It is because a modern economy is so complex that nobody can know all the facts that it could not effectively be guided by a central plan but must be conducted on the basis of decentralization of decisions.
This is worth emphasizing because it is sometimes argued that this very complexity, which in fact prevents effective planning, makes planning necessary.
-F. A. Hayek ( The Market and Other Orders)
And a pertinent question from Prof. Don Boudreaux to those who believe central planning IS a valid way to run an economy? (re: my favorite question of late: Who Chooses? You or someone else choosing for you?):
Until I receive a substantive and cogent answer I will continue to put the following question to anyone who proposes to improve the economy with industrial policy: From where will government officials who are charged with allocating resources get the information they must have in order to allocate resources better than resources will be allocated by open, competitive markets?
There is too much data to decide to use “real time” – and too late to compile for current analysis for by the time the compilation has been completed, the situations have changed and the data is outdated. Dunno about you folks, but I’d never want to use outdated data on which to make decisions. But, Socialists believe they are literally “Know it alls” – much to the detriment of everyone else who has to suffer through their misallocations of resources and resulting [lack of] product.
(H/T: Cafe Hayek)
