Can a government systematically guide an economy without falling into the trap of central planning? Of course it can. For decades after World War II, this was simple common sense across Western Europe. They called it indicative planning.
Under central planning, the state commands every enterprise: who produces what, who buys what, and at what price. It is a rigid, bureaucratic machine in which the individual disappears beneath layers of directives.
Indicative planning, on the other hand, doesn’t order anyone to do anything. It sets national goals and then shapes the environment so that private actors are naturally rewarded for moving in that direction.
Imagine a government deciding that within five years it wants to triple the number of foreign tourists staying in three-star and higher hotels. It can cut taxes for the hospitality industry, open new hotel schools, send the president on goodwill visits to key countries, and install romantic night lighting on historic castles. The taxpayers cover the cost — say, four billion crowns — but nobody is coerced. The government simply makes certain behaviors more profitable and others less so. After a few years, officials measure the results: Did tourism actually grow? If not, the program ends. If it worked, it expands.
That’s indicative planning — and it’s exactly what today’s Hungary is doing.
Now, the libertarian reflex kicks in: How could the government possibly be smarter than the market? The answer is surprisingly simple. At the national level, even the clumsiest bureaucrat is smarter than the market — because the market, left to itself, rewards only those who can extract the most profit, not those who can strengthen the nation. The market doesn’t care about national wealth, cohesion, or long-term prosperity. It serves the strongest players, not the public good.
In recent decades we’ve learned something else. When governments abandon any form of planning and surrender entirely to the “free market,” they soon discover that even the growth of the bureaucracy itself becomes driven by spontaneous market forces — expanding, feeding on itself, and becoming impossible to control. The result is not freedom, but chaos wrapped in red tape.
In life, as in economics, one principle always holds true: Either you take charge of events — or events take charge of you.