Economic History Essay Example | Topics and Well Written Essays - 1500 words

Economic History - Essay Example One of the most major market failures in the world is the presence of imperfect information, and indicative planning is considered as being one of the best attempts that can be used in order to bridge this information gap. Basically, the aim of indicative planning is "to improve the performance of the economy by the provision of better economic information: forecasts or targets are published but compliance with them is voluntary. The underlying logic is that the plan, via collective action, can supply economically valuable information which, as a public good, the market mechanism does not disseminate efficiently" (Young & Holmes, 2000). There are many different reasons as to why it is believed that we need this indicative planning, and namely: if there were complete and efficient forward markets there would be little need for indicative planning or any shared set of assumptions because enterprises could use such markets to hedge the risks attendant on their investment decisions; the economic forecasts embodied in an indicative plan give both buyers and seller's confidence that the general levels of demand for products and supply of materials would be forthcoming; by identifying early the existence of any oversupply or bottlenecks, investment behavior can be modified in a timely fashion and the incidence of market disequilibria reduced; and both business and consumers can benefit from exercise in collective and consistent market research, which is freely distributed to all the relevant actors in the economy. (He, 2007). In regards to French indicative planning, there are many other issues that need to be discussed here, and the theory of French indicative planning is an issue which is of primary importance; the founder of the French indicative planning was a man named Pierre Masse, and it was he who actually introduced the concept of information pooling, where planners carry out 'generalized market research', thus allowing a common view of the future, and "This research involves consulting with leading actors in the economy for their input, a process called concertation. After this step the elements of the plan are adjusted to assure coherence and to guarantee policy coordination. The goal is concerted economy" (He, 2007). The French adoption of indicative planning had many steps involved within it, and this begins around the year 1500, when France surpassed China as being the nation with the largest GDP in the world; Jean-Baptiste Colbert, who was the finance minister under Louis XIV at that time, was pursuing strongly for aggressive and comprehensive governmental policies, and in fact, during this time, Colbertism became a word that was used to describe interventionalist state activity. Similarly, in the 19th century, France was considered as being a 'late' industrializer, and policy was more directed towards the nurturing and protecting of the industry as a whole. In 1830 France was surpassed by the UK; in 1936 a leftist regime came to power, led by L'eon Blum, and resulted in establishing a Ministry of