The Failure of Central Planning

Capitalism can be seen as mirroring a naturally occurring process. It is no more imposed on society than the theory of relativity is imposed on physical reality. Without any given structure, people naturally organize in ad hoc functional groups for their survival. To survive and plan long term they must individually save and allocate resources for themselves based on their ability during the course of their life. Since people have varying levels of skill and will to do different things, a market emerges to trade the fruits of labor or simply the things one has access to that others don’t. This gave us language- a medium to express our innate desires. If the desire of one can be paired with the desire of another, a cultural sum is created that is greater than it’s parts. It is the fulfillment of two parties with one transaction. One thing creates two other things. That is growth.

As things grow, they also die. Death is contraction. It is subtraction. A thing that once was, is no more, therefore there is less. But that is the nature of things. Birth, growth, thriving, withering, and finally death. This process creates new space utilizing the dimension of time. Room is now available for a new thing, perhaps a more robust thing, or at least an altogether new thing. This still fits within the paradigm that capitalism describes. Nothing can expect immortality, but the fluid change and exchange of values and resources that meet them as time progresses and new spaces that are created as a result guarantee the refreshment of culture and life. This is not a structure that is imposed, but rather the consequence of the ad hoc, arbitrary nature of life with individual entities seeking their desires at all times to continue living.

If a sufficient number of members of a community eschew the personal responsibility of resource allocation because they simply lack resources, are incapable of acquiring and maintaining them or are just unwilling, then perhaps a non capitalist, centralized resource allocation structure will evolve for that community. But where that community interfaces with other communities is where capitalism will again emerge as the individual actors become the communities themselves. A group of communes will interact capitalistically until an attempt is made to create a greater commune made up of the individual parts.

But eventually such growing communes will run into a problem- how do you continue to effectively ration goods for a certain standard of living in an area under your jurisdiction when you are administratively distanced from that area and the people that live in it? How could you really know what amount to send to individuals of one community without negatively impacting others? You can have a statistical model of how things are predicted to pan out, but that doesn’t mean people will simply follow that vision. How can you avoid the distortion of the resource allocation process by individuals with differing values? If you’re willing to give freely, you must be willing to take back freely. Taking from people that have already been granted a comfortable situation will reduce their morale and their willingness to follow along with the principals of the administration, especially since the reality of differing values cannot be changed.

That is the failure of central planning, and where it fails, free markets naturally re-emerge whether sanctioned by the state or not.