Failures of Central Planning: California City, Calif.

The moral philosopher and political economist Adam Smith wrote in his work Theory of Moral Sentiments about a “man of system.” This conceited man believes in a plan for both government and society, and intends to enact it as if he were moving pieces on a chessboard. If only all of the pieces worked, acted, and moved as he demands, society would be perfect. The man of system “is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it.”

The reality eventually kicks in as he discovers that his hand is not the only mover at work, “but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it.” [sic]

The truth is that central planners can never establish a more efficient society than individuals themselves. When free people voluntarily exchange their time, energy, and capital, a much more prosperous system rises through what is known as “spontaneous order.”

Unfortunately, through human nature, people tend to be terrified of freedom and desire a central planners for their lives (along with the rest of society). Inevitably, through hubris, there are always those willing to accept this responsibility. We can look at the most damaging examples in history, such as the Soviet Union or Communist China, where central planning killed hundreds of millions of people in the twentieth century alone. Though, without fail, even when societies are centrally planned through voluntary mean, the “man of system” fails in his goals.

An example of this is California City, California. Located about 100 miles outside of Los Angeles, this former utopia-to-be is currently the third largest city in the entire state by area. However, the total population today is only around 13,000.

In 1958, a college professor Nat Mendelsohn bought 82,000 acres in the Californian desert with the intention of California City someday becoming a metropolis to rival Los Angeles and New York City. Across the land Mendelsohn planned out different sections, neighborhoods, and streets.

To this day, dirt roads throughout the area can be navigated by GPS. The city blocks are filled with undeveloped plots of dirt. Street signs are planted properly with no other amenities around for miles. Mendelsohn hoped to sell these plots one at a time, expecting flocks of people to come and settle in his utopia.

Not nearly as many people arrived to participate in his plan as he expected. Many who did show up were disappointed, some feeling duped, since land value did not increase as expected.

Even though the city voted to become officially incorporated in 1965, by 1969 Mendelsohn and his investors bailed on their plan. Much of the land was repossessed by the state of California when owners stopped paying property taxes on it. Instead of having a population of several million, this massive failure of central planning had only reached the population of several thousand.

Today, California City is a successful small town, but no utopian paradise. Nat Mendelsohn attempting to be a “man of system” met massive failure. Luckily, it was through voluntary exchange, and the only ones on the hook were Mendelsohn and the investors. But it goes to show, that central planning cannot work because it is a flawed belief.

People are free and independent creatures with individual passions, desires, temptations, flaws, and strengths. We don’t fit like bricks into society and value everything subjectively. However, through pursuing our own self interests, we can engage in “spontaneous order” and create a society much greater and far more superior than anything the “man of system” can imagine.


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