Steve Caputo

12/1/14
Policy Issues in the History of Economic Thought
FA Hayek Planning and Democracy
This piece from Hayek starts by focusing on the differences between different
systems of economic thought and the way that they take into account the will of the
people. He compares the way that communism and fascism exist; both are distinict in
their goals but the methods that they use to achieve such an end are very much similar.
There is an inherent distrust of centralized planning, something that Hayek strongly
believes against throughout his works, as it is impossible in his opinion for a central
authority to effectively understand the views of the many.
Hayek also speaks about Democracy in the chapter. He believes that the inherent
flaw with the system of democracy is first that there is a low probability that the elected
government will be able to pass the policies that it was elected on. People in democracies
also have unrealistic expectations for the government. The government is always going to
be a rule of the few, but in a democracy many people objectify and believe that a greater
body has the ability to influence policy. When he compares socialism to democracy, he
utilizes a critique of democracy that again cites its inherent slow nature. However, the
pro-socialist view that permeates the piece he uses is also dismantled. The socialist
argues that because a group of experts would be the ones making the policies in a
socialist system, that the decisions would be good and expedient. Hayek counters with
the argument that any time that the government is uprooted that the new government will
again start a new. This is exactly the same thing that happens in a democracy. All in all,
he argues for a decentralized form of government (but not communism, as he recognizes

the unrealistic nature of the system) that allows for a greater dispersion of knowledge and
more people involved in the decision making.