Sunday, July 22, 2012

Planning Has a Limit

This way lies charlatanism and worse. To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.

But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims.

- F.A. Hayek, from the essay The Pretense of Knowledge

We flatter ourselves undeservedly if we represent human civilization as entirely the product of conscious reason or as the product of human design, or when we assume that it is necessarily in our power deliberately to re-create or to maintain what we have built without knowing what we are doing. Though our civilization is the result of a cumulation of individual knowledge, it is not by the explicit or conscious combination of all this knowledge in any individual brain, but by its embodiment in symbols which we use without understanding them, in habits and institutions, tools and concepts, that man in society is constantly able to profit from a body of knowledge neither he nor any other man completely possesses. Many of the greatest things that man has achieved are the result not of consciously directed thought, and still less the product of a deliberately coordinated effort of many individuals, but of a process in which the individual plays a part which he can never fully understand. They are greater than any individual precisely because they result from the combination of knowledge more extensive than a single mind can master. -
F.A. Hayek from pages 149-150 of the 1979 Liberty Fund edition of Hayek’s 1952 study, The Counter-Revolution of Science

Hayek made the point outlined in the quotations above on many occasions and in many ways. Associated, but not exactly the same, Milton Friedman wrote a book and did a ten-part PBS series entitled Free to Choose. The point being made by Hayek and Friedman is that in the aggregate, in the real world, in the real time world where a zillion decisions are made's mainly a spontaneous order phenomena [the plans of the many in an environment of free choice] that brings greatest satisfaction, value, wealth, etc. to the greatest number of people.

A confusion that reins supreme surrounds the idea of "planning". Yes, you can make dinner plans, plan the family's evening meal for the evening or even the evening meals for the entire week, you can make wedding plans, plan production, make shopping can plan your brains out...BUT those plans are, in fact, the plans of the many and are in fact the zillion decisions mentioned above.

Some want to transpose the concept "plan" or "planning" as a second coming of the concept "plan". That is to say, a plan exists ahead of the already conjured up plan -or- as a second coordinating factor ahead of those plans, that are in fact, the plans of the many and are in fact the zillion decisions mentioned above. Somehow a value exists in a second plan, the-plan-of-the-plans, a plan not of emergent order, rather a plan of mass coordination. Stated alternatively, the concept that if the conjured up plans yield value, then certainly the-plan-of-the-plans adds more value.

If you think about it, to plan the zillion plans is to undo the zillion plans in some shape or fashion to meet the supposed super coordinated plan which is the-plan-of-the-plans. Greatest satisfaction of all is now reduced to a third party satisfaction. The third party being the few that authored the-plan-of-the-plans.

Moreover, the zillion decisions resulting in a zillion plans are made in real-time, with real information based on current conditions of alternatives. Any super coordinated plan, the plan-of-the-plans, would be after the fact based on post information and post conditions of alternatives. Further the knowledge of the many making the zillion decisions/plans would be supplanted by the few. The few, no matter how smart, knowledgeable or expert, have less total knowledge than the total knowledge of the many.

Hayek and Friedman's observations are counterintuitive: that planning has a limit.

Occasionally history records the coming of politico-ideologist they believe they can plan the zillion plans, that in essence, planning has no limit, and they have the-plan-of-the-plans . They merely plan to restrict, with their monumental plan-of-the-plans, the spontaneous order phenomena that brings greatest satisfaction, value, name the greatest number of people.

The result? The plan-of-the-plans is abysmal.

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