UPDATED — When the failure of central planning becomes undeniable

by CynthiaYockey on November 9, 2009

Where has this fellow Hayek been all my life?:

As the Austrian philosopher Friedrich von Hayek explained in his 1944 classic, The Road to Serfdom, central planning leads to massive inefficiencies and long queues outside empty shops. A state of perpetual economic crisis then leads to calls for more planning. But economic planning is inimical to freedom. As there can be no agreement on a single plan in a free society, the centralization of economic decision-making has to be accompanied by centralization of political power in the hands of a small elite. When, in the end, the failure of central planning becomes undeniable, totalitarian regimes tend to silence the dissenters—sometimes through mass murder.

I am old enough to remember communism on its last leg—communism that no longer had the confidence to pull the trigger, but still had the strength to lock the door of a prison cell.

Some 100 million people have died in the pursuit of a communist utopia. Eliminating profit and private property was meant to end social ills, such as inequality, racism, and sexism. But the closer a society got to Marxism—whether it was half-hearted attempt as in Hungary or a whole-hearted attempt as in Cambodia—the bloodier the result. Survival in a communist society necessitated lies, theft, and betrayal. Thus, as the former Czech President Vaclav Havel wrote, most people in the former Soviet bloc grew up without a moral compass. These morally compromised survivors of communism find it difficult to reflect on the past and to come to terms with it.

Unlike the Germans after the World War II, the people in ex-communist countries were never forced to face their demons. As a consequence, communist rule has not acquired the moral opprobrium of Nazism. As long as that remains the case, socialist economics will continue to enjoy an aura of plausibility.

Actually, I think the “small elite” mentioned above know perfectly well that power will be concentrated in their hands because that is their real goal all along. They use the promises of communism or socialism — the state will take care of you! the state will make everyone be nice to you! the state will humble people you envy and hate! — in order to get that power. They know they can’t deliver on their promises, but so what? The mass executions, mass starvations, show trials, re-education camps, mental hospitals and prisons will get rid of any complainers resentful they were promised heaven and given hell.

H/T Instapundit.

Update, 11/9/09: I saw this quote from Hayek at American Thinker — it reminds me of the struggles I had with the Medicaid bureaucracy getting wheelchairs for Margaret in a timely way — their usual lag time was a year, which filled me with despair because she had multiple sclerosis, a progressive illness, so having the right equipment at the right time was a big deal:

“In many fields persuasive arguments based on considerations of efficiency and economy can be advanced in favor of the state’s taking sole charge of a particular service; but when the state does so, the result is usually not only that those advantages soon prove illusory but that the character of the services becomes entirely different from that which they would have had if they had been provided by competing agencies. If, instead of administering limited resources put under its control for a specific service, government uses its coercive powers to insure that men are given what some expert thinks they need; if people thus can no longer exercise any choice in some of the most important matters of their lives, such as health, employment, housing, and provision for old age, but must accept the decisions made for them by appointed authority on the basis of its evaluation of their need; if certain services become the exclusive domain of the state, and whole professions — be it medicine, education, or insurance — come to exist only as unitary bureaucratic hierarchies, it will no longer be competitive experimentation but solely the decisions of authority that will determine what men shall get…

It is sheer illusion to think that when certain needs of the citizens have become the exclusive concern of a single bureaucratic machine, democratic control of that machine can then effectively guard the liberty of the citizen. So far as the preservation of personal liberty is concerned, the division of labor between a legislature which merely says that this or that should be done and an administrative apparatus which is given exclusive power to carry out these instructions is the most dangerous arrangement possible.” The Constitution Of Liberty [by Friedrich August von Hayek (1899-1992), winner of the Nobel Prize in Economics in 1974], 1960, p. 261.

One of the reasons that I’m taking advantage of the serendipity of these Hayek quotes coming to my attention on the same day is that at some point I’m going to relate Hayek’s observations on capitalism to the things Maharishi Mahesh Yogi had to say about the infinite organizing power latent within the unbounded pure consciousness within every individual and what Stuart Lichtman has to say about how to achieve goals in the book advertised under every one of my posts, How to Get Lots of Money for Anything — Fast.

Meanwhile, one of the best places to find essays on Hayekian economics is at The Other McCain.

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  • Thanks for the spur in the short rins. I bought The Constitution of Liberty some months ago, but it has sat unread on the shelf.

    Paul Samuelson wrote that he was not at first impressed by Hayek’s 1945 American Economis Review article “The Use of Knowledge in Society and the realization that Hayek had an important point to make took a while to sink in. Hayek’s The Road To Serfdom makes several deep points, but he makes his points in general, abstract terms rather than by example, so the book is a slow read. That’s my excuse, anyway, for deferring The Constitution of Liberty.

    The most succinct statement of the point you make, above, comes, oddly enough, from an economist who once was sympathetic to central planning. Robert Heilbroner wrote (I belteve it was in The Worldly Philosophers) that if you want to walk through a crowd, the easiest way to do this is to get everyone else to stand in formation. Small, unambitious plans lead naturally to larger, more totalarian plans.

    Hayek and Friedman gave us Goldwater, Reagan, and Thatcher. It’s sad to see that progress reversed by Obama, Pelosi, and Reid.
    .-= Malcolm Kirkpatrick´s last blog ..Delicious Spam =-.

    • Malcolm Kirkpatrick,

      The 1939 film, Ninotchka, with Greta Garbo, deftly provides the arguments and examples for capitalism over communism and socialism. I haven’t read Hayek’s books yet, but I suspect that being able to match pertinent scenes from Ninotchka to his points will make his books much easier to read. But even if they don’t, the movie is a work of genius and an absolute delight, so I highly recommend it.


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