Term
| Incompatibility of individual liberty and state planning |
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Definition
Classic liberal critique of marxism
1899-1992
Road to Serfdom = classic
Written 1944: state planning a trend in history (New Deal, fascism, socialism)
Dominant thinking: Keynes, Marx, etc.
Hayek provide a cry of warning |
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Term
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Definition
Born in Vienna
1931 to Britain
Views toward state planning = fringe
University of Chicago - Milton Friedman thinker
Nobel Peace Prize in Econ 1974 |
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Term
| Democratic socialism is a grand illusion |
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Definition
"democratic socialists" imagine that they can combine economic planning and individual freedom
in fact this is not possible - conflicts and will have to choose |
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Term
| Not a matter of intentions or sincerity |
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Definition
Genuinely want to combine
Believe that planning is an extension of democracy
Believe planning expands scope of individual freedom
Believe that planning promotes liberty and democracy
BUT just reality that it's impossible to combine both - profound illusion |
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Term
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Definition
Start off problem - redefining freedom in a non-Liberal sense
Marx on freedom? shorter work hours, job security, higher wages
New Deal re "new freedoms" |
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Term
| What is wrong with the Marxist redefinition of freedom? |
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Definition
Nothing - are very desirable
May wish to place high authority of achievement
But profound mistake to imagine that they equivalent to individual freedom
Trade-offs involved |
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Term
| Freedom = individual chooses |
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Definition
What to do, how to act, how to proceed
Markets = summation of individual choices
Markets = literally an institution of individual freedoms |
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Term
| Government decision/planning = preempts individual choice |
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Definition
Planning = government chooses for people, like hours per work day
any decision by government = some diminution of freedom
May decide to pick something other than freedom but must recognize that trade off |
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Term
| Socialist say that capitalism limits freedom for workers and exploits |
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Definition
But Hayek says that they're not losing much
Without capitalism losing - option of going into business and becoming entrepreneurs
Everyone has to work |
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Term
| Planners will find inconvenient free individual behavior |
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Definition
Economic planners devise/implement coherent plan - must all fit together
Many types of individual action will run counter to sound implementation of plan, changing jobs |
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Term
| Planners have coercive power of state behind them |
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Definition
Can secure cooperation of others by command - not merely persuasion (as with markets)
Must have a sound, coherent plan
When free individual behavior contradicts sound plan |
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Term
| Freedom of speech particularly vulnerable |
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Definition
Pernicious ideas = cascading effects
Government controls all paper, ink, presses
Make available to undermine planning? NO! |
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Term
| Impersonality of markets protect freedom of speech |
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Definition
Resources available to people of whatever perspective with money
Suppliers do not care about views |
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Term
| In system of state planning |
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Definition
Resources controlled by government
Have great interest in views expressed
Have ability to deny resources |
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Term
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Definition
Combination of state planning with individual freedom - impossible
Belief otherwise = dangerous illusion
Results not what intended - other than what intended, greater the planning, greater the sacrifice of freedom |
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Term
| Impossibility of democratic socialism |
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Definition
political democracy incompatible with sound economic planning
believe otherwise = grand illusion |
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Term
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Definition
state planning and ownership of means of production
replace markets and private ownership |
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Term
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Definition
| political system in which ordinary people are able to influence exercise of government power |
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Term
| Operationalization of democracy |
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Definition
What sort of institutional embodiments?
Decision-making by popularly elected assemblies
Elections: non-coercive, counting fair
Assemblies: resulting from actual power |
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Term
| Parliamentary power = crux of democracy |
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Definition
Elected assemblies - in fact effectively able to control exercise of government power
Combined with free debate, within assembly, during and not during elections
Sound economic planning not compatible with parliaments
1. Nature of decisions made by government
2. Type of person who sound politician vs sound planner
3. Requirement for agreement based by compromise vs logical consistency |
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Term
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Definition
specifies winners and losers
outcome clear and immediate
potential losers = oppose intensely |
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Term
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Definition
specifies rules of game
not pick winners and losers
often blind and stress openness
democratic governments deal largely with procedural
that's why democracy works well with capitalism |
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Term
| State economic planning require specification of outcomes |
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Definition
Planners must decide how much to invest and how much income
Consequence - decisions are very high stake, outcomes clear: who will win and lose |
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Term
| Argument 1: The broader the scope of economic planning - the greater the zero -sum nature of decisions by state economic planners |
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Definition
The more resources the state, the greater the consequences of losing those resources
Comprehensive economic planning = extremely high stakes |
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Term
| Argument 1: Attempt to make economic planning decisions via parliaments |
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Definition
extremely difficult: strong resistance from clear losers, time consuming
Result: strong tendency to take the politics out of planning |
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Term
| Argument 2: Astute politicians vs economic planners |
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Definition
Politician = generalist
Economic planner = technocrat, highly proficient in specific skills, does not possess high political skills |
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Term
| Argument 3: Compromise vs logical consistency |
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Definition
Decisions of democratic parliaments - compromise
Decisions of economic planning - must be consistent |
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Term
| Take the politics out of planning |
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Definition
give power to tech competent people
logical, sound decisions
planning agency have power instead of parliament |
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Term
| Parliament still the final decision? |
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Definition
planners = economic plan, to parliament
parliament = must accept or reject...if not, democracy?
what if parliament reject plan...need a plan! |
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Term
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Definition
government exercise of power limited
government cannot act in any way that it wishes
must act in accord with previous rules
key role within liberal philosophy |
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Term
| Hayek's correlates of classic understanding |
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Definition
Predictability of government behavior
Impartiality of government among individuals |
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Term
| Sound economic planning incompatible with rule of law |
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Definition
Economic planning require flexibility
Imperative in management of highly complex and dynamic economy
Many unforseen events will emerge in management of economy
Impossible to bind beforehand by clear and explicit rules |
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Term
| Need to be partial requires philosophical basis for partiality |
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Definition
Economic planning = picks winners and losers
Such decisions difficult to make and justify
Thus - strong tendency to lay out ideological basis for choices of planners |
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Term
| Autonomous individual behavior and rule of law |
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Definition
Free, autonomous behavior will often interfere with economic planning
This will occur in situation in which planners = great, arbitrary, discretion - use power to create order |
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