“Mises argued that under central planning, economic calculation never actually happened because it became de facto impossible—information is dispersed throughout the marketplace, central planners have no way of gathering information about people’s real preferences, and in any event the sheer volume of data necessary to the task meant that calculation never happened. Rational economic planning, he concluded, was impossible, because the planners could never process sufficient information to make rational calculations. Whatever their plans were based on, he argued, we could be sure that the central planners were not “considering all the options” and “taking into account all of the information.”
“He called this the “socialist calculation problem,” but its application is hardly limited to forms of government that are either explicitly or implicitly socialist. In fact, the calculation problem constrains all economic activity outside of those in which knowledge is dispersed among a large number of cooperating agents—that, not corruption or negligence, is what probably best explains the gross misallocation of material resources one sees in even the most traditional of governmental undertakings, such as law enforcement and the military. Needless to say, these objections to central planning were not only ignored but in some cases actively suppressed: Professor F. A. Harper was driven out of Cornell University for assigning Hayek’s Road to Serfdom to his students—such reactionary criticism of national central-planning ambitions was considered beyond the pale of respectable public discourse.”
Excerpt From: Kevin D. Williamson. “The End Is Near and It’s Going to Be Awesome.” HarperCollins, 2013-05-01. iBooks.
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