Nobel Laureate Friedrich Hayek’s last book is titled “The Fatal Conceit: The Errors of Socialism.” In this relatively short work from 1988, Hayek attempts to capture the essence of a lifetime effort to understand and explain how the actions taken by entire nations of people can create order. Let’s keep these lessons in mind as we hear ideas, both good and bad, from the field of 2020 presidential candidates.
Hayek’s focus was on institutions—customs, traditions, rules of law, and government—that sustain life and promote prosperity. Always showing a deep understanding of and respect for human nature, as well as an appreciation for evolutionary forces that affect all aspects of human life, he saw most features of society as having emerged spontaneously, not as the result of grand plans or designs. Millions of individuals making countless, largely rational and unnoticed decisions are the ones truly steering the ship.
The title of his book reflects a common self-delusion: the conceit that causes us to believe that mankind’s most profound problems can be solved if an assembly of the brightest and best—the “right ones”—are brought to Washington to devise a detailed, top-down plan to be implemented with the force of law. Almost inevitably, socialized approaches are seen as inherently superior to decentralized ones.
Of course, all of this conceit business is sometimes just political chatter. Many of these grand plans never really go anywhere. The conceit becomes potentially deadly—“fatal,” as Hayek put it—when it is taken too seriously. We see this when presidential candidates—though having never held a high-ranking executive office in their lives and with little first-hand technical knowledge—offer detailed plans to deal with such far-ranging problems as the opioid crisis, higher education for all, healthcare access for the indigent, climate change, nuclear proliferation, regulation of self-driving automobiles, abortion access, and cybersecurity.
No single person or agency can know how these plans (and their ripple effects) will affect the decision-making dynamic of millions of distinct individuals. Too often, this results in policies imposed upon the nation that simply do not work very well.
The conceit becomes complete when the typical voter is persuaded by all of this top-down political talk. This voter will not be satisfied with candidates who suggest, humbly and accurately, that the issue at hand is too complex to be solved beforehand by a group of experts, and that the knowledge necessary for addressing the problem is to found among the people. The candidate who says “I’ve got the solution” beats the one who will organize a series of town meetings nationwide to listen, learn, and then develop guidelines for legislating.
In like manner, the “I’ve got the solution” candidate won’t typically appreciate hearing about programs that assign a high priority to liberty while seeking to unleash and empower individuals to find decentralized solutions. Nor will this candidate be quick to leave some matters to state and local governments to resolve.
Conceit is endemic in presidential politics, no matter the party. We are not lacking for examples in the contest for the presidency in 2020. Nor should we expect otherwise.
We now see Senator Bernie Sanders presenting a series of detailed top-down solutions to important social problems. We hear plans from former Vice President Joe Biden and others. Indeed, a better illustration of Hayek’s concern is found in a New York Times analysis of Senator Elizabeth Warren’s public remarks. It focuses on her regular referral to specific plans and white papers that she has developed for solving many national problems. The Manchester Guardian also noted the senator’s habit of responding to questions about an issue by saying, “I have a plan for that.”
Hayek, who saw grand plans as a perfect vehicle for the fatal conceit, argued that highly mobile and creative human beings may have a better approach when left to their own devices. As he points out, ordinary people tend to solve the problems they confront, to figure things out, and invent new ways of doing things—including governing—and conserve resources in doing so. Those who face fewer regulatory constraints in carrying out their search for solutions tend to be more successful. But to be successful, those involved in life’s struggles must be subject to systems of property rights and a rule of law.
Through all this, human beings face a fundamental challenge which Hayek calls the “knowledge problem.” The knowledge required to address problems and invent solutions is dispersed across countless individual minds. In today’s terms, the trick is to find ways to make connections with billions of minds and engage them in building a better world.
Putting the meaning of Hayek’s knowledge problem into simple terms was a challenge met admirably by Leonard Read when he wrote a 1958 essay titled “I, Pencil.” Read’s essay makes the simple point that no one individual has sufficient knowledge to make even an ordinary yellow wooden pencil, the kind with lead inside and an eraser on top. While seemingly simple, each pencil component, along with its source and the technical knowledge required to obtain and process it, is extraordinarily complex. Yet these complicated devices are available everywhere, often without charge.
Read’s larger point is that ordinary people working in uncoordinated ways in relatively free markets solved the pencil problem, yet no single person had the knowledge necessary to do so. Those producing the inputs may have had no intent to create a pencil at all. We readily observe seemingly miraculous outcomes for far-more complicated devices, such as the construction of skyscrapers, suspension bridges, the design and manufacture of smart phones, computers, and the invention and production of artificial limbs and life-saving drugs.
The opposite of the pencil producers, Senator Warren and other candidates are attempting to solve important problems by concentrating knowledge in Washington and then passing problem-solving legislation based on a frozen collection of information. The candidates are undoubtedly sincere in their belief that they have the requisite knowledge and leadership ability to muster multiple solutions, if only they are elected.
Without realizing it, and as brilliant as they may be, the candidates—like all of us—are still profoundly ignorant. The time has come for more town meetings, more listening, less lecturing, and for the development of guiding principles instead of detailed answers for later legislative debate. That way, we may avoid the fatal conceit.