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Word Gems
exploring self-realization, sacred personhood, and full humanity
F.A. Hayek
The Road To Serfdom
PLANNING AND DEMOCRACY
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The statesman who should attempt to direct private people
in what manner they ought to employ their capitals, would
not only load himself with a most unnecessary attention, but
assume an authority which could safely be trusted to no
council and senate whatever, and which would nowhere be so
dangerous as in the hands of a man who had folly and pre-
sumption enough to fancy himself fit to exercise it. — Adam
Smith.
Common features of all collectivist systems may be
described, in a phrase ever dear to socialists of all
schools, as the deliberate organization of the labors of
society for a definite social goal. That our present society lacks
such “conscious” direction toward a single aim, that its activ-
ities are guided by the whims and fancies of irresponsible in-
dividuals, has always been one of the main complaints of its
socialist critics.
In many ways this puts the basic issue very clearly. And it
directs us at once to the point where the conflict arises be-
tween individual freedom and collectivism. The various kinds
of collectivism, communism, fascism, etc., differ among them-
selves in the nature of the goal toward which they want to di-
rect the efforts of society. But they all differ from liberalism and
individualism in wanting to organize the whole of society and
all its resources for this unitary end and in refusing to recog-
nize autonomous spheres in which the ends of the individuals
are supreme. In short, they are totalitarian in the true sense of
this new word which we have adopted to describe the unex-
pected but nevertheless inseparable manifestations of what in
theory we call collectivism.
The “social goal,” or “common purpose,” for which society
is to be organized is usually vaguely described as the “common
good,” the “general welfare,” or the “general interest.” It
does not need much reflection to see that these terms have no
sufficiently definite meaning to determine a particular course
of action. The welfare and the happiness of millions cannot be
measured on a single scale of less and more. The welfare of a
people, like the happiness of a man, depends on a great many
things that can be provided in an infinite variety of combina-
tions. It cannot be adequately expressed as a single end, but
only as a hierarchy of ends, a comprehensive scale of values in
which every need of every person is given its place. To direct
all our activities according to a single plan presupposes that
every one of our needs is given its rank in an order of values
which must be complete enough to make it possible to decide
among all the different courses which the planner has to
choose. It presupposes, in short, the existence of a complete
ethical code in which all the different human values are al-
lotted their due place.
The conception of a complete ethical code is unfamiliar, and
it requires some effort of imagination to see what it involves.
We are not in the habit of thinking of moral codes as more or
less complete. The fact that we are constantly choosing be-
tween different values without a social code prescribing how
we ought to choose does not surprise us and does not suggest
to us that our moral code is incomplete. In our society there is
neither occasion nor reason why people should develop com-
mon views about what should be done in such situations. But
where all the means to be used are the property of society and
are to be used in the name of society according to a unitary
plan, a “social” view about what ought to be done must guide
all decisions. In such a world we should soon find that our
moral code is full of gaps.
We are not concerned here with the question whether it
would be desirable to have such a complete ethical code. It
may merely be pointed out that up to the present the growth
of civilization has been accompanied by a steady diminution
of the sphere in which individual actions are bound by fixed
rules. The rules of which our common moral code consists
have progressively become fewer and more general in char-
acter. From the primitive man, who was bound by an elabo-
rate ritual in almost every one of his daily activities, who was
limited by innumerable taboos, and who could scarcely con-
ceive of doing things in a way different from his fellows, morals
have more and more tended to become merely limits circum-
scribing the sphere within which the individual could behave
as he liked. The adoption of a common ethical code compre-
hensive enough to determine a unitary economic plan would
mean a complete reversal of this tendency.
The essential point for us is that no such complete ethical
code exists. The attempt to direct all economic activity accord-
ing to a single plan would raise innumerable questions to
which the answer could be provided only by a moral rule, but
to which existing morals have no answer and where there ex-
ists no agreed view on what ought to be done. People will have
either no definite views or conflicting views on such questions,
because in the free society in which we have lived there has
been no occasion to think about them and still less to form
common opinions about them.
Not only do we not possess such an all-inclusive scale of
values: it would be impossible for any mind to comprehend the
infinite variety of different needs of different people which
compete for the available resources and to attach a definite
weight to each. For our problem it is of minor importance
whether the ends for which any person cares comprehend only
his own individual needs, or whether they include the needs of
his closer or even those of his more distant fellows — that is,
whether he is egoistic or altruistic in the ordinary senses of
these words. The point which is so important is the basic fact
that it is impossible for any man to survey more than a limited
field, to be aware of the urgency of more than a limited num-
ber of needs. Whether his interests center round his own physi-
cal needs, or whether he takes a warm interest in the welfare
of every human being he knows, the ends about which he can
be concerned will always be only an infinitesimal fraction of
the needs of all men.
This is the fundamental fact on which the whole philosophy
of individualism is based. It does not assume, as is often as-
serted, that man is egoistic or selfish or ought to be. It merely
starts from the indisputable fact that the limits of our powers
of imagination make it impossible to include in our scale of
values more than a sector of the needs of the whole society,
and that, since, stricdy speaking, scales of value can exist only
in individual minds, nothing but partial scales of values exist —
scales which are inevitably different and often inconsistent
with each other. From this the individualist concludes that the
individuals should be allowed, within defined limits, to follow
their own values and preferences rather than somebody else*s;
that within these spheres the individual’s system of ends should
be supreme and not subject to any dictation by others. It is
this recognition of the individual as the ultimate judge of his
ends, the belief that as far as possible his own views ought to
govern his actions, that forms the essence of the individualist
position.
This view does not, of course, exclude the recognition of
social ends, or rather of a coincidence of individual ends which
makes it advisable for men to combine for their pursuit. But
it limits such common action to the instances where individual
views coincide; what are called “social ends’’ are for it merely
identical ends of many individuals — or ends to the achieve-
ment of which individuals arc willing to contribute in return
for the assistance they receive in the satisfaction of their own
desires. Common action is thus limited to the fields where peo-
ple agree on common ends. Very frequently these conunon
ends will not be ultimate ends to the individuals but means
which different persons can use for different purposes. In fact,
people are most likely to agree on common action where the
common end is not an ultimate end to them but a means capa-
ble of serving a great variety of purposes.
When individuals combine in a joint effort to realize ends
they have in common, the organizations, like the state, that
they form for this purpose are given their own system of ends
and their own means. But any organization thus formed re-
mains one “person” among others, in the case of the state
much more powerful than any of the others, it is true, yet still
with its separate and limited sphere in which alone its ends
arc supreme. The limits of this sphere are determined by the
extent to which the individuals agree on particular ends; and
the probability that they will agree on a particular course of
action necessarily decreases as the scope of such action extends.
There are certain functions of the state on the exercise of
which there will be practical unanimity among its citizens;
there will be others on which there will be agreement of a sub-
stantial majority; and so on, until we come to fields where, al-
though each individual might wish the state to act in some
way, there will be almost as many views about what the gov-
ernment should do as there are different people.
We can rely on voluntary agreement to guide the action of
the state only so long as it is confined to spheres where agree-
ment exists. But not only when the state undertakes direct con-
trol in fields where there is no such agreement is it bound to
suppress individual freedom. We can unfortunately not indefi-
nitely extend the sphere of common action and still leave the
individual free in his own sphere. Once the communal sector,
in which the state controls all the means, exceeds a certain
proportion of the whole, the effects of its actions dominate the
whole system. Although the state controls directly the use of
only a large part of the available resources, the effects of its de-
cisions on the remaining part of the economic system become
so great that indirectly it controls almost everything. Where, as
was, for example, true in Germany as early as 1928, the cen-
tral and local authorities directly control the use of more than
half the national income (according to an official German
estimate then, 53 per cent), they control indirectly almost the
whole economic life of the nation. There is, then, scarcely an
individual end which is not dependent for its achievement on
the action of the state, and the “social scale of values” which
guides the state’s action must embrace practically all individ-
ual ends.
It is not difficult to see what must be the consequences when
democracy embarks upon a course of planning which in its
execution requires more agreement than in fact exists. The
people may have agreed on adopting a system of directed
economy because they have been convinced that it will pro-
duce great prosperity. In the discussions leading to the deci-
sion, the goal of planning will have been described by some
such term as “common welfare,” which only conceals the ab-
sence of real agreement on the ends of planning. Agreement
will in fact exist only on the mechanism to be used. But it is a
mechanism which can be used only for a common end; and the
question of the precise goal toward which all activity is to be
directed will arise as soon as the executive power has to trans-
late the demand for a single plan into a particular plan. Then
it will appear that the agreement on the desirability of plan-
ning is not supported by agreement on the ends the plan is to
serve. The effect of the people’s agreeing that there must be
central planning, without agreeing on the ends, will be rather
as if a group of people were to commit themselves to take a
journey together without agreeing where they want to go:
with the result that they may all have to make a Journey which
most of them do not want at all. That planning creates a
situation in which it is necessary for us to agree on a much
larger number of topics than we have been used to, and that
in a planned system we cannot confine collective action to the
tasks on which we can agree but are forced to produce agree-
ment on everything in order that any action can be taken at
all, is one of the features which contributes more than most to
determining the character of a planned system.
It may be the unanimously expressed will of the people that
its parliament should prepare a comprehensive economic
plan, yet neither the people nor its representatives need there-
fore be able to agree on any particular plan. The inability of
democratic assemblies to carry out what seems to be a clear
mandate of the people will inevitably cause dissatisfaction
with democratic institutions. Parliaments come to be regarded
as ineffective “talking shops,” unable or incompetent to carry
out the tasks for which they have been chosen. The conviction
grows that if efficient planning is to be done, the direction
must be “taken out of politics” and placed in the hands of ex-
perts — permanent officials or independent autonomous bodies.
The difficulty is well known to socialists. It will soon be half
a century since the Webbs began to complain of “the in-
creased incapacity of the House of Commons to cope with its
work.” More recently, Professor Laski has elaborated the
argument:
“It is common ground that the present parliamentary ma-
chine is quite unsuited to pass rapidly a great body of com-
plicated legislation. The National Government, indeed, has in substance admitted this by implementing its economy and
tariff measures not by detailed debate in the House of Com-
mons but by a wholesale system of delegated legislation. A
Labour Government would, I presume, build upon the am-
plitude of this precedent. It would confine the House of Com-
mons to the two functions it can properly perform: the ventila-
tion of grievances and the discussion of general principles of its
measures. Its bills would take the form of general formulae
conferring wide powers on the appropriate government de-
partments; and those powers would be exercised by Order in
Council which could, if desired, be attacked in the House by
means of a vote of no confidence. The necessity and value of
delegated legislation has recently been strongly reaffirmed by
the Donoughmore Committee; and its extension is inevitable
if the process of socialisation is not to be wrecked by the nor-
mal methods of obstruction which existing parliamentary pro-
cedure sanctions.”
And to make it quite clear that a socialist government must
not allow itself to be too much fettered by democratic pro-
cedure, Professor Laski at the end of the same article raised
the question “whether in a period of transition to Socialism, a
Labour Government can risk the overthrow of its measures as
a result of the next general election” — and left it significantly
unanswered.
As Professor Laski invokes the authority of the Donoughmore Committee, it may be worth recalling that Professor Laski was a member of that committee and presumably one of the authors of its report.
It is important clearly to see the causes of this admitted in-
effectiveness of parliaments when it comes to a detailed ad-
ministration of the economic affairs of a nation. The fault is
neither with the individual representatives nor with parlia-
mentary institutions as such but with the contradictions in-
herent in the task with which they are charged. They are not
asked to act where they can agree, but to produce agreement
on everything — the whole direction of the resources of the na-
tion. For such a task the system of majority decision is, how-
ever, not suited. Majorities will be found where it is a choice
between limited alternatives; but it is a superstition to believe
that there must be a majority view on everything. There is no
reason why there should be a majority in favor of any one of
the different possible courses of positive action if their number
is legion. Every member of the legislative assembly might pre-
fer some particular plan for the direction of economic activity
to no plan, yet no one plan may appear preferable to a major-
ity to no plan at all.
Nor can a coherent plan be achieved by breaking it up into
parts auid voting on particulcir issues. A democratic assembly
voting and amending a comprehensive economic plan clause
by clause, as it deliberates on an ordinary bill, makes non-
sense. An economic plan, to deserve the name, must have a
unitary conception. Even if a parliament could, proceeding
step by step, agree on some scheme, it would certainly in the
end satisfy nobody. A complex whole in which all the parts
must be most carefully adjusted to each other cannot be
achieved through a compromise between conflicting views. To
draw up an economic plan in this fashion is even less possible
than, for example, successfully to plan a military campaign by
democratic procedure. As in strategy it would become in-
evitable to delegate the task to the experts.
Yet the difference is that, while the general who is put in
charge of a campaign is given a single end to which, for the
duration of the campaign, all the means under his control
have to be exclusively devoted, there can be no such single
goal given to the economic planner, and no similar limitation
of the means imposed upon him. The general has not got to
balance different independent aims against each other; there
is for him only one supreme goal. But the ends of an economic
plan, or of any part of it, cannot be defined apart from the
particular plan. It is the essence of the economic problem that
the making of an economic plan involves the choice between
conflicting or competing ends — different needs of different
people. But which ends do so conflict, which will have to be
sacrificed if we want to achieve certain others^ in short, which
are the alternatives between which we must choose, can only
be known to those who know all the facts; and only they, the
experts, are in a position to decide which of the different ends
are to be given preference. It is inevitable that they should
impose their scale of preferences on the community for which
they plan.
This is not always clearly recognized, and delegation is
usually justified by the technical character of the task. But
this does not mean that only the technical detail is delegated,
or even that the inability of parliaments to understand the
technical detail is the root of the difficulty.* Alterations in the
* It is instructive in this connection briefly to refer to the government document in which in recent years these problems have been discussed. As long as thirteen years ago, that is before England finally abandoned economic liberalism, the process of delegating legislative powers had already been carried to a point where it was felt necessary to appKiint a committee to investigate “what safe-
guards are desirable or necessary to secure the sovereignty of Law." ...
structure of civil law are no less technical and no more difficult
to appreciate in all their implications; yet nobody has yet
seriously suggested that legislation there should be delegated
to a body of experts. The fact is that in these fields legislation
does not go beyond general rules on which true majority
agreement can be achieved, while in the direction of economic
activity the interests to be reconciled arc so divergent that no
true agreement is likely to be reached in a democratic assembly.
It should be recognized, however, that it is not the delega-
tion of law-making power as such which is so objectionable.
To oppose delegation as such is to oppose a symptom instead
of the cause and, as it may be a necessary result of other
causes, to weaken the case. So long as the power that is dele-
gated is merely the power to make general rules, there may
be very good reasons why such rules should be laid down by
local rather than by the central authority. The objectionable
feature is that delegation is so often resorted to because the
matter in hand cannot be regulated by general rules but only
by the exercise of discretion in the decision of particular cases.
In these instances delegation means that some authority is
given power to make with the force of law what to all intents
and purposes are arbitrary decisions (usually described as
“judging the case on its merits”).
The delegation of particular technical tasks to separate
bodies, while a regular feature, is yet only the first step in the
process whereby a democracy which embarks on planning..
Even if, by this expedient, a democracy should succeed in planning every sector of economic activity, it would still have to face the problem of integrating these separate plans into a unitary whole. Many separate plans do not make a planned whole — in fact, as the planners ought to be the first to admit, they may be worse than no plan. But the democratic legislature will long hesitate to relinquish
the decisions on really vit^ issues, and so long as it does so it
makes it impossible for anyone else .to provide the comprehen-
sive plan. Yet agreement that planning is necessary, together
with the inability of democratic assemblies to produce a plan,
will evoke stronger and stronger demands that the govern-
ment or some single individual should be given powers to act
on their own resjwnsibility. The belief is becoming more and
more widespread that, if things are to get done, the respon-
sible authorities must be freed from the fetters of democratic
procedure.
The cry for an economic dictator is a characteristic stage in
the movement toward planning...
In Germany, even before Hitler came into power, the move-
ment had already progressed much further. It is important to
remember that, for some time before 1933, Gtomany had
reached a stage in which it had, in effect, had to be governed
dictatorially. Nobody could then doubt that for the time being
democracy had broken down and that sincere democrats like
Briining were no more able to govern democratically than
Schleicher or von Papen. Hitler did not have to destroy de-
mocracy; he merely took advantage of the decay of democracy
and at the critical moment obtained the support of many to
whom, though they detested Hitler, he yet seemed the only
man strong enough to get things done.
The argument by which the planners usually try to reconcile
us with this development is that, so long as democracy retains
ultimate control, the essentials of democracy are not affected.
Thus Karl Mannheim writes:
“The only ... way in which a planned society differs from
that of the nineteenth century is that more and more spheres
of social life, and ultimately each and all of them, are subjected
to state control. But if a few controls can be held in check by
parliamentary sovereignty, so can many In a democratic state sovereignty can be boundlessly strengthened by plensary powers without renouncing democratic control.”
This belief overlooks a vital distinction. Parliament can, of
course, control the execution of tasks where it can give definite
directions, where it has first agreed on the aim and merely
delegates the working-out of the detail. The situation is entire-
ly different when the reason for the delegation is that there is
no real agreement on the ends, when the body charged with
the planning has to choose between ends of whose conflict
parliament is not even aware, and when the most that can be
done is to present to it a plan which has to be accepted or re-
jected as a whole. There may and probably will be criticism;
but as no majority can agree on an alternative plan, and the
parts objected to can almost always be represented as essential
parts of the whole, it will remain quite ineffective. Parliamen-
tary discussion may be retained as a useful safety valve and
even more as a convenient medium through which the official
answers to complaints are disseminated. It may even prevent
some flagrant abuses and successfully insist on particular short-
comings being remedied. But it cannot direct. It will at best be
reduced to choosing the persons who are to have practically
absolute power. The whole system will tend toward that plebi-
scitarian dictatorship in which the head of the government is
from time to time confirmed in his position by popular vote,
but where he has all the powers at his command to make cer-
tain that the vote will go in the direction he desires.
It is the price of democracy that the possibilities of conscious
control are restricted to the fields where true agreement exists
and that in some fields things must be left to chance. But in
a society which for its functioning depends on central planning
this control cannot be made dependent on a majority’s being
able to agree; it will often be necessary that the will of a small
minority be imposed upon the people, because this minority
will be the largest group able to agree among themselves on
the question at issue. Democratic government has worked
successfully where, and so long as, the functions of govern-
ment were, by a widely accepted creed, restricted to fields
where agreement among a majority could be achieved by free
discussion; and it is the great merit of the liberal creed that it
reduced the range of subjects on which agreement was neces-
sary to one on which it was likely to exist in a society of firce
men. It is now often said that democracy will not tolerate
“capitalism.” If “capitalism” means here a competitive sys-
tem based on free disposal over private property, it is far more
important to realize that only within this system is democracy
possible. When it becomes dominated by a collectivist creed,
democracy will inevitably destroy itself.
We have no intention, however, of making a fetish of de-
mocracy. It may well be true that our generation talks and
thinks too much of democracy and too litde of the values
which it serves. It cannot be said of democracy, as Lord Acton
truly said of liberty, that it “is not a means to a higher political
end. It is itself the highest political end. It is not for the sake
of a good public administration that it is required but for the
security in the pursuit of the highest objects of civil society,
and of private life.” Democracy is essentially a means, a
utilitarian device for safeguarding internal peace and individ-
ual freedom. As such it is by no means infallible or certain.
Nor must we forget that there has often been much more
cultural and spiritual freedom under an autocratic rule than
under some democracies — and it is at least conceivable that
under the government of a very homogeneous and doctrinaire
majority democratic government might be as oppressive as the
worst dictatorship. Our point, however, is not that dictator-
ship must inevitably extirpate freedom but rather that plan-
ning leads to dictatorship because dictatorship is the most ef-
fective instrument of coercion and the enforcement of ideals
and, as such, essential if central planning on a large scale is to
be possible. The clash between planning and democracy
arises simply from the fact that the latter is an obstacle to the
suppression of freedom which the direction of economic ac-
tivity requires. But in so far as democracy ceases to be a
guaranty of individual freedom, it may well persist in some
form under a totalitarian regime. A true “dictatorship of the
proletariat,” even if democratic in form, if it undertook cen-
trally to direct the economic system, would probably destroy
personal freedom as completely as any autocracy has ever
done.
The fashionable concentration on democracy as the main
value threatened is not without danger. It is largely responsi-
ble for the misleading and unfounded belief that, so long as
the ultimate source of power is the will of the majority, the
power cannot be arbitary. The false assurance which many
people derive from this belief is an important cause of the gen-
eral unawareness of the dangers which we face. There is no
justification for the belief that, so long as power is conferred
by democratic procedure, it cannot be arbitrary; the contrast
suggested by this statement is altogether false: it is not the
source but the limitation of power which prevents it from
being arbitrary. Democratic control may prevent power from
becoming arbitrary, but it does not do so by its mere existence.
If democracy resolves on a task which necessarily involves the
use of power which cannot be guided by fixed rules, it must
become arbitrary power.
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- "How sharp a break not only with the recent past but with the whole evolution of Western civilization the modern trend toward socialism means becomes clear if we consider it not merely against the background of the nineteenth century but in a longer historical perspective. We are rapidly abandoning not the views merely of Cobden and Bright, of Adam Smith and Hume, or even of Locke and Milton, but one of the salient characteristics of Western civilization as it has grown from the foundations laid by Christianity and the Greeks and Romans... The Nazi leader who described the National Socialist revolution as a counter-Renaissance spoke more truly than he probably knew." F. A. Hayek
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