Sunday, October 11, 2009

Review of Hayek's The Road to Serfdom

The Road to Serfdom
Friedrich August von Hayek
University of Chicago Press, 1944 (original publication)
240 pages

One of the most important and influential books of the 20th Century, von Hayek's The Road to Serfdom makes two profound arguments relating to the differences between classical liberals (modern libertarians) and statists (cultural conservatives and modern American liberals). The first of these arguments is to show the bankruptcy of notion that the government can improve upon the free market by "rationally organizing" resources. The second, and more disturbing, thesis is that setting up a truly organized society, economic or otherwise, can only be accomplished via totalitarian methods. While I have a few quibbles about Hayek's willingness to redistribute wealth to set up a "minimum standard," the case made against the statist philosophy is amazingly strong.

Rather than outlining or summarizing the book, I will present a few of the ideas that I found surprising and worthy of deeper thought. That isn't to say the aspects I present were the only parts worth knowing; the book as a whole was presents a hell of a wallop that just doesn't exist in isolated chunks. Nevertheless, these ideas stood out to me. It's not often a book presents novel ideas to me; it is even rarer for a book to present as many questions to seriously ponder as this one did.

Hayek points out that the success of liberalism (again, classical, not modern American) may very well bring about its own demise. The freedom to innovate and profit from that innovation inspired untold entrepreneurs and inventors into action; we saw a correspondingly amazing growth in technology and wealth at all levels of society from the end of feudalism until the time this book was written. However, this amazing increase in wealth has made us unwilling to accept any imperfection, as we see it, in society. Our skyrocketing wealth, combined with the Enlightenment ideals of rationality and unbounded potential, leads us to conclude we could solve problems like poverty and inequality of wealth if we could only organize society more rationally. Rather than acknowledging the success of the system, critics will point out that not everyone has risen equally, though even that implicitly acknowledges that everyone has indeed risen. Imagine a group of starving peasants suddenly having enough meat to eat, but rather than being happy they become incensed over the fact that some get filet mignon and others only get a rib eye.

Democratic governments are particularly libel to this problem. No matter how much they may gain by a capitalist system, only a few will rise to the top (by definition, only a few can be at the top). The vast majority who have not gained as much, though in absolute terms they have indeed gained much, will be jealous. Certain politicians and other "enlightened" men proclaim to be able to fix this inequality if they could but "organize" society along more "rational" grounds that they supposedly can see. However, even if these reformers obtain a majority in government, the details of how best to organize society will lead to infighting. One may wish to expand railroads (his constituency has lots of them); another, farm work (her's is teaming with farmers); another, computers (Silicon Valley's man). The conservative and classical liberal representatives will vote against all of them, while the statists will only support the reorganization that helps their constituents. In this way, despite having a majority, the statists will not be able to use democratic institutions to impose a state run economy. The danger lies in that the people, still jealous and still demanding more, quickly become fed up with parliaments and democracy. They will turn to a few "experts" or a single man and will give them whatever authority they need to impose their will and organize society as they see fit. Society is now in the hands of a dictator or an oligarchy, individual rights (which would impede the "reorganization") are thrown out, and what more is needed for a totalitarian system?

The main argument of statists is that government can provide more for us because they are more efficient than multiple companies competing against each other. Well, nothing is more efficient than a dictatorship. Democracy is not efficient and the American Republic was built with the intended purpose of having a slow government that would need to compromise at every turn, hardly the tool for reorganizing society. Our armed forces are not a democracy; wars are much, much simpler than the economy; why, then, should we believe a government controlled society will be democratic?

The Rule of Law cannot coexist with statist philosophy. The Rule of Law is applying equally the rules (whatever they may be) to everyone. This exists to give everyone in the society a clear notion of what is acceptable and what actions will bring about costs. For statism, however, costs can be inflicted upon individuals irrespective of those individuals. An example: a pig farmer is forced to give up some of his money to give to the apple pickers. The pig farmer did nothing to warrant this act, save for having money. The pig farmer can do nothing to avoid this act, save for having money. The pig farmer, then, has no incentive to work hard or to produce, as the pig farmer has absolutely no reason to believe he'll enjoy the fruit of his labor. Rule of Law is based on a passive system of rules that does not make any distinction between people save whether they have transgressed a rule or not; statism is an active system controlled by people (with all of the faults of greed, corruption, etc.) who arbitrarily take from some.

Interestingly, Hayek shows that socialism and its offshoots have to be nationalistic. Think of it this way: if the government of the United States decided to become internationally socialist, that government would have to send the wealth of this nation over to Africa, Asia, and the tribes of the Amazon. The people here would not stand for it! Socialism is Nationalist and we should remember the threat of National Socialism well.

From page 228: "Exclusive control of an essential commodity or service (as, for example, air travel) is in effect one of the most far-reaching powers which can be conferred on any authority. And as there is scarcely anything which could not be justified by 'technical necessities' which no outsider could effectively question...there is little possibility of controlling that power....this would inevitably become the worst of all conceivable rackets..." Food for thought for those seeking to put the Federal Government in charge of our health care. The government could put the screws to any opposition in the future by denying them coverage. This does not have to apply to the current administration (though it could). Unless we are certain no administration in the future will use this power inappropriately, we should not grant such excessive powers to the government. The burden now rests on those supporting such an expansion of government powers to show no government will indeed abuse this massive power.

These are but a few of the amazing questions that are raised against the statist philosophy by Hayek's book. I am fairly well versed in both political theory and libertarian thought, but this book was still worth the time and effort to read. His analyses on statism's influence on Fascism and Communism is indispensable for anyone who wishes to know what those two ideologies really were, as is his warning to those who would collect too much power in the hands of any person for any goal. Despite being written over 60 years ago, The Road to Serfdom remains remarkably relevant today, a testament to Hayek's ability to move beyond the policy issues of his day to examine the philosophical underpinnings.

What Others Have Said

George Orwell, 1944, The Observer

Ludwig von Mises Institute

Matthew Lymburner, 2008,

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