By Steve Horwitz: Posted on the Coordination Problem Blog Site.
This is from a 1934 Cobden Memorial lecture of Gustav Cassel’s entitled “From Protectionism through Planned Economy to Dictatorship”:
Planned economy will always tend to develop into Dictatorship…[because] experience has shown that representative bodies are unable to fulfill all the multitudinous functions connected with economic leadership without becoming more and more involved in the struggle between competing interests with the consequence of a moral decay ending in party - if not individual - corruption. The parliamentary system can be saved only by wise and deliberate restrictions of the functions of parliament. Economic dictatorship is much more dangerous than people believe. Once authoritative control has been established, it will not always be possible to limit it to the economic domain.
That is quoted from Hayek’s “Freedom and the Economic System” (p. 192 in CW).
Hayek says of that passage that it has “a clarity which leaves nothing to be desired.” Yup, Fritz, you called that right. That passage has the knowledge problem, the public choice problem, the “road to serfdom”, and the importance of constitutional rules all packed into four sentences. It even hints at the ratchet effect.
The sad part is how much of the wisdom of that concise paragraph has been swamped by the nonsense coming from reams of worthless paper produced by the four P’s: professors, pundits, policymakers, and politicians.
