Here’s a second response to Fukuyama’s review of Hayek’s Constitution of Liberty:
Reviewing F.A. Hayek’s The Constitution of Liberty: The Definitive Edition, Francis Fukuyama writes that “there is a deep contradiction in Hayek’s thought. His great insight is that individual human beings muddle along, making progress by planning, experimenting, trying, failing and trying again. They never have as much clarity about the future as they think they do. But Hayek somehow knows with great certainty that when governments, as opposed to individuals, engage in a similar process of innovation and discovery, they will fail” (“Friedrich A. Hayek, Big-Government Skeptic,” May 8).
Hayek was guilty of no such contradiction. Mr. Fukuyama wrongly convicts Hayek on this count by mistaking government planning and “muddling along” as being “a similar process of innovation and discovery” that occurs so successfully in the private markets that Hayek championed. The two processes aren’t remotely similar.
Plans in private markets are decentralized; government plans are centralized. Private-market planners risk their own money; government planners risk other-people’s money. Plans in private markets face constant competition from rival private plans; government plans are monopolies which face no such competition. This competition prevents plans in private markets from growing in scope to outstrip the knowledge and capacities of persons who make and carry them out. No such competitive check constrains the scope of government plans. Finally, plans in private markets – unlike government-made plans – often cross-pollinate with each other to inspire the creation and discovery of entirely new possibilities that would remain unknown without such decentralized planning within competitive markets. Government ‘plans’ almost inevitably suppress such possibilities of cross-pollination, creation, and discovery.
Donald J. Boudreaux
Or, more eloquently, as Hayek raps to Keynes in “Fight of the Century“:
I don’t want to do nothing, there’s plenty to do
The question I ponder is who plans for whom?
Do I plan for myself or leave it to you?
I want plans by the many, not by the few.