Don't corporations have growth targets and multi-year plans? Don't they (mostly) have a top-down management structure, where freedom of action and collective intelligence are constrained the further you get from the Central Committee (also known as the C-suite)?
Don't corporations regularly do incredibly stupid, naive, uninformed, and self-destructive things that would be impossible if the kind of distributed intelligence claimed in this article was a reality?
Are corporations any better at constraining the effects of toxic self-promoting and self-aggrandising individuals who talk a good game but are either incompetent or actively destructive?
And so on. It doesn't really matter that Hayek is misunderstood and (mis)used for free market propaganda in the same way that Adam Smith is.
What matters is that the existence of true freedom of thought and action is debatable in any culture which considers that kind of propaganda a necessity at all.
That said, planning on top-level is still needed and still done. The point of setting up feedback loops isn't to let them run unchecked, but to make it easier to control the whole system (including keeping it stabilized). Just like it would be stupid to build a thermostat without input, having the temperature be determined by the point at which the materials it's made of start to "sweat", you don't want to leave market totally unchecked, doing whatever the hell it wants. Governments still get to influence the market, the same way a temperature dial influences the thermostat.
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[0] - as performed by humans with pen and paper; I don't see a reason why a centralized planning scheme could not work better than capitalism if performed by optimization algorithms in a hyper-connected world.
One very Hayekian (Austrian) reason is that you won't have [very useful] data on consumer preferences. The price system will aggregate this effectively. You can't really poll for this, but purchase decisions will reveal it.
UPDATE: And this applies not just at the consumer level, but in the decisions firms make regarding their supply chains.
In what way do prices help with that? If more Fuji apples are requested, you know people like that over the other varieties. If you want one brand of apples over the other, one brand's products_distributed variable increases by one. Sorry if it appears as though I'm being obtuse.
>And this applies not just at the consumer level, but in the decisions firms make regarding their supply chains.
Howso?
Maybe I prefer Fuji apples, but only slightly; I'd be perfectly okay with a Nashi pear too, or if there's a shortage of Fuji apples, a Royal Gala.
Maybe a frost has reduced Fuji apple production; it would make sense for Fuji apples to be allocated first to the people who really prefer them, and then if any are left over they could come to people like me.
> If you want one brand of apples over the other, one brand's products_distributed variable increases by one.
Right, so how do you capture my "sure, a Fuji apple, but only if there's plenty"?
In a price system, it's easy: The price of Fuji apples fluctuates based on supply and demand, and I'll purchase the fruit based both on my internal, ever-changing preferences and the price. Regardless of the changing relative scarcity of Fuji apples, I will, apparently magically, end up with the fruit that more efficiently matches my wants and needs with the global fruit supply.
And this works even if you scale it up to 7 billion people and millions of products. That's a very difficult trick to match!
(And keep in mind, we also need to make decisions about distribution, stock levels, what apple types to grow, how much land to allocate to orchards, how much fertilizer to use, where to locate orchards to maximise growing season but minimise fuel usage for transportation. Every resource we have is limited in some fashion, often sharply so, yet our wants and needs are effectively boundless.)
Other than the fact one of them scales incredibly, has been proven to work in practice, has a strong theoretical basis, and the other has none of those and is entirely different in every way...
...yeah, they're very similar?
> Don't corporations have growth targets and multi-year plans?
Many corporations are managed internally along non-market ways (ie, socialist, bureaucratic, etc.), yes.
We're looking at a higher level: The entire market for copper, the entire supply chain for pencils, or the economy as a whole. At that scale, growth targets and multi-year plans do not work, have never worked, and will probably never work.
> Don't corporations regularly do incredibly stupid, naive, uninformed, and self-destructive things that would be impossible if the kind of distributed intelligence claimed in this article was a reality?
Of course. But the market as a whole works around it. At a big picture level, we don't know how to make companies that never do bad things, but we can create a system where bad companies are (mostly) starved of funds and killed off, whole good companies are (mostly) rewarded and allowed to grow. A planned economy also doesn't know how to stop companies (or the equivalent economic unit) from doing bad things but also can't allocate resources from the bad companies to the good ones. It's strictly inferior.
All the rest is just the natural result of cybernetic laws, such as the law of requisite variety: the controlling element has to be as complex as the system it controls. Under capitalism there's no limit to the complexity of the management system, because it's decentralized and dynamic; every grocery store has a full-fledged human brain working solely for the benefit of the store. Under communism the complexity of the central planning unit simply cannot match the complexity of the capitalist management system. There's an interesting quirk though: the governing system cannot be overthrown, so instead of the growing economy replacing the inefficient controller, the inefficient controller simplifies the economy. The defining characteristic of all communists societies is that their economy and technology are very primitive (aside from few selected branches). They kind of flew to the space, but you cannot buy decent underpants :)
When governments collapse, a lot of people tend to die.
Yes. IDK if Hayek addresses this or not, but Coase has a very good (and short) little book on the theory of the firm where he goes into exactly that. Basically, there are transaction costs to going to the market. So sometimes it's worthwhile to lose market feedback and centrally plan things.
Yes, and for the most part they are driven by the requirements of a relatively small community of fund managers and so-called activist investors.
The other things you list sound right to me. It's been a few decades since I actually read Hayek. For those who haven't read Hayek, I definitely recommend it.
"the freedom of the individual by no means need be extended to give all these freedoms to organized groups of individuals, and even that it may on occasion be the duty of government to protect the individual against organized groups."
You can see from the essay why a lot of right-wing American businessmen were disappointed in Hayek.
I think I got more out of John Gray's "Hayek on Liberty" than reading Hayek in the original. Look for it on libgen.
That seems very consistent with typical free market libertarian stand. I haven't seen any libertarian loving socialized medicine or unemployment benefit. Are you confusing Libertarianism with something else perhaps ?
His contribution to social science is his focus on distributed information in economic production. Think about how decision-making is distributed in capitalist economies: bankers, investors, asset managers, producers, distributors, retailers, brokers, executives, corporate planning departments, middle managers, marketing departments, advertising, etc. Just imagine trying to replicate all that effort with a few office buildings' worth of planners in Moscow (Compare that to just Wall Street!). You can't run an economy without enough planners.
Hayek never tells jokes. I think if he had any sense of humor at all it might have occurred to him that designing the perfect society without planners (or much democracy) was certainly a kind of planning. He's like the whiteboard in "Office Space" that says "Planning to Plan" except it says "Planning to not Plan" and it's three books and 700 pages long ("Law, Legislation and Liberty").