Socialists don’t just think central economic planning is desirable. They deliberately cultivate the myth that new technology and increasing complexity make central planning inevitable. Hayek dispels this notion as a Marxist opinion (not an objective fact). It is not true that competition will be eliminated by technological change beyond our control. Marxists believe that industries eventually consolidate into monopolies. But in fact, the opposite is true.
The increasing complexity of our society does not require economic matters to be coordinated by some central agency. It’s the reverse. Growing division of labor makes central planning unworkable and competition more and more necessary. A competitive pricing system does what no other system can possibly accomplish. Decentralization of economic control becomes more necessary because no one person or thing could balance all the considerations bearing on the decisions of so many concerning so much. If we had to rely on central control of economic activity, our economy would never have grown so fast, producing the astoundingly wealthy and flexible global economy that we enjoy right now.
Hayek ends chapter 4 of The Road to Serfdom with an explanation of why there are so many experts (economists, academics and politicians) who so strongly advocate for social engineering. Why so many advocates for an idea that is so wrong? First, it is clear that almost every one of the goals of socialism could be realized quickly if that was the sole aim of humanity. “It is the frustration of his ambitions in his own field which makes the specialist revolt against the existing order.”
Things cannot all be done at the same time. Doing one thing means sacrificing others. Many economic specialists focus myopically on central planning and socialist goals. They are intellectually disciplined only in their narrow field of expertise. They don’t engage in the painful intellectual effort that you and I are engaging in right now. It’s painful to force our minds to see against a wider background of things that are outside our immediate interests and expertise, because we obviously care less about them. Socialists goals, considered in isolation, create enthusiasts for central planning who feel that their sense of the value of a particular objective is correct and achievable. But they don’t consider the unintended consequences, which are made clear if you think it through thoroughly like Hayek does.
Hayek warns that the world needs people with a passion for high ideals but that this is not the type of person to be put in charge of the economy. Those who are most anxious to plan society are the most dangerous if they are allowed to do it. From the single-minded idealist to the tyrannical fanatic is but one step. Next week, we’ll put Hayek’s ideas about central planning and The Rule of Law in our Estate Planning War Chest. Spoiler alert – they do not go well together.