This has happened repeatedly over the centuries and in many countries, among people of every race, and under governments ranging from democracies to totalitarian dictatorships.

Even the centrally planned economies of the Soviet Union and the Soviet bloc in Eastern Europe ended up having to allow a larger role for individual farming decisions, made by farmers guided by prices and sales, than they would permit in industry. Nevertheless, they did not permit a fully free market in agriculture and so ended up repeatedly being forced to import large amounts of food to feed their populations. While central planning has an unimpressive record in industry as well, the fact that its agricultural failures are usually far worse, and more often catastrophic, suggests the crucial role of knowledge. Industrial products and industrial production processes have a far greater degree of uniformity than is found in agriculture. Orders from Moscow on how to make steel in Vladivostok had more chances of achieving their goal than orders from Moscow on how to grow carrots or strawberries in Vladivostok. There are too many variables of soil, climate, plant diseases, and insect infestations, for example, that vary from one locality to another for anyone to successfully operate farms from thousands of miles away.

What was lacking in the Soviet Union was not expertise but highly specific mundane knowledge. There were Soviet economists who were as much aware of general economic principles as Western economists were, in addition to highly trained experts on various aspects of agriculture. What the U.S.S.R. did not have were decision-making individuals with the same range of highly specific hard facts about each particular farm as an individual farm owner would have at his disposal. Power and knowledge were separated in their central planning system, as in all centrally planned economies.

Commercial and industrial enterprise managers knew what the specific equipment, personnel, and supplies at their disposal could and could not do, but central planners in Moscow did not — and it was the central planners who held the power to make the ultimate decisions. Nor could the central planners possibly be sufficiently knowledgeable about all the industries, technologies, and products under their command to be able to determine what would be best for each, independently of what the respective enterprise managers told them. Central planners could be skeptical of the self-serving statements and demands of the enterprise managers, but skepticism is not knowledge.

Add comment

Security code

Copyright © 2019 | "The Theory of the Business"