Are Austrians Really Opposed to Central Planning?


This seems like a really stupid question to ask. I mean, after all, Ludwig von Mises wrote an entire treatise on the complete impossibility of economic central planning, and went on to call it “Planned Chaos”, the title of another of Mises’ brilliant works.

Murray Rothbard later expanded on Mises’ overall insights, particularly in the area of monopoly, and production theory. In political theory, Murray Rothbard was, make no mistake about it, what we consider to be an Anarchist today.1 He believed that the State could be and should be utterly abolished. To those who say that the State is required by the very nature of man because man is by necessity a societal being, Murray Rothbard had this to say:

A common defense of the State holds that man is a "social animal,"
that he must live in society, and that individualists and libertarians believe
in the existence of "atomistic individuals" uninfluenced by and unrelated
to their fellow men. But no libertarians have ever held individuals to be
isolated atoms; on the contrary, all libertarians have recognized the
necessity and the enormous advantages of living in society, and of
participating in the social division of labor. The great non sequitur
committed by defenders of the State, including classical Aristotelian and
Thomist philosophers, is to leap from the necessity of society to the
necessity of the State. On the contrary, as we have indicated, the State is
an antisocial instrument, crippling voluntary interchange, individual
creativity, and the division of labor. "Society" is a convenient label for
the voluntary interrelations of individuals, in peaceful exchange and on
the market. Here we may point to Albert Jay Nock’s penetrating distinc-
tion between "social power"-the fruits of voluntary interchange in the economy and in civilization-and "State power," the coercive interference
and exploitation of those fruits. In that light, Nock showed that human
history is basically a race between State power and social power, between
the beneficent fruits of peaceful and voluntary production and creativity
on the one hand, and the crippling and parasitic blight of State power
upon the voluntary and productive social process. All of the services
commonly thought to require the State-from the coining of money to
police protection to the development of law in defense of the rights of
person and property-can be and have been supplied far more efficiently
and certainly more morally by private persons. The State is in no sense
required by the nature of man; quite the contrary2

This is one of many gems in Murray Rothbard’s writings, and it is in this writing that we find our first real problem with the common concept of central economic planning; the question is virtually never asked, “what is the center of society?” Austrian economist Ludwig von Mises answered that question through his discussion of Praxeology. He pointed out (quite correctly) that only individuals act or are capable of acting, that individuals by necessity come before society. Drawing upon this insight, as well as the insight that Rothbard has given us, i.e., that “Society” is nothing more than a convenient label for the voluntary interrelations of individuals in peaceful exchange, we can safely conclude therefore that Austrians not only support central economic planning, but call for it almost religiously.

This almost sounds like a non sequitur (which I will be accused of I’m sure) at first glance, but I can assure you that it is not. The problem with the current, popular definition of Central Economic Planning is that it declares the State to be the center of society. As Rothbard pointed out in the above quote, however, the State is an inherently anti-social entity that cripples society by crippling voluntary exchange. On the contrary, the State is not the center of society, nor does it exist within society. The State is nothing more than an external force imposing its will upon society.

Using the above insights, we are prepared now to redefine the term Central Economic Planning. Central Economic Planning is that system in which all of the production in Society is controlled and maintained by all of the individuals of society through peaceful exchange.

I am well aware of the fact that I will be accused of redefinition for ideological reasons, but my reasons for redefining the term Central Economic Planning are far from ideological. The reason I am defining the term Central Economic Planning as such is because it is the only definition that fits the facts.

Using all of the above, we can safely conclude that it is not Central Economic Planning that Austrians such as Mises and Rothbard rejected, it was “External Planning”, that they rejected, and that is exactly what a State planned economy is; External Planning.

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Posted on August 21, 2013, in Economics, Political Philosophy and tagged , , , , , , . Bookmark the permalink. Leave a comment.

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