The Road To Serfdom

While it’s true that economic freedom gives advantages to those born to wealth or who are otherwise lucky, freedom also gives people the chance to raise their circumstances by their own efforts. This is better than “a system where it is the will of a few persons that decides who is to get what” (134).

In a planned society, the state has power that no one in a free society can possess. In a competitive economy, the power of ownership is spread out across so many players that, even for the poor, “nobody has complete power over us, that we as individuals can decide what to do with ourselves […] And who will deny that a world in which the wealthy are powerful is still a better world than one in which only the already powerful can acquire wealth?” (136)

Controlling an entire economy is so complex and daunting that most planners would rather avoid dictating all the minutiae. Since every part of an economy affects every other, any change made by planners will cause other changes, to the point where the planners must finally reach ever deeper into people’s lives in order to guide their affairs.

At this point, people will notice that the bad outcomes arrive, not from luck or circumstance, as in the old competitive market system, but from the decisions of bureaucrats. People will learn that the only real economic power is political—that what matters is not what you can produce but whom you know in the government.

Whether planners seek for perfect equality, which is simple but impractical, or merely more equality, they must still navigate the innumerable moral quandaries presented by all the competing interests of their subjects. What is a just price? What is a fair wage? How much should be produced? There is no way to answer these questions, even in a socialist marketplace. Yet the planner must try, and the answers will decide the fates of all the workers. A free people would be unlikely to put up with these conditions.

Worse, coalitions that influence the planners will fight among themselves over which set of values should dictate the system of allocation. Ultimately, this decision will be arbitrary: “It is not rational conviction but the acceptance of a creed which is required to justify a particular plan” (142). To that end, the winning faction will try to indoctrinate everyone else into accepting their code of values, especially the superiority of their supporters’ claims on redistribution.

Systems of social uniformity inaugurated by the collectivists in Germany and Italy, those of “of organizing sports and games, football and hiking, in party clubs where the members would not be infected by other views […] political uniforms and military party formations”—were quickly adopted by fascists and Nazis (143). Their support came from disenfranchised office workers, small tradesmen, and petty officials, “a new underprivileged class against the labor aristocracy which the industrial labor movement had created” (144).

Fascists and Nazis, along with their followers, “had no illusions about the capacity of reason to decide all the questions” (146). The revolt within the socialist classes would be won by the largest and toughest group.

When campaigning for increased economic security through government planning, progressives tend to ignore the costs to their freedom. It’s one thing for a society to provide “security against severe physical privation,” but quite another to try to guarantee for all “the security of a given standard of life” (147).

Hayek supports government efforts to provide against severe want, acts of God, and major economic downturns. He even approves of government social and medical insurance. He draws the line, however, at “that special kind of planning which according to its advocates is to replace the market,” or “public works undertaken on a very large scale,” which require the heavy hand of government in the marketplace (148).

What Hayek counsels against is the effort to insure that workers’ incomes do not fluctuate, as they do in a market economy. This effort leads to loss of freedom to choose one’s field of work: “When a person’s income is guaranteed, he can neither be allowed to stay in his job merely because he likes it nor to choose what other work he would like to do” (150). Likewise, workers who perform very well do not receive merit pay.

Since workers cannot easily be let go under forced full employment, their mistakes tend instead to be punished as crimes. They become like slave labor to be whipped, or like soldiers in a regimented, military society.

Each time a sheltered group receives a raise, the other groups will complain: “with every grant of complete security to one group the insecurity of the rest necessarily increases” (153). Prices and wages may remain stable, but production and employment gyrate up and down. Thus, “the more we try to provide full security by interfering with the market system, the greater the insecurity becomes” (154). Finally, “[i]t is no longer independence but security which gives rank and status” (154).

The nations of the West seem to be preparing their youth for a similar future: enterprise is denigrated, profit is a bad word, and capitalism is condemned as a great evil. The lesson to heed is Germany, where the spirit of enterprise slowly was stifled to the point that “so large a proportion of her people did not regard themselves as independent but as appointed functionaries” (155). Liberty becomes too expensive, and too risky.

Each of us is unique, unusual, and sometimes even eccentric. One of our tasks in life is to find employment that suits our individuality. That involves risk, to be sure, but the option even to try is lost under collectivism.