A malignant concept of technocracy that greatly affects policy design

Published by the great Austrian economist and political philosopher Friedrich von Hayek The Road to Serfdom In 1944, he argued against socialism, planning and collectivism, and against the market system and capitalism in favor of individual freedom. Much later, during the fall of Communism in Eastern Europe, in 1988, he published Fatal feeling, Which expands and enhances the arguments he utters over half a century. (This later work was edited by the philosopher William Warren Bartley, and there is a scholarly controversy as to whether he was more of an author than an editor, at which point Hayek was already ill.) The title of the later work comes from a well-known passage Theory of moral concepts (1759) Adam Smith, Scottish economist and political philosopher, best known for his classics The Wealth of Nations (1776).

This book, written by Adam Smith, is so great and so ambitious that it needs to be quoted entirely: “The man of the system, by contrast, is apt to be very intelligent in his own thinking; And is often fascinated by the beauty of his own ideal government plan, which he does not experience the slightest deviation from any part of it. He goes on to establish it completely and in all its parts, without considering either the great interests, or the strong prejudices that can oppose it. He seems to have imagined that he could easily arrange different members of a great community to fit different pieces on a chess-board. He does not consider the pieces on the chess-board to be motionless; But, in the great chess-board of human society, each piece has its own principle of motion, different from what the legislature chooses to impress on it. If those two principles work simultaneously and in the same direction, the game of human society will run smoothly and harmoniously and will have the potential to be happy and successful. If they are opposite or different, the game will continue to be bad, and society will be in the highest disorder at all times. “

Smith gave us nothing less than a critique of ‘scientific socialism’, a theory that must have emerged almost two centuries later. This theory emphasizes that a good government can achieve social good, or, nevertheless, socially desirable ends, by planning and directing a society and its citizens through law, rules, regulations and administrative fiat. India has to experience its reform under the license-permit-quota raj, which is at the core of Nehruvian socialism and the country’s five-year plans, and many Western countries have experienced its reform in the form of a post-war turn towards competitive market forces to regulate Keynesian business cycle management and government regulation.

Smith’s critique identifies the essence of the deadly concept of central planning: the “man of system” treats humans as pieces of chess that can be moved at will by the chess master and have no behavioral motivation or response of their own. This is contrary to the basic tenet of economics, in which human beings deliberately choose their own actions to achieve their own actions, and therefore respond to their behavioral incentives and incentives (whether derived from the market or otherwise) and, in this case, critically, to the incentive / incentive structure created by government planning.

As applied to economic policy, this insight goes by several names: ‘Lucas Criticism in Macroeconomics’, named after Nobel economist Robert Lucas; And the ‘offsetting principle’ in microeconomics, developed by economists-economist Sam Peltzman of the University of Chicago. In short, humans respond to government policy with the goal of shaping their behavior, and this approach often serves to negate or replace the intended purpose of that policy. Thus government intervention in the economy is often self-defeating, because humans are not pawns on the chess board, but deliberately respond to such intervention, as Smith understood almost 300 years ago.

The theory of scientific socialism may have been thrown on the ashes of history when communism collapsed in Eastern Europe and the former Soviet Union, but it lives on in its offspring, a variety of technologies that have emerged and blossomed in recent years, especially this year after the outbreak of the Kovid epidemic. The contemporary embodiment of deadly arrogance is exemplified by the lockdown idea, which aims to curb the spread of viral infection by issuing “stay at home” orders, closing public spaces, curfews, and banning public and private gatherings. Or imposing severe restrictions on the management of private businesses.

Epidemiologists who argue in favor of lockdowns as a deterrent to the spread of Kovid are committing a version of the lie identified by Hume — their “agent-based” models generally do not have a public behavioral response that is more committed than working around lockdowns. Similarly, mandating the use of a mask creates false safety and promotes other dangerous behaviors — as in Peltzmann’s famous work that mandating seat belts in automobiles can trigger hives, thereby reducing the intended effect of the procedure.

Vivek Dehezia is a Mint columnist.

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