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III. TWENTY-FIRST CENTURY PLANNING

Twenty-first-century planning will need to incorporate, explicitly, the evolutionary and dynamic aspect of communities to be successful. This implies accepting and integrating the fundamental role markets play in allocating resources in a market economy, including land. Thus, urban planning and land-use regulation must adopt market-oriented principles and concepts before these processes can realize the goals and objectives of planners. Essentially, market-oriented planning (MOP) allows market decision making to determine the general outline, pace, and details of development. The role of government is limited to providing a general framework for market adjustments and adjudicating disputes when conflicts arise among property owners. MOP does not pre-empt or foreclose future development paths and options.

MOP has a few core principles that provide a general framework for developing specific recommendations for local planning practice. The MOP paradigm, at its core, builds upon a vision of communities as constantly evolving and interrelated sets of institutions. This vision also implies an acceptance of uncertainty, embracing change and innovation as a fundamental component of city building.

Communities and economies are dynamic and complex. Increasingly, economic development comes from leveraging knowledge and providing personalized and specialized service. Entrepreneurial activity is constantly re-creating the world according to many personal and diverse visions. Innovation and resilience to changing economic and personal circumstances are keys to economic prosperity in a dynamic, global economy. Often, these innovations are antithetical to the basic principle of planning: future-directed decisions about community needs. The microchip, rise in dual income families, and telecommuting have all transformed the community in ways unanticipated by the most knowledgeable and experienced urban planners of the 1950s, 1960s and 1970s. Zoning codes and comprehensive plans, for example, still often use exceedingly narrow criteria for permitting home-based businesses, if they are allowed at all.

In an "idea-based" economy, economic activity has become more "footloose." Firms are not tied to place; nearness to raw materials is often no longer critical. Instead, what is important to firms are supplies of skilled workers; low overall operating costs; the ability to change building form, work style, and production content quickly; and desirable amenities to attract employees.

In this dynamic, idea-based context, the public interest is best served by institutions that can register, process, and meet the needs and desires of all individuals within the community or neighborhood rather than prescribing outcomes that represent the vision or desire of planners and politically effective, special-interest constituents.

Land-use decisionmaking institutions should be grounded in voluntary exchanges, since voluntary exchanges mean reduced conflict and mutual gain. Public policy should facilitate community evolution in ways that harmonize the interests of current and future individuals within a community.

The fundamental challenges faced by planners, local residents, and their elected officials are:

  • What rules will determine the boundaries of autonomous action?
  • What rules will resolve conflicts in those realms where different people’s rights and actions intersect?

These challenges translate into four more specific questions:

  • What rules will facilitate entrepreneurship, innovation, and a dynamic, evolving economy?
  • What institutions will create opportunities for cross-jurisdictional coordination and market-driven problem-solving?
  • What institutions and decision rules will ensure linkages between developer/consumer decisions and the public impacts associated with those decisions?
  • What rules will create a sort of "bounded instability" that preserves spheres of autonomy that are a key source of innovation, dreaming, opportunity, and personal satisfaction, while still limiting public harms and balancing competing rights?

The next sections attempt to begin answering these questions by outlining the principles and tools of a market-based system of urban planning.

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