Cliché of Socialism #1: The greater complexity, the greater government control
I’ve decided to embark on a new project, inspired by a book published by FEE in 1970. As a way to confront economic myths and flimsy political arguments encouraging limits to individual liberty, FEE published a book which addresses 76 “clichés of socialism,” in an effort to help liberty advocates answer these claims.
In that spirit, I’d like to update or offer an alternative perspective to these clichés. So without further ado…
Cliché of Socialism #1: “The more complex the society, the more government control we need.”
This cliché stands supported by a few fallacies: decentralization is inherently bad and chaotic, government serves as a protective balancing force against complicated institutions , and a lack of understanding about voluntary coordination and cooperation.
Most often as of late, this cliché is uttered concerning the financial crisis of 2008. The financial system is vastly complex and intricate to the extent where no one truly recognizes actual value, risk and other factors of different financial instruments and institutions; as a result, greedy individuals exploit the system. If government control had been more extensive, not only would the financial crisis fail to develop, but the economy would be more stable and productive.
What the argument fails to notice is that not only did government regulation fail (rather than being non-existent), but the correction of the crisis failed to occur, as bailouts and other government interventions prevented market corrections. When financial institutions do not have to face risk or loss, it is inevitable that such a situation occurs.
The cliché also presumes omnipotence on the part of the government. Our complex and globalization society did not evolve and develop as a result of centralized planning and government develop. Complex societies develop and evolve through voluntary association and individual effort that produces an emergent order, as F.A. Hayek, among other intellectuals, strongly argue. The question may be asked: how, if not through central planning, could complex societies develop? It is not through random chaos and confusion, but voluntary (rather than coercive) planning by individuals and associations pursuing distinct goals through various means. Whether or not these individuals and associations intentioned to produce the results they did is irrelevant; the pertinent information is what actually developed and flourished. Society evolves as a result of these individuals and associations pursuing their self-interest (not synonymous with greed), which fosters cooperation and competition for mutual benefit.
Voluntary planning also highlights another important insight: the more complex the society, the less feasible it is for government control to improve, rather than hinder, society. How is this the case? Knowledge is unaggregated, dispersed and fragmented throughout society; as a result, a “knowledge problem”* exists. Decentralized, voluntary planning coordinates knowledge and action better than centralized, coercive planning. Not perfectly, but better, because “it does a better job of mobilizing the knowledge relevant to the decisions that need to be made.” Increasing government control in an increasingly complex society misunderstands the issue and exhibits an inflated belief in the knowledge of humanity. Our society has not been constructed rationally and logically; indeed, it has evolved through a process of experimentation. Tradition may have a greater influence than any level of rationality in shaping current society.
Complexity is frightened when coupled with a limitation of knowledge. To be sure, emergent orders and voluntary planning are not perfect (or even remotely desirable, in some cases). However, emergent order vs. government control to develop a perfect society is a false dichotomy. The benefits of voluntary action, coupled with the utter failure of governments to control societies without butchering their members and the knowledge issue, presents to me a compelling case in support of decentralization of decision-making and power throughout society. Emergent order generally allows modification, experimentation and evolution to a greater extent than an order cultivated be central planning.
Not only is a complex society managed by government edict infeasible, but it appears greatly undesirable.
*The term “knowledge problem,” however, is misleading, as the word “problem” implies a corresponding solution. A more accurate terminology would be “knowledge issue,” as it is akin to the issue of scarcity; a regretful fact in an imperfect world.