Way back in Journal 5, I explained “The Day After Problem”, which highlights the inevitability of change, and suggested that I might return to the topic in a later journal. This is that journal. There in Journal 5, I concluded that “where there is life, where there is action, there is change.” I said that it would be possible to maintain a permanent wealth distribution in a given society, but only insofar as that society was dead. There is a broader point here, not specific to wealth redistribution: Any planned organization imposed upon society is maintainable only to the extent that change, and the life that creates it, is suppressed. “Socialism [central planning] is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.” A planned society is a frozen society, lifeless.
Why do we mourn death? I’m not asking why we fear death; it’s clear that a large part of this fear is actually just a fear of the unknown. No, why do we universally mourn the death of the people around us and seek to postpone our own deaths? I think it’s because death is a foreclosing of possibilities. A hundred potential futures have suddenly been permanently denied to us. We dread our own deaths because we have so much more to do; we grieve the death of others because of all that they never got to do. Something has been lost. We’ve lost something: any future with that person in it. The world has lost something: any contribution or effect from that person in the future. And, of course, the dead person has lost something: any future at all. Death involves loss. It is this loss that we mourn.
In the same way, when a society becomes frozen due to the implementation of some intellectual’s central plan by the coercive power of the State, and it loses some of its life, we all lose something. We lose the possibility of change. We lose the progress that will go unrealized. A frozen, planned society cannot change, and therefore cannot grow and progress. It loses the benefits of the flexibility and imagination that have so distinguished human beings. Society’s greatest resource, the imagination and purposeful behavior of its members, is lost. It is man’s nature to continually engage in action to change the world into a version that the actor finds more suitable. To the extent that man is denied the right to do this, because some other vision has been deemed to be best, the future potential benefits of society are severely limited.
A central plan is a coercive design, imposed upon society by the State (that institution with a monopoly of force in a given territory), that was created by a group of intellectuals (“court intellectuals”) who believe that they know what is best for everyone. A central plan manifests itself as a set of rules and regulations which constrain the actions of other individuals in society; since the central plan entails a vision for what society should look like in the present and a vision for what society should look like in the future and a prescription for how society should reach that future vision, interference in this plan by other actors must be restricted. By imposing one set of ideas on everyone, and constraining their ability to interfere, a central plan effectively limits the possibility of change and the potential for innovation in society. The central plan’s rules and regulations prevent alternative futures, which have not been endorsed by the court intellectuals, from arising.
It seems to me, and I think that the court intellectuals would actually agree, that the only possible justification for using violence or the threat thereof to subjugate the ideas and visions of some individuals to the ideas and visions of other individuals is if such subjugation, the enactment of the central plan, results in everyone actually being better off, or at least in a net benefit to society, than if everyone retained the freedom to act as they think best. That is, every rule or regulation in the central plan should be able to pass a cost-benefit analysis. Of course, there may be some social planners who don’t care about the costs of their plan. Or, rather, they think that the cost is justified. Many of their countrymen may starve to death, but this outcome is necessary to please the gods or to fulfill some other mission, even if others can’t understand this fact. What I’m trying to say is, value is subjective. If a regulation will objectively cost more than it yields in benefits, as determined by an accountant looking at economic price information, the glorious cause might be subjectively seen as outweighing the economic costs of the regulation, even if that ideal cannot be measured monetarily. However, in order to convince the masses to submit to the authority of the central planner, the court intellectuals must at least pretend that their rules are justified by a net increase in welfare, for that is the standard for every action, and the masses cannot see the vision that the central planner has for society which will theoretically be so good that any sacrifice is justified. And, again, for those who can see this vision and believe that it is good, the rule or regulation would be considered worth the cost.
However, and this is important, the cost of these rules and regulations is incalculable, because their true cost is a loss of future innovation. The real cost of any action is its opportunity cost. What else could have been, if not this? By choosing one future, and forcibly excluding all others, a central plan costs us these other possible futures. And, because these futures never come into existence, it is impossible to measure how much they might have been worth. The future is always uncertain. But by trying to impose a certain future on the world, a central plan forestalls the possibility of an unseen and unconsidered and perhaps even unimagined future that could possibly be better than the central plan. Now, at this point, I will admit that it is possible that the central plan is a plan for the very best possible future. However, there is no way to confirm this, no cost-benefit analysis that could support it, because the true cost of its enactment can never be actually known.
And this is the real argument against central plans and government rules and regulations. There are, of course, the plethora of arguments against specific government actions that demonstrate that these actions will not accomplish their goal or will result in unintended and disastrous consequences. And then there are all of the arguments directed against the rule’s objective itself, arguments that support the enactment of a different plan. But the argument against central planning itself, as a practice, rests upon this acknowledgment that there is no objective way to justify a central plan. This fact alone does not prove, by itself, that we shouldn’t craft and enact central plans. But it is powerful and damning to recognize that there is no way to know or even effectively argue that our central plan should be enacted. And this does suggest that central plans should be abandoned in favor or freedom. The argument against central planning is that there could be something better, if only we had the freedom to discover it.
Hayek put it best when he said that “if we knew how freedom would be used, the case for it would largely disappear.” That is, if we did know the futures that men could and would create, and could foresee all of the future knowledge and innovation that would come about, and conduct comparative cost-benefit analyses of these futures, then we could create a central plan that would lead to the best possible outcome. But, obviously, we can’t do that, precisely because we do not know what the future will hold. We cannot know what the nature or effect of innovation will be until the innovation has already occurred. As Mises said, “progress is precisely that which the rules and regulations did not foresee.” We therefore cannot say that a certain central plan is the best course of action for society to follow.
The alternative to a central plan, as mentioned, is freedom, and the market process that freedom results in. The market allows each individual to craft and act upon their own plan for building a better future, and subjects each action to the profit-loss test, to determine whether the action actually was, on net, good or bad for society. In a complex society based on the division of labor, the surest way to a successful life is to satisfy the desires of your fellow man as you engage in many economic (and personal) transactions. Everyone in the market has the same rights: the right to control their own person and property and to enter contracts with others. Interactions are always voluntary; no one’s will is overridden by the will of another. Therefore, every interaction benefits both parties (ex ante). Every individual retains their own agency and ability to choose the best path they see available to them. The imagination of each man may be allowed to develop to ever greater heights in pursuit of the ever elusive ultimate good, happiness.
The market does not provide for one overarching plan, but allows every individual to try to enact their own plan for solving the problems facing society. If society agrees with an actor’s plan and actions, then the actor is rewarded with profits, enabling him to serve society to a greater extent in the next round of production. If an actor does not choose the right plan, and does not effectively serve the consumer, then he suffers economic losses which ensure that he is not in a position to squander society’s resources again. See my first SDA for further elaboration of the market process and how it directs society’s scarce resources in ways that are the most beneficial for society.
The important point about the market, however, is that it does not foreclose the possibility of change. Indeed, change is it’s whole reason for existence. Hayek points out that “economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan.” The market is most suitable for discovering a solution to a problem that is particularly suited to the specific circumstances of the problem. As the circumstances change, so does the problem, and so also the solution must change. In the market, a change in circumstances causes a change in price, which changes the results of the profit-loss test of the individual’s action. This change in economic results causes the individual to either adjust his action to fit the new circumstances or be replaced by someone else better suited to providing a solution to the new problem. The market, therefore, acts as an evolutionary process whereby the plans of individuals adapt in response to changes in the world around them. The market ruthlessly seeks better and better solutions, and allows every individual the freedom to experiment and try their own solution. It cares not who the solution comes from, whether they be an intellectual or not (something intellectuals detest). All that matters is their action, and whether or not it was good or bad for society.
A central plan is essentially the choices of a single individual (or group acting as a single entity) enacted through the individual actions of all members of society (as directed by the propagated rules and regulations). There is a clear hegemonic relationship in that one plan predominates, and, backed by the threat of force, the plan is not subject to the profit-loss test of the market. There is no effective feedback mechanism that can tell the central planner whether his plan is correct or not. Indeed, in an outright socialist system, there would not even be any prices for the central planner to even try to judge his actions by. The imposition of a single plan forstalls any attempt at trying different ideas. As discussed above, the rules and regulations which make up the central plan freeze the economy and society because change, or deviation from the plan, is forbidden. Even if the central planner allowed the market to arrive at a solution, the codification of that solution into the rules of the central plan would freeze the market process into an arrangement that was only appropriate for those particular circumstances, inappropriate for others. Incorporating the present results of the market process into a central plan still forecloses the possibility of better results arising in the future, or even the ability of the market to respond to changes in circumstances. Progress, and society, would come to a standstill. The plan, defined as it is by the existing state of knowledge and technology, could allow no room for new knowledge or innovation to appear.
Now, clearly, central plans are subject to attack through employment of the knowledge problem, as done in Journal 38. Society functions by utilizing the particular knowledge that is spread among all the members of society of each individual’s specific circumstances. It is impossible for a single mind or group of court intellectuals to possess all of this knowledge and thus to form a fully-informed central plan. But I’d also like to touch upon my “Theory of the Black and White”. Even if the central planner did possess all of the knowledge in society, it is certain that some of this knowledge would be incorrect, and that the body of the knowledge would be incomplete. We don’t know everything. We cannot possibly know enough to confidently design and pick one central plan to organize society by. There is always something more that needs to be learned or figured out or adjusted. This is because everything exists on a spectrum. And this applies to the central plan itself. Even if the plan was regarded by everyone as the best possible course for society, it would still have the potential for future improvements as man, his environment, and his ideas continued to change, if only such improvements were allowed. This is the great danger in choosing one view and committing ourselves to the belief that it is the best or only view: it denies to us the benefit of encountering other views and testing our view against them and improving our view from our experience with the other views. Choosing one plan is a rejection of the humility that is necessary for true intellectual and social progress. It doesn’t just freeze society; it freezes the planners in their current state of mind. They cannot find a better way, and no one else is allowed to look.
Now, I have addressed the economic and social costs of a central plan. Before I conclude, I would also like to address the spiritual effects. The real cost of a central plan is the loss of a chance to achieve anything better. The plan is all we have, and it is all we will ever have. But if the future is predetermined, and a vision has been chosen for society to move inexorably towards, then there is no possibility of anything ever being different, or better. There is no hope for anything better. Human beings are purposeful creatures. It is their function to act, to constantly be engaged in purposeful behavior in an attempt to create a better world for themselves. But, to act, they must have purpose. If there is no hope for a better world, if there is no belief that a better life can be attained, then there can be no human action. By deciding upon the course of the future and eliminating the possibility of change, a central plan takes away people’s hope for a better future, and this loss of hope leads to a loss of agency. Human beings are defined by their ability to imagine new worlds and act to bring them into existence. If they can’t do this, if they cannot act, then they lose that creative human spark which distinguishes them from the rest of the universe. They become less than human. A centrally planned society has just one actor; one will rules. And since, logistically, society cannot actually be planned, and civilization cannot be built or sustained alone, this arrangement can only lead to catastrophe. If you have a culture in which people do not desire to live better or don’t believe that a better life is possible, then society will grow stagnant, and civilization will collapse, and man will return to the state of nature which he has worked so hard to escape. The only way to avoid this, the only way to keep civilization stable and growing, is to have a culture where people believe in the future and their ability to change it for the better. And in order for people to have this culture, to possess agency, they must be free of any central plan.
Of course, we do not live under a central plan. Such a situation would be, as I just said, impossible. Central plans cannot be sustained because the future does change, and other people do act in new and independent ways. The central planner can never exercise full control over society, because men are emphatically unsuited to behaving like cogs in a machine. But, we do live under many rules and regulations, and each one of these are part of a larger plan, whether this larger plan is recognized or intended to be enacted fully, and each one of these rules or regulations that are enacted and enforced by government, outside the voluntaryness of the market, is a restriction on society’s ability to change and grow and innovate in the future. Each one costs us an incalculable amount of unrealized progress, and chips away at our freedom to act. Every rule and regulation reduces the scope of choice available to us and our sense of agency. Therefore, the criticisms leveled against central planning here in this post, and in other posts, may just as validly be applied to every restriction imposed upon society by a group of intellectuals who believe that they know best, through the coercive power of the State. It should be noted that central planning is a scalable phenomenon; its flaws are the same no matter the context, whenever one individual tries to make decisions for another individual.
My thoughts are, as always, drawn to modern public schooling, which, as I said in Journal 38, is almost a perfect model of a central plan (subject, of course, to the same limitations that apply to the feasibility and efficacy of every central plan). The present schedule and curriculum of every student is determined by a central board somewhere, and the future of all of these students is predetermined for them. It has been decided by one group of intellectuals what each and every student should know, and when, and how they should learn it. There is a definite image of what each student is meant to look like at the end of the years-long schooling process, a process which the students have no choice but to participate in and little control over. The freedom of teachers and students is severely constrained. The system doesn’t work very well, of course; there are many variations in outcomes, and not every student emerges in the image of the central planners. But this is because central plans don’t work very well, not because there was no central plan, and certainly not because there was a lack of effort in enacting the central plan. In Journal 32, entitled “A Human Education”, I said that the purpose of an education was to develop the student’s human mind, “to develop creative, thinking human beings.” And, as I have explained throughout this post and throughout this project, the distinguishing characteristic of man and his thinking is his purposeful action and all that it entails. It seems logical, then, that the development of an individual as a human being is roughly the same as the development of an individual’s agency. As I said above, agency is denied to individuals trapped in a central plan. The proper education of students, therefore, requires freeing them from the central plan that is modern public schooling, and giving them ultimate control over their own lives and learning.
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