The catastrophic state of the gas market in Australia demonstrates the failure of Labor’s new economics practically before the ink is dry on Jim Chalmers’s forthcoming manifesto in The Weekly. A piece in the Fin Review today tells the grisly tale. If you think we had problems with power prices last year, you ain’t seen nothing yet!

This illustrates a principle that Popper briefly expounded in The Open Society and Its Enemies, that is the distinction between using rules and orders for public administration.

The particular concern is the reasonable price provisions that are proposed.  Who is going to make the call on “reasonable prices”? 

Given the blatant return to central planning we can only fear the worst

Popper offered some telling comments  on the kind of legislative and administrative arrangements that are required for the state to intervene without allowing dangerous discretionary powers to be assumed by politicians or bureaucrats, especially when they are representing various special interests. Possibly influenced by correspondence with Hayek, Popper proposed that state intervention should proceed by way of protective laws and a legal framework instead of empowering organs or agents of the state to act as they see fit to achieve the ends laid down by the rulers at the time.

The introduction of piecemeal reforms permits the application of the method of trial and error to make adjustments in the light of experience in slowly changing the permanent legal framework. In contrast discretionary decisions by politicians and civil servants are short-term, often reflexive and opportunistic, and are not usually subjected to public discussion and scrutiny before they are launched.

The legal framework should be designed to be understandable and predictable, providing a degree of certainty and security in social life.  So in Popper’s view, when the framework is altered, allowances should be made, during a transitional period, for those individuals who have laid their plans in the expectation of its constancy.

Popper concluded “As opposed to this, the method of personal intervention [think of Presidential executive orders over the head of Congress in the US] must introduce an ever-growing element of unpredictability into social life, and with it will develop the feeling that social life is irrational and insecure. The use of discretionary powers is liable to grow quickly, once it has become an accepted method, since adjustments will be necessary, and adjustments to discretionary short-term decisions can hardly be carried out by institutional means. This tendency must greatly increase the irrationality of the system, creating in many the impression that there are hidden powers behind the scenes, and making them susceptible to the conspiracy theory of society with all its consequences – heresy hunts, national, social, and class hostility.”

To learn all about Popper’s critique of Marx, and other things

Listen to it. An audible version of a short guide to Popper’s The Open Society and Its Enemies.

Or read it on kindle.

Or read on paper in The Popper Guides.