One of the base arguments supporting central planning is that society left alone is guided by the fancies and whims or irresponsible individuals. Therefore, once again we are left back at collectivism. It desires the organisation of society in achieving things which are in the “general interest” or “general welfare”. The problem with this is that the complexity of happiness or welfare is ever-present. Hayek uses the individual happiness of a man as an example; we do not place our happiness in the result of one central goal, but create a hierarchy of goals in which completion aids our well-being or happiness. Thus, planning must attempt to find out all of these micro goals, and place them in relative importance to each other, and this ultimately is an impossible task.
Furthermore, this imposes the need for an ethical code. This would have to establish the significance of each aspect of our lives in contributing to the general interest. However no such code exists or could ever be comprehensively completed, due to the innumerable differences between each individual. Additionally, Hayek states that it “would be impossible for anyone mind to comprehend infinite variety of different needs of different people” even more so as to some extent we all compete for available resources. The central planning system could only cater to one set of needs, whereas individualism (not in the sense of being egoistic or selfish) allows each individual his own value placement, and thus through coordination with other common areas can be reached, or an individual pursuit can occur, not being limited by an overriding power. Hayek is not against voluntary association as in that case it is simply the realisation amongst a group of individuals their common goal and how they go about it, however this can of course depend on whether there is a leadership in this association.
Contributing to this is the concept of voluntary agreement, whereby the state should only be allowed to intervene in the case where agreement exists. At any moment when there is no agreement and the state intervenes there is a loss of freedom. He notes that at a given point of intervention the state holds enough of resources or income, that it indirectly controls all aspects of economic life. Thus, individual ends become inevitably dependent on the state, and then they are not met as the state cannot cater for every individual end.
This brings Hayek onto democracy and planning, as he seeks the importance of making an ultimate agreement. Hayek mentions that the use of “general welfare” or “general interest” is actually just a cloak for the fact that socialism struggles to agree on one definite end:
“As if a group of people were to commit themselves to take a journey together without agreeing where they want to go: with the result that they may all have to make a journey which most of them do not want at all”
Thus democracy and planning do not coincide! Democracy attempts to allow each individual to voice his desires, and thus in places like parliament there is a tendency for more conversation then agreement because our aims conflict. Hayek states that in most cases there is no real majority but a compromise which ultimately satisfies no one. Socialism comes to the conclusion that there should be a removal of democracy in order to push through certain decisions and that in itself is the removal of both political and economic freedom.
Even if a plan were to be broken down, and clause by clause voted on this would not satisfy anyone to a full degree. Even if it were delegated to separate bodies in which they developed it in regards to expert knowledge, it would then become difficult to integrate the individual plan with all other plans. Democracy struggles with planning as it reduces democracy in itself, as it loses the power of guidance and a reliance on each individual institution. He then accounts for how democracy can decay (a great example of this being Weimar Germany) in that “people reach the agreement that planning is necessary, then democratic assemblies struggle to produce a plan, thus invoking demands that the government or a single individual should be given power to act on their own responsibility.” Thus this leads to the loss of political freedom, almost in arguing that there is a need for an economic dictator “unfettered by democratic procedure”.
There exist today many harsh critiques of democracy from a variety of places. But there is evidence as Hayek states that a democratic government can work effectively:
“restricted to fields where agreement among a majority could be achieved by free discussion; and it is the great merit of the liberal creed that it reduced the range of subjects on which agreement was necessary to one on which it was like to exist in a society of free man”
The use of competitions reduces the amount of things that require agreement, and allows government to concern itself only where it truly fails to operate. Democracy will inevitably destroy itself under the guidance of collectivism, as stated previously one body or person will have to prevail with the responsibility for making the decision.
To round of the chapter Hayek quotes Lord Acton in regards to liberty:
“is not a means to a higher political end. It is itself the highest political end”
Where democracy is the manner in which we safeguard liberty (individual freedom), this is not to say that democracy achieves this at all times, but it is the best method in our possession. Power regardless of where it lies can be arbitrary; democracy can at times bring the illusion that due to things being the will of the majority that power cannot be arbitrary. Democracy tries its best to prevent this.