Le Plan

Aside from the troubles of the Common Market, perhaps the most widely discussed economic topic in Europe is a spreading phenomenon known as "Le Plan." So called because the French, having Gallicized what they found useful to borrow, have pushed it hard at home and proselytized for it throughout Europe, Le Plan is a form of state economic planning, somewhere between Western capitalism and socialism. It is becoming a favorite device in Western Europe, designed to expand business, brake inflation and put critically short capital resources to the most productive uses.

In France, Le Plan has helped to double industrial production over the past decade and create the Continent's strongest economy. Sweden and The Netherlands have held labor costs in line with a plan that sets annual wage increases after informal contacts among chiefs of government, unions and management. Italy and Belgium are in the process of setting up their own economic plans. Britain's Conservatives have fathered a pair of twins known as "Neddy" (National Economic Development Council) and "Nicky" (National Incomes Commission). The only major holdout to the idea of state planning is West Germany, where planning is vaguely associated with the corporate state memories of Fascism and Nazism. Economics Minister Ludwig Erhard created the German economic miracle by freeing the economy, but now even his aides believe that some state planning is inevitable.

No Credit. The plan that is most envied, condemned and imitated was started by Jean Monnet in 1946 to rebuild war-torn France. A 30-man Commissariat du Plan--working with reports on demand and capacity from 3,500 businessmen, unionists, economists and educators--now estimates how fast France can and should grow. The current goal is 5 1/2% annually through 1965, and to reach it the commissariat "suggests" investment and output levels for each major industry and producer. The theory: if appliance makers can be led to expect a 5 1/2% increase in consumer demand, they will increase production and, in turn, boost the makers of steel, copper, machine tools and other appliance essentials. Those who dance to the government's tune enjoy tax incentives and generous credits from the all-powerful Bank of France. On the other hand, as one planner admits, "any French company bucking the plan would have a very hard time finding money."

While French businessmen generally applaud this "voluntary" plan, most feel that it involves a restrictive kind of market sharing, and some wonder whether it has contributed as much to economic growth as have the Common Market and the stabilization of the franc. In some cases Le Plan, like many French wines, does not travel very well. Britain's Neddy and Nicky are hamstrung right now, primarily because the government wants wages held in line with productivity--and the unions are unwilling to go that far for the Tories. In Italy, Planning Chief Ugo La Malfa hopes for everything from socialized medicine to tax crackdowns on investments in luxury apartment buildings. Many Italian businessmen fear that the plan will lead to further intervention by the state, which already controls close to half of Italian industry.

No Magic. Europe's broad-based economic plans have aroused the curiosity of President Kennedy, who sent several of his top economists on trips to Europe to investigate facets that might be useful in spurring the U.S. economy. They came back generally agreeing that Europe's forms of economic planning would fare poorly in a land that cherishes an anti-cartel spirit, ample capital markets and freedom of industry. Says Chief Presidential Economist Walter Heller: "There is no magic in Le Plan for the U.S."

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