‘Seeing Like a State: How Certain schemes to Improve the Human Condition Have Failed’ is a great and insightful book. Although it comes from an academic tradition I am not at all familiar with, I found it quite accessible. This book is about what happens when ‘high-modernism’, the belief that societies should be centralized, ordered and structured from above based on ‘rational’ and scientific principles, is coupled with autocracy. According to Scott, many schemes to improve the human condition have failed because local and practical knowledge, informal processes and improvisation, which are necessary in order to produce efficiently and to create livable living environments, are lost in great centralizing schemes. The book also makes the case of diversity, as it is more reliable and durable than specialization.
Scott argues that all centralization requires information reduction. In order for a policy maker to make policy he needs information, but he can never grasp all information. The amount of information needs to be reduced by creating all kinds of short cuts (aka heuristics, such as averages). Moreover, centralization requires that information is left out. While it is possible to decide on a certain policy while keeping in mind one or two variables, it is very difficult to plan ahead keeping in mind fifty variables which interact and which are highly unpredictable. Policy makers have limited cognitive abilities, and this makes them vulnerable to committing costly errors when they are given much power over many policy areas.
This is exactly what happens when high-modernism is the dominant ideology. This is ‘a strong version of the self-confidence about scientific and technical progress, the expansion of production, the growing satisfaction of human needs, the mastery of nature (including human nature), and, above all, the rational design of social order commensurate with the scientific understanding of natural laws.’ Moreover, often high-modernists had a focus on visual order, as if visual order ensured that a village or production was efficiently planned. Then, if this high-modernism is combined with a situation in which a central planner has a lot of power, unhampered by civil society, such as in an autocracy, disasters are bound to happen.
Scott bases his argument on several examples, amongst others the unlivable city that newly planned Brasilia would have become if the original plans had not been altered by many Brazilian citizens going about their daily life without paying too much attention to official city planning. While Brasilia looks very ordered on a map, and everything is built in such a way that it fits most efficiently the purposes that the city planners had in mind, the city actually depends on the outskirts. From where the services and products are delivered which the city planners had not kept in mind while designing the city. It is impossible to take into account all the needs and wishes of citizens of a city, local knowledge about those wishes in combination with improvisation is what allows a city to prosper.
Another example Scott gives is the failed collectivization of agriculture in the USSR. While in terms of political power the collectivization was a success (collectivization gave much more power to the Communist Party), in terms of production it was disastrous, and wholly dependent on the illegal private production of all kinds of vegetables and food. One of the main problems was that central planners in Moscow had too little information about the exact quality of the land farmers were working on. It is impossible to aggregate sufficiently precise information about that. So even if human beings functioned the way the Soviets imagined, as ants completely disregarding their own individual benefits willing to work all day long at little personal returns, collectivization would have failed. (On a sidenote, what does this say about colony insects? Those individual insects which appear to be slaves of the collective, must have much more decision power than we would expect at first sight, after all, ant colonies also need local knowledge and improvisation!) Efficient production is exactly dependent on informal processes and local knowledge, not on following centralized guidelines. An example Scott often uses is the ‘work-to-rule strike’, a strike in which employees follow the exact regulations laid down by their employers. Rather than improvising to increase production, they reduce production by pretending to be brainless idiots blindly following the rules. Following the rules meticulously for 70 years will decrease economic growth, even with workers who work hard.
So, what makes the book particularly interesting is that it does not really look at how markets function. It goes beyond Hayek’s argument that the price mechanism conveys information about how much production is needed to match consumption. Rather, it looks at how agricultural production in many countries took place and what is needed to create a pleasant living environment in cities. So while Hayek acknowledged that local knowledge was necessary to produce efficiently, and made useful through the price mechanism, which conveyed all the necessary information about the wider market to the local producer, Scott does add a lot about how exactly humans need local knowledge. Yet, Scott does not make the argument that all centralization is bad, he does not really touch upon this topic, for it is simply another topic.
Bottom Line: Central planning needs reduction of information and is done by fallible human beings. This means wrong decisions are made under certain circumstances. Instead, we need local knowledge, diversification and decentralized decision making in areas in which many unpredictable variables need to be taken into account.