calcu-la t ions we shal l have t w o i tems: the cost of w o r k s proper and the cost of purchasing cons t ruc t ion equipment. F o r a l ong t e r m p l an these two can be added together to ob ta in the t o t a l cost; for , the equip-ment locked up in the implementa-t i o n of the l ong t e r m plan m a y be considered as becoming completely eaten up by i t . In the shor t r u n , however, on ly a p o r t i o n of the equip-ment gets used up and therefore one. is obliged to consider the cost in terms o f t w o variables, b o t h o f w h i c h cannot be min imised at the same t ime.

I t should be noted t h a t our sug-gestion does no t boi l down to the usual procedure of i nc lud ing in short t e r m cost ca lcu la t ion the de-preciated par t of f ixed cap i ta l and m i n i m i s i n g th i s cost per u n i t of output . We are not ins i s t ing on unit-cost m i n i m i s a t i o n as such, bu t t o t a l cost m i n i m i s a t i o n f o r a l o n g t e r m period, and t h a t means t h a t we are a l l o w i n g fo r the possibi l i ty of cer ta in stages of a p rog ramme or even ce r ta in entire programmes belonging to a long t e r m p lan be-i n g r u n on n o n - m i n i m u m cost bases in the interest of the ent i re l o n g t e r m p lan being fu l f i l l ed a t the m i n i m u m t o t a l cost.

Here, yet another poin t deserves a t t en t ion . We are considering ex-perts ' plans fo r Ind iv idua l sectors. As such, the t ime over w h i c h the p lan Is to ex tend and f o r w h i c h cost is to be min imised need not be a r b i t r a r y as in the case of eco-nometr ic ian 's l o n g t e r m plans. The l eng th need no t be the same in the case of each sectoral l o n g t e r m plan. Each long t e r m p l an m a y

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have a period l eng th re la ted to the technical t ime lags of the sector concerned. Thus, i t takes about 5 years to set up a steel f ac to ry ; about 7 or 8 years to complete a g i a n t hydro-electr ic project; 7 years to replant a rubber p l a n t a t i o n ; 6 years to t r a i n a doctor a n d 3 years a nurse; ten or eleven years to educate a ch i ld upto the secondary stage; and so on. W h e n such tech-n ica l t ime lags are ignored a n d an econometrician's comprehensive l ong t e r m p l a n i s d r a w n fo r an a r b i t r a r y period, say, 15 years, the max imi sa -t i o n or m i n i m i s a t i o n operations can-not g ive sa t i s fac tory results f o r i n -d iv idua l sectors. B u t the expert 's l ong t e r m plans fo r the steel indus-t r y or hydro-electr ic power, or rub -ber p lan ta t ions or hea l th services or education can take in each case an appropr ia te l e n g t h as the p l a n period; as a result , m i n i m i s a t i o n of cost for the fu l f i lment of the p l a n wou ld m a k e sense no t on ly f r o m a theore t ica l po in t of v iew but also f r o m the point of v iew of the ex-perts in the respective f ields,

We have g i v e n above the example of a l o n g t e r m p l a n for roads. T h a t is a case where on ly one type of technological p rob lem arises, t h a t r e l a t i ng to cons t ruc t ion . B u t l ong t e r m p l a n in product ive fields w o u l d give rise to b o t h the types men t ion -ed earl ier . Take l ong t e r m p lan-n i n g fo r the development of f i sh-eries. Such a p l a n w o u l d first l ay down targets o f p roduc t ion for a l l the years of the p lan . Then i t w o u l d w o r k out the requirements of means of product ion , means of preserva-t ion , means of d i s t r i b u t i o n and var ious ex te rna l economies. These could be fu r the r reduced to equip-ment for ca tch ing fish, (e g, boa ts ) ; equipment for the manufac tu re of equipment f o r ca tch ing fish (e g, boat b u i l d i n g machines) ; construc-t i o n w o r k s (e g, harbours , boat bu i ld ing yards ; etc.) B u t in ca l -c u l a t i n g the t o t a l cost of the p lan , n o t on ly are the costs a r i s i n g f r o m a l l these i tems to be included, b u t also the labour cost i nvo lved in the p roduc t ion o f f i sh corresponding to the targets set. M i n i m i s a t i o n o f cost thus w o u l d in th i s case be equivalent to m a x i m i -sa t ion of the q u a n t i t y "accumulat-ed surplus minus t o t a l investment i n f i x e d cap i ta l " . I t should aga in be noted t h a t th i s approach w o u l d no t necessarily give the same resul t as t h a t of " m i n i m u m period of re-cuperat ion of cap i ta l invested"; fo r in the l a t t e r approach, the t ime

fac tor is made var iable and thus has no positive role to play, where-as in our approach we are a l l t h r o u g h keeping the t ime period fixed at a l eng th h a v i n g some spe-c ia l technical significance fo r the sector in question.

No claims are made for the ap-proach sketched above as g i v i n g a sa t i s fac tory answer to the problem of technological choice. I t has, how-

ever, one qua l i ty w h i c h m a n y a theoret ical ly sa t isfactory economet-ric approach lacks, namely t ha t I t faces squarely the fact t h a t no re-commendat ion about technological choice in general has any value, unless i t can be t rans la ted i n to con-crete steps to be t aken by special-ists and experts concretely p lan-n i n g for the different sectors of the economy.

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