It presents the frameworks through which you should start thinking politically. A key belief of yours is that planning should be modest — and in this you are in a noble line of thinkers that includes Friedrich Hayek, Karl Popper and so on. If, however, you move on from the pre-political framework to actual policies, it is not enough to invoke the Fatal Conceit. There is, after all, the opposite fallacy that we might call the Fatalistic Conceit. So how shall we find the right place between, on the one hand, the conceit of imagining that we can have a central regulated economy that is successful and, on the other, the opposite conceit that says: "Forget about piecemeal social engineering, as even the most modest plan that involves a large number of people is going to have unexpected consequences"?

RS: It's a really good question. I would suggest that one look at examples of continuous institutions which arrive at solutions to social conflicts and difficulties, not by planning but by solving them case by case and building up an accumulation of accepted principles. I take common law as my favourite example — and Hayek is brilliant on common law, essentially reiterating William Blackstone's original defence. It is a system of law that arises through generalising from individual conflicts for which the solution has been found, and then extracting principles that can be tested in the next conflict. 

One of the tragedies of this country is that this wonderful system has been overlaid with a European law that derives legal answers from abstract premises accepted at the top, rather than building up solutions from the bottom. In other words, EU legislation to me is an instance of the planning fallacy. One can see its danger by considering what's happening with the euro. There's a perfect example of something that has been imposed by a plan, built into a system of law, but with no plan B should the thing go wrong. Suddenly, like the French revolution and the Russian revolution, the plan comes up against the truth — and the truth is people, who do not on the whole follow the plans that others make for them.

RT: Your ten pages or so on the EU are devastating — they are brilliant. As a Europhile, it gave me a pause for thought. But if we could continue talking about the planning fallacy, I admit that I am sympathetic to the idea of the Invisible Hand, and the notion of social institutions being shaped from the bottom upwards, with correctives being applied top down where necessary. But if one took to the extreme what you were saying, we wouldn't have statutory law. At some point, it is necessary to move from common law to statute. One needn't go all the way to a Bill of Rights and the kind of thing that puts your hackles up, but I just wondered, where do you feel that the statutory law fits into your scheme of things? 

RS: Statutes are necessary because, as societies become increasingly complex, problems arise with which our ordinary day-to-day reasoning cannot deal. They need the advice of committees that try to see the long-range effect. Statutes in English systems of law are of two kinds: one is the result of those committees — that's the ideal statute — committees in the Commons and the Lords, the committees in the US Congress, which take a problem and solve it, taking into account as much information as possible.