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Hayek Was Right, Welfare Is False Philanthropy at Its Finest

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In chapter 14 of The Road to Serfdom, “Material Conditions and Ideal Ends,” Hayek focuses on the path forward now that the Second World War was coming to an end. Specifically, he explains that calling on the state to coercively act in the name of the “greater good” is not a moral act worthy of praise.

Employment

When the book was written in 1944, the country was anxious to see what America’s post-war economy would look like. One of the primary concerns in this regard was the issue of employment. Two million soldiers were returning from war. They needed work. What would be the effect on wages and growth?

Hayek writes:

That no single purpose must be allowed in peace to have absolute preference over all others applies even to the one aim which everybody now agrees comes in the front rank: the conquest of unemployment.

Keynesian economists claim that war is actually supremely beneficial to the national rate of employment. And on paper, this might appear to be true.

In times of war, and especially when a draft is instituted, employment does tend to rise. But this is due largely to the fact that when a draft forces many into military service, they are now considered “employed.” For many young adults who were otherwise unemployed prior to the war, being drafted bumped these men up to “employed” status.

Similarly, WWII saw an influx of working women. The Rosie the Riveter era of women entering the workforce also had significant impacts on the rate of employment. There was also a higher demand for jobs in the sectors that were part of what Eisenhower called the Military Industrial Complex.

As Hayek says:

One of the dominant features of the immediate postwar situation will be that the special needs of war have drawn hundreds of thousands of men and women into specialized jobs where during the war they have been able to earn relatively high wages. There will, in many instances, be no possibility of employing the same numbers in these particular trades.

But now that the war was coming to an end employment was going to once again become an issue. The soldiers coming back from war who were not mentally or physically fatigued would be looking to re-enter the workforce immediately. With less of a demand for weaponry and other war-related products, the employer’s demand for jobs would decrease at the same time the workforce market was increasing. Not only were veterans looking for work, but there were now also more women competing for some of these same jobs in the workforce.

This caused many to turn to the government to provide enough jobs to keep the employment rates high. Books like William Beveridge’s Full Employment in a Free Society asserted that the free market was not capable of creating full employment and so it was the state’s job to provide this to all individuals.

Hayek comments on this belief of “full employment” saying:

It is, in fact, in this field that the fascination of vague but popular phrases like “full employment” may well lead to extremely shortsighted measures, and where the categorical and irresponsible “it must be done at all cost” of the single-minded idealist is likely to do the greatest harm.

And while the answer for the country’s unemployment woes was not to be found within state bureaucracies, the prospect of massive unemployment was still a major problem in the post-WWII era, as Hayek explains:

There will be an urgent need for the transfer of large numbers to other jobs, and many of them will find that the work they can then get is less favorably remunerated than was true of their war job. Even retraining, which certainly ought to be provided on a liberal scale, cannot entirely overcome this problem. There will still be many people who, if they are to be paid according to what their services will then be worth to society, would under any system have to be content with a lowering of their material position relative to that of others.

But, most people do not want to lower their material positions, even after surviving a war. And as we see happen today, when this material status is in any way threatened, labor unions and activists began calling for a raising of wages to help correct this great “injustice.” But this can not be done with coercion threatening our liberties.

Hayek says:

If, then, the trade unions successfully resist any lowering of the wages of the particular groups in question, there will be only two alternatives open: either coercion will have to be used (i.e., certain individuals will have to be selected for compulsory transfer to other and relatively less well paid positions) or those who can no longer be employed at the relatively high wages they have earned during the war must be allowed to remain unemployed until they are willing to accept work at a relatively lower wage.

And, as many free market economists have tried to warn in our current day, there is the failure on the part of many of these labor activists to recognize that by artificial raising wages, other inflationary measures must be taken as well.

Yet to raise all other wages and incomes to an extent sufficient to adjust the position of the group in question would involve an inflationary expansion on such a scale that the disturbances, hardships, and injustices caused would be much greater than those to be cured.

And while the state could use its power to waive its proverbial magic wand and do its best to force full employment, it does not usually turn out as many would hope:

There will always be a possible maximum of employment in the short run which can be achieved by giving all people employment where they happen to be and which can be achieved by monetary expansion. But not only can this maximum be maintained solely by progressive inflationary expansion and with the effect of holding up those redistributions of labor between industries made necessary by the changed circumstances, and which so long as workmen are free to choose their jobs will always come about only with some delays and thereby cause some unemployment: to aim always at the maximum of employment achievable by monetary means is a policy which is certain in the end to defeat its own purposes.

False Philanthropy

Those calling on the state to provide jobs and higher wages to all individuals have a tendency to believe that they are standing on moral high ground. These people believe that forcing individuals to meet their “charitable” expectations is only right. Nothing could be further from the truth. Forcing “ideal” behavior through coercion does not make people moral. People will do almost anything when forced.

Touching on this, Hayek writes:

What our generation is in danger of forgetting is not only that morals are of necessity a phenomenon of individual conduct but also that they can exist only in the sphere in which the individual is free to decide for himself and is called upon voluntarily to sacrifice personal advantage to the observance of a moral rule.

An individual is not acting out of personal responsibility when he or she is forced to do something. Instead, whatever act is being forced is neutral, serving only the ends of the state and no moral ends that will serve to benefit the individual in any way. If someone held you at gunpoint and demanded that you give five dollars to a homeless individual, that would not make your “donation” moral, but it would make the gun holder’s actions immoral.

Hayek says:

Outside the sphere of individual responsibility there is neither goodness nor badness, neither opportunity for moral merit nor the chance of proving one’s conviction by sacrificing one’s desires to what one thinks right. Only where we ourselves are responsible for our own interests and are free to sacrifice them has our decision moral value.

When acting out of fear of state retribution, we are not acting of our own volition, we are simply doing what we have to do to stay out of a prison cell.

Hayek writes:

Responsibility, not to a superior, but to one’s conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.

And after explaining that coercion is not on par with authentic philanthropy, Hayek laments the direction society is headed. As has been the theme throughout the last few chapters of this book, Hayek worries that by abandoning the English concepts of liberalism, we are quickly approaching collectivism.

That in this sphere of individual conduct the effect of collectivism has been almost entirely destructive is both inevitable and undeniable. A movement whose main promise is the relief from responsibility cannot but be antimoral in its effect, however lofty the ideals to which it owes its birth.

One of the primary elements of classical liberalism is the focus on self-reliance and personal responsibility, without which, a free society cannot truly exist.

It is true that the virtues which are less esteemed and practiced now—independence, self-reliance, and the willingness to bear risks, the readiness to back one’s own conviction against a majority, and the willingness to voluntary cooperation with one’s neighbors—are essentially those on which the working of an individualist society rests. Collectivism has nothing to put in their place, and in so far as it already has destroyed them it has left a void filled by nothing but the demand for obedience and the compulsion of the individual to do what is collectively decided to be good.

Looking to the Future

Hayek always tries to end his chapters on somewhat of a hopeful note. But at the end of this chapter, you can sense the sadness in his writing. Hayek, who as we have seen was a bit of an anglophile was sad to see the English liberal traditions fading from popular opinion.

Hayek has continuously written about his deep respect for the classical liberal tradition that derived from England. He truly believed that holding vigorously to these ideas was the right antidote to economic servitude.

If we are to succeed in the war of ideologies and to win over the decent elements in the enemy countries, we must, first of all, regain the belief in the traditional values for which we have stood in the past and must have the moral courage stoutly to defend the ideals which our enemies attack.

And closing the chapter with a rather frank statement that reflects the political rhetoric of the day, Hayek says:

Not by shamefaced apologies and by assurances that we are rapidly reforming, not by explaining that we are seeking some compromise between the traditional liberal values and the new totalitarian ideas, shall we win confidence and support. Not the latest improvements we may have effected in our social institutions, which count but little compared with the basic differences of two opposed ways of life, but our unwavering faith in those traditions which have made England and America countries of free and upright, tolerant and independent people is the thing that counts.

England Inches Down the Road to Serfdom

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Hayek has spent the last few chapters of The Road to Serfdom explaining the roots and rise of totalitarian governments. In chapter twelve, Hayek highlighted prominent Marxist theorists who would later lay the roots for the German National Socialist party.

Hayek’s whole purpose in writing this chapter, “The Totalitarians in Our Midst,” serves as a warning to his readers. The mass death of WWII had devastated and shocked the world. But unless individuals were able to identify how totalitarianism had taken over Europe in the first place, they would be ill-prepared to prevent it from happening again.

It was for this reason that Hayek uses chapter thirteen to demonstrate to his readers that a similar perversion of truth was already occurring among England’s intellectual elite as had occurred in the leadup to the Third Reich.

Individualism in Danger

England, which, as explained in the last chapter, represented the origin of individualist thought, had steadily been heading down a similar road as Germany had in the decades prior to WWII. While it may have taken a different form, when looked at from the perspective of totalitarianism in all things economic, England, as it stood in 1944, had taken swift strides away from liberalism and instead found itself headed in the direction of complete central authority.

It is for this reason that Hayek’s writing sounds so urgent in this chapter. As fresh as WWII was in the minds of all people, Hayek is urging them to not become complacent. It was not enough to mourn the recent past; they needed to proceed vigilantly and look to the enemies in their own nations.

As Hayek writes:

Probably it is true that the very magnitude of the outrages committed by the totalitarian governments, instead of increasing the fear that such a system might one day arise in more enlightened countries, has rather strengthened the assurance that it cannot happen here.

But for those who pushed away any suggestion that England was in anyway comparable to Germany, Hayek says:

And the fact that the difference has steadily become greater seems to refute any suggestion that we may be moving in a similar direction. But let us not forget that fifteen years ago the possibility of such a thing’s happening in Germany would have appeared just as fantastic…

But the real problem, as Hayek has stressed throughout the entire book, is that the threat to economic liberty comes from both sides of the political spectrum.  

…but the Germany of twenty or thirty years ago to which conditions in the democracies show an ever increasing resemblance…We have already mentioned the most significant—the increasing similarity between the economic views of the Right and Left and their common opposition to the liberalism that used to be the common basis of most English politics.”

And most importantly, especially to Hayek, was pointing out how England was already well on their way down a most dangerous path.

England, or rather, Great Britain, is the birthplace of liberalism in many capacities. It is where many of the founding philosophies of the American Revolution came from. These same principles of contract law and property rights served as the roots of free market economics and also came from England. So it was all the more troubling for Hayek to see his this nation going astray.

How far in the last twenty years England has traveled on the German path is brought home to one with extraordinary vividness if one now reads some of the more serious discussions of the differences between British and German views on political and moral issues which appeared in England during the last war.

Men like Lord Morley or Henry Sidgwick, Lord Acton or A. V. Dicey, who were then admired in the world at large as outstanding examples of the political wisdom of liberal England, are to the present generation largely obsolete Victorians.

Although few people, if anybody, in England would probably be ready to swallow totalitarianism whole, there are few single features which have not yet been advised by somebody or other.

E.H. Carr

Beginning his accusations against those contemporary English figures who were having a dramatic impact on the political climate, Hayek writes:

There are, perhaps, few other instances in contemporary English literature where the influence of the specific German ideas with which we are concerned is so marked as in Professor E. H. Carr’s books on the Twenty Years’ Crisis and the Conditions of Peace.

Explaining why he views Carr (1892-1982) as dangerous to the future England, Hayek writes:

How little difference he is able to see between the ideals held in this country and those practiced by present-day Germany is best illustrated by his assertion that ‘it is true that when a prominent National Socialist asserts that ‘anything that benefits the German people is right, anything that harms them is wrong’ he is merely propounding the same identification of national interest with universal right which has already been established for English-speaking countries by [President] Wilson, Professor Toynbee, Lord Cecil, and many others.

What is interesting, at least to me, when reading this chapter is the tone Hayek takes. Hayek’s entire purpose for writing this book is to warn others not to repeat history, and yet here it is repeating itself and going almost completely unnoticed by the people. You can almost hear the frustration in Hayek’s voice when he condemns Carr’s dismissal of the 19th-century liberalism.

Does Professor Carr, for example, realize, when he asserts that “we can no longer find much meaning in the distinction familiar to nineteenth-century thought between ‘society’ and ‘state,’ that this is precisely the doctrine of Professor Carl Schmitt, the leading Nazi theoretician of totalitarianism and, in fact, the essence of the definition of totalitarianism which that author has given to that term which he himself had introduced?

Further commenting on Carr’s negative attitude towards free market capitalism, Hayek quotes Carr himself:

The victors lost the peace, and Soviet Russia and Germany won it, because the former continued to preach, and in part to apply, the once valid, but now disruptive ideals of the rights of nations and laissez faire capitalism, whereas the latter, consciously or unconsciously borne forward on the tide of the twentieth century, were striving to build up the world in larger units under centralized planning and control.

Referring to the principles of capitalism as “disruptive ideas” and praising planned economies was enough to for Hayek to say, “Professor Carr completely makes his own the German battle cry of the socialist revolution of the East against the liberal West in which Germany was the leader…”

Hayek also goes on to undermine Carr’s commentary on economics by writing, ”Professor Carr is not an economist, and his economic argument generally will not bear serious examination.

Professor Carr’s contempt for all the ideas of liberal economists…is as profound as that of any of the German writers quoted in the last chapter. He even takes over the German thesis, originated by Friedrich List, that free trade was a policy dictated solely by, and appropriate only to, the special interests of England in the nineteenth century.

C.H. Waddington

The next target of Hayek’s criticisms is C.H. Waddington (1905-1975) another prominent figure in the field of science British society in 1944 in the realms of developmental biology, genetics, and paleontology. Again, this was so close in time to the horrors of the Holocaust and the pseudoscience that accompanied it, and this concerned Hayek gravely.  

It is well known that particularly the scientists and engineers, who had so loudly claimed to be the leaders on the march to a new and better world, submitted more readily than almost any other class to the new tyranny.

But to make matters worse, Hayek’s warnings seem to increase in severity as he digs deeper into Dr. Waddington’s beliefs on totalitarian rule:

Dr. Waddington’s claim that the scientist is qualified to run a totalitarian society is based mainly on his thesis that “science can pass ethical judgment on human behavior”—a claim to the elaboration of which by Dr. Waddington Nature has given considerable publicity.

Further elaborating as to why he believes Dr. Waddington is a threat to liberty, Hayek attacks his belief in freedom in itself. Or rather, his lack thereof.

For an illustration of what this means we do not need to go outside Dr. Waddington’s book. Freedom, he explains, ‘is a very troublesome concept for the scientist to discuss, partly because he is not convinced that, in the last analysis, there is such a thing.’

He continues to make the connection between Dr. Waddington’s work and his own Marxist roots, writing:

As in almost all works of this type, Dr. Waddington’s convictions are largely determined by his belief in ‘inevitable historical tendencies’ which science is presumed to have discovered and which he derives from ‘the profound scientific philosophy’ of Marxism, whose basic notions are ‘almost, if not quite, identical with those underlying the scientific approach to nature.

But, coming to at least one area of agreement, Hayek points out that even those who are pushing England further down the road to serfdom recognize that the country had been on the decline since the height of the liberalism in the 19th-century.

Thus Dr. Waddington, though he finds it ‘difficult to deny that England now is a worse country to live in than it was’ in 1913, looks forward to an economic system which ‘will be centralized and totalitarian in the sense that all aspects of the economic development of large regions are consciously planned as an integrated whole.’

Where We Are on the Road

While Hayek is certainly more urgent in his tone during this chapter, he has not given up hope quite yet. In spite of the stumbling blocks inhibiting free-market competition, he still believes that society has the option of turning back before totalitarianism reached its full and ugly potential.

While there is no reason to believe that this movement is inevitable, there can be little doubt that if we continue on the path we have been treading, it will lead us to totalitarianism.”

But, as is obvious throughout this chapter, Hayek implores the readers to proceed with constant vigilance and to not be fooled by the ruling class once again. And, as is demonstrated in one of his final passages of the chapter, Hayek wanted really to drive home the importance of studying history in order to prevent it from happening again.

But to find it once more held after twenty-five years of experience and the re-examination of the old beliefs to which this experience has led, and at a time when we are fighting the results of those very doctrines, is tragic beyond words.

Hayek Explains How Socialist Academics Contributed to the Rise Third Reich

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Throughout the last three chapters of F.A. Hayek’s The Road to Serfdom, I have found myself questioning whether I am still reading the same book. In chapters 1-11, Hayek went from being an economist to a philosopher, to a historian. But in chapter twelve, “The Socialist Roots of Nazism,” he takes on the role of biographer.

Hayek highlights the very important connection between the socialist and Nazi intellectuals by profiling a handful of prominent German Marxist supporters whose philosophical beliefs would radicalize during WWI. While their academic careers were centered on spreading socialist philosophy, many would later come to the conclusion that nothing short of Nazism would help bring about the necessary revolutionary change they each wanted.

But most importantly, Hayek points out that contrary to what many think, Nazism did not simply appear out of thin air and infect the minds of docile German people. There were academic roots that, while grown in the soil of socialist thought, grew into a philosophy that praised German superiority, ultimate war, and the degradation of the individual.

As Hayek writes:

It is a common mistake to regard National Socialism as a mere revolt against reason, an irrational movement without intellectual background. If that were so, the movement would be much less dangerous than it is. But nothing could be further from the truth or more misleading.

Speaking of socialism’s intellectual leaders who later helped lay the intellectual foundation for the rise of the Third Reich, Hayek says:

…It cannot be denied that the men who produced the new doctrines were powerful writers who left the impress of their ideas on the whole of European thought. Their system was developed with ruthless consistency. Once one accepts the premises from which it starts, there is no escape from its logic.

While touching on each of Hayek’s examples would be just as long as Hayek’s own twelfth chapter, I will touch specifically on Werner Sombart, Johann Plenge, and Oswald Spengler.

Werner Sombart

Hayek writes:

From 1914 onward there arose from the ranks of Marxist socialism one teacher after another who led, not the conservatives and reactionaries, but the hardworking laborer and idealist youth into the National Socialist fold. It was only thereafter that the tide of nationalist socialism attained major importance and rapidly grew into the Hitlerian doctrine.

Beginning his list of influential thinkers prior to WWII, Hayek begins with the dedicated Marxist who later embraced nationalism and dictatorship, Werner Sombart (1863-1941). Hayek says of Sombart:

Sombart had begun as a Marxian socialist and, as late as 1909, could assert with pride that he had devoted the greater part of his life to fighting for the ideas of Karl Marx. He had done as much as any man to spread socialist ideas and anticapitalist resentment of varying shades throughout Germany; and if German thought became penetrated with Marxian elements in a way that was true of no other country until the Russian revolution, this was in a large measure due to Sombart.

Sombart was no stranger to radicalized thought. In fact, he would never be allowed to rise to the ranks of university chair in the course of his career because of his ties to Marxism.

He was also a strong believer in the glory of war and, specifically, the German people’s global role as ideal soldiers. In his works can be found this belief that a “German War” between England’s capitalist society of “peddlers” and Germany’s warrior culture of “heroes” was inevitable and vital for the progress of the world. He seethed with criticism for the English people, who, in his mind, had lost their warlike instincts. This became a recurring theme for him in later writings.

His other main criticism of English culture was the emphasis placed on the individual. For Sombart, individual happiness was hampering societies from being truly great. As Hayek said of Sombart, “Nothing is more contemptible in his eyes than the universal striving after the happiness of the individual…

Sombart’s dismissal of the individual tied in with his obsession with and glorification of war. In Sombart’s view, the concept of individual liberty was a barrier, preventing Germany from obtaining its true greatness. As Hayek says of Sombart’s beliefs, “there is a life higher than the individual life, the life of the people and the life of the state, and it is the purpose of the individual to sacrifice himself for that higher life.”

This all plays in perfectly with the rise of the Third Reich, where people were seen as means to an end, rather than as ends themselves.

Johann Plenge

Professor Johann Plenge (1874-1963) was another leading intellectual authority on Marxist thought during this time. He also saw war with England as a necessary struggle between two opposite principles: emphasis on the individual and organization and socialism.

Hayek explains what organization meant to Plenge by saying, “Organization is to him, as to all socialists who derive their socialism from a crude application of scientific ideals to the problems of society, the essence of socialism.” But for Plenge, the Marxist doctrine did not take this belief far enough.

Quoting Plenge, Hayek writes:

Marx and Marxism have betrayed this basic idea of socialism by their fanatic but utopian adherence to the abstract idea of freedom.

Interestingly enough, many of these socialist philosophers eventually abandoned Marxism in favor of National Socialism because they considered the former too liberal. Since Marxists at least claim to incorporate principles of democracy into the philosophy, this was thought to give too much power to individuals and was thus seen as dangerous by these intellectuals.

The doctrines which had guided the ruling elements in Germany for the past generation were opposed not to the socialism in Marxism but to the liberal elements contained in it, its internationalism and its democracy…It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.

Both Sombart and Plenge would have agreed. In order to have an ideal world, an extreme regimentation of society would have to take place and strong intellectual ideas would need to form the basis for this new planned world.

In Plenge’s own words:

Because in the sphere of ideas Germany was the most convinced exponent of all socialist dreams, and in the sphere of reality she was the most powerful architect of the most highly organized economic system.—In us is the twentieth century. However the war may end, we are the exemplary people. Our ideas will determine the aims of the life of humanity.—World History experiences at present the colossal spectacle that with us a new great ideal of life penetrates to final victory, while at the same time in England one of the World-Historical principles finally collapses.

Plenge believed that Germany’s war economy born in 1914 was:

The first realization of a socialist society and its spirit the first active, and not merely demanding, appearance of a socialist spirit. The needs of the war have established the socialist idea in German economic life, and thus the defense of our nation produced for humanity the idea of 1914, the idea of German organization, the people’s community (Volksgemeinschaft) of national socialism… The feeling of economic responsibility which characterizes the work of the civil servant pervades all private activity.

If Marxism, as it was believed, allowed too much of an emphasis on democracy, many of these intellectuals believed that their socialist views had to be taken even further to achieve the ends they wanted. By 1918, Plenge was already reflecting his new belief that something stronger and more authoritarian than Marxism was needed.

Plenge writes:

It is high time to recognize the fact that socialism must be power policy, because it is to be organization. Socialism has to win power: it must never blindly destroy power. And the most important and critical question for socialism in the time of war of peoples is necessarily this: what people is pre-eminently summoned to power, because it is the exemplary leader in the organization of peoples?

However, while Sombart and Plenge are thought to have provided the intellectual basis for Nazi thought, it was Oswald Spengler (1880-1936) who took the thoughts of these men and directly channeled them into the burgeoning philosophy of the National Socialist Party.

Oswald Spengler

Like the other two intellectuals, Spengler believed philosophy wasn’t enough to ensure the continuation of the German people and viewed liberalism as a dangerous English philosophy that was spreading throughout the world.

For Spengler, the Prussian model stood in opposition to England’s liberalism and was the ideal example of what Germany should aspire to. In the Prussian political model, the individual has no other role than to be a part of the whole and to serve the collective’s interests in the name of the state.

As Hayek says:

The three last nations of the Occident have aimed at three forms of existence, represented by famous watchwords: Freedom, Equality, Community. They appear in the political forms of liberal Parliamentarianism, Social Democracy, and authoritarian socialism… The German, more correctly, Prussian, instinct is: the power belongs to the whole. . .  Everyone is given his place. One commands or obeys. This is, since the eighteenth century, authoritarian socialism, essentially illiberal and anti-democratic, in so far as English Liberalism and French Democracy are meant.

And while Prussian militarism was seen to be the enemy of socialism, Spengler helped bridge that gap. Both schools of thought require an abandonment of the individual identity and a dedication to the greater good of society. Explaining the similarities, Hayek says:

In Prussia there existed a real state in the most ambitious meaning of the word. There could be, strictly speaking, no private persons. Everybody who lived within the system that worked with the precision of a clockwork, was in some way a link in it. The conduct of public business could therefore not be in the hands of private people, as is supposed by Parliamentarianism.

This sounds shockingly similar to the requirements made of the German people by the Third Reich. This is exactly why Spengler hated English liberalism so much. He targets it as the enemy of the Prussian model.

But unlike the other two, Spengler’s views were directly manifested in his support for Nazism. Spengler, more so than the others, wanted to incorporate these views in a tangible way that made Germany the ultimate authority on the matter.

Spengler writes:

The decisive question not only for Germany, but for the world, which must be solved by Germany for the world is: Is in the future trade to govern the state, or the state to govern trade? In the face of this question Prussianism and Socialism are the same…Prussianism and Socialism combat the England in our midst.

The Birth of National Socialism

At its very core, and as specified by these German thinkers, liberalism was the archenemy of planning and organization. And unless full-fledged National Socialism was adopted, the individual would not be sufficiently squashed as to allow for authoritarian rule.

This hatred and fear of the individual is the worldview espoused by these thinkers and it continues on with those who claim to be socialists today. Unless the concept of individualism is completely eradicated, the glorified state cannot come into existence. Let this, of all things, be a lesson on why Hayek places so much importance on the individual.

It is the individual, above all things, and the philosophical outlook that defends his or her rights, who presents the greatest obstacle to totalitarianism.

Education Is the State’s Greatest Tool for Propaganda

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In chapter 10 of The Road to Serfdom, Hayek describes how some of the worst people always end up rising to the top of the political heap. Continuing to touch on this theme in the eleventh chapter, Hayek digs even deeper and discusses the control of information and the very basis of truth in a planned society.

In a society where totalitarianism reigns, truth is found not in objective principles, but in a government’s desired ends. Once these ends have been established, all other forms of information are tailored to reinforce that “truth.” Reason is henceforth thrown out the window and the state’s version of truth is beyond contestation. As George Orwell wrote:

Nazi theory indeed specifically denies that such a thing as “the truth” exists. … The implied objective of this line of thought is a nightmare world in which the Leader, or some ruling clique, controls not only the future but the past. If the Leader says of such and such an event, “It never happened” – well, it never happened. If he says that two and two are five – well, two and two are five. This prospect frightens me much more than bombs.

But this on its own is not enough to sway entire nations. Instead of the people merely accepting these “truths” it is important that the state convince them that these truths are their own. When individuals begin to tie their interests to the state’s interests a terrifying unity occurs, the likes of which can be seen in almost every deceptive dictatorship throughout history.

As Hayek says:

The most effective way of making everybody serve the single system of ends toward which the social plan is directed is to make everybody believe in those ends. To make a totalitarian system function efficiently, it is not enough that everybody should be forced to work for the same ends. It is essential that the people should come to regard them as their own ends.

In order to do this, all propaganda is orchestrated to reinforce these ends in order to push individuals in the desired direction. Common themes and slogans are repeated over and over again in order beat these goals into the minds of the people. Anything contrary to the end goal must be squashed immediately. Anyone speaking out against them must too be destroyed in the name of national security. As Hayek says, “But the minority who will retain an inclination to criticize must also be silenced.”

And while most people associate propaganda with political posters and multimedia, there is no greater tool for propaganda than a nation’s education system.

State-Controlled Education

No matter how intelligent an individual may be, almost every person is susceptible to propaganda. This is because, in many instances, most are unaware that they are falling prey to it. It seeps into our lives through all forms of entertainment but most especially through state-sponsored education.

In Nazi Germany, indoctrinating the youth was one of the easiest ways to ensure the fervent support of future generations. Adolf Hitler himself said, “He alone, who owns the youth, gains the future.” Children were forced into youth groups where their role in the Third Reich was reinforced continually. Germany even tailored toys, games, and books towards the desired ends of the Reich, ensuring that children would believe whatever they wanted them to believe.

Hayek writes:

If all the sources of current information are effectively under one single control, it is no longer a question of merely persuading the people of this or that. The skillful propagandist then has power to mold their minds in any direction he chooses, and even the most intelligent and independent people cannot entirely escape that influence if they are long isolated from all other sources of information.

And this was the aim of the Third Reich. If the German people were to not only accept but condone the acts of their government, there was no better way to do it then to teach them young, and lead them to believe that this has always been the case.

Touching on this, Hayek says:

The most effective way of making people accept the validity of the values they are to serve is to persuade them that they are really the same as those which they, or at least the best among them, have always held, but which were not properly understood or recognized before.

Or, to pull from Orwellian speak, the goal is to make these children believe that, “we have always been at war with Eastasia.”

But this deliberate molding of minds does not only occur in young students. In fact, once these children’s minds have been sufficiently indoctrinated, they are passed off to institutions of higher education where a belief in intellectual elitism is then instilled.

The Educated Elite

Trained to learn by rote methods rather than critical thinking, young adults, eager to assert their independence, were thrown into colleges and universities and told that they are now part of the intellectual elite. But from this comes the dangerous tendency to stop questioning the information that is presented to you. After all, your professors are highly regarded for their intellect. Why would they steer you in the wrong direction?

But when these professors begin to present state opinion as unquestioned truth, this is where the real problems arise.

The field of eugenics, for example, was once taught as if it were doctrinal truth. If racial superiority could be “scientifically” proven, or, rather, if the state could assert that this was fact, then questioning this doctrine became heresy.

As Hayek says:

The need for such official doctrines as an instrument of directing and rallying the efforts of the people has been clearly foreseen by the various theoreticians of the totalitarian system. Plato’s “noble lies” and Sorel’s “myths” serve the same purpose as the racial doctrine of the Nazis or the theory of the corporative state of Mussolini. They are all necessarily based on particular views about facts which are then elaborated into scientific theories in order to justify a preconceived opinion.

And, as has been seen throughout history, once a theory becomes part of the scientific narrative, it contributes to the direction of all societal ends. Hayek comments on this saying, “Thus a pseudoscientific theory becomes part of the official creed which to a greater or lesser degree directs everybody’s action.” While the eugenics example may seem rather extreme, it was very applicable to the time that Hayek was writing.

And while it is not easy in hindsight to understand how an entire population could fall for theories this callous, Hayek reminds us, “It is not difficult to deprive the great majority of independent thought.”

It may be easy to cast blame on the media and the entertainment industry for being natural propaganda machines, but history tells a different story. As we have now seen, state-controlled education is one of the worst and most effective propaganda tools that has ever existed.

Why the Worst Humans Are Able to Rise to Power

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In chapter ten of The Road to Serfdom, “Why the Worst Get on Top,” Hayek continues to warn about the dangers of planned economies, but with a slightly different approach from earlier chapters.

Stepping into new territory, here we see Hayek not only identifying economic problems, but also discussing the very nature of power itself. Specifically, he addresses how totalitarians are able to rise to power and coerce entire populations into absolute despotism.

What is so fascinating about Hayek’s warnings in this chapter is the fact that they were written at a time when the world was desperately trying to make sense of what had just occurred in Germany during WWII. Hitler and the Third Reich were all too fresh in the minds of all mankind, making Hayek’s warnings extraordinarily relevant.

The world was determined to never let that kind of evil loose on civilization again, but as Hayek warned, it is not merely a matter of making sure “good” people get elected to office; it is making sure totalitarianism is rejected at all corners: economic, political, social and all other forms imaginable.

Three Reasons Why

History’s most notorious dictators did not rise to power randomly. And in this chapter of his book, Hayek explains why the most despicable people always end up with political power and why, to paraphrase Lord Acton, absolute power always corrupts absolutely.

Hayek explains:

“There are three main reasons why such a numerous and strong group with fairly homogeneous views is not likely to be formed by the best but rather by the worst elements of any society. By our standards the principles on which such a group would be selected will be almost entirely negative.”

Addressing the first reason, Hayek says:

“In the first instance, it is probably true that, in general, the higher the education and intelligence of individuals become, the more their views and tastes are differentiated and the less likely they are to agree on a particular hierarchy of values. It is a corollary of this that if we wish to find a high degree of uniformity and similarity of outlook, we have to descend to the regions of lower moral and intellectual standards where the more primitive and “common” instincts and tastes prevail.”

And this is precisely what happened in Germany prior to the rise of the Third Reich.

Hayek continues:

“It is, as it were, the lowest common denominator which unites the largest number of people.”

After the German economy was decimated in the aftermath of WWI, economic woes were the bond that united all Germans. They may have had nothing else in common save this one element, but it was of enough importance to impact the day-to-day lives of all Germans.

In addition to the economic hardships brought about by the hyperinflation of the Weimar Republic, the “volk” had one other common element: They were all Germans. And from this came a propaganda campaign that would capitalize on these few similarities in order to further unite the German people to one cause: The Third Reich.  

Discussing his second reason, Hayek says:

“Here comes in the second negative principle of selection: he will be able to obtain the support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently. It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party.”

The German people were exhausted after WWI. Like the rest of the globe, their economy had already taken the fiscal hits associated with the costs of long-term war. They wanted prosperity and they would take it however they could get it if it meant a guarantee of putting food on the table.

But they had also just finished fighting a war. Women were widowed, limbs were lost, and morale was at an all-time low as the entire globe was pointing its fingers at Germany.

When Joseph Goebbels was tasked with manipulating the German people into not only submission but full-blown fanaticism, he knew exactly what to do: unite the people in a common cause and direct them to a desired end. He also knew that a good propaganda campaign involved repeating certain slogans and rhetoric over and over again until it became second nature to the people, as Hayek explains above.

By utilizing a brilliant propaganda campaign that played to the sympathies felt by all Germans in the post-WWI climate, Hitler and his followers were able to hoodwink an entire nation.

But the real evil genius of the Third Reich’s propaganda campaign was its utilization of a common enemy that the whole populace could blame. This brings us to Hayek’s third reason the worst get on top:

“The third and perhaps most important negative element of selection enters. It seems to be almost a law of human nature that it is easier for people to agree on a negative program—on the hatred of an enemy, on the envy of those better off— than on any positive task. The contrast between the “we” and the “they,” the common fight against those outside the group, seems to be an essential ingredient in any creed which will solidly knit together a group for common action. It is consequently always employed by those who seek, not merely support of a policy, but the unreserved allegiance of huge masses.”

The German people were mad, tired, and frustrated with their situation. Blaming the nations responsible for making their country pay reparations was not sufficient since, at the time, Germany lacked the ability to do much about it. Instead, the enemy became anyone who wasn’t like everyone else.

Don’t Give up Your Power

Though Hitler’s detestation of the Jewish population is no secret, they were not the only people on his list. Anyone who didn’t have German blood coursing through their veins was a threat to the fatherland and had to be stamped out.  

Most people would protest that they would be guilty of condemning entire segments of the population to death, but what is important to understand about Germany in WWII is that most Germans did not understand the magnitude of the situation.

They had capitulated power because they were desperate for change. But by relinquishing that power, they allowed horrible, unchecked atrocities to occur. But as Hayek says, there is “an increasing tendency among modern men to imagine themselves ethical because they have delegated their vices to larger and larger groups.”

This in itself hits at the very core of why all totalitarian regimes are dangerous. If individuals give up all their power to an authority, there are no longer any checks on power. All things that can be done will be done, and the people, through their own volition, have allowed this to come to pass because the ends were more important than anything else.

As Hayek says:

“It is even more the outcome of the fact that, in order to achieve their end, collectivists must create power—power over men wielded by other men—of a magnitude never before known, and that their success will depend on the extent to which they achieve such power. Power, and the competitive system is the only system designed to minimize by decentralization the power exercised by man over man.”

Few politicians are ever elected on a platform of brutality of epic proportions. Had the German people known what the end results of the Third Reich would be, I doubt the majority would have complied. But it is always easier to make these claims in hindsight.

So how, as individuals, can we do our best to ensure we do not let this happen again? How do we do our absolute best to ensure that we are not tempted in the face of economic uncertainty or foreign threats? The answer is constant vigilance.

Be wary of any politician who is eager for the masses to give up their power, and when faced with such a decision, remember the creed so commonly associated with the great Ludwig von Mises, “Tu ne cede malis sed contra audentior ito,” do not give in to evil but proceed ever more boldly against it.

Halfway Point: Suggested Readings to Accompany the Road to Serfdom

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Reading The Road to Serfdom while simultaneously liveblogging my thoughts has been far more intellectually grueling than expected. However, taxing as it has been, I am pleased to say that I have finally made it to the halfway point of my Hayekian liveblogging journey.

Looking back on the first half of the book, there is a lot of reading I wish I had done beforehand. And as many have expressed that they have been reading the book along me, I thought it might be useful to provide some helpful reading suggestions. 

Individualism: True and False

Understanding the role individualism plays in the economy is one of the most important concepts to grasp before diving into The Road to Serfdom. But for those who may not want to dive headfirst into Hayek’s essay Individualism: True and False before beginning this classic, here are ten essential takeaways.

The Law

Before digging into the heart of free market economics with The Road to Serfdom, it is important to understand the foundation of the classical liberal tradition. The reoccurring themes of natural law, government restraint, and ominous warnings of socialism found throughout Hayek’s work can all be traced back to Bastiat’s The Law. Though as you will see later, Bastiat was hardly the first to write of such things.

This timeless body of work is still so extraordinary today largely because it managed to articulate in 75 pages, what took many philosophers thousands of pages to explain. The Law is essential to understanding these basic principles that are the basis for much of Hayek’s beliefs.

The Second Treatise on Government

Without John Locke’s Second Treatise on Government, The Law may well have never existed. What Bastiat’s sums up, Locke traces in absolute detail. From natural rights to contract theory, Locke took from philosophers throughout history and laid out what he believed to be the most civilized society capable in a world of individual choice.

His work continues to be the staple for any belief that government should be restrained for the sake of individual liberty.

Know Your History 

It is important to understand the political and economic climate in which Hayek conceived The Road to Serfdom.

The very real threat of state totalitarianism was fresh in the minds of every single person around the globe. These warnings are not hyperbolic by any means. The individuals alive in the world during its time were tired of war and were desperate to prevent this same global devastation from ever occurring again.

Perhaps the greatest and most easily digestible books on this matter that I could suggest come from a series called, Uncle Eric written by Richard Maybury. The series, while aimed at young adults, offers the most compelling and well-summed up histories on the topics of both WWI and WII. They will give you a very clear picture of the time this book was written and the economic factors involved.

The Curse of Machinery 

There is a common thread you will see throughout Hayek’s work and my own corresponding liveblogs: A very real fear of technology and its impacts on economic policy. To understand the commonality of this problem, Henry Hazlitt’s chapter “The Curse of the Machinery” in his classic Economics in One Lesson is an essential read. 

Hazlitt uses history to explain the myth that this technological progress is bad for workers. This is most helpful to understanding our current climate where fear of innovation is used to justify policies like the universal basic income.

 

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