The Road to Serfdom (1944) – F.A. Hayek, Chapter 5 – Planning & Democracy

  • A common feature of collectivist systems is the deliberate organization of society’s labors for a common social goal. Socialists complain that our present society lacks “conscious direction” towards one goal & that our activities are guided by the whims of individuals.
    • There’s conflict between individual freedom & collectivism. The kinds of collectivism differ in the nature of their goals but they all want to organize all of society. This makes them all totalitarian.
    • The “Social goal” all this planning is for is often called “common good” or “general welfare.” There’s no definite meaning to these because many people’s happiness & welfare can’t be measured on a single scale. It all depends on many things that can’t be expressed as a single goal.
      • To direct all activities requires a ranking system but that can’t be done for millions of people & on such a vague topic.
    • A complete ethical code isn’t familiar to us. We choose between different values without a social code. But in our society there’s no reason why we’d have a single view on how decisions are to be made.
      • Our present growth is accompanied by a shrinking sphere where individual actions are bound by fixed rules. Our common moral code has fewer rules compared to primitive man.
    • No complete ethical code exists to direct all economic activity. People either have no definite views or have conflicting views because in a free society, we don’t have the occasion to think about them or form them completely.
      • It would be impossible for the mind to comprehend the needs of all people in society, the available resources & each one’s importance to each individual. An individual’s ends will always be a fraction of all men’s needs.
        • This is the basis of Individualism. We don’t assume man is egoistic or selfish but we know the limits of our abilities & imagination make it impossible to sum up the needs of society. Individuals should be allowed to follow their own values & preferences instead of those of someone else. The individual is the ultimate judge of his own ends & his own views ought to govern his actions.
        • This doesn’t exclude social ends. But those are limited to where individual views coincide, meaning identical ends. Common action is limited to where people agree. The common ends aren’t ends at all but the means themselves.
    • When individuals combine in a joint effort, they form a system of ends & means. The organization becomes “one person” – as government, etc. Limits of this sphere are determined by the ends & means people agree on. The more the sphere extends, the less likely people are to agree. Eventually, there’ll be as many views on what the government should do & how it should do it as there are people in society.
      • We can rely on voluntary agreement to guide the state as long as it’s confined to spheres where there’s agreement. When the state takes over areas where there’s no agreement, individual freedom will be suppressed. Once the common sector expands to a certain point, the government will control everything. At that point, no individual action or goal will be independent of the state & the “social scale of values”.
  • It’s not hard to see what happens when Democracy tries to plan things when there’s no agreement.
    • People may have agreed on a directed economy because they’re sure of good results, based on the coals of “common welfare”, etc. but nothing about the lack of agreement on what that means. Agreement is the only thing holding it all together – but only for a common end.
    • The agreement on the desirability of planning isn’t supported by the ends. The effect of the agreement on central planning without agreeing on any ends will be that we’ll be forced to produce an agreement to get anything done.
    • It may be the people’s will that parliament creates a comprehensive economic plan. It’s clear that democratic assemblies in order to carry out a mandate will cause dissatisfaction with democratic institutions. Parliaments become talking shops but unable or unwilling to carry out the mandate.
      • It’ll be seen that planning is to be removed from politics & put in the hands of experts. Socialists know this & complain about the democratic functions slowing down the achievement of their goals.
      • In a transition to Socialism, a government can risk the overthrow of its measures through a general election.
  • Let’s look at the causes of the ineffectiveness of parliaments with respect to economic planning.
    • The problem isn’t with individual representatives or parliamentary institutions but the contradictions in the task they’ve been charged with. They’ve been asked to act on matters that haven’t been agreed upon.
    • Majority decision is based on limited alternatives. It’s silly to think we need a majority view on everything. Every representative may have some particular preference for no plan at all, yet the majority may not like any one plan.
    • You can’t have a coherent plan be broken into parts to be voted on. An economic plan has to have unitary conception, without which no one can be pleased. The complex whole must have parts carefully adjusted to each other which can’t be achieved through compromise just like a military campaign cannot be run in each step by democratic means. The items may contradict one another or undo one another.
      • But a general only has a single goal – victory. The planner has to satisfy the needs of every person, which hurt some & help others.
    • The delegation of this task is justified by its technical nature. Not every detail is delegated & parliament isn’t always unable to understand those technical details.
    • Alterations to civil law are also technical & difficult to understand but these aren’t being delegated. Somehow economic activities based on individual desires & interests are too variable & divergent that no agreement can be made democratically.
  • The delegation of law-making isn’t so objectionable, so long as it’s just the power to make the rules. It may be better done locally than centrally.
    • What’s objectionable is that delegation is used because the matter at hand can’t be regulated by rules but by discretion. That means delegation is giving some authority the power to make arbitrary decisions.
    • Delegation of technical tasks is the first step where a democracy relinquishes power. It can’t really remove the causes that make planning advocates impatient with democracy.
      • It just creates a new obstacle to achieving planning. Even if democracy could succeed in planning the economy, it’d still be hard to integrate all the parts into a whole. It could be even worse than no plan at all.
      • The inability will evoke stronger demands for more power to be given to the government under the idea of freeing the government from democracy’s fetters.
      • Fans of planning will complain of economic chaos & will demand an economic dictatorship.
    • Germany’s democracy had already broken down long before Hitler’s rise. He just took advantage of the circumstances because only he seemed to be able to get anything done.
  • Planners try to ease our minds by saying as long as democracy keeps control, the essentials won’t be affected.
    • They claim democracy can be strengthened through these methods.
    • This ignores the fact that while parliament can give orders based on what’s been agreed upon, when there’s no general agreement, the plan created has to be accepted or reject as a whole plan.
    • No majority would agree to it & none could come up with an alternative. All parts of the plan will be seen as essential to the whole.
    • Parliaments can be a good place to complain about things but it can’t direct anything. At best, it’ll just choose who’ll have absolute power. But the one with that power can do as he likes.
  • The price of democracy is that the possibilities of conscious control are restricted to fields where true agreement exists & other fields are left to chance.
    • A centrally planned society can’t let this control be based on the majority’s voice because it won’t exist, & the will of a small minority will decide the matter.
    • Democratic government will only work where government functions are limited to fields where agreement is reached via free discussion.
      • Only a capitalist & competitive system will allow a democracy to function as intended. Once it’s been dominated by collectivist ideas, it’s doomed.
  • Acton said that liberty was the highest political end. You can’t say that about democracy. It’s inefficient but it’s a means to achieving the security for people to achieve their own private goals.
    • Democracy is a utilitarian device to safeguard intern peace & individual freedom.
    • Cultural & spiritual freedom are possible under autocratic rule & it’s also possible that doctrinaire democracy can be as oppressive as the worst dictatorships.
  • Planning leads to dictatorship because dictatorship is the most effective instrument of coercion & enforcement of ideals essential to planning.
    • Planning & democracy clash because democracy is an obstacle to the suppression of freedom that planning requires. When democracy stops guaranteeing individual freedom it might persist under a totalitarian regime. True dictatorship most likely will destroy personal freedom.
    • The concentration of democracy as the main value is dangerous as well. People will think so long as the ultimate power resides in the majority, power won’t be arbitrary.
      • Only the limitation of power will prevent it from being arbitrary. Democracy can do that but not necessarily so.

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