Chapter Four: The "Inevitability" of Planning

This chapter concerns an argument we don't hear much these days. The argument that modern civilized production processes are so complex that only central planning can keep a handle all the complexity.

I love his opening quote, "We were the first to assert that the more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become." -- Benito Mussolini

This chapter helped answer a mystery that this book itself brought up as I read it: The mystery was, "Why were socialism/central planning/collectivist ideas so virulent in the first half of the 20th centry, and so 'yesterday' in the first decade of the 21st?"

The answer is: computers! This is a wonderful example of how computers have changed our lives.

What Benito, and many other people of Europe, were worried about in the early 20th century was the growing complexity of both civilized life and the production of goods that made it possible. This was an age when all accounting was done by green-eye-shaded accountants with fountain pens and manual ledgers, and middle managers wrote reports with those same fountain pens, then handed them off to secretaries using typewriters which had no spell checking, cut and paste, or copy-making beyond using carbon paper. In such an age planning and controlling this growing complexity was getting to be task that consumed a whole lot of human rescource. And even with all that rescource devoted to it, the decision making was slow and crude.

This is a place where rapidly declining computer and communications costs have made a huge difference in how we live, how we think, and what we think is possible. (I recently encountered another example of this change in thinking as I picked up Issac Asimov's "End of Eternity" to read again. He wrote that in 1955, and it's fascinating reading now because of his portrayal of the relations between people, computers and information. It's very different.)

In this chapter Hayek is arguing that even without computers, this feeling that central planning was both better and inevitable was the result of contemporary government policies, not real-world truth.

Relevant to our contemporary experience, one of the policies that Hayek fingers as promoting monopoly, and through that central planning, is protectionism. His ghost is saying that the currently emotionally popular movement to protect American jobs will prove to be even more effective at protecting and promoting American monopolies.

Hayek further argues that the growing complexity of modern civilization makes the case for competition even more compelling. It is only competition that can produce good answers to these complex issues quickly. It will solve these complex issues by allowing prices and wages to float in response to demand. As these go up and down, these complex issues will find solutions... good ones, and quickly.

Central planning will find a solution, but it's not likely to be even close to an economically good solution because it doesn't have to be. It just has to be a good solution in the planner's eyes.