Hayek acknowledges that the aim of socialism may be noble (social justice, greater equality and financial security for everyone). The problem is not the goals rather it’s the method by which the goals are to be achieved. It’s vital to focus on the method of central economic planning because that is the instrument used by socialism. And that instrument can also be used to achieve goals other than that of socialism (e.g. getting more of the world’s good things into the hands of Nazis).
Socialist propaganda misappropriates the word “planning”. Everybody desires planning. We should all handle our affairs carefully, rationally and with foresight. Hayek objects to socialists’ use of the term planning because they do not use the word to mean whether we ought to choose intelligently between alternative ways of organizing society. The dispute is whether the holder of coercive power (Government) should create conditions for individuals so that they can best plan or whether Government should do the actual planning. Leftist writers use the term planning in a misleading manner.
Hayek acknowledges that Government must have a role in competitive markets but this role should not be to direct or plan markets. The dispute is not an argument about the degree to which Government should be involved in economic activity. People mistakenly believe it must be possible to find a middle ground between free markets and central planning. That’s the treachery. It seems reasonable to choose a judicious mix of those two methods of economic organization but that cannot be done.
Free market competition can bear Government regulation but it cannot be effectively combined with central planning. Planning is not a medicine, which taken in small doses, can produce a desired result. Planning and competition are opposite economic tools. Neither system will work well if combined with the other. “Planning and competition can be combined only by planning for competition but not by planning against competition”.
Socialism is not just an inefficient economic system; it’s sinister because its intellectual foundations are so deceptive. Whether it’s changing the definition of the word freedom, trying to get people to chase utopia, using the word planning in a misleading manner or asserting that central planning is inevitable; Leftist philosophy is treacherous. The War Chest explores Hayek’s thoughts on that last point next week.