From Phoenecia to Hayek to the ‘Cloud’: Why Central Planing Does Not Work

The crowd-sourced, wikinomic cloud is the new, new thing that all management consultants are now telling their clients to embrace. Yet the cloud is not a new thing at all. It has been the source of human invention all along. Human technological advancement depends not on individual intelligence but on collective idea sharing, and it has done so for tens of thousands of years. Human progress waxes and wanes according to how much people connect and exchange.

When the Mediterranean was socially networked by the trading ships of Phoenicians, Greeks, Arabs or Venetians, culture and prosperity advanced. When the network collapsed because of pirates at the end of the second millennium B.C., or in the Dark Ages, or in the 16th century under the Barbary and Ottoman corsairs, culture and prosperity stagnated. When Ming China, or Shogun Japan, or Nehru’s India, or Albania or North Korea turned inward and cut themselves off from the world, the consequence was relative, even absolute decline.

Knowledge is dispersed and shared. Friedrich Hayek was the first to point out, in his famous 1945 essay “The Use of Knowledge in Society,” that central planning cannot work because it is trying to substitute an individual all-knowing intelligence for a distributed and fragmented system of localized but connected knowledge. Click To Read More…

Mr. Ridley writes the Journal’s weekly Mind & Matter column. He is the author of “The Rational Optimist: How Prosperity Evolves” (Harper, 2010). This op-ed is adapted from his Hayek Prize lecture, given under the auspices of the Manhattan Institute, to be delivered on Sept. 26.