Hayek, The Road to Serfdom - 12th session

Monday, September 21, 2020 Reading Group Journal

“The New Problems Brought by Technological Change”

12th The Road to Serfdom reading discussion meeting: Mori, Roshya, Damjae, Kangyoung, Kongdubu

As always, Roksha was the first to join.

He shared a rather unsettling story: worried about how Mori, a self-employed businessman, was doing, he went to some neighborhood clinics, only to find that one had already shut down and another had no patients, so the director was dozing off. It hit a little too close to home for me, since I’ve also been caught dozing off by patients quite a few times these days. The world has grown so dull that even YouTube puts me to sleep now.

Damjae, who had skipped last week, came and, as expected, spent about 30 minutes briefing us on news related to election fraud. He said he was looking for the election white paper that the left had published when it was campaigning to invalidate Park Geun-hye’s election.

Today’s reading was from Chapter 4 of The Road to Serfdom, “The ‘Inevitability’ of Planning?” specifically the section “The New Problems Brought by Technological Change.”

It deals with why the argument is mistaken that modern technological progress makes modern civilization more complex and therefore requires more centralized planning.

When this book was written in the 1940s, many people still had lingering doubts about whether the increasingly advanced technology and civilization brought about by the development of capitalism, along with the many complex variables they created, should really continue to be left to the capitalist market. Of course, having watched the following decades of history unfold, we now know that the more complex society becomes, the more problem-solving must be entrusted to decentralization.

In explaining why society should be left not to centralization but to the market’s decentralized system, the book introduces a famous term:

the concept of the “price system as an apparatus of registration.”

“What we need is an apparatus of registration which automatically records all the relevant effects of individual actions, and whose indications are at the same time the resultant of individual decisions and a guide to further decisions. Under competition, the price system is just such a mechanism, and no other system can perform this function. It enables entrepreneurs, by watching the movement of comparatively few prices, as an engineer watches the hands of a few dials, to adjust their activities to those of their fellows.”

In advanced civilized society, the role of the division of knowledge among individuals grows ever larger through the impersonal information-transmission mechanism of the price system.

The more social civilization becomes complex through technological development, the more centralized methods actually lose their usefulness.

Mori, who these days is immersed in books about the Great Depression in the United States in the 1930s and 1940s, naturally started showing off what he knew about the social conditions of the time and why this issue was being discussed in this chapter.

Damjae added some explanation. He said that in the early period when capitalism was taking root in society, the wide gap between rich and poor was keenly felt, and the accumulation of dissatisfaction over that was also one of the causes behind public demand for centralized intervention at the time.

Mori, our unrivaled master of nitpicking, immediately found something to argue with again.

“That’s because we forget the history of earlier times. Capitalism did not widen the gap between rich and poor. Because of the nature of capital, which tends to deepen accumulation, it may be that more capital accumulates with certain individuals or groups. But that did not create a gap in the things people enjoy in everyday life. A large concentration of money somewhere and the actual enjoyment of things in daily life are different matters.”

He went on at length, rambling through stories from his own experience.

“The reason the gap between rich and poor narrows when capitalism is alive and well is that capitalism produces a wide variety of goods, and then even people with lower incomes get access to products they can enjoy in much the same way. Government regulation has stifled capitalist competition, small restaurants have all shut down, and cheap eateries have disappeared. That is what has actually caused the rich-poor gap. We should not accept the frame that capitalism causes inequality.”

Unable to use a microphone, Kongdubu responded by text. Income disparities may have widened, he said, but we should pay attention to the fact that the living standards of low-income people have improved.

It was time to wrap up the meeting.

Kangyoung, who is the type to speak sparingly, closed with an analogy about statistics.

“Far more people than we think do not think logically. More than logical persuasion, what is needed is a clear message that will stick in people’s minds.”

That’s right. We need to argue forcefully that capitalism has been reducing the gap between rich and poor. That is probably why, before condemning Ayn Rand as an extremist thinker, we ought to feel a certain reverence for her—for fighting, during the left-wing era of the United States from the 1930s to the 1970s, with provocative and concise messages.

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Original title: 하이에크 <노예의 길>-12차

Author: Jayujuui Ipmun Dokseotoronmoim

Date: 2020-09-21

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=8&idx=23105