Walt Byars wrote:
I read The Road to Serfdom in 2002 and haven't read it since so I may be
getting the details wrong. I recall that one of the arguments Hayek makes
is that in a planned economy, you will eventually end up with a situation
in which there is a single planner, thus leading to despotism. I think his
argument is that one can't change a part of a plan without changing the
other parts, and thus there must be a single comprehensive plan.
This argument seems pretty flawed to me. At best, it shows that the
different parts of the plan can't be developed independently of each
other. Why can't a group of people develop a coherent plan in concert?
The argument is based on the idea of "tacit information," which is used
to make the claim that the group cannot acquire this information (by
definition) and thus that information cannot be included in the plan.
Subjective use-value or the neo-classical notion of "willingness-to-pay"
are often offered as examples of tacit information. The state cannot
make a valid plan for loaves of bread because the state cannot discover
the use-values the group places on bread. Only market prices will
reflect such information.
The other realm where tacit information is thrown up is technological
creativity and economic change. There is no way for a group to make a
creative discovery, only the individual, who relies on tacit
information, can do this. Or so the argument runs.
And
why would it result in despotism even if there was one planner?
Hayek and von Mises have different reasons. von Mises argues that
despotism follows logically from the axioms he begins with. Hayek argues
that it is an empirical issue, then points to Eastern Europe.
These are just my intuitions and I probably dont remember the argument
perfectly. Does anyone know of any more thorough critiques which have been
published?
Information and Economics: A Critique of Hayek
W. Paul Cockshott and Allin F. Cottrell
http://reality.gn.apc.org/econ/hayek.htm
http://www.ecn.wfu.edu/~cottrell/socialism_book/hayek_critique.pdf
But I don't believe this critique is adequate.
I'm not ready to accept the view put forth by Hodgson in,
The Limits to Participatory Planning: A Reply to Adaman and Devine,
Economy and Society, 34(1), February 2005, pp. 141-53.
http://www.geoffrey-hodgson.info/user/image/particplanning.pdf
It seems to me the modern corporations have found ways to make plans
even if tacit information cannot be acquired.
My view is that it is a mistake to be trapped by the dichotomy:
decentralized==private markets; centralized==state planning. There is
much social interaction that is collective but is not within the state,
and private markets are not the only way to make decentralized decisions.
