Between State and Market: A Third Way of Planning

Abstract

The ‘Third Way’ offers a critical but realistic view of planning to support a progressive agenda. Grounded in integrated transaction-cost theory (TCT), it refutes neo-liberal arguments from their own economic theory, associating planning with organization, breaking its juxtaposition to ‘the market’ and recognizing planning in the market and planning for and of markets, which includes public planning and regulation. The ‘Third Way’ disarms libertarian attacks on public planning, while TCT forces retreat from generalizations to focus debate on particular issues and cases. Here contingent TCT-based institutional analysis and design is the tool for promoting progressive values, enabling effective resistance to neo-liberal practices and encroaching globalization.

Notes

Substantial parts of this paper are drawn from Alexander (1992, 2001a, 2004) and what it says is not new. However, it is worth restating in the framework of this special feature: ‘What's Left of Planning’ because of the relevance of its basic thesis to what is still one of the main issues in this discussion: planning and the state's role in governance, and the obvious fact that this debate continues to take the link between planning and the state for granted, see e.g. Law-Yone (2007) and Sanyal (2007).

The controversy over the ‘Third Way’ has always raged around the question of whether it is really Left. Critics maintained that a movement that is not radically anti-capitalist and does not promote revolutionary social transformation is nothing but a betrayal of the true Left, compromising its pure socialist ideology. Its proponents claim their association with the Left on the basis of shared and enduring progressive values of social justice, which entitle them to advocate pragmatic ideological revision. I have not taken a position in this debate (though it can easily be guessed) for two reasons: (1) It is remote from my areas of concern and expertise; (2) My belief that such ideological disputes (on defining what is Left and who belongs to it) are irrelevant at best and at worst destructive.

A systematic review of this school of thought is beyond this article, but examples range from early Castells (1979) through Feldman (1995) and Moulaert and Cabaret (2006) who limit themselves to excellent analyses but eschew explicit normative implications, to recent Harvey (2000), who advocates ‘dialectical utopianism’, and Law-Yone who calls for ‘reimagining planning as a counter-hegemonic project’ (Law-Yone, 2007:315) as the way to realize some admittedly utopian and unspecified future.

I omit citations from the more esoteric directions of this literature, but a classic example is Toffler's (1980) ‘The Third Wave’; for a more recent exposition of anarchist-communalism, see Boochkin (1992).

This section is condensed from Alexander (2001a:50–55) which itself draws from Williamson (1975, 1985, 1995a, b) for economic transaction cost theory, and on Dixit (1996), Ilchman and Uphoff (1969), Lindblom (1988), Williamson (1999) and others for integrated TCT that extends the former into the public domain.

Except transactions in strictly defined sovereign tasks such as rule-making and legislation, and final adjudication and third-party enforcement (by the legal and justice system).

Some question this assertion, suggesting that the ‘Third Way’ really conceals a conservative bias. Their case is based on two refutable critiques: (1) Its orientation is implicitly empiricist: guilty, but empiricism can only be labeled as intrinsically conservative from a position that considers everything short of radical utopianism conservative – back to the controversy about what is ‘Left’ referred to above. (2) Its epistemology is based on methodological individualism: this charge is only partly true but arguing this is beyond the realm of this discussion. More to the point is the critique's irrelevance to the accusation, because it draws on the analogy with neo-liberal (Hayekian) economics. But methodological individualism is common to all economic theory (though least in institutional economics) and e.g. radical economic theory (and, indeed, some Marxist theory too) share this epistemological base.

‘Appropriate’ here refers to the intended type of planning: a progressive agenda will fit a curriculum oriented to public planning, for example, but might need adaptation to a real-estate/property market program. For more on different types of planning and their significance, see Alexander (2005:95–98)

Authoritative is not meant here in any absolute sense, but in the context of the debate around planning, where TCT is authoritative in a way that, for example, Habermasian critical theory is not, because it shares its disciplinary-theoretical foundations (in economics) with the intellectual base (classic economics) of the neo-liberal critics.

Space considerations preclude any more extended definitions or discussion of institutional analysis and design here, but see Alexander (2006); for examples, see Alexander (2001c), Gualini (2001:81–179) and Webster and Lai (2003:184–206).

If the identification of relevant actors includes a broad range of stakeholders and affected publics, and transaction costs are defined as including the opportunity costs (e.g. decision delays, organization, and litigation) of confrontational conflict, minimizing transaction costs can integrate efficiency with equity considerations.

This draws on TCT's concept of ‘remediableness’, which, rather than referring evaluation to a hypothetical ideal, prescribes comparison of the subject institution with other feasible alternatives (Williamson, 1999: 310–311).