Straight Shot, or Right Turn? The Road to Serfdom

It is very possible that were it not for his 1944 The Road to Serfdom, Friedrich Hayek would be relegated to the collection of economists history has mostly forgotten. Written in his spare time, it was an economist’s dabbling in subjects ranging from history to sociology to politics. Yet it ultimately launched Hayek’s second act. Today, The Road to Serfdom stands as his magnum opus; in it, he formulated a comprehensive and articulate intellectual defense against the totalitarian trends which he saw sweeping across Europe—trends from which the United States and Britain were by no means immune.

Because of its fame, The Road to Serfdom is exposed to vitriol from detractors and misinterpretation by adherents. Hayek does not shy away from the fact that the book is largely about politics. But it is not about politics in the way that we might think of such today. It is not a book about “ends”, about justifying and explaining which outcomes are best for a country or society. It is a book about “means”—specifically, the extent to which some means should be prohibited for the purpose of leaving many ends up to the individuals whom those ends most concern. In a word, it is a book about liberty and freedom. It is neither left-wing nor right-wing—but it is decidedly not authoritarian.

The Road to Serfdom found plenty of opponents among intellectuals in the West: the sort of people who imagined that their conceptions of an ideal society would surely be popular if only “those other people”, those uncultured masses, could be made to understand them. Heightening the irony was that the book received this reception while most of Europe was under the sway of either the Third Reich or the Soviet Union—both of which imposed their “ideal societies” on their respective countries.

We’re often taught today to consider communism a left-wing ideology, and fascism—including Nazism—a right-wing one. To Hayek, this was a distinction without a difference. Both were top-down, authoritarian nations, with economics managed by the state, morals policed by the state, and individual rights infringed by the state. Each persecuted groups of their own citizens based on prejudice; each constructed laws and moralities to compel all to bend the knee. Hayek saw the threat to Europe as not just a single totalitarian concept, but twin ones.

This certainly did not make him popular. Not only were the Soviets allies of America and Britain, but many prominent intellectuals in those nations were sympathetic to communism. Even further, many told him that as a prominent economist, he would likely attain great status under the very sort of command economy against which he was warning—as if he were some sort of white-collar class traitor. Yet those who actually experienced communism found in Hayek an intellectual lodestar, a counterpoint to the ideology with which they had been poisoned. In the foreword, written after the collapse of the U.S.S.R., Milton Friedman credits Hayek’s thoughtful refutation as “an important intellectual source of the disintegration of faith in communism behind the Iron Curtain.”

In the prefaces of subsequent editions, Hayek admitted that the imminent threat of totalitarianism in the West was much diminished—that the “century of socialism” likely ended in 1948. Yet he still sees relevance in the core thesis: that centrally-directed economies are rife with unintended, negative consequences. As just one example, he cites the postwar British government which extolled the differences between democratic and totalitarian planning—only to introduce peacetime conscription six months later.

Definitions of Various Political Terms

If you thought we would get through any book by Hayek without stopping to define terms, you were sorely mistaken. He offers, specifically to “the American reader”, a brief decryption of different political labels, which America has tended to misuse for the greater part of a century.

  • The term “liberal” means, to Hayek: “the original, nineteenth-century sense in which it is still current in Britain.” This entails support for individual rights and decisions, limitations on government involvement in all manner of things, etc. It is this word that Hayek accuses Americans of misconstruing, claiming that “it has been part of the camouflage of leftish movements in this country…that ‘liberal’ has come to mean the advocacy of almost every kind of government control.”
  • Conservatism is “paternalistic, nationalistic…power-adoring…often closer to socialism than true liberalism…bound to be a defender of established privilege and…the power of government for the protection of privilege.”
  • Hayek’s use of the word socialism should not be equated to mean a more egalitarian, economic-left society. When Hayek speaks generally of socialism, he speaks of authoritarianism, regardless of what sort of political ends to which it is directed. The Soviets were socialist because they purported a class revolution. The Nazis (or National Socialists) were socialist because they mobilized the German economy for war during peacetime. Hayek will often use the term “planning” or “planners” as an equivalent phrase for the sort of all-encompassing socialism he seeks to argue against.

With our bases covered, we are ready to examine Hayek’s masterwork in greater detail. As with his previous works, I will go chapter-by-chapter in summarizing key points & passages. Unlike my previous posts on Hayek, I will borrow his chapter titles for major section headers.

A quick note before we go on. I’ll admit that part of my reason for writing these posts is an “I read this book so you don’t have to” sort of approach. This is what I took with the other economics texts we’ve covered, including the early Hayek works. Hayek’s ideas on economic theory are important, but the original texts themselves are not exactly gripping. Because of this, I tried to provide the full thread of Hayek’s reasoning, which resulted in long posts and many thick paragraphs.

In this post, my intent is different. The Road to Serfdom is chock full of outstanding quotes on epistemology, liberty, human nature, and far more. I cannot possibly do it justice in a such a short form. If you, dear readers, will read only one book that I have covered in this economics series, let it be The Road to Serfdom. It will repay the time you spend on it. If you insist on the shorthand version, by all means read on. But I highly recommend you read the original.

Another procedural note. It has become fashionable in many cesspools of the Internet to censor words which are neither slurs nor vulgarities: words such as “Nazi”, “kill”, “die”, “Hitler”, etc. I will engage in no such squeamishness here. Such bald matter-of-factness is a far cry from glorifying death or promoting Naziism. The ideas behind Hitler’s regime were disgusting and deplorable; the use of the letters “zi” instead of asterisks is utterly irrelevant. Any hero knows that you cannot defeat evil if you fear to speak its name. Ask Harry Potter.

The Abandoned Road

Hayek opens with the lament that any “unexpected turn” away from the “continuous progress which we have come to expect” has a predictable consequence: “we naturally blame anything but ourselves.” Part of this is due to the stickiness of ideas—whether you call it status quo bias, confirmation bias, or something else. Indeed, although people will disagree on the cause of such ills, they will agree on one thing: that the consensus ideas held by people of good will “cannot have been wrong”.

Yet to hold such a belief would be a case of poor memory. Amidst the unifying clamor of the Second World War, Hayek reminds how quickly things had changed: “even before the war the values for which we are now fighting were threatened here [the U.K. and United States] and destroyed elsewhere.”

The Multinational Origins of Totalitarian Thought

Certainly during the war itself it was natural to think of Germany, Italy, even Russia as “different worlds”. But they were no such places. They were “products of a development of thought in which we have shared.” He points out that the strands of thought that led to Bolshevism and Naziism were not solely Russian and German ideas. John Stuart Mill’s On Liberty was inspired heavily by two Germans: Goethe and von Humboldt. Conversely, Naziism could trace its intellectual roots to, among others, a Scotsman and Englishman: Thomas Carlyle and Houston Stewart Chamberlain, respectively.

A Brief History of Individualism

Individualism, to Hayek, stemmed both from Christian and classical thought. It entails “the respect for the individual man qua man, that is, the recognition of his own views and tastes as supreme in his own sphere, however narrowly that may be circumscribed.”

This philosophy, which lay largely dormant during the Dark and Middle Ages, reemerged in the Renaissance. This began the emergence of a society “where men could at least attempt to shape their own life [sic].” It was no coincidence that individualism grew as commerce grew—and no coincidence that “marvelous growth of science” grew as individualism grew. The result: “Wherever the barriers to the free exercise of human ingenuity were removed, man became rapidly able to satisfy ever widening ranges of desire.” Thus the returns to liberal individualism were far beyond expectations.

Critics of individualism, of course, lamented the expansion of human flourishing which accompanied it. August Comte was one such critic; Hayek referred to Comte as “that nineteenth-century totalitarian”. Comte, in turn, lambasted liberalism as “the revolt of the individual against the species.”

The “Inevitable” Decline

With the advent of progressivism in the late 19th and early 20th centuries, came a sister phenomenon: historicism. Historicism takes the suspense out of the future by taking contingency out of the past. Things happen because of inevitable “societal” trends, not because of fortune, valor, or divine providence.

Liberalism makes use of the same contingency which historicism rejects: the “spontaneous forces of society” can be found “capable of an infinite variety of applications.” Yet even as this spontaneity bore fruit over decades and centuries, that fruit became “taken more and more for granted.” Here was the seed of discontent with liberalism: it offered “little more than a share in the common progress—a progress which…was no longer recognized as the result of the policy of freedom.” Thus the “very success of liberalism became the cause of its decline.”

The challenge to liberalism, which began as progressivism and morphed into more authoritarian forms of socialism, came from well-being people who proposed “a complete remodeling of society.”

The Great Utopia

It wasn’t at all a surprise to Hayek that any form of socialism would require a refutation—or at least rejection—of liberal ideas. Tracing the history of socialism through the reaction of too-moderate liberalism following the French Revolution, he laments that “it is rarely remembered now that socialism in its beginnings was frankly authoritarian.” Much of this was indeed accepted by early socialists: “freedom of thought they regarded as the root-evil of nineteenth-century society.”

The connection between socialism in equality was recognized by Alexis De Tocqueville—but this shows socialism in stark contrast to democracy. Tocqueville’s words: “while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.”

Differing Definitions of Freedom

Rising socialism resulting in changing definitions in freedom, including an emphasis on “economic freedom”, lack of which would render useless the political freedom that liberty offered.

The original freedom was thought of as “freedom from coercion”, the freedom to act (or refrain from acting) as one chose.

Socialism’s definition of freedom was “freedom from necessity”, an overthrowing of the “despotism of physical want”. Hayek recognized that such a freedom was “merely another name for power or wealth.” He traces in footnotes the intellectual history of such fallacious equating of liberty with power. Therefore the debate between personal liberty and social planning is a debate about what definition of freedom should prevail.

Fascism and Communism: Warring Brothers

Even staunch American communists like Max Eastman (who befriended Lenin) gave harsh testimonies decrying the atrocities of Stalin’s regime in Russia. Eastman went so far as to describe Stalin’s regime as fascist rather than Marxist—but yet admitted that it remained a socialist one.

Communism and fascism are two sides of the same coin, two extremes on the political horseshoe that very nearly touch each other. As Peter Drucker put it: “Fascism is the stage reached after communism has proved an illusion, and it has proved as much an illusion in Stalinist Russia as in pre-Hitler Germany.”

The ideology consistency between the two factions of evil was displayed in the ease of converting a young communist into a fascist—and vice versa. Indeed, Hayek mentions many 1930s Anglo-American students who “return from the Continent uncertain whether they were communists or Nazis and certain only that they hated Western liberal civilization.”

Therefore the violent struggles in interwar Germany between Marxists and Nazis were fought in competition “for the support of the same type of mind.” It was the “liberal of the old type…with whom they had nothing in common and whom they could not hope to convince”, who was the real enemy of both.

In February, 1941, with the mortal invasion of Russia being planned, Hitler claimed in a public address that “basically National Socialism and Marxism are the same.”

Misguided, Not Malicious

Hayek, who dedicated The Road to Serfdom “To the Socialists of All Parties”, readily admitted that many western advocates for socialism did not see socialism and freedom as diametrically opposed. Therefore socialists in Britain and America may indeed have had the best of intentions—but their intentions, Hayek insists, matter less than the results which their preferred policies would ultimately have.

The claim Hayek intends to support: “That democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something so utterly different that few of those who now wish it would be prepared to accept the consequences.”

Individualism and Collectivism

Another Clarification of Socialism

Hayek again clarifies the definition of socialism as he employs it: it is not a concept of ends, such as “ideals of social justice, greater equality, and security”, but rather the means directed toward any ends: “the abolition of private enterprise, of private ownership of the means of production, and the creation of a system of ‘planned economy’.”

Given this approach, he recognizes a key argument against liberalism is that the “liberal plan, according to them [modern planners], is no plan.” But this is not to suggest that liberalism by nature must embrace a “dogmatic laissez faire attitude.” A liberal program requires planning as well, but on a narrower scope than a socialist one, specifically a “carefully thought-out legal framework…in order that competition should work beneficially.”

Competition, Within Limits

Competition, with some predictable and even-handed restraints, is the key economic virtue of liberalism, and this “precludes certain types of coercive interference with economic life, but it admits of others.” This admits that certain regulations are not necessarily distortive if they “affect all potential producers equally and are not used as an indirect way of controlling prices and quantities.”

Hayek is even prepared to concede that competition-based economies can coexist with “an extensive system of social services”, but only if this system “is not designed in such a way as to make competition ineffective over wide fields.” This leaves some room for interpretation—it is up to clear-eyed observers to reckon whether, say, America’s health care system passes this test.

Further, in cases where “it is impracticable to make the enjoyment of certain services dependent on the payment of a price, competition will not produce the services.” This leaves a “wide and unquestioned field for state activity.” One suspects that the more staunchly libertarian students of Hayek would find such sweeping admissions concerning, perhaps even endangering to the rest of his thesis. But again, it is up to good judgment—generally a scarce commodity—to apply such a principle thoughtfully.

The Monopolist’s Irony

Hayek’s point on competition is that a true liberal approach is to embrace it and supplement it where necessary. By contrast, a socialist approach is one of “displacing it altogether.”

It was ironic that Hayek observed, as the first step away from competition, not a government-directed economy but a “syndicalist or ‘corporative’ organization of industry, in which competition is more or less suppressed but planning is left in the hands of the independent monopolies of the separate industries. This is the inevitable first result of a situation in which the people are united in their hostility to competition but agree on little else.” Such a picture sounds like a harsh callback to America’s “Gilded Age” of the late 19th century, and Hayek in 1944, confirms that such a state “has already existed for some time.”

The problem with such a situation as that it becomes quickly untenable, as the independent monopolists’ planning would “produce effects opposite to those at which the argument for planning aim.” At such a stage, there are only two effective options: either a return to competition through “anti-trust” actions or “the control of the monopolies by the state.” Big business must either be dispersed or nationalized.

Planning vs. Competition

It’s a further critical point that planning and competition are “alternative principles used to solve the same problem, and a mixture of the two means that neither will really work.”

Hayek ends the chapter with another qualification: his arguments against planning are limited to the field in which planning purports to replace competition—again, he admits of some “very necessary planning which is required to make competition as effective and beneficial as possible.”

The “Inevitability” of Planning

This chapter opens with a quote: “We were the first to assert that the more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become.” This idea aligns with the argument that the complexity of the modern word has rendered liberalism and individualism obsolete. The speaker in the quote? Benito Mussolini.

Hayek considered it “revealing” that most proponents of central planning saw it as a necessity, “that we can no longer choose but are compelled by circumstances beyond our control to substitute planning for competition.” In recent decades, such refrains have become almost routine. We must abdicate this or that portion of our individual spheres for the sake of “climate change”, “social justice”, or, most perversely, “protecting our democracy”.

Bigger Isn’t Always Better

One argument for this inevitability is sheer economies of scale, under which a large firm can produce more efficiently, and therefore production should be consolidated and ultimately overseen by government. Yet “this argument singles out one effect sometimes accompanying technological progress; it disregards others which work in the opposite direction.”

Hayek further notes that monopolies are often “attained through collusive agreement and promoted by public policies.” Indeed, if the argument that technical advances created natural monopolies were true, then one would expect such monopolies to develop first in the most technically advanced nations. Instead, it was in “then comparatively young industrial countries, the United States and Germany” where these monopolistic syndicates were most prevalent.

We aren’t surprised, of course, by Hayek’s return to the price mechanism as the coordinator of individual interests under a competitive system. Yet it is this very coordination that fails when competition is abandoned.

Newer Isn’t Always Better

Another argument given in favor of planned monopolies is regarding new technologies: that “it will be impossible to make use of many of the new technological possibilities unless protection against competition is granted.” The obvious answer to such an argument is that “if a new technique for satisfying our wants is really better, it ought to be able to stand up against all competition.”

Therefore, we should not rush to subsidize new technologies simply because they are new. Hayek admits this will have some short-term losses in innovation, but will also “avoid…the necessity of making future developments dependent upon the knowledge which particular people now possess.” By not coddling non-economical technologies in the short run (even desirable technologies), Hayek argues we can “leave room for the unforeseeable free growth.”

It’s easy to fail to appreciate the seriousness of Hayek’s reasoning here, and a paragraph deserves to be quoted at length:

“While it is true, of course, that inventions have given us tremendous power, it is absurd to suggest that we must use this power to destroy our most precious inheritance: liberty. It does mean, however, that if we want to preserve it, we must guard it more jealously than ever and that we must be prepared to make sacrifices for it. While there is nothing in modern technological developments which forces us toward comprehensive economic planning, there is a great deal in them which makes infinitely more dangerous the power a planning authority would possess.”

The Engineer’s Dream

Hayek then asks why so many technical experts in various fields appear so in favor of government coordination of the economy. His suggestion: technical specialists see planning as a means of realizing a vision of society dominated disproportionately by consideration of their own technical specialties. To the civil engineer, every valley is just waiting for a bridge to be built across it. To the busybody, a neighbor’s yard is an HOA violation waiting to happen.

Such “specialist” bias is not limited to any single vocation. Despite their differences, “all know that their aim can be fully achieved only by planning—and they all want planning for that reason.” Therefore, the movement in favor of economic planning “unites almost all the single-minded idealists…The hopes they place in planning, however, are the result not of a comprehensive view of society but rather of a very limited view and often the result of a great exaggeration of the importance of the ends they place foremost.”

Planning and Democracy

Collectivism, generally speaking, requires a “definite social goal” at which the collective organization of society is to be directed. The types of collectivization (communism, fascism, etc.) differ in what these goals are—but are all “totalitarian in the true sense of this new word”.

Socialism Requires Government-Mandated Morality

To describe such an end as merely “general welfare” or “the common good” is fine in principle, but too broad, complex, and subjective to derive policies from. Thus it all comes down to how such a platitude is interpreted, how the dictators rank all possible ends from most to least desirable. Such an exercise “presupposes, in short, the existence of a complete ethical code in which all the different human values are allotted their due place.”

Totalitarian systems, therefore, are by necessity moral regimes. In organizing the economic lives of all its citizens, the government is managing millions of real-life Trolley Problems in real time.

The problem here is that many questions of morality—like the Trolley Problem—have definitive answers. Further, over millennia the moral code common to all individuals within a single group or society has grown less strict and less specific. This does not mean that we are necessarily amoral, but that the “common moral code” has retreated to make way for more and more differences in moral outlook between individuals. Gone are the days when the Scythian tribes put to death any of their number who recognized Greek festivals to the gods. By this token, then, the imposition of a universal and government-sanctioned moral code is a “complete reversal” of the human story to date.

Individualism’s Limits on Morality

Individualism need not assume that “man is egoistic or selfish or ought to be.” Instead, individualism simply asserts that “it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs.” This reasoning reduces the possibility of omnipresent, unified moral theory to an epistemic fantasy.

This does not mean that individualism precludes pursuit of “social ends”. Under individualism, such ends are the result of a shared goal among like-minded individuals who cooperate for that purpose. But this is voluntary.

Democracy and Socialism: Can They Coexist?

Because of the disparate opinions inherent in democratic politics, the pursuit of planning by democratic states is fraught with risks. This is usually when a nation “embarks upon a course of planning which in its execution requires more agreement than in fact exists.” Therefore the true ends at which such planning aims will not appear clear—or at least not to everyone—and will instead be described as “common welfare” and other such trite sayings. For a democracy to commit to central planning without establishing some agreement on the ends to be pursued “will be rather as if a group of people were to commit themselves to take a journey together without agreeing where they want to go.”

Even if it were unanimously demanded that a democratic government have some comprehensive plan, the agreement on a particular, specific plan will be rendered impossible. Therefore, “the inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions…The convention grows that if efficient planning is to be done, the direction must be ‘taken out of politics’ and placed in the hands of experts.”

The result of this is a form of parliamentary abdication, by which the democratic government confers sweeping powers to more-or-less permanent bureaucracies; this process is largely already complete in the United States today.

The price of democracy is that “possibilities of conscious control are restricted to the fields where true agreement exists and that in some fields things must be left to chance.” Further: “when it becomes dominated by a collectivist creed, democracy will inevitably destroy itself.”

Democracy is a Means, Not an End

As Hayek saw it, liberty was the highest possible end. Democracy was only appropriate or desirable as a means to that same end. Indeed: “our generation talks and thinks too much of democracy and too little of the values which it serves…A true ‘dictatorship of the proletariat,’ even if democratic in form…would probably destroy personal freedom as completely as any autocracy has ever done.”

Rule by the people therefore is not a check against arbitrary power; how could it be, given the capriciousness of human judgment?

Planning and the Rule of Law

Rule of Law (capital-L Law) refers to the consistency of laws not as applied to citizens but to the government itself. The effectively means “government in all its actions is bound by rules fixed and announced beforehand.” It matters less what these rules are than it matters how they are applied: they must be done so consistently.

By very definition, therefore, Rule of Law is incompatible with any form of central planning, as planning “cannot tie itself down in advance to general and formal rules which prevent arbitrariness.”

A nation under the Rule of Law circumscribes the actions available to its government by being a nation under Law. This creates predictability for individuals who seek to make their own decisions. Further, having such laws established ex ante is critical: a government cannot be under Rule of Law while employing a “legislate-as-you-go” approach. “Where the precise effects of government policy on particular people are known,” such policy by default cannot be impartial.

Equality Before the Law

The 14th Amendment to the U.S. Constitution requires equality before the law. Passed in a context of civil rights reform after the Civil War, this stipulation also makes socialism illegal in the United States. How?

Economic planning requires both flexible policymaking and subjective choices regarding the welfare of different groups. Imagine an economic planner seeks to increase energy production, and can offer a subsidy to either oil fields or coal mines. For the planner to enact a subsidy favoring one industry over another, it is promulgating, by law, an inequality between the two, thereby demolishing equality before the law.

Equality as a term has been so mangled into concepts such as “equality of opportunity”, “equality of outcome”, and “equity” that it has largely turned into just another “common welfare”, the sort of word we as Americans can agree on without taking time to define just what it should mean. “To produce the same result for different people, it is necessary to treat them differently.” This is what pursuit of equality of outcome will ultimately require: a forfeiture of legal equality.

By extension then, in a society under Law, the concept of privilege should have no link to the ownership of any form of property. When the same rules apply to all, the success of a few cannot be said to be a result of their privilege, and to suggest so “is depriving the word ‘privilege’ of its meaning.”

Economic Control and Totalitarianism

Socialists who admit that economic control requires total dictatorial power often still assert this would apply “’only’ to economic matters.” But there are no ends which are “only” economic, and all ends are, to a degree, “economic.” “There is no ‘economic motive’ but only economic factors conditioning our striving for other ends.” Therefore, to be controlled in one’s economic sphere is to have one’s hierarchy of ends, and all possible means to them, under control by a central planner.

Further, planners cannot evaluate qualitative personal factors, which will “effectively bar groups of people from entering many trades…A rather plain girl who badly wants to become a saleswoman, a weakly boy who has set his heart on a job where his weakness handicaps him…if they value the position sufficiently they will frequently be able to get a start by a financial sacrifice and will later make good through qualities which at first are not so obvious.” Under planning, however, “the strength of their desire for the job will count for very little.” Big Brother, alas, does not care about “hustle”. It is not fervent savants of underwater basket weaving that the People’s Republic requires—it is simply further human fodder for the uranium mines.

Who, Whom?

Competition is not respecter of persons, any more than justice is. To Hayek, this is an absolute positive, not a weakness that needs remedied by a system where “the will of a few persons…decides who is to get what.” Indeed, though “the man who starts poor” will always be at a disadvantage in pursuit of wealth, “the competitive system is the only one where it depends solely on him and not on the favors of the mighty.” Ironically, Max Eastman, the same disillusioned ex-communist from earlier, identified Marx as the first to draw the connection between market competition and democratic freedom—but without ever suggesting the dismantling of markets would result in loss of those freedoms.

Inequality is virtually inevitable in any society. But such inequality “is undoubtedly more readily borne…if it is determined by impersonal forces than when it is due to design.” While many socialist regimes seek to impose some idea of “distributive justice”, no such movement has gained support by promising complete equality. And the proposition of “greater equality” rests on the same imprecise, shaky ground as the “common good”.

Many socialists in Hayek’s day (and our own) saw education as a means to instill demands for greater equality in the people. Yet this, to Hayek, is beyond the ken of what education is supposed to mean. “Surely we have learned that knowledge cannot create new ethical values, that no amount of learning will lead people to hold the same views…It is not rational conviction but the acceptance of a creed which is required to justify a particular plan.”

Besides, many socialist movements begin as “closely bound up” with the interests of a single group. In such a case, it is easier for this movement to achieve common goals in terms of the ideal society. Yet as the movement gains support from other groups, a “tug-of-war between the various pressure groups” is inevitable. This is essentially class struggle within the socialist society. This is because the “new middle class…clerks and typists, administrative workers…schoolteachers…” was not quite accounted for by socialist theory. These professions are not blue-collar, but they are not quite bourgeois either. Yet their lot relative to the industrial workers deteriorated as the industrial workers exacted gains in various labor movements. At this point, the ideals of “workers of the world, unite” appealed less to these lower-middle-class socialists who saw themselves being left behind. The result was that socialist movements like fascism and Naziism were driven more by these middle-class groups than by the “labor aristocracy” of industrial workers.

Security and Freedom

“In a country where the sole employer is the State, opposition means death by slow starvation. The old principle: who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat.” –Leon Trotsky

In economic terms, there are two types of security:

  • “Security against severe physical privation.” To some extent, this is a subjective standard, but Hayek estimated that the level of general wealth in the West was likely sufficient in the 1940s to achieve this level of security for all. But this comes with necessary questions, “particularly the important question whether those who thus rely on the community should indefinitely enjoy all the same liberties as the rest.”
  • “Security of a given standard of life, or of the relative position which one person or group enjoys compared with others.” This demand for security leads to planning “designed to protect individuals or groups against diminutions of their income.” Such planning negates the fact that competition and innovation will render many skills obsolete. Further, to protect such skills for a few is to pass on this cost to the many, “whose security is thereby necessarily diminished.” In practice, the seeking of this sort of security for different groups renders others increasing insecure, and “in consequence the value attached to the privilege of security constantly increases…until in the end no price, not even that of liberty, appears too high.”

As the “standard of living” form of security is more accessible, incentives to productivity will break down, and new incentives of employment must replace them. To this end, society—all of society—must be organized as a military force, with “the security of the barracks”.

And again: “If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole.” Thus, the politics of handing out privileges of security ultimately creates more urgent need for security from those left out. Ultimately, security will be seen as preferable to freedom.

The worship of security has been further advanced by education, particularly the “deliberate disparagement of all activities involving economic risk and the moral opprobrium cast on the gains which make risks worth taking but which only few can work.” The same “socialist teaching” argues that “to employ a hundred people is represented as exploitation but to command the same number is honorable.”

Benjamin Franklin’s quote continues to ring true: “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.”

Why the Worst Get on Top

Nazi Germany and Soviet Russia both established their regimes with the help of thuggery. Hitler had the Stormtroopers and later the SS. The Soviets had the Cheka and the NKVD. This has led to the argument among socialists that “the most repellent features of the totalitarian regimes are due to the historical accident that they were established by groups of blackguards and thugs.” But are such tactics a bug or a feature of totalitarian systems?

Totalitarianism usually begins by a popular demand for a strong leader willing to “get things done.” In interwar Germany and Italy, this was brought about by the refusal of democratic socialists to abandon their own democratic ideals. Ultimately, disappointment with the lack of progress toward socialism encouraged militant socialists to take matters into their own hands.

In general, Hayek claims that moral differentiation is greatest among the intelligent and highly-educated—that is, more intelligent people will be less likely to agree with each about morality and values than less intelligent people will be. Because of this, “the largest group of people whose values are very similar are the people with low standards…If a numerous group is needed, strong enough to impose their views on the values of life on all the rest, it will never be those with highly differentiated and developed tastes—it will be those who form the ‘mass’ in the derogatory sense of the term, the least original and independent.” Therefore, a dictator gains power by capturing “the docile and gullible, who have no strong convictions of their own.”

These masses, however, are not suitable assistants for the supreme leader. To truly be a cog in the totalitarian machine of state, one must be “completely unprincipled and literally capable of everything”—this, after all, is what Big Brother requires. “There is thus in the positions of power little to attract those who hold moral beliefs of the kind which in the past have guided the European peoples.” The SS was not evil because Himmler led it—Himmler led it because it was evil.

The End of Truth

While not peculiar to totalitarianism, propaganda has a more profound effect in totalitarian systems. The consequences of totalitarian propaganda “undermine…the sense of and the respect for truth.” This is by necessity, as there are no abstract ex ante principles that constrain what a totalitarian government can do or say. Planning authorities will therefore have to constantly justify their own arbitrariness, “make the people believe they are the right decisions.” By this process, the “pseudo-scientific theory”, the whims of a dictator, turn into ideological dogmas and “the official creed.”

One suspects George Orwell read The Road to Serfdom as inspiration for his 1984. A “most effective” means of inducing acceptance of new values is to dress them up as old and familiar ones, suggesting that they were not “properly understood or recognized before.” To this end, people must “use the old words but change their meaning.” The result of this bastardization of words such as “freedom”, “liberty”, “social”, “justice”, “equality”, etc. is that people will say the same words while meaning radically different things, without stopping to realize just how these changes came about. This eventually “makes any real communication [between different viewpoints] impossible.”

Although “it is not difficult to deprive the great majority of independent thought.” Yet some will “retain an inclination to criticize…Public criticism or even expressions of doubt must be suppressed because they tend to weaken public support.”  To this end, official doctrine cannot be confined to values, but just venture into the realm of “facts and theories.” The result of this is that “the theory of relativity [Einstein’s] is represented as a ‘Semitic attack on the foundation of Christian and Nordic physics,’” or, in more modern parlance “math is racist.”

The effect of all this on the intellectual climate is “the spirit of complete cynicism as regards truth…the disappearance of the spirit of independent inquiry and of the belief in the power of rational conviction.” Hayek warns that most people are already too far gone, but this is an impersonal fact and should remain one: “In any society freedom of thought will probably be of direct significance only for a small minority. But this does not mean that anyone is competent, or ought to have power, to select those to whom this freedom is to be reserved.”

The Socialist Roots of Naziism

National Socialism was not an intellectual flash in the pan, but rather “the culmination of a long evolution of thought.” The result of all this was a philosophy that saw much to admire in Marx’s concepts of socialism, but found Marxism too liberal and internationalist.

In 1915, Werner Sombart’s Merchants and Heroes (published in German) drew a contrast between the “commercial” character of the British and the martial character of the Germans. He displayed contempt for the former and praise for the latter. He exhorted the Germans to glory in the present war, as it had reminded them of their roots as “a people of warriors.”

Johann Plenge expanded on these ideals in 1789 and 1914: The Symbolic Years in the History of the Political Mind. Plenge compared the 1789 “ideal of freedom” to the 1914 “ideal of organization.” His thesis is that organization is “the essence of socialism,” by which he divorces Marxism from any insistence on individual liberty. It was Plenge’s ideas which perceived the clamoring among German technical experts “for the centrally planned organization of all aspects of life,” a demand that would be taken up by their Anglo-American peers.

The development of German nationalism increasingly disparaged liberalism and market capitalism as English relics, incompatible with an organized, efficient state. In this sense, socialism developed into the “Prussian idea” of every citizen an employee of the state. This concept was the intellectual fodder for Naziism to rise.

The Totalitarians in Our Midst

However, the ideas that contributed to such violent socialism on the Continent also traced their roots to thinkers in the U.S. and Britain. Professor E.H. Carr claimed that Allied victory in World War One was intellectually Pyrrhic, as Russia and Germany were “borne forward on the tide of the twentieth century…striving to build up the world in larger units under centralized planning and control.” Carr reserved contempt for the liberal economic ideas which he delegated as “nineteenth-century ideas”. Carr supported the thesis of the German economist Friedrich List, who claimed that arguments for free trade were only a policy applicable to the interests of Britain in the 1800s.

Dr. C.H. Waddington’s The Scientific Attitude showed how rationalism had finally overstayed its welcome. His central claim is that “the scientist is qualified to run a totalitarian society [because] ‘science can pass ethical judgement on human behavior.’” Yet this was further made ironic by the fact that such science-worshipping literature in the early 20th century was full of “familiar cliches and baseless generalization about ‘potential plenty’…while the serious studies of the same problems are conspicuously neglected.” Science cannot simply be offered as a mystical cure-all for the ills of society; it lacks the means. There was a time when scientists recognized their limitations.

Material Conditions and Ideal Ends

The incredible improvements in the human condition since the dawn of time were largely the result of individuals submitting to a spontaneous market order. There is a danger, then, in sacrificing the achievements from “the co-ordination of individual efforts by impersonal forces.”

Unemployment, undesirable as it is, is not so terrible that we should pay any price to get rid of it. This essentially challenges the entire argument of Keynesian economics; the economy cannot be managed scientifically.

Noble as it may sound to insist on a “decent world” regardless of economic viability, this is in fact “merely irresponsible.” The only way to achieve any sort of decent world is to “improve the general level of wealth.” Nor is there any virtue in the unselfishness of socialism which demands sacrifices from others: “We are neither entitled to be unselfish and someone else’s expense nor is there any merit in being unselfish if we have no choice.”

The Prospects of International Order

In the final chapter, Hayek turns to the subject of socialism or economic planning on a global scale.

Hayek admits that some of this is possible on condition of homogeneity: “So long as it is a question of helping people whose habits of life and ways of thinking are familiar to us…we are usually ready to make some sacrifices.” But the idea even of an economic union in Europe is fraught with problems: “Who imagines that there exist any common ideals of distributive justice such as will make the Norwegian fisherman consent to forego the prospect of economic improvement in order to help his Portuguese fellow, or the Dutch worker to pay more for his bicycle to help the Coventry mechanic, or the French peasant to pay more taxes to assist the industrialization of Italy?” Just how well such economic integration efforts are proceeding in Europe, it is probably too early to tell.

One argument advanced in favor of such international socialism is the “fatal delusion that…the community of interest of the working classes [of all nations] would readily overcome the differences which exist between the ruling classes.” Yet working classes are not a monolith, and international economic planning would require decisions that benefit workers in some nations at the expense of those in others.

Instead, therefore, international bodies should be relegating to “keeping order and creating conditions in which the people can develop their own life.” A rules-based international order is not untenable, because “while nations might abide by formal rules on which they have agreed, they will never submit to the direction which international economic planning involves.”

Conclusion

We must recall Hayek wrote The Road to Serfdom in the 1940s, a time in which the continued survival of liberalism and individual freedom was very much in question. By 1944, when the book was published, the Allies appeared in little danger of losing the war, but the perils to liberty were by no means diminished. One totalitarian state emerged among the victors and would dominate Eastern Europe for another fifty years. Further, many British and American intellectuals entered the uneasy peace having inherited a great deal of the authoritarian principles against which the war had ostensibly been fought. Even U.S. President Franklin D. Roosevelt included in the Anglo-American Atlantic Charter four fundamental freedoms, which included the “freedom from want”—that is, economic security.

It is insufficient to consider our nation safe from totalitarian rule simply because we lack a powerful and proximate totalitarian enemy. The threat of totalitarianism remains as long as we are willing to concede philosophical ground to those who believe that any “rational” design of human affairs can produce desirable outcomes. Thus, the argument against socialism is an argument against epistemological arrogance, against the idea that the mind of man is sufficient to direct all the affairs of mankind. This impulse to “play God” was what Hayek would call “the fatal conceit”.

As he closes The Road to Serfdom: “If in the first attempt to create a world of free men we have failed, we must try again. The guiding principle that a policy of freedom for the individual is the only truly progressive policy remains as true today as it was in the nineteenth century.”

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *