Romania’s economic problems justify frequent appeals to the state and its specialists. Judging by the results, many of them turned out to be poorly prepared: serious arguments for this are the deterioration of the economic situation and the ineffectiveness of the solutions applied by governments in recent years. Numerous ministries and other government bodies responsible for the economic sphere, and numerous “specialists” in them did not provide the financial and monetary stability and prosperity promised by the authorities. However, every time a new economic problem arises, it is presented as an accident to be solved by “competent” government bodies. The recent explanations for the unsatisfactory evolution of macroeconomic indicators (economic growth, budget deficit, public debt, inflation) are instructive examples in this regard. Apart from the anecdotal aspect of these attempts at justification, the problem is that the excessive state apparatus reflects a dangerous conception of the economic and social order.

At the forefront of the increase in the number of state bodies (the government and ministries, central institutions, regional institutions, prefectures, councils and county institutions, city halls and local institutions) and the number of employees, they have, in addition to interests, a mechanistic concept of society, according to which it is mechanical an object whose parameters can be known and used to ensure its proper functioning. Such a concept of society as a physical object is reflected, for example, in the language of some economists who talk about “calibrating” inflation, “stimulating” economic growth, “fine-tuning” the economy, etc. It has ancient roots in ideas about a society ruled by philosophers (Plato), scientists (Saint-Simon), teachers of the proletariat (Marx, Engels, Lenin), technocrats (the American engineer H.G. Smith, who coined the term), etc. Common to these concepts is the idea that elites possess knowledge that exceeds the freedom of individuals, that is, their judgments about how they want to live their lives.

The underlying illusion is that some human mind may possess all the relevant information on a given economic or social issue, and that its possessors make better use of it than the individuals involved in those issues. Management of such a society is equivalent to regulatory mechanisms, i.e. operational levers and operational control. In short, it is the handing over of power to social engineers or central planners (the “men of the system,” as Adam Smith called them) who drive society the way a car is driven, changing its direction and speed. The collapse of communism, where everything was determined by the state – from the distance at which corn is sown to the price of bread and the number of children a family should have – shows as clearly as possible that such a statement is unrealistic.

However, the hope for salvation through the state is shared not only by a large part of Romanian society, but also by a large number of modern economists – Romanian and foreign – who believe that economic science has ceased to be a social science, but has become an engineering discipline, the content of which consists of theorems and systems of equations. A telling fact in this regard is that several Nobel prizes in economics have recently been awarded to mathematicians (C. Granger, R. Aumann, R. Myerson, E. Maskin, who recently lectured at the University of the West, Timisoara). In general, in the current economic literature, econometric demonstrations and models are widely used to argue that the economy is an object that can be left in the hands of a few specialists.

Among others, two brilliant economists of the Austrian school, Ludwig Mises and Friedrich Hayek, emphasized the danger of such arrogance. Nobel laureate in economics (1974) Hayek, for example, gave a speech on the “claim to knowledge” in which he showed that society is a complex network of millions and millions of nodes and interactions, and that it would be a delusion to believe that that these elements and connections can be known and controlled by one human mind or by several enlightened heads. However, the scientist’s pride has many sad consequences: the goals cannot be achieved, if they can, without negative side effects. “The amazing purpose of economic science,” he wrote shortly before his death, “is to show people how little they know what they think they can plan.”

It does not follow from what has been said that experts are useless. However, this is not a fundamental problem, because the answer is clear: specialists are needed and extremely useful. The real problem is how society can make the most of the knowledge of its members – specialist or layperson – who are dispersed throughout the social body. The complexity of society and the division of labor inevitably requires large-scale recourse to specialists – computer scientists, neurosurgeons, economists, etc. -, but all these specialists, who undoubtedly contribute to specialization and, therefore, to the improvement of the efficiency of economic and social activity, are fundamentally different from specialists whom the state engages for the development and application of various state policies.

In a market economy, specialists are placed in decentralized organizational structures and do not work on a single project. Like government experts, they have limited information, but the price system acts as an indicator of the knowledge and skills that best meet the needs of members of society. A quality expert, regardless of his specialty, can get a high price (comfortable salary) on the labor market in exchange for the knowledge he has. A business that manages to effectively coordinate the services of the several specialists it has will thrive; however, that which allows mistakes risks disappearing.

Thus, competition is a dynamic process, and the expertise of state bodies and specialists, even if it exists, is essentially static. In the market, as well as in state institutions, specialists make mistakes, drive down closed roads, do not understand the facts of observation, etc. However, competition makes them responsible: adjustments to the price system signal errors, causing reduced profits or even losses. Erroneous decisions are sanctioned and canceled; on the contrary, effective methods and procedures are imitated by other participants in economic life. In the long run, through trial and error, imitation, etc., knowledge of what to do and what not to do is spread through society. Thus, competition is a “process of contextual discovery,” as Hayek put it.

In this context, the question arises about the place and role of the government. In Romania, this problem is particularly relevant, as the number of civil servants has increased significantly recently. Although it is no longer the comprehensive economic planning of communism, government action in the economy remains at a high level and is carried out through the enormous work of regulation (preferably through emergency decrees), authorization, control and supervision.

Therefore, Romanian society must solve this problem: either it locks itself in rules, controls, denunciations, etc., as during communism, or it is limited by basic legal principles and leaves the main areas of economic activity to individual initiative and action. The evolution of national debt is a clear symptom of the pernicious nature of government overreach. Numerous organs of the Romanian state have very broad prerogatives, which they often use poorly or not at all. However, they impede the functioning of the price system through regulation, permits, controls, exclusions, etc. Paradoxically, such a statist society is short-sighted.

Read the rest of the article and comment on Contributors.ro