Last fall a rather remarkable article entitled Chavez Restyles Venezuela With '21st-Century Socialism' appeared in the New York Times. What it is that's remarkable is not that in the 21st century the paper of record would publish such an obviously pro-Socialist puff piece. That I've come to expect. Rather, it is remarkable because of its ignorance- willful ignornance of historical and empirical fact and dark ignorance of the fundamentals of business, management, economics, and capitalism. As such, virtually every paragraph is worthy of an entire post as retort. And so it shall be.
Before beginning, let me note that the cartoon images in each post were from a cartoon synopsis of The Road to Freedom originally published in Look magazine in the 1940's. There were 18 panels in the series, 19 if you include the title. Interestingly, the NY Times article is comprised of 18 paragraphs. This series of posts follows the order of the 18 paragraphs of the "21st century Socialism" article. The images appearing in each article appear in the same order as they appear in the cartoon booklet. Any similarity between the content of the paragraphs and the content of the images is purely coincidental!
Firmly in power and his revolution now in overdrive, President Hugo Chavez is moving fast to transform Venezuela's economy by bucking free-market planning with what he calls 21st-century socialism: founding state companies, seizing abandoned private factories and establishing thousands of cooperatives and worker-run businesses.
During World War II, FA Hayek published his seminal work, The Road to Serfdom. In that book he spelled out for his generation and for the preceding ones the problems with the Socialist model of governance. Of particular concern, as Hayek saw it, was the damaging effect that the "central planning" so characteristic of Socialism had on economic activity. Here is how he explained the popularity of planning, the ways in which the term is understood, and what "modern planners" hope to achieve by it.
"Planning" owes its popularity largely to the fact that everybody desires, of course, that we should handle our common problems as rationally as possible and that, in so doing, we should use as much foresight as we can command. In this sense everybody who is not a complete fatalist is a planner, every political act is (or ought to be) an act of planning, and there can be differences only between good and bad, between wise and foresighted and foolish and shortsighted planning.
An economist, whose whole task is the study of how men actually do and how they might plan their affairs, is the last person who could object to planning in this general sense. But it is not in this sense that our enthusiasts for a planned society now employ this term, nor merely in this sense that we must plan if we want the distribution of income or wealth to conform to some particular standard.
According to the modern planners, and for their purposes, it is not sufficient to design the most rational permanent frame work within which the various activities would be conducted by different persons according to their individual plans. This liberal plan, according to them, is no plan -- and it is, indeed, not a plan designed to satisfy particular views about who should have what. What our planners demand is a central direction of all economic activity according to a single plan, laying down how the resources of society should be "consciously directed" to serve particular ends in a definite way.
Hayek then makes clear that the debate between advocates and detractors of central planning is one of means, not of ends.
The dispute between the modern planners and their opponents is, therefore, not a dispute on whether we ought to choose intelligently between the various possible organizations of society; it is not a dispute on whether we ought to employ foresight and systematic thinking in planning our common affairs. It is a dispute about what is the best way of so doing. The question is whether for this purpose it is better that the holder of coercive power should confine himself in general to creating conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed "blueprint." The socialists of all parties have appropriated the term "planning" for planning of the latter type, and it is now generally accepted in this sense. But though this is meant to suggest that this is the only rational way of handling our affairs, it does not, of course, prove this. It remains the point on which the planners and the (classical) liberals disagree.
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