The Privatization of Roads and Highways - Ludwig von Mises Institute

Congestion and Road Pricing 71
the modern city might well be “to end in disaster.” Certainly it is
heading in that direction at present. But the modern city is, if
anything, dedicated not to laissez faire, but to its very opposite.
Advocates of city planning, and of planning in general, ofttimes
make the facile equation between their views and economic
rationality. The implication is that a society which does not
utilize a comprehensive central plan is acting irrationally, leaving
important decisions to chance and inviting chaos. Nothing could
be further from the truth, however.
Economics as a science can trace its beginnings to the discovery
that men can coordinate their individual plans entirely without
benefit of one overall planning body empowered to direct the
whole society: it is precisely the function of the price system to
impart the bits of information, known only in the most decentralized
manner, to all participants in the economy. 35 One need
not explicitly add up all bales of cotton, for example, in order to
plan for cloth making, as the central planners would have it; by
far the best way to use all the relevant information known to people
in the cotton and cloth industry is to allow markets and prices
to exist in these areas, and then to rely on the profit motive to
insure that the two industries are coordinated with one another.
An incipient shortage in either area will call forth market behavior
which will tend to be self-correcting. There would be no need
to mention basic postulates such as these but for Owen’s complete
and utter misunderstanding of the function of profits. One
cannot, in a market setting, earn profits in any other way than by
producing “for people”: by producing, that is, what people are
willing to purchase.
Owen’s case for “new towns” as a means of avoiding traffic
congestion is likewise unconvincing. New towns cannot possibly
counteract traffic congestion if they are built and managed on the
identical principles that have caused this problem in the old
35 See the three chapters on the “socialist calculation debate” in F.A.
Hayek, “Socialist Calculation I, II, & III,” Individualism and Economic Order
(Chicago: University of Chicago Press, 1948), pp. 119–208.