Socialism versus Decentralization

Jack Knight states that "A standard argument in the study of peroperty rights and forms of ecomomic organization is that an institutional rule established by decentralized emergence is more socially efficient than is one established by the state, because the latter is subject to political manipulation and the influence of distributive interests." (213) [29]. Indeed, Hayek and many others expound upon this view, saying that any kind of central control necessarily involves some single mind or group of minds trying to make use of dispersed knowledge, rather than "unifying the knowledge of a number of persons"(87) [29]. According to Hayek and his Theory of Knowledge, the benefit of decentralized systems, is that the more decentralized they are, the more relevant knowledge they necessarily take into account, leading to outcomes that provides in some way for these concerns. In contrast, central control is fundamentally unable to collect and incorporate all available information, especially for concerns that involve vast amounts of information, like the direction of the distribution and allocation of goods via the price system. Knight however, counters by saying that this type of argument for the social efficiency of decentralized emergence implies that decentralized processes are neutral in their distributional consequences, and thus distributional conflict does not apply. This is evidenced by the fact that decentralized mechanisms almost always involve distributional conflict, that many Pareto-improving changes redistribute wealth (and may require compensation via state intervention to be Pareto-improving), and that decentralized change is "a slow and cumbersome process".(213) [29].

General Overview | Major Contributors | Game Theory Models | Objections/Arguments | Sources