The Free Market 21, no. 6 (June 2003)
"The enemy we're fighting is a bit different from the one we had war-gamed against," said General William Wallace after the first week of fighting in Iraq had not gone as planned. The comment speaks to a truth of which we are reminded in wartime: the military is a government operation that undertakes its activities according to a plan cooked up by nonmarket actors. The bureaucrats are denied access to prices, the signaling devices that serve as the basis for assessing the success or failure of any particular project on the market.
As such, even the best military plans, even those that lead to a declared victory, will partake of features similar to that of any form of central planning. The reason wars can tend to appear successful whereas socialism never does is due to the goal of the war plan (destruction rather than wealth creation) and the means (firepower proving more accomplished at destruction than efficiency), both of which can be accomplished by governments with enough resources at their disposal.
War gaming may be the newest term for the static trial runs that government officials use as proxies for a real world that always surprises them. If we want to call war planning a "social science"—that's how the Pentagon thinks of it—what we have here is a classic error: the belief that government policy and its effects can be modeled in the same way as the physical sciences.
But as Ludwig von Mises says, "in the field of purposive human action and social relations no experiments can be made and no experiments have ever been made." To the extent that models deal with real conditions, all data used in the model are derived from history. The future is something else entirely. Conditions change. Variables and change cannot be isolated from other variables and changes.
In the games planners play, the model builder wins by outsmarting an opponent programmed to react in predictable ways. The conclusion is decided by the assumptions built into the system. The more variables in the game, the harder it becomes to win. As for truly unpredictable and unknown variables, the kind we associate with acts of human will, they cannot be modeled. If this is true in peace, it is all the more true in war.
The games of central planners have nothing to do with the demands placed on the market in the real world. Entrepreneurs must discover the values and priorities of consumers through a real-world process of trial and error. Divvying up capital between competing ends requires property titles, the ability to exchange, and the freedom to choose. The fact of exchange generates market prices that permit profits and losses to be calculated, and hence guide production.
Central planners who attempt to replicate this process within the structure of an equation or a static game simulation are fooling themselves. They are merely playing a game called "market," and not truly engaging the real world. The game called "war" is no better at preparing central planners for real-life economizing than the game called "market." What's especially interesting is how attempts at central planning display a series of highly typical features.
First, they overutilize resources. At the outset, the war planners anticipated that Iraq could be won with a few strategically placed bombs, and a massive display of human will combined with plenty of psychological operations. Faced with the sudden reality that the first round of plans didn't work, the response is wholly predictable: more of the same.
The same approach is used in domestic economic policy. When one "stimulus plan" fails to revive an economy, the government's approach is to spend ever more money or drive interest rates ever lower. In war, the approach is to drop more bombs and send more troops.
We are familiar with this line of thinking from the proponents of the welfare state. But the same is true for the warfare state. The rationale behind this approach in war is to convey to the enemy—whether that enemy is a recession or a foreign foe—that planners really mean business.
In a world of liberty and peace, the economy is always working to do more with less. No entrepreneur has the luxury of just throwing more money and labor at a problem. When the enterprise is not profitable, the capitalist seeks to economize and reassess.
The exact opposite impulse drives the socialist planner or war planner. Instead of cutting, capital and labor are overutilized, while the underlying plan remains unchanged, with the result of increased squandering and wealth destruction. The defining mark of overutilization is the failure to account for costs, both in lost physical resources and human lives.
Second, the planners tend to not account for the possibility of error. The planners who put together the war on Iraq, for example, expected the troops to be treated as liberators, but someone planning the Iraq war forgot to consider the reality that has dominated the entire gulf region for 10 years: the hatred engendered by deadly sanctions.
The sanctions compromised the image of America as a force for liberation. But the war planners turned a blind eye to this, even after the September 11th terrorists specifically cited the sanctions as an underlying source of their hate. This is the big picture that the war planners missed. They failed to critically examine the possibility that the Iraqis will resent the invaders even more than their own government.
Third, planners nearly always fail to anticipate the will to resist. They believe that once people have the merits of the plan explained to them, they will go along with it. The people are the clay and the planners are the masters, so their hubristic minds believe. But the truth is that people are not automatons and there are other forces at work besides the will of the planning regime.
People resist central economic plans and they resist wartime plans too. The usual response of the planner when faced with resistance is to liquidate those who dare not go along. Once these meddlesome troublemakers are eliminated, they believe, the results of the plan will begin to show. In the Ukraine in the 1930s, and Cambodia in the 1970s, that was pretty much everyone.
Fourth, the planners typically refuse to admit error and rather shift the blame. Wallace's open admission that something was amiss was highly unusual. They usually stick by the plan and admit no error. The public might actually be more supportive if the central planners were willing to admit error. But that is not the way of the planners. They believe that they must posture as gods on earth while insisting on total deference.
Fifth, planners assume that the world is theirs for the making. The planners are loath to admit that there are forces beyond their control, forces like culture, economics, and the inherent limits of power to accomplish its aims. The people who planned the war on Iraq dismiss suggestions that perhaps not everyone in Iraq is going to be overjoyed at the prospect of gaining freedom through bombing, destruction, and martial law administered by a US military dictatorship. They dismiss the possibility that resources to impose the plan may eventually run out.
Looking to the future, there are many people in Washington who have opinions on how best to manage a post-war Iraq. They have probably "gamed" this scenario too, and come up with the idea that Iraq needs a military dictatorship for a time. But the advocates of dictatorship always assume that they will be in a position to make all the decisions. They consider the viability of their own plan and not the possibility that someone else's plan will prevail.
Finally, planners tend to persist in ignorance. F.A. Hayek described the voluntary society as one of continual learning. We might describe government planning as one in which ignorance persists no matter what. In war as in socialism, the world would be a much safer place if the planners would stick to their games and leave real life alone.
Llewellyn H. Rockwell, Jr. is president of the Ludwig von Mises Institute, and editor of LewRockwell.com (Rockwell @mises.org).
