“Where there is no vision the people perish,” the King James Version translation of Proverbs 29:18, is one of the most misunderstood and misapplied verses in the Bible.
Christian leadership books often quote Proverbs 29:18 as a rationale for a church writing a vision statement. The KJV version reads, “Where there is no vision, the people perish.” This wording fits nicely for those who want to persuade others regarding the need for a vision statement.
While it is good for leaders to communicate vision, Proverbs 29:18 is not talking about a leader’s vision. Rather, “vision” here refers to special revelation and the principle is that that apart from God’s Word, society quickly spins into moral chaos.
The ESV gives this translation of Proverbs 29:18.
Where there is no prophetic vision the people cast off restraint, but blessed is he who keeps the law (Proverbs 29:18, ESV).
The word translated “prophetic vision” refers to special revelation or God’s Word. The word translated “cast off restraint” carries the idea of there being a total loss of social order. It is the same word used in Exodus 32:25 to describe the Israelite’s frenzy during the Golden Calf disaster. The NIV translation reads:
Moses saw that the people were running wild and that Aaron had let them get out of control and so become a laughingstock to their enemies (Exodus 32:25, NIV).
If a people do not hear God’s Word, then we can expect society to break down and even local churches to cast off restraint. “Social harmony and restraint cannot be achieved without the exhortations of the prophets and the teaching of the law.” Public morality depends on knowing the law of God. Fabarez argues that the reason there is so much immorality in evangelicalism today is because God’s Word is not preached.
UPDATE: Regarding Proverbs 29:18, James Hamilton writes:
Proverbs 29:18 proclaims, “Where there is no vision . . . the people are set loose, but as far as the one who keeps the law . . . blessed is he.” The word rendered “vision” is a term often used to describe the visions of the prophets. Proverbs 29:18 appears to be describing the blessed restraining power of the Law and the Prophets. Disregarding the visions of the prophets is like walking blindly toward a precipice, but the danger is not an abstract fall from an impersonal height. Rather, the danger lies in defiling the holy God by transgressing his boundaries. Yahweh is a God of justice, and “the ways of a man are before the eyes of Yahweh, and all his paths he observes” (Prov 5:21). The fear of judgment leads to salvation. (God’s Glory in Salvation through Judgment: A Biblical Theology, 272-273).
 “חָזֹון”, see Francis Brown, S. R. Driver, Edward Robinson, Charles A. Briggs, and Wilhelm Gesenius, A Hebrew and English Lexicon of the Old Testament : With an Appendix Containing the Biblical Aramaic : Based on the Lexicon of William Gesenius as Translated by Edward Robinson (Oxford: Clarendon Press, 1979), 302. Waltke concludes that this word refers here to, “the sage’s inspired revelation of wisdom.” Bruce K. Waltke, The Book of Proverbs, The New International Commentary on the Old Testament, vol. 2 (Grand Rapids: Eerdmans, 2005), 446.
“פָּרַע,” has the idea of “let go, let alone.” Brown, Driver, Robinson, Briggs, and Gesenius, 828. There is some confusion about the meaning of this verse because of the King James Version translation, “perish.” See Robert L. Alden, Proverbs: A Commentary on an Ancient Book of Timeless Advice (Grand Rapids: Baker Book House, 1983), 202.
 This Proverb has been used a great deal in recent years as a biblical defense for local churches writing vision statements. Writing a vision statement is a good idea. However, this verse doesn’t apply to that task. Alden summarizes, “Verse 18 has been misinterpreted for many years, probably because of the way it reads in the KJV; ‘Where there is no vision the people perish.’ ‘Vision’ here does not refer to one’s to need formulate goals and work toward them, nor does it mean eyesight or the ability to understand. ‘Vision’ instead is a synonym for what a prophet does. Thus its real meaning is God’s ‘guidance’ (TEV), ‘revelation’ (NIV), ‘authority’ (NEB), ‘prophecy’ (NAB).” Alden, 202. See also, Kaiser, 10-11. Kaiser applies this passage directly to a call for expository preaching. Delitzsch summarizes, “People are only truly happy when they earnestly and willingly subordinate themselves to the word of God which they possess and have the opportunity of hearing,” quoted in Waltke, 447.