Consign it to the Flames

So, back when giants strode the earth, one of them had a debate with Friedrich Hayek. Hayek had just published Road to Serfdom, an argument that central planning will lead to, well, serfdom. Here is how Keynes responded [UPDATE: forgot to mention that this is from John Maynard Keynes: Fighting for Freedom, by Robert Skidelsky]:

You admit . . . that it is a question of knowing where to draw the line. You agree that the line has to be drawn somewhere, and that the logical extreme is not possible. But you give us no guidance whatever as to where to draw it. It is true that you and I would probably draw it in different places. I should guess that according to my ideas you greatly under-estimate the practicability of the middle course. But as soon as you admit that the extreme is not possible . . . you are, on your own argument, done for, since you are trying to persuade us that as soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice.

. . .

I should therefore conclude your theme rather differently. I should say that what we want is not no planning, or even less planning. I should say that we almost certainly want more. But the planning should take place in a community in which, as many people as possible, both leaders and followers, share your own moral position. Moderate planning will be safe if those carrying it out are rightly oriented in their own minds and hearts to your own moral position . . .

What we need therefore . . . is not a change in our economic programmes, which would only lead in practice to disillusion with the results of your philosophy; but perhaps even . . . an enlargement of them. . . . I accuse you of perhaps confusing a little bit the moral and the material issues. Dangerous acts can be done safely in a community which thinks and feels rightly which would be the way to hell if they were executed by those who think and feel wrongly.

I want to emphasize the very last line. Keynes is making the point that planning does not exist in a vacuum. What matters is a shared commitment to . . . well, I'm not sure exactly what, but I guess respect for property, prices as signals, whatever.

Two things strike me. The firsst first [oops] is that the reverse is probably also true. Capitalism is probably a great system in a society with strong norms of generosity, egalitarianism, good governance, etc. This is maybe unsurprising: Scandinavia prospers under a variety of center-left public policies (all right, so they're probably not that different from each other, but I think there are meaningful differences). Greece is probably doomed no matter what system it embraces. (I am exaggerating a bit, but I really do think a government that is roughly at Greece's position on the right-left spectrum would do just fine in Scandinavia. The problem is its position on just about every other spectrum.)

So the second thing that strikes me is that capitalistic values are almost certainly corrosive in any society. It depends on exactly how you specify the values, of course, but basically it comes down to greed and self-promotion. There are other values that are associated with capitalism or that are helpful for particular people within a capitalist system, but I am not sure that any of those (empiricism? pluralism?) are nearly as selected-for as greed and self-promotion. Certainly I think commitment to rule-of-law is only sometimes advantageous for an individual in a capitalist society.

Anyway, the point is not at all original to me. See this paper (PDF) via Marginal Revolution. But there is something a little pleasing and a little disturbing about the idea that capitalism (and perhaps all advanced civilization) is at its best when it is young and vigorous - that is, before it has devoured all of society's accumulated norms of human decency.