Hayeking

JKSCHW at aol.com JKSCHW at aol.com
Fri Apr 21 22:12:04 PDT 2000


OK, my remark that a future socialist society would owe a lot to Hayek seems to have struck a chord. I have tried to combine responses to everyone's comments so far. if I left someone out, apologies. Sorry about the delay, but we have had family over for Pesach.

Doug H and other comment correctly that capitalism is very wasteful and thae market externalize costs, or more exactly create incentives to do so. First, of course, set aside capitalism, which I am not defending. Charles' point that capitalists like competition for others and monopolies for themselves--a point as old as Smith--is true but irrelevant, and Hayek would of course agree.

Second, the point about markets is true, and the deeper point is that the question of design of social institutions has to be comparative. In view of that we have to look at the balance of costs and benefits involved in markets versus other inntiututional forms of allocation.

However, Hayerk';s point is that you cannot even do the analysis unless we have a reasaonably accurate way of ascertaining costs. He argued that of the institutions available, markets were necessary to provide the incentives to get that information, aggregate it, and create incentives to act on it. You may not agree, but you need a plausible story about what other institutions we have or might have that could do at least as good a job. Doug D said, "nearly right will do," and that is right too. Hayek's point is the for many purposes, competitive markets are a lot more nearly right that any alternative, and no other alternative is nearly right enough.

I have yet to see a story about what Jim D called (was it here or on Pen-L?) democratic decentarlized planning that even looked remote credible. Cockshott & Cotrill have a credible effort; other attemts have been made by Mandel, Albert & Hahnel, and Pat Devine. I don't think any of them are adequate.

I don't mean planning never works. We know planning works better in some areas, health care, for example. But that doesn't mean it works better globally. This is the reply to the objection that corporations plan effectively. They do, but in a market context. Take away that context and the incentive to get things right, and the planning is not so effective. That is what is wrong with monopoly, and why we have antitrust laws.

Likewise with the point, due to Doug D, that markets create incentives to lie about available capacities and needed resources. Quite true. But they also create systematic incentives for individuals who would profit by the information get find out the truth and publicize it. The question for pro-planners is, what are the analogous incentives that a planning system would have? The lying problem was pervasive in centarlly planned economies. Yoshie says that class power creates incentives to lie, and that is true. But the market punishes lies in the end, as the dot.com sector just found out. What punishes lies in a planned economy? Thus Yoshie is correct that we need the hard budget constraint of bankruptcy and failure to make an economy work. That ain't a bug; it's a feature. Surely she does not want wasteful enterprises taht produce nothing that anyone wants using up resources in a socialist economy?

Doug D and others empahsized that some of what counts as waste in capitalsim might a benefit in socialism, for example more leisurely work conditions. True, but Hayek's point is more abstract and deeper than that. He contends taht the problems with planning lead to waste by socialism's criteria. People produce stuff that no one wants because no one has found out accurately what people do want. They have wasted their own time and the resources that they used making the stuff. Surely we would want more leisure. But that would call for more efficient production with less waste, less necessary worktime, so instead of goofing off at hated jobs, we could work less time at jobs we liked and have more real free time. But this requires accurate information about wants, costs, and resources. This is why Gorden's point that the problem with efficiency is that it doesn't say anything about what's coming out the end is quite misguided. Efficiency does not tell us what to choose. It allows us to choose intelligfently according to our other values. If we do not know about costs and waste our resources, we cannot effectively promote the values we care about.

Finally, Carroll assues us, in classical Marxist purity, that it is utopian and silly to think about hwo a future socialist society might be organized to attain its goals. Marx thought that, but he was wrong. We knwo know a lot more than Marx did about how a socialist society can screw up. More to the point, thew orking classes of the world know that too, and they will quire rationally refuse to surrender their paltry birthright of wage labor for a mess of of undefined pottage at the end of the Historical Process.

People should reread the essays in Individualism and the Economic Order--a great book, as I said, of socialist economics, and quite accessible.

--jks

One also needs to add all the immense social costs of environmental

damage, the health cost of deliberate flaunting of the already pitifully

inadequate OSHA regulations, the immense pile of luxury goods,

the immense wealth put into various forms of bribery to protect

narcotics, gambling, prostitution, etc. The cost of the military budget --

even assuming a continuing need for high military expenditures, there

would not exist that part of the military budget which is of no military

use -- probably a large proportion of it. The guarantee of work and

income regardless of efficiency and competence would more than

pay for itself probably by reduced health costs.

All the talent in advertising and finance could be put to work (with

much lower incomes [no operating of airconditioning in a convertible

with the top open]) in an enormous polling system to see what

people wanted.

But in general, forbodings about a future socialist order are every

bit as silly as daydreans about the wonders of such a system.

Utopiaism has two branches -- one daydreams heaven, one

daydreams hell. Both are out of touch with reality -- e.g., neither

even tries to factor into its view of the future the process by means

of which we get from here to there, and that process will cancel

out all the conditions which now exist and provide the basis

for these opposing daydreams and nightmares.

Carrol

You put it quite nicely. Even capitalist management often allows for

slacking off, shrinkage, etc. Policing every move of a worker &

exercising perfect discipline (no "wasted" moment, no "wasted"

movement, no "wasted" resources) may be the dream of a capitalist

Panopticon, but where there is power, there is resistance, as

Foucault says (and even capitalists know this). Whether the market

or planning or a mixture of both, the techniques of extracting

"optimal efficiency" which look good on paper are likely to turn out

to be inefficient practically. I think that communist planning

should include much elbowroom, so to speak. There is a Japanese

adage "muyo no yo," which may be translated as "usefulness of

uselessness," "utility of non-utility," or something like that. In a

future of emancipated work & abundant free time, I hope we'll enjoy

much _muyo no yo_. (Here's my utopian/millenarian speculation,

Carrol!)

Yoshie

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