The Big Push: Planning for Transformation

The Utopia Thieves: Progress, Ecology and Neoliberalism — Chapter 6

Chris Harris, PhD
14 min readApr 26, 2021

IN the 1960s, an economist named Andrew Shonfield noted that planning, even economic planning, was not an attempt by bureaucrats to out-guess the market — a common misconception — but, rather, something that was more transformational in character.

In other words, an intervention by the state to lend its mighty shoulder to help budge the wheel of some hard technical problem, in something like the sense of various, mostly successful, military-industrial programs of World War II.

This insight was given a serious, economic expression in 1943 by a Polish economist working in London at the time, named Paul Rosenstein-Rodan. In an article called ‘Problems of Industrialisation of Eastern and south-Eastern Europe’, Rosenstein-Rodan contended that whereas economists usually focused on substitution or tradeoffs at the level of the individual, or a farmer deciding how much to spend on fertiliser as opposed to something else, the problem for modern industrial economies was that many activities were complementary: a question of both-and, rather than either-or.

Rosenstein-Rodan contended that many industries of the more modern and complex type were viable only as parts of a cluster of related and supporting industries or activities, some privately organised and some public.

Most obviously, without a government that spent lots of money on freeways, the carmakers wouldn’t sell so many cars. Likewise, prime contractors like the people who built the factory in in the clip about World War II aero engines above, or NASA in the time of the Apollo moon rockets, drag armies of subcontractors along in their wake.

According to Rosenstein-Rodan, many economically underdeveloped regions of the planet, such as Eastern and south-Eastern Europe in his day, languished in perpetual poverty because potential industrial clusters had not yet attained critical mass. For that to happen, there was probably a need for government kickstarting. Even in nineteenth-century America and Britain, the government had played more of a role in the economy, for example through its military procurement programmes and through easing the path of the railways and other transportation infrastructures, than most people realised.

The US Postal Service, for example, played a key role in the promotion of new, faster methods of transportation by paying the innovators to carry its mail and parcels, thus providing them with a massive base of ongoing government revenue, guaranteed to accrue to whoever could deliver the mail faster. According to a September 2020 article in the Smithsonian magazine, “As World War I engulfed Europe, the Post Office recognized the value of air transport and almost alone supported the aviation industry until the late 1920s.” Passengers, in those days, were carried in tiny numbers and could never have paid for the early progress of the aviation industry.

The only quibble I’d have with the Smithsonian’s analysis is that there was also a substantial ongoing military subvention from the time of World War One, in the USA as in other countries, as well.

1920s mail pilots, of the kind so romantically written up by people like Saint-Exupéry, often flew with the benefit of aircraft and engines developed during the recent conflict. Aircraft and engines vastly superior to pre-War designs, which would have been quite unsuitable for long-distance mail flights.

For instance, the favourite engine of of 1920s American mail pilots was the Liberty V-12, a 400 hp powerplant rushed into production for the military in 1917 and 1918. An overhead-cam design with aluminium pistons and block — standard today, but radical back then — the Liberty V-12 was several times more powerful than anything that had been in the air when World War One broke out in 1914.

Originally intended for evasion and pursuit, the Liberty’s deep reserves of power also made it easier for pilots to recover from a sudden downdraft. For that reason, few things were more reassuring to American mail pilots of the 1920s than the knowledge that it was a Liberty that was making their exhaust pipes glow in the night.

This military-industrial tie-in was perhaps never more obvious than in the 1950s, when Boeing decided to cut portholes in the side of the revolutionary new KC-135 Stratotanker they’d developed for a US Strategic Air Command contract, fit seats all the way along, and call it a Boeing 707 airliner.

For better or worse, you owe your affordable air travel, today, to World War One, World War II, and the Cold War.

If aviation had been purely ruled by market forces and peaceful competition since the days of the Wright Brothers, and hadn’t so quickly become the chief long-term fixation of the military-industrial complex, the technology probably wouldn’t have developed very far beyond the level of a crop-dusting biplane.

The kind of crop-dusting biplane that’s still in use today, since it is in fact good enough for a great many utilitarian purposes. By contrast, every development of a more exotic or unprecedented nature in aviation has been pushed by government to begin with rather than pulled by market forces.

The history of aviation (and other technologies) is rife with what the German philosopher G W F Hegel once called “the cunning of reason:” a progress that comes about by way of spinoffs and unintended consequences and even a large dollop of apparently irrational behaviour.

Many people don’t like to reflect on this fact, with its implied suggestion that competition between nations is more important as a driver of industrial progress than competition between firms.

The temptation is to pretend otherwise, to pretend that just about every major technology hasn’t been born covered in blood, as we might say, when a sober look at the facts suggests that it has.

In reality, it is better to face up to such issues and redirect national-level efforts onto a more cooperative path, as they have done in Europe since the founding of the EU and as was demonstrated also, since the year 2000, by the path taken in the development of affordable solar photovoltaic power, as in a recent Guardian story:

This rapid radical reduction in the price of PV solar is a story about Chinese industrial might backed by American capital, fanned by European political sensibilities and made possible largely thanks to the pioneering work of an Australian research team.

We actually have to get away from old habits in this regard, even if it is true that past wars have helped to kick things along at great sacrifices we can never repay, in much the same way that slavery probably did as well, or for that matter the dispossession of indigenous peoples.

Australian politicians, who seem a particularly worthless breed by and large, are currently talking up the possibility of a war with China: but that’s obviously not where the future lies. Cautions such as H. G. Well’s idea that modernity is a race between education and catastrophe, or E. O. Wilson’s observation that we are busy trying to manage modern technology with palaeolithic brains and mediaeval institutions, remain as relevant as ever.

Whether in the military or otherwise, government kickstarting of innovation requires that the bureaucracy and, for that matter, the politicians, be pretty much up to speed with modern science and technology. Obviously, the people in charge of the process on the government side couldn’t be set in their ways, or inclined to ‘play it safe’ and ‘stick with what works’, in the way that politicians and bureaucrats are often accused of!

Also, the officials needed to be willing to take on vested rentier interests such as plantation-type landowners who wanted plenty of cheap labour with no alternative job options to toil in the fields forever: something that’s an issue in places like Pakistan and the Philippines, apparently. Or, speculative landowners who wished to reap parasitic windfalls from the growth of industrial cities, to the point of eventually killing the goose that laid the golden eggs, in much the same way that Ireland’s ‘Celtic tiger’ industrial boom of the 1990s soon gave way to a squalid, financially destabilising real estate boom that impoverished a great many Irish people all over again.

And, last but not least, the bureaucrats and politicians also had to be patriotic, in the good sense of the word, and incorrupt; qualities of character that helped them to fend off the blandishments of vested rentier interests.

Unfortunately, bureaucrats of sterling character and politicians of vision have often been hard to find; which is why, even the USA , mostly well-governed by world standards though Americans might not think so, John F Kennedy still stands out along with Abraham Lincoln, Franklin D. Roosevelt and a handful of other past presidents. Likewise, in ancient Rome, they used to speak of ‘the five good emperors’, given that some of the others were pretty bad.

And this was, perhaps, the most fundamental problem. If, as in somewhere like post-Korean War South Korea, your local bureaucrats and politicians were competent, forward-looking and not easily bought off, the average citizen was in luck. If, as in certain other countries and times, they weren’t, then the average citizen was not in luck.

Assuming that the governmental prerequisites were in place, it thus paid for societies to ‘think big’ in the manner attributed to the Chicago architect and planner Daniel Burnham, at the turn of the twentieth century, by a journalist who took notes from one of Burnham’s speeches:

Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty. Think big.

One of the most common misconceptions about planning is that the planner, especially in economic and industrial fields, is somehow trying to out-guess the market: whatever the point of that might be, other than for purposes of the kind of speculation Keynes condemned.

In reality, the planner is working a technological or physical field, helping to assemble clusters of related and supporting activities in order to produce things for which there is not yet a well-established market; whether we are speaking of high technology or simply a high quality public transport system in a city that has been, up to now, without one.

Thus, Shonfield argued that planners were mainly concerned with achieving and maintaining “momentum” toward a transformational goal, one assumed to have long-term benefits that were admittedly, as yet, unclear.

The benefits of such transformational schemes were hard to calculate at the outset. But to the extent that economics did enter into the picture in a more calculating sense, it was largely in the form of the principle enumerated in 1936 by the New Deal-era engineer Theodore Wright, subsequently known as Wright’s Law, whereby every doubling of output led costs to fall by a certain percentage each time.

In other words, the more that the momentum was kept up, the cheaper things would get. As with solar photovoltaic panels, which, in the 1970s only such early adopters as NASA could afford for the odd space capsule, but which over the next forty years would decline in real price by the incredible factor of a hundred.

Skylab on 8 February 1974, public domain image via Wikimedia Commons

Almost self-evidently, such technologies, which also included the very first jet planes and the very first microchips, had no commercial applications at first because of their initially high costs, not to mention their initially limited performance.

The role of the state planner was thus combined with that of early adopter and kickstarter.

And it was important not to worry too much about short-term costs; in part because they would soon come down, but also because even something that looked like a complete white elephant at first was likely to have major spinoffs ten, twenty, thirty or forty years down the road.

This insight applies to such things as the achievement of rockets to the moon and their many subsequent technological spinoffs all the way down to the iPhone, an urban mass transit system, or the initial mass-production of synthetic rubber during World War II. A form of rubber upon which virtually the whole of the world’s vehicle fleet rolls today, because the natural stuff, upon which everyone relied before World War II, could not possibly have kept up with post-War economic expansion.

Interestingly enough, World War II-era rubber shortages feature prominently both in libertarian critiques of planning, and in more positive accounts. In Günter Reimann’s 1939 book The Vampire Economy, available on the web-page of the libertarian Mises Institute, we have an account of literally Gestapo-like methods in use in Nazi Germany:

The businessman needs every bit of his ingenuity to circumvent regulations and restrictions and to avoid interruptions in production. Rubber, for example, is extremely scarce, and it is consequently very difficult to buy a new rubber tire. lt has become an officially decreed rule that no new tires may be sold unless the old tire is returned completely worn out. But this system does not work out in practice. Reserve tires are needed so badly that firms have resorted to buying entire new trucks just to obtain new tires. These tires were then removed and the new trucks sold without the tires as scrap iron. Business ingenuity in circumventing the State bureaucracy thus results in fantastic waste of materials, all in the name of preventing waste.

The same idea informs the admittedly crude and vulgarised cartoon version of Friedrich Hayek’s 1944 anti-planning manifesto The Road to Serfdom, a cartoon version which can also be found on the website of the Mises Institute in its entirety as a downloadable PDF, and presented here in abridged form in a Youtube video as well.

Hayek’s original Road to Serfdom is not so far-gone. But Hayek does pay comparatively little attention to matters of industrial transformation and the technological drivers of bigness, contending instead that bigness is largely an artifact of deliberate government consolidation and the way that big business often has the ear of government to a far greater extent than small business — which is, of course, generally true.

That, in other words, if only the government would stop favouring its corporate mates and otherwise generally butted out of our lives, life for the proprietors of the mom and pop shop and little workshops would improve.

Hayek’s position in the original Road to Serfdom is thus quite reasonable in many respects, but a perspective with which you can nevertheless disagree from a practical point of view, on the grounds that it is scientifically and industrially out of date.

If we ran the economy on Hayekian grounds there would certainly not have ever been a rocket to the moon, and probably not any computers, jet planes, solar photovoltaic panels or even a well-developed automobile industry, which has had massive government subvention all the way as well.

Then again, I suspect most left-wingers, opposed to Hayek on every other count, would argue that the result of nearly a hundred years of state support for automobile technology by way of complementary investment in roads and freeways, some fundamental R&D, military expeditions sent to secure overseas oil fields and the creation of an entire profession of traffic engineering mostly educated at public expense, has indeed been a disaster!

The point is that, for better or worse, the world of bigness and complex industries is the kind of world we live in now, and the best we can do is make it more democratic. To say that we should go back all the way to smallness, or even a particularly long way to smallness, is actually quixotic and counterproductive.

It’s also possible to disagree with Hayek’s thesis — remember, The Road to Serfdom came out in 1944 — on the grounds that a large state presence in post-WWII European social democracies since has not led to actual tyranny. But as with all these sorts of things, including the writings of Karl Marx, it’s generally the cruder adaptations that are better known than the original. Marx did actually write that he was not a Marxist, if by Marxist some kind of actual extremist was meant. And I would like to think that Hayek was not a Hayekian either, if by that the cartoon version The Road to Serfdom was meant.

But I digress. In actual fact, the planned development of a synthetic rubber industry in World War II America was a collaborative endeavour. Or so, at any rate, reports the technological historian Henry Inman in his book Rubber Mirror, who reports a completely different picture to that painted of the management of scarcity under the Nazis in Reimann’s Vampire Economy. According to Inman, writing of the World War II era United States’ rubber industry,

“You would never see in our lifetime, and even our grandchildren’s lifetime, the collaborative efforts that took place at that time . . . You have the government, private enterprises and academia all working towards one objective sharing patents and agreements and operating these facilities on behalf of America.”

The collaborative perspective survived through the Kennedy era and into the 1960s, as the opening minutes of the documentary about Apollo 4 suggest: opening minutes in which the narrator describes a rocket made up of “three million parts, from the labor of people at twenty thousand companies, universities and government facilities.”

The idea that something deemed an unnecessary waste of money at first would be proven to be wise investment in hindsight was most obvious with technology projects and their eventual spinoffs. The amount of money lavished on Apollo and, for that matter, Concorde, was pretty controversial in the late sixties. But it’s clear that, in hindsight, they accelerated our technological development by a decade or so in addition to making it look like anything was possible, making us look at the Earth as something fragile and beautiful compared to the moon in the case of Apollo — it’s probably no coincidence that the Earthrise photo of 1968 was followed, in less than 18 months, by the first Earth Day in 1970 — and binding European nations closer together in the case of Concorde.

It’s hard to put a price on all these spinoffs, especially when you consider just how much money is spent on other things that are just patently useless every day.

Even comparatively low-tech public investments such as urban rapid transit schemes often faced a similar dismissal at first, only to be viewed as indispensable after they had been in service for twenty years or so.

Until the 1970s, the importance of what the economist Mariana Mazzucato would later term the “entrepreneurial state” — a transformational, nation-building state — was well understood. It infuses, for example, that famous speech by President John F. Kennedy, in which he talks about going to the moon and doing “the other things,” which included the elimination of poverty and urban rapid transit systems for every American city above a certain size.

Well — to reiterate a point made earlier — we never went back to the moon, poverty wasn’t eliminated and only a handful of American cities, such as Washington DC and San Francisco, got the promised rapid transit systems.

For, with the coming of neoliberalism, this former progressive orthodoxy was quite abruptly discarded in favour of the idea that the government should do as little as possible to transform industry and society.

These days, the transformative spirit is more associated with countries such as China, where, for example, two-thirds of the world’s high speed rail is now to be found, almost of all of it built since 2008.

As we shall see in the next installment, the contents of the average American economics textbook had quite a bit to do with neoliberalism’s insistence that we should turn our back on greatness, in the true meaning of the word.

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Chris Harris, PhD

I am an urban historian from Aotearoa New Zealand. With an engineering background, I also have a PhD in planning and economics.