Word
Gems
What is a
man but the sum of his thoughts?
Wealth
& Economics:
- F. A. Hayek's
- The Road
to Serfdom
-
- Economic
Control
- and
- Totalitarianism
- The control of the production of wealth is the control of
human life itself.
Hilaire
Belloc
MOST planners who have seriously considered the practical aspects of their task have
little doubt that a directed economy must be run on more or less dictatorial lines.
That the complex system of interrelated activities, if it is to be
consciously directed at all, must be directed by a single staff of experts, and that
ultimate responsibility and power must rest in the hands of a commander-in-chief whose
actions must not be fettered by democratic procedure, is too obvious a consequence of
underlying ideas of central planning not to command fairly general assent.
The consolation our planners offer us is that this authoritarian
direction will apply "only" to economic matters. One of the most prominent
economic planners, Stuart Chase, assures us, for instance, that in a planned society
"political democracy can remain if it confines itself to all but economic
matter."
Such assurances are usually accompanied by the suggestion that, by
giving up freedom in what are, or ought to be, the less important aspects of our lives, we
shall obtain greater freedom in the pursuit of higher values. On this ground people who
abhor the idea of a political dictatorship often clamor for a dictator in the economic
field.
The arguments used appeal to our best instincts and often attract the finest minds. If
planning really did free us from the less important cares and so made it easier to render
our existence one of plain living and high thinking, who would wish to belittle such an
ideal? If our economic activities really concerned only the inferior or even more sordid
sides of life, of course we ought to endeavor by all means to find a way to relieve
ourselves from the excessive care for material ends and, leaving them to be cared for by
some piece of utilitarian machinery, set our minds free for the higher things of life.
Unfortunately, the assurance people derive from this belief that the power which is
exercised over economic life is a power over matters of secondary importance only, and
which makes them take lightly the threat to the freedom of our economic pursuits, is
altogether unwarranted. It is largely a consequence of the erroneous belief that there are
purely economic ends separate from the other ends of life.
Yet, apart from the pathological case of the miser, there is no such
thing. The ultimate ends of the activities of reasonable beings are never economic.
Strictly speaking, there is no "economic motive" but only economic factors
conditioning our striving for other ends. What in ordinary language is misleadingly called
the "economic motive" means merely the desire for general opportunity, the
desire for power to achieve unspecified ends.
If we strive for money, it is because it offers us the widest choice in
enjoying the fruits of our efforts. Because in modern society it is through the limitation
of our money incomes that we are made to feel the restrictions which our relative poverty
still imposes upon us, many have come to hate money as the symbol of these restrictions.
But this is to mistake for the cause the medium through which a force
makes itself felt. It would be much truer to say that money is one of the greatest
instruments of freedom ever invented by man. It is money which in existing society opens
an astounding range of choice to the poor man--a range greater than that which not many
generations ago was open to the wealthy.
We shall better understand the significance of this service of money if
we consider what it would really mean if, as so many socialists characteristically
propose, the "pecuniary motive" were largely displaced by "noneconomic
incentives."
If all rewards, instead of being offered in money, were offered in the
form of public distinctions or privileges, positions of power over other men, or better
housing or better food, opportunities for travel or education, this would merely mean that
the recipient would no longer be allowed to choose and that whoever fixed the reward
determined not only its size but also the particular form in which it should be enjoyed.
Once we realize that there is no separate economic motive and that an economic gain or
economic loss is merely a gain or a loss where it is still in our power to decide which of
our needs or desires shall be affected, it is also easier to see the important kernel of
truth in the general belief that economic matters affect only the less important ends of
life and to understand the contempt in which "merely" economic considerations
are often held. In a sense this is quite justified in a market economy-but only in such a
free economy.
So long as we can freely dispose over our income and all our
possessions, economic loss will always deprive us only of what we regard as the least
important of the desires we were able to satisfy.
- A "merely" economic loss is thus one whose
effect we can still make fall on our less important needs, while when we say that the
value of something we have lost is much greater than its economic value, or that it cannot
even he estimated in economic terms, this means that we must bear the loss where it falls.
And similarly with an economic gain. Economic changes, in other words,
usually affect only the fringe, the "margin," of our needs. There are many
things which are more important than anything which economic gains or losses are likely to
affect, which for us stand high above the amenities and even above many of the necessities
of life which are affected by the economic ups and owns.
Compared with them, the "filthy lucre," the question whether
we are economically somewhat worse or better off, seems of little importance.
- This makes many people believe that anything which, like
economic planning, affects only our economic interests cannot seriously interfere with the
more basic values of life.
This, however, is an erroneous conclusion. Economic values are less
important to us than many things precisely because in economic matters we are free to
decide what to us is more, and what less, important. Or, as we might say, because in the
present society it is we who have to solve the economic problems of our lives. To be
controlled in our economic pursuits means to be always controlled unless we declare our
specific purpose. Or, since when we declare our specific purpose we shall also have to get
it approved, we should really be controlled in everything.
The question raised by economic planning is, therefore, not merely whether we shall be
able to satisfy what we regard as our more or less important needs in the way we prefer.
It is whether it shall be we who decide what is more, and what is less, important for us,
or whether this is to be decided by the planner.
Economic planning would not affect merely those of our marginal needs
that we have in mind when we speak contemptuously about the merely economic.
- It would, in effect, mean that we as individuals should
no longer be allowed to decide what we regard as marginal.
The authority directing all economic activity would control not merely
the part of our lives which is concerned with inferior things;
- it would control the allocation of the limited means for
all our ends. And whoever controls all economic activity controls the means for all our
ends and must therefore decide which are to be satisfied and which not. This is really the
crux of the matter.
Economic control is not merely control of a sector of human life which
can be separated from the rest;
- it is the control of the means for all our ends.
And whoever has sole control of the means must also determine which ends
are to be served, which values are to be rated higher and which lower-in short, what men
should believe and strive for.
Central planning means that the economic problem is to be solved by the
community instead of by the individual; but this involves that it must also be the
community, or rather its representatives, who must decide the relative importance of the
different needs.
The so-called economic freedom which the planners promise us means precisely that we are
to be relieved of the necessity of solving our own economic problems and that the bitter
choices which this often involves are to be made for us.
Since under modern conditions we are for almost everything dependent on
means which our fellow-men provide, economic planning would involve direction of almost
the whole of our life. There is hardly an aspect of it, from our primary needs to our
relations with our family and friends, from the nature of our work to the use of our
leisure, over which the planner would not exercise his "conscious control."
The power of the planner over our private lives would be no less
complete if he chose not to exercise it by direct control of our consumption. Although a
planned society would probably to some extent employ rationing and similar devices, the
power of the planner over our private lives does not depend on this and would be hardly
less effective if the consumer were nominally free to spend his income as he pleased.
The source of this power over all consumption which in a planned society
the authority would possess would be its control over production.
Our freedom of choice in a competitive society rests on the fact that, if one person
refuses to satisfy our wishes, we can turn to another. But if we face a monopolist we are
at his mercy. And an authority directing the whole economic system would be the most
powerful monopolist conceivable.
While we need probably not be afraid that such an authority would
exploit this power in the manner in which a private monopolist would do so, while its
purpose would presumably not be the extortion of maximum financial gain, it would have
complete power to decide what we are to be given and on what terms.
It would not only decide what commodities and services were to be
available and in what quantities; it would be able to direct their distribution between
districts and groups and could, if it wished, discriminate between persons to any degree
it liked. If we remember why planning is advocated by most people, can there be much doubt
that this power would be used for the ends of which the authority approves and to prevent
the pursuits of ends which it disapproves?
The power conferred by the control of production and prices is almost unlimited. In a
competitive society the prices we have to pay for a thing, the rate at which we can get
one thing for another, depend on the quantities of other things of which by taking one, we
deprive the other members of society. This price is not determined by the conscious will
of anybody. And if one way of achieving our ends proves too expensive for us, we are free
to try other ways.
The obstacles in our path are not due to someone's disapproving of our
ends but to the fact that the same means are also wanted elsewhere. In a directed economy,
where the authority watches over the ends pursued, it is certain that it would use its
powers to assist some ends and to prevent the realization of others. Not our own view, but
somebody else's, of what we ought to like or dislike would determine what we should get.
And since the authority would have the power to thwart any efforts to elude its guidance,
it would control what we consume almost as effectively as if it directly told us how to
spend our income.
Not only in our capacity as consumers, however, and not even mainly in that capacity,
would the will of the authority shape and "guide" our daily lives. It would do
so even more in our position as producers.
These two aspects of our lives cannot be separated; and as for most of
us the time we spend at our work is a large part of our whole lives, and as our job
usually also determines the place where and the people among whom we live, some freedom in
choosing our work is, probably, even more important for our happiness than freedom to
spend our income during the hours of leisure.
No doubt it is true that even in the best of worlds this freedom will be very limited. Few
people ever have an abundance of choice of occupation. But what matters is that we have
some choice, that we are not absolutely tied to a particular job which has been chosen for
us, or which we may have chosen in the past, and that if one position becomes quite
intolerable, or if we set our heart on another, there is almost always a way for the able,
some sacrifice at the price of which he may achieve his goal.
Nothing makes conditions more unbearable than the knowledge that no
effort of ours can change them; and even if we should never have the strength of mind to
make the necessary sacrifice, the knowledge that we could escape if we only strove hard
enough makes many otherwise intolerable positions bearable.
This is not to say that in this respect all is for the best in our present world, or has
been so in the most liberal past, and that there is not much that could be done to improve
the opportunities of choice open to the people.
Here as elsewhere the state can do a great deal to help the spreading of
knowledge and information and to assist mobility. But the point is that the kind of state
action which really would increase opportunity is almost precisely the opposite of the
"planning" which is now generally advocated and practiced.
Most planners, it is true, promise that in the new planned world free
choice of occupation will be scrupulously preserved or even increased. But there they
promise more than they can possibly fulfill. If they want to plan, they must control the
entry into the different trades and occupations, or the terms of remuneration, or both.
In almost all known instances of planning, the establishlnent of such
controls and restrictions was among the first measures taken. If such control were
universally practiced and exercised by a single planning authority, one needs little
imagination to see what would become of the "free choice of occupation"
promised.
The "freedom of choice" would be purely fictitious, a mere
promise to practice no discrimination where in the nature of the case discrimination must
be practiced, and where all one could hope would be that the selection would be made on
what the authority believed to be objective grounds.
There would be little difference if the planning authority confined itself to fixing the
terms of employment and tried to regulate numbers by adjusting these terms. By prescribing
the remuneration, it would no less effectively bar groups of people from entering many
trades than by specifically excluding them.
A rather plain girl who badly wants to become a saleswoman, a weakly boy
who has set his heart on a job where his weakness handicaps him, as well as in general the
apparently less able or less suitable are not necessarily excluded in a competitive
society; if they value the position sufficiently they will frequently be able to get a
start by a financial sacrifice and will later make good through qualities which at first
are not so obvious.
But when the authority fixes the remunerations for a whole category and
the selection among the candidates is made by an objective test, the strength of their
desire for the job will count for very little.
- The person whose qualifications are not of the standard
type, or whose temperament is not of the ordinary kind, will no longer be able to come to
special arrangements with an employer whose dispositions will fit in with his special
needs: the person who prefers irregular hours or even a happy-go-lucky existence with a
small and perhaps uncertain income to a regular routine will no longer have the choice.
Conditions will be without exception what in some measure they
inevitably are in a large organization-or rather worse, because there will be no
possibility of escape. We shall no longer be free to be rational or efficient only when
and where we think it worth while; we shall all have to conform to the standards which the
planning authority must fix in order to simplify its task.
To make this immense task manageable, it will have to reduce the
diversity of human capacities and inclinations to a few categories of readily
interchangeable units and deliberately to disregard minor personal differences.
Although the professed aim of planning would be that man should cease to be a mere means,
in fact--since it would be impossible to take account in the plan of individual likes and
dislikes --
- the individual would more than ever become a mere means,
to be used by the authority in the service of such abstractions as the "social
welfare" or the "good of the community."
That in a competitive society most things can be had at a price--though
it is often a cruelly high price we have to pay--is a fact the importance of which can
hardly be overrated. The alternative is not, however, complete freedom of choice, but
orders and prohibitions which must be obeyed and, in the last resort, the favor of the
mighty.
It is significant of the confusion prevailing on all these subjects that it should have
become a cause for reproach that in a competitive society almost everything can be had at
a price. If the people who protest against having the higher values of life brought into
the "cash nexus" really mean that we should not be allowed to sacrifice our
lesser needs in order to preserve the higher values, and that the choice should be made
for us, this demand must be regarded as rather peculiar and scarcely testifies to great
respect for the dignity of the individual.
That life and health, beauty and virtue, honor and peace of mind, can
often be preserved only at considerable material cost, and that somebody must make the
choice, is as undeniable as that we all are sometimes not prepared to make the material
sacrifices necessary to protect those higher values against all injury.
To take only one example: We could, of course, reduce casualties by automobile accidents
to zero if we were willing to bear the cost--if in no other way--by abolishing
automobiles. And the same is true of thousands of other instances in which we are
constantly risking life and health and all the fine values of the spirit, of ourselves and
of our fellow-men, to further what we at the same time contemptuously describe as our
material comfort.
Nor can it be otherwise, since all our ends compete for the same means;
and we could not strive for anything but these absolute values if they were on no account
to be endangered.
That people should wish to be relieved of the bitter choice which hard facts often impose
upon them is not surprising. But few want to be relieved through having the choice made
for them by others. People just wish that the choice should not be necessary at all. And
they are only too ready to believe that the choice is not really necessary, that it is
imposed upon them merely by the particular economic system under which we live. What they
resent is, in truth, that there is an economic problem.
In their wishful belief that there is really no longer an economic problem people have
been confirmed by irresponsible talk about "potential plenty" -- which, if it
were a fact, would indeed mean that there is no economic problem which makes the choice
inevitable.
- But although this snare has served socialist propaganda
under various names as long as socialism has existed, it is still as palpably untrue as it
was when it was first used over a hundred years ago.
In all this time not one of the many people who have used it has
produced a workable plan of how production could be increased so as to abolish even in
western Europe what we regard as poverty--not to speak of the world as a whole. The reader
may take it that whoever talks about potential plenty is either dishonest or does not know
what he is talking about. Yet it is this false hope as much as anything which drives us
along the road to planning.
While the popular movement still profits by this false belief, the claim that a planned
economy would produce a substantially larger output than the competitive system is being
progressively abandoned by most students of the problem.
Even a good many economists with socialist views who have seriously
studied the problems of central planning are now content to hope that a planned society
will equal the efficiency of a competitive system; they advocate planning no longer
because of its superior productivity but because it will enable us to secure a more just
and equitable distribution of wealth.
This is, indeed, the only argument for planning which can be seriously
pressed. It is indisputable that if we want to secure a distribution of wealth which
conforms to some predetermined standard, if we want consciously to decide who is to have
what, we must plan the whole economic system. But the question remains whether the price
we should have to pay for the realization of somebody's ideal of justice is not bound to
be more discontent and more oppression than was ever caused by the much-abused free play
of economic forces.
We should be seriously deceiving ourselves if for these apprehensions we sought comfort in
the consideration that the adoption of central planning would merely mean a return, after
a brief spell of a free economy, to the ties and regulations which have governed economic
activity through most ages, and that therefore the infringements of personal liberty need
not be greater than they were before the age of laissez faire.
This is a dangerous illusion. Even during the periods of European
history when the regimentation of economic life went furthest, it amounted to little more
than the creation of a general and semipermanent framework of rules within which the
individual preserved a wide free sphere. The apparatus of control then available would not
have been adequate to impose more than very general directions. And even where the control
was most complete it extended only to those activities of a person through which he took
part in the social division of labor.
In the much wider sphere in which he then still lived on his own
products, he was free to act as he chose.
The situation is now entirely different. During the liberal era the progressive division
of labor has created a situation where almost every one of our activities is part of a
social process. This is a development which we cannot reverse, since it is only because of
it that we can maintain the vastly increased population at anything like present
standards. But, in consequence, the substitution of central planning for competition would
require central direction of a much greater part of our lives than was ever attempted
before. It could not stop at what we regard as our economic activities, because we are now
for almost every part of our lives dependent on somebody else's economic activities. [footnote: It is no accident that in the totalitarian countries, be it
Russia or Germany or Italy, the question of how to organize the people's leisure has
become a problem of planning. The Germans have even invented for this problem the horrible
and self-contradictory name of Freizeitgestaltung (literally: "the shaping
of the use made of the people's free time"), as if it were still "free
time" when it has to be spent in the way ordained by authority.]
The passion for the "collective satisfaction of our needs,"
with which our socialists have so well prepared the way for totalitarianism, and which
wants us to take our pleasures as well as our necessities at the appointed time and in the
prescribed form, is, of course, partly intended as a means of political education. But it
is also the result of the exigencies of planning, which consists essentially in depriving
us of choice, in order to give us whatever fits best into the plan and that at a time
determined by the plan.
- It is often said that political freedom is meaningless
without economic freedom. This is true enough, but in a sense almost opposite from that in
which the phrase is used by our planners.
The economic freedom which is the prerequisite of any other freedom
cannot be the freedom from economic care which the socialists promise us and which can be
obtained only by relieving the individual at the same time of the necessity and of the
power of choice;
- it must be the freedom of our economic activity
which, with the right of choice, inevitably also carries the risk and the responsibility
of that right.
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