In the late 1940s the Harvard Free Enterprise Society was formed in order to deal with issues that directly influence the economy. In particular, the society promoted equality of opportunity, provided by the free market. The Foundation for Economic Education aided the society with pamphlets and other materials, though it did not agree with all of what the society promoted. Still, this type of organization was particularly rare at the time given the strong intellectual prior in academia towards central planning. Today’s document from November 17, 1948 is the Society’s Newsletter Vol. II, No. 3, which discusses the the welfare of workers in the Soviet Union and the welfare of workers in capitalist countries.
As the newsletter states, when the horrors of the Soviet system were pointed out, most socialists either denied the brutality or claimed a “middle way”. The newsletter raises a good question, “What middle way? Is freedom only halfway good? And is slavery only halfway bad?”
In fairness, most socialists are well-intentioned people and what they desire is planning with freedom. They believe that planning is a way of fixing the flaws in the economy and a way of achieving social justice. And they believed this can be done while maintaining liberty. What they fail to realize is the incompatibility of central planning and liberty. Given the impossibility of economic calculation in a socialist economy, the socialist means cannot achieve the socialist ends.
Central planning under democracy is certainly possible. The problem, however, is that it is unstable. Without economic calculation, planners cannot properly allocate scarce resources to their highest valued ends and so the desired ends cannot be achieved. This leaves the planners with two options, either abandon the intervention into the market, i.e. stop central planning, or increase the interventions, i.e. new and more planning.
Under democracy coming up with new plans to correct the failed old plans is easier said than done. Finding agreement is next to impossible. If central planning is to continue it requires a stronger arm to implement any new plan. This was the point F.A. Hayek was making in his book, The Road to Serfdom. Thus, to continue central planning socialists must abandon the ideals of freedom that they hold. In order to make one plan work more planning is necessary. Soon the end result is that the workers, whose lot this system is supposed to help, end up being treated as bad as, or in some instances, even worse than, cattle.
This makes slogans such as, “Let’s drop the holier than thou attitude, and meet them halfway,” impractical. In the long run, there is no middle way. Achieving planning and liberty is like having your cake and eating it too. While today the Soviet Union is gone and few advocate for outright central planning, this threat is far from gone. Distrust in the market to achieve efficiency and provide justice still exists. Through the failures of socialism in the last half century the calls for a middle way have never gone away. If we don’t learn the dangers of the middle way we will soon find out through experience. As Yogi Berra once said, “If you don’t know where you are going, you might wind up someplace else.” And most likely, that someplace else is not somewhere any of us want to be.