From Brad DeLong's review of James Scott (1998), Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed
One of the best one sentence summaries of Hayek:
that the bureaucratic planner with a map does not know best, and can not move humans and their lives around the territory as if on a chessboard to create utopia;
that the local, practical knowledge possessed by the person-on-the-spot is important;
that the locus of decision-making must remain with those who have the craft to understand the situation;
that any system that functions at all must create and maintain a space for those on the spot to use their local, practical knowledge (even if the hierarchs of the system pretend not to notice this flexibility).
Also
...Scott draws heavily on the excellent work of Jane Jacobs to criticize this planned, surprise-free, every-apartment-building-looks-the-same high-modernist order of pre-planned Brasilia. Jacobs argued that rigid spatial segregation of functions made for visual regularity from the bird's-eye view of the architect but made the city damn hard to live in. By contrast, it is the mingling of residences with shopping areas and workplaces that makes an urban neighborhood interesting--and livable. And this urban diversity of uses cannot be planned by the high-modernist architect. At best it can be planned for--by the government providing a framework and infrastructure for urban development instead of specifying land use down to the last square centimeter.
As Scott argues, even planners who recognize diversity will never plan it. You cannot spend your life at the office, and bureaucratic budgets are limited. Thus:
...the logic of uniformity and regimentation is well-nigh inexorable [in comprehensive urban planning]. Cost effectiveness contributes to this tendency. Just as it saves a prison trouble and money if all prisoners wear uniforms of the same material, color, and size, every concession to diversity [in the urban plan] is likely to entail a corresponding increase in administrative time and budgetary costs.... [T]he one-size-fits-all solution is likely to prevail (pp. 141-2).
Scott contrasts the communism of Rosa Luxemburg and Alexandra Kollontai to that of Lenin. Luxemburg did see that when one was exploring new social territory: "only experience is capable of correcting and opening new ways. Only unobstructed, effervescing life falls into a thousand new forms and improvisations, brings to light creative force, itself corrects all mistaken attempts" (p. 174). And Luxemburg did see that Lenin's "socialism... decreed from behind a few official desks by a dozen intellectuals" was headed for complete disaster:
Hayek's adversaries--Oskar Lange and company--argued that a market system had to be inferior to a centrally-planned system: at the very least, a centrally-planned economy could set up internal decision-making procedures that would mimic the market, and the central planners could also adjust things to increase social welfare and account for external effects in a way that a market system could never do.
Hayek, in response, argued that the functionaries of a central-planning board could never succeed, because they could never create both the incentives and the flexibility for the people-on-the-spot to use the immense amount of knowledge about the actual situation that only people-on-the-spot can know. As Hayek argued in his "Impossibility of Socialist Calculation," the enormous amount of dispersed knowledge that individual producers know and act on in a market economy can never be mobilized by a central planner. That a central planner could--that he or she could ever "possess a complete inventory of the amounts and qualities of all the different materials and instruments of production" available to the manager of a single plant--is "a somewhat comic fiction."
In Hayek's view, as he wrote in "The Use of Knowledge in Society," the fundamental economic problem is:
...the fact that knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.... It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge...
All of Scott's examples are cases illustrating that the centrally-planned social-engineering that Scott calls "high modernism" is definitely not a way to solve this fundamental economic problem. The bulk of Scott's book is spent adducing evidence for the critique of centrally-planned social engineering that had been made by Friedrich Hayek back before World War II.
Yet a casual reader of the book would not find any significant pointers to the Austrian intellectual tradition--no references to works like "The Impossibility of Socialist Calculation," "The Use of Knowledge in Society," or "Competition as a Discovery Procedure" that are directly on point for Scott's critique of centrally-planned social-engineering (the only works referred to are The Road to Serfdom and the collection Studies in Philosophy, Economics, and Politics, with no references to the individual works collected in the volume).
The key fault of what Scott calls "high modernism" is its belief that details don't matter--that planners decree from on high, people obey, and utopia results. Note that Scott's conclusion is not just that attempts at high-modernist centrally-planned social-engineering have failed. It is--as von Mises argued 70 years ago--they are always overwhelmingly likely to fail. As Scott puts it:
... [the] larger point [is that]... [i]n each case, the necessarily thin, schematic model of social organization and production animating the planning was inadequate as a set of instructions for creating a successful social order. By themselves, the simplified rules can never generate a functioning community, city, or economy. Formal order, to be more explicit, is always and to some degree parasitic on informal processes, which the formal scheme does not recognize, without which it could not exist, and which it alone cannot create or maintain (p. 310).
...subconscious fear that recognizing that one's book is in the tradition of the Austrian critique of the twentieth century state will commit one to becoming a right-wing inequality-loving Thatcher-worshiping libertarian (even though there are intermediate positions: you can endorse the Austrian critique of central planning without rejecting the mixed economy and the social insurance state).
References
Friedrich Hayek, ed. (1935), Collectivist Economic Planning: Critical Studies on the Possibility of Socialism (London: Routledge: 0678007659).
Friedrich Hayek (1937), "Economics and Knowledge," Economica 4, pp. 33-54.
Friedrich Hayek (), "The Impossibility of Socialist Calculation,"
Friedrich Hayek (1945), "The Use of Knowledge in Society," American Economic Review 35, pp. 519-30.
Friedrich Hayek (), "Competition as a Discovery Procedure"
Jane Jacobs (1961), The Death and Life of Great American Cities (New York: Vintage).
Jane Jacobs (1965), The Economy of Cities (New York: Vintage).
Frank Knight (1936), "The Place of Marginal Economics in a Collectivist System," American Economic Review 26:2, pp. 255-6.
Abba Lerner (1934), "Economic Theory and Socialist Economy," Review of Economic Studies 2, pp. 51-61.
James Scott (1998), Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed (New Haven: Yale University Press: 0300070160).
Ludwig von Mises (1920), "Die Wirtschaftsrechnung im sozialistischen Gemeinwesen," Archiv fur Sozialwissenschaften und Sozialpolitik 47:1, pp. 86-121.
