The Education Calculation Problem

In the last century a minority of great economists, led by Ludwig von Mises, clearly and forcefully pointed out the impossibility of calculation and planning under a socialist economy.  History bore them out, and the Soviet Union collapsed under the crushing weight of its own absurdly uncoordinated production patterns.  Absent a price system, planners grasped for anything they could measure in order to get the right mix of goods.  They judged the success of the nail factory by the total weight of all the nails it produced, which naturally led to factories producing giant nails of no use to anyone.  Then they switched to the number of nails produced, which led to tiny nails, equally useless.  It may seem like a silly case of some rascally producers, but regardless of the intentions or skills of the workers or planners, how were they to know what type, size, quantity and quality of nail to make?  They had no connection or effective communication channel to the consumer.

The insights about the impossibility of planning under total socialism apply equally to so-called “mixed” economies, except that whatever remnants of a market are in operation will stave off total collapse at least for a time, acting as a kind of safety valve.  In other words, the same top-down disorder that resulted in a surplus of mustard and a shortage of bread can be expected in the “planned” segments of any economy.

Education is “mixed” in the US, but more top-down than market based in almost every case.  There is almost no relationship between the end users of education – students and their parents – and the producers and planners in the system.  It is no wonder the education system focuses on compliance, obedience, respect for authority, behaving exactly like other people your age, memorizing things whether or not they’re valuable, and a lot of other characteristics inimical to a free society and entrepreneurship, production, and innovation.  They focus on these things because they can be measured absent a market.  Something like student satisfaction is far more important, but only the nuanced, complex, adaptive market order can cater to such individualized, subjective vagaries.  Top-down orders don’t know what to do with it so they endlessly tweak and argue over Common Core and other arbitrary outputs that can be measured.

Are teachers paid too much?  Too little?  Are facilities too big and costly?  Too small and dated?  Are class sizes too big or too small?  Do students need more tech, or less?  Longer school days and years, or shorter?  More extra-curriculars or fewer?  More or less homework?  More STEM or more arts?  No one knows, and no one ever can know absent a market.

Imagine markets for other goods and services if they were managed in this way.  Does your local grocery store need more of fewer types of refried beans?  Do you think a town hall meeting and a few bean board elections would come to a better solution than the market process?  Does “society” need more trucks and fewer sedans?  The absurdity of these questions ought to give pause before we enter ridiculous debates about whether schools or universities need more of this, or less of that.  Good intentions and good people can’t make sense out of the chaos.  Only markets can.

The more managed a system, the more it relies on what can be easily measured, and will therefore tend to produce those things rather than what is of value to consumers.  If this goes on long enough, consumers may forget that they even have an opinion, or that they could even value things other than the low-quality product they’re given.  If you’d never lived in a world with a flourishing, diverse market, you may not even know that you wanted low-sodium extra smooth refried beans, because you didn’t even know canned beans existed.

The solution in socialist countries was private property.  Even at its peak, those who went outside the system and operated in black markets kept some semblance of quality of life possible.  Once people were formally allowed to take ownership over their own lives and resources, markets and a functioning price system emerged and quickly began the ongoing coordination and creative destruction of a beautiful spontaneous order.  Consumers were once again king, and their wants and needs (sometimes unknown until entrepreneurs offered it to them) were the ultimate driving force.  Production patterns became flexible yet highly efficient at moving resources from lower value to higher value uses, as determined by the preferences of the end user, not some board or commission.

Unless private property (the ownership of ones own learning) in education reigns, educators will continue to grasp in the dark for what to produce.  They’ll tend toward uniformity, authoritarianism, and clumsy, blunt approaches that lend themselves to easy measurement.  Once consumers seize ownership of their own learning and seek products and services outside the grip of the state, the education market will reach full bloom and a cornucopia of methods and means will emerge.  Until then, the question, “What should education look like?” is as unanswerable as, “What should an economy produce?”.

Aristotle on Mixed Economies

This is an article I wrote some time ago for the Ludwig von Mises Institute.


A friend recently commented that he has found wisdom in moderation. He said it seems that truth and goodness are found not at the extremes, but at the place of balance between extremes. This can be very true.

As Aristotle wrote in his Nicomachean Ethics, “Virtue must have the quality of aiming at the intermediate.” In Aristotle’s examples, it is cowardice and recklessness that are the extremes, courage the middle ground. It is drunkenness and uptightness that are extremes, and moderate drinking the mean.

My friend went on from this concept to state that he believed in neither socialism nor capitalism, but in a mixed economy — or what he called a “messy middle ground.” There are two main problems with this conclusion.

The first is that statements like this in the abstract are meaningless. To construct a pretend spectrum, and place various actions and beliefs on it and then to choose the “middle” between them does not give meaning to that middle in and of itself. That is, without actual arguments and definitions regarding what that middle choice or belief is, it is simply a made up point on an imaginary spectrum on which other ideas are arbitrarily placed. Using this logic, I could claim that, since the mean is always good, green beans and omelets are both extremes and I prefer the middle ground.

Most often, those advocating an idea simply because it is in the “middle” of their mentally constructed spectrum do so because they lack any real arguments about the idea itself. For the idea of a middle ground or moderation to have any meaning, the extremes must first be defined and understood as opposite responses to a common problem, and must be placed on an ordinal value spectrum, such as a standard of basic morality that always holds falsehood as bad and truth as good.

The second problem with the conclusion that, since even Aristotle recognized moderation as the source of virtue, a mixed economy is better than capitalism or socialism is that it departs from the logic used in the earlier examples of courage and moderate drinking.

Courage and moderate drinking were the mean because either an excess or a deficiency was problematic. However, both courage and moderate drinking are extremes in another sense. Courage is a word that describes the good state of mind in the face of danger. There is no case in which courage itself is bad or not to be desired, since it is by definition the proper balance between cowardice and recklessness — you cannot have too much courage, nor too little, only too much fear or too little. There is either courage or noncourage (cowardice, recklessness), just as there is either truth or falsehood. In this sense it is an extreme.

Perhaps this sounds like a simple matter of definitional difference. There is, however, a fundamental difference here, meant to show that moderation is only good if it is moderating between two bad extremes and to a good mean, and not if it is moderating between a good and a bad. As Aristotle put it:

But not every action nor every passion admits of a mean; for some have names that already imply badness, e.g., spite, shamelessness, envy, and in the case of actions adultery, theft, murder; for all of these and suchlike things imply by their names that they are themselves bad, and not the excess or deficiencies of them. It is not possible, then, ever to be right with regard to them; one must always be wrong.

The midpoint between murder and nonmurder is not the good choice — nonmurder is. However, the moderation between not caring a lick about the actions of another and caring so much you would use violence to control them is a good middle ground — but this middle ground is not to be confused with socialism.

Socialism is a system where government uses force to tell people what decisions they can and cannot make. There may be degrees of freedom within different socialist systems, just as a prisoner may be treated better or worse by different wardens, but if you are not free, you are not free.

Capitalism is an economic system that allows people to make choices free from government intervention. All government intervention is backed by the threat of violence — if it were not, it would not be a government policy, but rather a voluntary recommendation, or a rule of a voluntary association. The fact that one cannot avoid taxation and obedience to a government without physical consequences proves that it is not a voluntary institution, but rather one backed by force.

Advocating a “mixed economy” or a middle ground between socialism and capitalism is nothing more than advocating a middle ground between threatening your neighbor with violence if he doesn’t do your will and not threatening him with violence. If he resists, it becomes the same as the “middle ground” between murdering and not murdering. In that sense, capitalism is an extreme, just as courage is an extreme against noncourage.

In another sense, there is a middle ground economically. The middle ground is between caring so much about the economic decisions people make that you would threaten them with murder to control them, and caring so little that you would allow them to harm themselves or others. By definition, you cannot escape the second extreme by application of the first. You cannot care about individuals by threatening them with violence. Such care must come peacefully and voluntarily: by persuasion, not force.

The middle ground in this case is not socialism — or control by threat of violence — but a capitalist system in which individuals voluntarily look out for one another, and peacefully persuade others to look out for themselves and others. Capitalism is not a virtue in the way that courage is a virtue; it is rather a framework that avoids the extreme of violent coercion. Avoiding the one extreme, as a capitalist system does, does not guarantee avoidance of the other extreme, just as not being reckless does not guarantee you will be courageous. But again, avoiding the extreme of neglecting others cannot be achieved by embracing the extreme of coercing them.

The true middle ground is to accept a capitalist system — i.e., avoid the extreme of coercion — and choose personally to care for and about others, and persuade them to do the same — i.e., avoid the extreme of neglect. Since caring for others is a highly subjective, individual concept, no form of coercive economic arrangement can bring it about; one can only allow it to occur.

In one sense capitalism is an extreme in that it is the opposite of coercion. In another sense, capitalism is simply a system that allows individuals to choose the middle ground between coercion and neglect. Socialism, on the other hand, is an extreme in both cases; it is the opposite of freedom and it is not a middle ground between coercion and neglect; it is itself coercion.

Attempting to find a middle ground between coercion and freedom is a bad idea.

Finding a middle ground between coercion and neglect is a good one.

Capitalism is the only system that allows for both of these. We should not stop advocating capitalism, nor should we stop caring about ourselves and others in peaceful, voluntary ways.

I find it no less disturbing when someone says both capitalism and socialism are extreme and they seek a middle ground than if someone were to say both love and cruelty were extreme, and they therefore seek a middle ground. Some vices or virtues are found in moderation; some are found in absoluteness. As Barry Goldwater famously said,

Extremism in the defense of liberty is no vice! — Moderation in the pursuit of justice is no virtue.

Capitalism is just. Socialism is unjust. There is no “messy middle.”

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