Wednesday, March 10, 2010

The Joys of Planning

Liberty Leads to Non-Socialist Behavior
Socialism depends on centralized planning and control if only because people at liberty to make their own commercial (economic) decisions will, by their decisions, pull the system away from the socialistic ideal. Socialism and exemption from coercion are incompatible.

We know this because, without central planning (or where it lacks control), the extended order of people freely interacting for mutual benefit (the free market) always appears spontaneously, without anyone planning it, and it is not socialistic. Even in a controlled and planned economy, free markets spontaneously spring up along the margins and in the interstices left by planning. These weeds of liberty in the socialist garden are usually called “black markets” or "capitalist subversion of the will of the people".

Universal socialism is made possible only by eliminating all liberty or by eliminating (murdering) all individuals who use their liberty to do things other than what is planned. Socialism is possible only to the extent the central authority (the state) can eliminate non-socialist economic activity.

A Problem of Scale
Proper planning depends on ready access to all the relevant information. To the extent that information is lacking, not employed, or out-of-date, the planning process will be poor and results unsatisfactory.

With billions of people in a multi-national society, each person with multitudinous and changing desires, each encountering the vicissitudes of life (accidents, serendipitous opportunities, uncertain weather, etc) and making scores of decisions every day, the volume of information needed for proper planning and allocation of resources is almost unimaginable. And the conditions change daily, even hourly.

Imagine that: 16 million economic decisions per second. Each decision evaluating relative prices, ease of buying or selling, personal preferences, current bodily aches and pains and hungers and longings, personal mental states, and the environment relative to one or more of the 1.2 billion products available in the United States and Canada, plus all the services and all the products available in other countries. (Don’t imagine that the greedy capitalists created all those unnecessary products to take advantage of consumers. I’m a product manager. I know how expensive it is for a supplier to create and manage a new product; you don’t do it unless consumers want it. Profits are higher if you can get by with fewer products.)

So Many Decisions

It’s raining; do I buy an umbrella or not? Would I rather buy an umbrella or get a little wet? Do I drive today or walk to the bus stop in the cold wind? Do I accelerate quickly to save time, or drive more cautiously to save gas? Do I want fries with that? Do I buy an extra roll of toilet paper to put in the cupboard? Do I want to accept the price the customer has offered, or tell him to get lost? Do I throw in an extra doughnut with the dozen the customer asked for, and not charge for the extra? Do I put the 32-ounce Coke on sale? At what price? Every decision leads to an action (or action foregone) and every action affects inventories, demand, prices, and availability as well as affecting the conditions that every other person on the planet faces as she makes her own decisions.

Sixteen million economic actions every second about one or more of the 1.2 billion products. Each action taken with consideration of the economic conditions at the time of the decision to act (or not to act) and each changing, however slightly, the economic conditions faced by everyone else (and every decision-making entity – corporation, department, club, agency, or group) in the economy.

Rationalist intellectuals, socialist planners, and government agencies seeking power imagine that it is possible to understand all the effects of all these decisions and plan accordingly. They imagine they can rationalize, bring order to, and improve the efficiency (and justice) of this human system that has complexity defying human comprehension.

Central planning is possible only by drastically limiting human liberty by eliminating most of available products and restricting choices. You prefer Pepsi? Tough. The planning commission has decided that Coke is all that you need, and only in the 16-ounce size. And it’s always the same price and never goes on sale. And you can only buy 2 six-packs at a time because you don’t need any more. And the stores are only open 9 hours a day, so for the remaining 15 hours you won’t be taking any economic actions that might not be planned. Otherwise, you'll upset the plan.

Nice world. You like it? The Russians didn’t.

Computation by the Evolving, Spontaneously-Created Extended Order
The only computer powerful enough to process all the information and make timely allocations is the one that spontaneously evolves when people are at liberty to make their own decisions within the framework of abstract rules such as traditions and simple laws that protect liberty.

Within this vast, ever-evolving computer, are many cells or subsystems: some flexible, some rigid, some highly efficient and effective, some flawed and destined for extinction. The power of this computer is unimaginable and its operation beyond human understanding because the system it controls is the most complex thing in the universe. Socialists are socialists because they can neither imagine nor believe what this computer can do. Because a certain type of rationalist lacks imagination and doesn’t believe anything he can’t understand, he will be a socialist.

And force you to live in a world that is simple enough for him to understand.

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