I think The Road To Serfdom is fabulous. I think Glenn Beck didn’t read it carefully enough. Here is the main part I think the foxnewsies ignore, because it is “off-message”: (Which is the only polite way I know of to say it.)
There are, finally, undoubted fields where no legal arrangements can create the main condition on which the usefulness of the system of competition and private property depends … In all these instances there is a divergence between the items which enter into private calculation and those which affect social welfare; and, whenever this divergence becomes important, some method other than competition may have to be found to supply the services in question. Thus, neither the provision of signposts on the roads nor, in most circumstances, that of the roads themselves can be paid for by every individual user. Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories be confined to the owner of the property in question, or to those who are willing to submit to the damage for an agreed compensation. In such instances we must find some substitute for the regulation by the price mechanism. But the fact that we have to resort to the substitution of direct regulation by authority where the conditions for the proper working of competition cannot be created does not prove that we should suppress competition where it can be made to function.
In other words, some situations are not well handled by the usual capitalistic means. But let’s try and keep its good ideas.
To create conditions in which competition will be as effective as possible, to supplement it where it cannot be made effective, to provide the services which, in the words of Adam Smith, “though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals”—these tasks provide, indeed, a wide and unquestioned field for state activity. In no system that could be rationally defended would the state just do nothing. [My emphasis.]
Yes, really; in the situations where relying on laissez-faire capitalism won’t get ‘er done, the state must step in.
But how we go about it is very important, and in this I am completely capitalist. Hayek’s great bogeyman argument is “centralization of economic activity”. That any sort of “centralized planning of control” will fail or be inferior. Of course I agree with this central point. But note that this is not anti-control or anti-regulation. You can still control by regulating. And you should! The following is quite complicated and dependent on the meaning of his terms:
…most people still believe that it must be possible to find some middle way between “atomistic” competition and central direction. Nothing, indeed, seems at first more plausible, or is more likely to appeal to reasonable people, than the idea that our goal must be neither the extreme decentralization of free competition nor the complete centralization of a single plan but some judicious mixture of the two methods. Yet mere common sense proves a treacherous guide in this field. Although competition can bear some admixture of regulation, it cannot be combined with planning to any extent we like without ceasing to operate as an effective guide to production. Nor is “planning” a medicine which, taken in small doses, can produce the effects for which one might hope from its thoroughgoing application. Both competition and central direction become poor and inefficient tools if they are incomplete; they are alternative principles used to solve the same problem, and a mixture of the two means that neither will really work and that the result will be worse than if either system had been consistently relied upon. Or to express it differently, planning and competition can be combined only by planning for competition but not by planning against competition.
A bit of a longer-winded section with some challenge-able parts asserted without proof, but I absolutely love that last line. It is my favorite line in the whole book and it tells us exactly what we need to do:
…planning and competition can be combined only by planning for competition but not by planning against competition.
If you need to plan, plan on accomplishing it via competition.
Just don’t tell me that planning is wrong. Or that just because “conventional capitalism” cannot solve it, it shouldn’t be done. You’ll have to find your justification elsewhere.