Why Central Planning Doesn't Work

By Christina Grattan


As Socialism idealizes central planning in the name of equality, it is important to address that it is not compatible with our nature as human beings. Central planning is “the process by which key economic decisions are made or influenced by central governments.” 1 This means that the government could seize the means of production and distribution resources, which goes against the very reason humans create. 

Rose Wilder Lane, a journalist, explains, “They are a hundred million individuals with a hundred million backgrounds, characters, tastes, ambitions, and degrees of ability” 2. The self-evident fact is that at the core, we are individuals with our own desires, needs, passions, interests. It would be inevitable for the government to accurately predict each and every one of these needs, meaning that someone would lose out. 1 

Central planning would also be dangerous since we live in a world of scarcity, “economists mean that resources such as raw materials, capital goods, and labor have many alternative possible uses but can only fulfill a very finite number of ends…If resources are instead squandered on less urgent needs, poverty and squalor will result.” 2

To trust that the government will fruitfully provide for the people means that the government must know exactly what we are thinking, what we are going to buy, and how we would use our money in theory. And if resources are not unlimited and the government, in reality, does not know exactly what each of us truly desires, and it will likely misallocate and not know what should be produced to meet our needs. 1

Ludwig von Mises, a brilliant economist, sums up this idea in his provoking question, “Should each member of society plan for himself, or should a benevolent government alone plan for them all?” 3

But central planners do not see human beings as individuals as Lenin described Communist Russia as, “The whole of society has become one office and one factory”. Rather, Lenin did not realize how humans are naturally inclined to choose the products and services they want. 3 Instead, he looked at humanity as a homogenous mass that needs to be cradled by the government This questions how any individual would be satisfied being reduced to a collective, with the same ambitions. Central planning would evoke the death of the individual to decide for themselves, which would erase the spirit of humanity itself. This is why central planning would not work since the individual would have no autonomy over their life. 

The capitalist system is the only means of guaranteeing the sovereignty of the individual. Mises believed that “[Capitalism]  is subject to the supremacy of the consumers. the consumer is king, is the real boss, and the manufacturer is done for if he does not outstrip his competitors in best-serving consumers” (Mises, 2009, p. 20).

In capitalism, there would be no oppressor such as the state dominating their life, since the individual would have the liberty of making their own economic decisions. In a centrally planned economy, these fundamental rights would be sacrificed to the state.


1. Hayek, F.A. (2007). The Road to Serfdom. University of Chicago Press. pp. 113, 126

2. Lane, R. (1954). Give Me Liberty. Caxton Printers. p. 32

3. Mises, L. (2009). Liberty & Property. Ludwig Von Mises Institute. pp. 24, 25

About Christina

Instagram: @christinagoldieruby

Christina is currently a junior political science major at Biola University, who has a genuine heart to help the world. Her strong faith in God drives her to pursue justice to create a freer and better world, which starts with fighting the lies of socialism. In her free time, you can find her reading books to inform herself, discussing politics, and making frozen yogurt runs.

#Socialism #America #Capitalism


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