Libertarian "thought experiment" about planned economy

5

I once stumbled upon a text from a libertarian (I believe it was a philosopher) setting out a thought experiment to show that even a planned economy run by "omniscient bureaucrats" would produce inferior results than a free market.

Sadly I have forgotten who wrote it and where to find it. Can you give me some suggestions? Thanks!

Ystar

Posted 2015-02-20T20:58:22.390

Reputation: 302

Answers

8

Any chance you're talking about The Road to Serfdom by Friedrich Hayek?

I haven't read the above book in ages, but I did stumble across the following on an amazon review of a closely related book named Individualism and Economic Order, which is a collection of several essays:

After dealing with the absurd notion of full information, Hayek turns to three issues. First, Socialists once aimed at overcoming the results of markets. Now they accept the results of market competition as a standard to aim at. Second, an omniscient and omnipresent dictator would also require omnipotence to plan an economy using their omniscience. Even if they had omniscience, the central planners would still have to work through an imperfect bureaucracy. So the notion of omnipotence is absurd. We must look at the actual bureaucratic problems that planners will face. Third, Perhaps, in a world of unchanging data Socialist planners could arrive at efficient prices for the means of production through trial and error. But, with changing data, the plans of the authority will never match the decisions of the 'man on the spot'. Hayek discusses incentive problems and knowledge problems at length, and also mentions the potential for abuse by concentrating power into the hands a few. This is the subject of his book "The Road to Serfdom".

Given Hayek's economic views, it wouldn't be too surprising to come across an essay which supports the free market over planned economies.

Five σ

Posted 2015-02-20T20:58:22.390

Reputation: 1 118

Yes, this sounds very, very good. I remember this "not even omniscience and omnipresence would be enough, one would also need omnipotence". Very probably it was a passage taken out from this book, I'll try if I can find it. Thanks a lot! – Ystar – 2015-02-20T21:22:52.203

No problem, good luck. – Five σ – 2015-02-20T22:33:11.280