I'm really confused with the meaning of the terms 'normative planning' and 'system planning'. Investopedia says "normative economics is subjective and value-based". On the other hand, many other sites say normative planning is value-neutral, while system planning is value-based.

As far as economic planning is concerned, which one is value-neutral? - System planning or normative planning?


It is important to mention that while it is very accessible, Investopedia is (IMO) a poor source that sometimes contains mistakes and muddles concepts.

From Foundations for Normative Planning by Klosterman

Most radical have been the calls by Friedmann (1966), Faludi (1973), and others for “normative” planning in which planners subject both the ends and means of public policy to rational consideration. These proposals are of particular interest because they suggest that the planning profession can combine scientific analysis with reform and change and thus be true to both of its intellectual roots.
However, none of the calls for normative planning has outlined the procedures by which planners are to rationally evaluate public policy ends. More fundamentally, they have not developed the logical foundation for rational consideration of ethical issues in public policy-an activity which runs counter to some of the most fundamental and widely shared assumptions of the positive social sciences.

Thus normative planning purports to be value-netrual, but in practice this seems to be impossible. Indeed, economic planning is usually about

  1. what goal to reach (there are several metrics to consider, usually with trade-offs)
  2. how to reach that goal in terms of efficiency, probability, etc.

The first step simply cannot be value-neutral. See the vast literature on Social Choice or the corresponding chapter in microeconomics textbooks.
Even the second step is unlikely to be value-neutral in practice. Some believe that awarding a contract to the lowest bidder fulfilling a certain set of criteria is value-neutral, but who these probable bidders are is usually well-known, and awarding contracts to them may further inequality.

I am not that familiar with "System planning" - this seems to be an engineering term -, so it would be nice to have someone else elaborate on this. I suspect that the difficulties outlined above persist: one hides values in the choice of the goal function of the planning problem.


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