Michael Polanyi

Society, Economics, and Philosophy

Wherever a number of units are formed to achieve a joint purpose by mutually adjusting themselves to each other, this mutual adjustment cannot be replaced by the directives of a superior authority.

This principle has, in its most general form, nothing to do with the claims of individual freedom, or indeed with human affairs. It applies to a sack of potatoes. Consider how ingeniously the knobs of each potato fit into the hollows of a neighbour. Weeks of careful planning by a team of engineers equipped with a complete set of cross-sections for each potato would not reduce the total volume filled by the potatoes in the sack so effectively as a good shaking and a few kicks will do. Passing on to human affairs, take a soccer team of eleven mutually adjusting at every moment their play to each other, and pit it against a team each member of which has to wait before making a move for the orders of a captain controlling the players by radio. Central direction would spell paralysis.

This is not to place mutual adjustment generally above central direction. These two principal ways of ordering human affairs have each their proper functions. A hierarchic order controlled from one centre is proper to a task which can be subdivided by stages into consecutive details. Consecutive stages are then assigned to descending tiers of authority, down to the individuals actually handling the task of the organisation at the base of the pyramid. This is how a million soldiers are directed to carry out a single strategic or tactical manoeuvre decided upon by their supreme commander. And in spite of modem attempts at mitigating its hierarchic structure, this is how the distribution of resources and tasks within an industrial enterprise must be organised. Any attempt to replace lines of authority, fanning out by successive stages from one centre, by allowing individuals to adjust themselves mutually for going into battle or for working a mine, would result in total chaos. Anarchists in Spain trying to dispense with the lines of command in armies and to run railways without time-tables have proved (if proof were needed) the madness of such ideas.

The impossibility of replacing the market by central direction is but a particular instance of the fact that no process of mutual adjustment can be so replaced. The Soviet experiment of 1920 was a sustained attempt to replace the market by central direction, and it did spell complete paralysis. The Soviets have never forgotten this lesson and never repeated the experiment. Their present system, which does function, cannot, therefore, be centrally directed—as it pretends to be—and our problem is to find out how it does function in reality.