Hayek, Arrow, and the Problems of Democratic Decision-Making
Originally published in Journal of Public Finance and Public Choice
This working paper explores the views of Hayek and Arrow in relation to the effects of voting on social welfare.
Both Hayek and Arrow provide arguments about the inability of the voting process to yield a coherent social choice. Hayek demonstrated that planning is incompatible with democracy; its coherence requires dictatorship. Arrow demonstrated that voting fails to produce rational social choices; social rationality can be assured only when there is a single will. In both, the substitution of a single will for the many wills is ruled as incompatible with a free society. Because market socialism relies upon either the existence of a meaningful, stable social welfare function or democratic decision-making to allocate resources, the complimentary arguments of Hayek and Arrow imply that market socialism requires dictatorship to achieve coherence. This working paper explores the views of Hayek and Arrow in relation to the effects of voting on social welfare.
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