When F.A. Hayek moved to Britain in the early 1930s from his native Austria, he was struck by what he saw as the same attitude among British intellectuals as he experienced among German thinkers during the 1920s. There was an extreme skepticism toward the market economy and capitalism, coupled with great optimism for planning and the promise of socialism. Advance the calendar almost a century, and Hayek might hear the chorus of Alexandria Ocasio-Cortez, Elizabeth Warren, and Bernie Sanders humming the same reprise. His ears may even perk up a bit when harmonies emanate from right-leaning folks like President Trump, who dabble in central planning.
British intellectuals in the ’30s such as Harold Laski and William Beveridge were dedicated social reformers. They despaired over the social costs they identified with unbridled capitalism resulting from monopoly power, externalities, macroeconomic volatility, mass unemployment, and income inequality. E.F.M. Durbin’s 1934 Labor Party Policy Committee “Memorandum on the Principles of Socialist Planning” promised that a planning system could eradicate the social ills emerging from the market’s inherent weaknesses. But a critically important point to understand is that from the perspective of these intellectuals, they were socialists in their economics precisely because they were liberal democrats in their politics.
Hayek heard all this before in the coffee houses of Vienna and throughout German-language periodicals. By the late ’30s, he decided to offer a warning to his sincere colleagues and fellow liberal democrats. “The Road to Serfdom” was the result of that effort.
He sought to demonstrate the incompatibility of socialist economic policy with the rule of law and democracy. Key to his argument is that in a democratic liberal society, there’s no overarching single scale of values. Society cannot achieve a single hierarchy of ends we all agree on. In fact, the great strength of democratic liberal societies is a multiplicity of values that are respected among diverse and often divergent, even distant, individuals. Liberal democratic society is a pluralistic society.
There are severe limits of agreement on the ends within a functioning democratic society, and thus we must restrain ourselves to an agreement on the means by which we interact, resolve conflicts, and come eventually to live better together with one another than we ever could live in isolation. Democracy in this sense is a way to relate to one another as dignified equals—not simply as a set of voting procedures such as one person, one vote majority rule.
In “The Road to Serfdom” Hayek gets to this point when he argues that “whoever controls all economic activity controls the means of all our ends and must therefore decide which are to be satisfied and which not.” So, Hayek warns his friends—“those socialists of all parties,” to whom he dedicates the book—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, many will not believe until the connection has been laid bare in all its aspects.” To lay bare the consequences for liberal democracy of socialist economic policy is what Hayek set out to do not only in “The Road to Serfdom” but throughout his career, culminating in “The Fatal Conceit.”
It’s important to understand, however, that his argument was never a slippery slope argument as critics often suggest. Hayek’s economic analysis of socialist economic planning reveals that policies employed to achieve impossible goals will lead to dire unintended consequences. Crucially, once faced with such frustrating feedback, it’s up to those in positions of power to decide to continue down their predetermined yet flawed road, or to change path.
The book is not deterministic. It’s a warning that, if heeded, means that the road where the danger to our freedom lies can be avoided. For many years, the UK and Nordic countries were headed down that road, but their leaders changed course—in part due to Hayek’s influence and the failures of the Soviet Union. For many, these lessons still inform their stance on government today, such as when former Swedish Prime Minister Carl Bildt recently chided Berne Sanders’ socialist policies.
Yet if recent trends are to be believed, intellectuals, policy makers and the youth in the United States and the UK are turning their backs on Hayek’s warning. Angered by two decades of international conflict since the 9/11 attacks, the discontent with globalization, and the outrage of the global financial crisis—which robbed individuals and communities of their livelihood and in many instances their dignity—the capitalist system is perhaps more under attack today than any time since the 1930s.
While nobody is calling for comprehensive central planning and the abolition of private property, calls ring out for government involvement in the economic and social system at every stage, and the establishment of large-scale policy initiatives to address societal priorities. The Green New Deal was introduced only shortly after the Council of Economic Advisors produced a report on the opportunity costs of socialist policies.
In any public policy discussion, we should insist that the debate move from the level of abstract desirability to the concrete level of feasibility. If we really want progress, we must earnestly scrutinize the array of feasible outcomes that are economically viable. Such moves in public discourse require a discipline in intellectual affairs that seems almost out of reach at this time of division and discord.
But this challenge is certainly less daunting than the one Hayek took up when he began his “Abuse of Reason” project and released “The Road to Serfdom” 75 years ago. A fresh reading of the book today provides a calm and sober analysis of economic and political systems, not at all prone to hyperbole as Hayek’s critics contend. His argument is a subtle and nuanced one examining the situational logic of comparative institutional arrangements and the impact on productive specialization and peaceful social cooperation among free and equal people.
Hayek still speaks to us today about the nature of democratic ways of relating to the rule of law, the structure of government, the role of public policy, and the promise of an international order of cosmopolitan liberalism. The book may be 75 years old, but its essential message is as young and fresh as any work in political economy and social philosophy that you will read this year.
Peter Boettke is Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU. This article first appeared at AIER.org.