The prevailing message in The Road to Serfdom is that centralized planning is inherently undemocratic because it requires that “the will of a small minority be imposed upon the people (Hayek, 77). This can be a dangerous form of government because it limits individualism and creativity. The government essentially has the power to take money and property from individuals in pursuit of centralized goals, or the good of the community (Hayek, 82). This sounds all fine and dandy, however, is limited to the perception of the authority, which at times can be ill informed. After all, we are all humans and run the risk of human error. For example, the current leader of Libya, Muammar Gaddafi, has proclaimed (and assuredly believes) that he is doing what is best for his people. Unfortunately, as we see with the current revolution, not all agree with his political views.
I like to think of this phenomenon in evolutionary terms. The environment naturally selects various traits that are most adaptable for the environment, as a result of random mutations. Without the variance, the organism runs the risk of going extinct. For example, the finch beak variation allows for big beaked finches to crack big seeds in times of drought, while all the other finches die out. The point is that there is variation amongst the random mutations. In a free market, the entire population is involved and allows for random insights of genius. Centralized planning hinders this process.
Hayek also stresses the importance of the flow of information in The Use of Knowledge in Society. He asserts that a centrally planned market could never match the efficiency of the open market because any individual knows only a small fraction of all, which is known collectively (Hayek, 30). This is an interestingly true. Here I prefer the image of society as many tiny neurons, consistently communicating with one another to guide the body (or the economy). The problem here is that we are all specialized, which means that we need to communicate. The neurons in the amygdala (essentially, emotions) cant control the entire organism. Nor can the cerebral cortex (essentially, consciousness). Effective communication between both is needed for optimal functioning.
I suppose then that I completely agree with Hayek. From my perspective, centralized planning is too risky, oppressive, and limits creativity.
I also agreed with many points that Hayek made regarding how information should be regulated in an open market. While he states that a centrally planned market is problematic in that the group in charge can never have the same amount of information as a large group of individuals, it seems chaotic to have so many people in control. Of course, this is answered with communication techniques. I don't think Hayek really proposes a method of communication that would allow for perfect transferal of ideas and opinions between thousands of individuals, but in theory of course, the thought that each person with their specialized information could contribute to controlling a market is quite ideal.
ReplyDeleteYour comparison to evolution is a good one, as obviously individuals are going to vary in what they can contribute, and each person has information based on their environment, education, etc. I think perhaps the best option would be have some kind of all-knowledgable central person...obviously a very realistic option. I just don't believe that communication between individuals will ever be problem-free, but still a better option than a single party (with limited information).
I love reading your blog because you always pull in such interesting examples! I also really enjoyed Hayek. Your comparison to neurons explained his argument very well. Hayek had a way of explaining society that made it pretty hard to disagree. With that explanation, who would want a world where everything is controlled and we have no freedom of choice?
ReplyDelete