This is a lovely little tale from Paul Ormerod in City AM:
Igal Hendel and Yossi Spiegel document the evolution of productivity over a 12 year period in a steel mini-mill, producing an unchanged product, working 24/7. The steel melt shop is almost the Platonic ideal from a national accounts perspective of output measurement. The product – steel billets – is simple, homogenous, and internationally-traded. There was virtually no turnover in the labour force, very little new investment, and the mill worked every hour of the year. Yet despite production conditions which were almost unchanged, output doubled over the 12 year period. As the authors note, rather drily, “the findings suggest that capacity is not well defined, even in batch-oriented manufacturing”.
This is a product of the point that Hayek made, that all knowledge is local. This increase in production from the same assets and workforce came not because anyone outside the plant had anything at all to do with it. There was no governmental either mandate, nor advice on how to do it. There was no technological breakthrough, no scientist involved, no research. Simply people getting better at doing something simply by doing that thing. And note that production doubled in 12 years just from this factor.
This isn't something you can do by plan nor is it something that can be accomodated in a plan: for obviously it's not true of all processes all the time. Another blow struck against the idea that the centre can possibly detail how an economy should work.
Yes, we do indeed still need the centre, there are some things that can only be done there. But as I've remarked before we should be using central government only for those things that both must be done and can only be done by central government.