Professor Frederick Hayek’s chapter on housing and town planning in his book The Constitution of Liberty, published in 1960, has been republished by the Selsdon Group as a 90th birthday tribute this month.(*) The Selsdon Group was formed in 1973 “to ensure that the case for the free market economy has the fullest hearing within the Conservative Party”.
In an introduction to the reprint, Selsdon Group chairman Iain Mays says that while the Conservative Party has won three notable election victories by following policies which restore individual liberties, the Government has seen only limited success when it has pursued policies which have extended state control and regulation. Town planning is moving to the forefront of politics, Mays says, with increasing pressures for changes in land use. “The pressures are building for the Government to ‘do something’. If it tries to solve the problem by spending more taxpayers’ money, or by strengthening the stranglehold of planners, it will be on a hiding to nothing.”
In many areas housing is in short supply and business development is being stifled by rules and regulations which are grossly out of date, Mays argues. “It is surely time to reconsider old assumptions, many of which look increasingly stale. We must find new ways of letting the free market operate, without allowing the ‘administrative despotism’ of town planners or the ‘superior advantage of large units’ to work against the common good.”
Writing in the days of large-scale public rented housing and rent restriction, Professor Hayek argues that any group of people whom the Government attempts to assist through a public supply of housing will benefit only if the Government undertakes to supply all the new housing they will get. “Provision of only part of the supply of dwellings by authority will in effect be not an addition to, but merely a replacement of, what has been provided by private building activity.” He suggests that “cheaper housing provided by the Government will have to be strictly limited to the class it is intended to help” and “merely to satisfy the demand at the lower rents, Government will have to supply considerably more housing than that class would otherwise occupy.
“Such limitations of public housing to the poorest families will generally be practicable only if the Government does not attempt to supply dwellings which are both cheaper and substantially better than they had before; otherwise the people thus assisted would be better housed than those immediately above them on the economic ladder, and pressure from the latter to be included in the scheme would become irresistible, a process which would repeat itself and progressively bring in more and more people.”
In a curious passage, Professor Hayek observes that town planning is motivated by the desire to dispense with the price mechanism and to replace it by central direction. “Much of the town planning that is in fact carried out, particularly by architects and engineers who have never understood the role that prices play in co-ordinating individual activities, is of this kind. Even where it is not aimed at tying future developments to a preconceived plan which prescribes the use of every piece of land it tends to lead to this by making the market mechanism increasingly inoperative. The issue is therefore not whether one ought or ought not to be for town planning but whether the measures to be used are to supplement and assist the market or to suspend it and put central direction in its place.”
Professor Hayek also questions the need for extensive building regulations: “There are few fields in which government regulations offer the same opportunity for abuse or have in fact been used so much to impose harmful or wholly irrational restrictions on development and so often help to strengthen the quasi-monopolistic positions of local producers.”
(*) Housing and town planning. Selsdon Group, 170 Sloane Street, London SW1X 9QG.£5.25 inc p&p.
