August 28, 2015 7 Comments
Not long ago I was listening to one of Russ Roberts’s archived “EconTalk” podcasts with the great Thomas Sowell (and if you don’t listen to EconTalk you’re missing one of the top podcast artists of our time—subscribe for free here), and was completely stunned by something Sowell said. When he was assigned Friedrich Hayek’s seminal essay “The Use of Knowledge in Society” as a graduate student, he didn’t get it. Sowell found it too abstract and dense. Russ Roberts, another fine Chicago-school economist, said he had the same reaction to it the first time he read it, and, moreover, that Vernon Smith (a Nobel Prize winner) also found the essay opaque at first reading.
Like Steven, I’ver never found this anything but clear as a plate glass window, so I’m a bit dumbfounded. Still the examples he gives worked through it, extraordinarily well, and as sometimes happens, maybe they understand it better for not seeing immediately the point.
He then proceeds to comment on an article in The New Republic, entitled “What If Stalin Had Computers?” What his point is that it is simply the old socialist saw that communism merely needed more time, as if a few more generations of misery would have made it work, violates another thing. Name one thing that Stalin’s Soviet union invented or developed from scratch. Can’t think of one myself, everything they had, somebody in the west, mostly Britain or America developed. So, Stalin having computers is simply a fantasy, that would have never happened in a millennium without the west. But, in truth, communism, or socialism, can never work, because people will always act in their own rational self-interest. And if you attempt to force it, they will simply pretend to work, and lie.
And the real reason it makes no difference is this. Sometime, long ago, I read a quote from Sir Winston Churchill, which I can no longer find, that said roughly, “We gather all the statistics in the world, and analyze and plan things on them, and reorder national priorities and all that. But it all come down to that grubby little man, with a clipboard and a pencil, who wrote down whatever he felt like.” And that is what always kills command economies–they lie to themselves, whether they are the Soviet Union, Venezuela, or increasingly, the United States. The real reason that we didn’t forsee the downfall of the USSR was that we believed the BS given to the Politburo.
Let’s finish with Steve and how he finished his article:
I recall reading one of the last interviews Hayek ever gave shortly before his death in 1992 in Forbes (sadly I can’t seem to find it now), where he was asked whether the information revolution and supercomputing didn’t change things, and make possible more effective centralized economic planning. Hayek said no—no matter how big and fast computers get, and how complete the data gathering, no centralized process can ever hope to match the uncoordinated actions of the constantly changing marketplace. Go re-read “The Use of Knowledge in Society” slowly and repeatedly until you get it.
At the end of the day, of course, the socialist impulse is not really rooted in reason or epistemology, but in envy and the desire for authoritarian control. That’s why we’ll never be rid of these people, no matter how many Venezeulas and Cubas you pile up.