Thursday 8 July 2010

Stopping points on the Road to Serfdom [updated]

Update: see also here and here.

Andrew Farrant and Ed McPhail nicely contrast divergent readings of The Road to Serfdom in the July-August issue of Challenge.

Where some recent scholars, like Bruce Caldwell, reading Hayek's Road to Serfdom see his argument as simply being that full-blown command and planning socialism is incompatible with freedom, the book's resurgent popularity among the likes of Limbaugh and Beck rests on the inevitability reading of its argument: that the slope to full command planning is very slippery, and small pushes in that direction risk a cannonball run to serfdom. In that reading, unless we change our ways and that right soon, very bad things await. Which is the correct reading of what Hayek meant?

Farrant and McPhail nicely show that Hayek intended his thesis to apply not only to full command planning but also to the welfare state.
As Caldwell rightly points out, the crux of Hayek’s thesis had initially appeared in a 1938 article. Caldwell explains that Hayek—in 1939—“came out with an expanded version in the form of a public policy pamphlet. . . . If one compares the two articles one can trace an accretion of ideas that would later appear in The Road to Serfdom” (Caldwell 2007, 6). Tellingly, in the 1939 pamphlet Hayek wrote:
It is not necessary to review the familiar economic arguments which show why mere “interventionism” is self-defeating and self-contradictory, and how, if the central purpose of intervention is to be achieved, intervention must expand until it becomes a comprehensive system of planning. (Hayek [1939] 1997, 199–200, emphasis added)13
The tenor of the above remarks is readily apparent in The Road to Serfdom itself and throughout Hayek’s later commentary on the thesis of the book. As Hayek had explained in The Road to Serfdom: “[T]he close interdependence of all economic phenomena makes it difficult to stop planning just where we wish . . . once the free working of the market is impeded beyond a certain degree, the planner will be forced to extend his controls until they become all comprehensive” (Hayek [1944] 1994, 117, emphasis added). Importantly, Hayek—alluding to the negative consequences that welfare state policies have on the development of law, morals, education policy, and the organization of science—argues that
the general tendency towards a paternalistic welfare state, which is the result of a misunderstood rationalism . . . is constantly producing results which are only too similar to those produced by economic planning and which also had shown themselves clearly in Germany long before they became visible elsewhere. They contribute almost as much as the economic factors to that profound transformation of society which follows from increasing governmental regulation and leads towards another direction not in the least intended by those who advocated these regulations. (Hayek 1948, 14–15, quoted in Farrant and McPhail 2009; emphasis added)
Though Caldwell argues that Hayek’s reasoning is inapplicable to the welfare state (2007, 31), any such view is rather hard to square with Hayek’s suggestion that
[today] . . . socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state. In [this] . . . latter kind of socialism the [totalitarian] effects I discuss in [Road to Serfdom] are brought about more slowly, indirectly, and imperfectly . . . the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same as that described in this book. (Hayek [1976] 1994, xxiii–xxiv, emphasis added)
Similarly, Hayek remarks that while many socialists have “turned to a redistribution/fair-taxation idea—welfare . . . I believe this indirect control of the economic world ultimately leads to the same result [totalitarianism], with a very much slower process” (Hayek 1994, 108, emphasis added).
In short, Limbaugh has the accurate reading of Hayek, but the one that fails in the real world; Caldwell has the charitable reading of Hayek that's more consistent with ex post outcomes.
As noted above, Limbaugh et al. readily invoke Obama and Stalin as ideological soulmates. Similarly, one noted “Hayekian”—Glenn Beck—has suggested that Obama’s policies could lead to concentration camps. Lionel Robbins—a Hayekian fellow traveler and academic colleague of Hayek’s in the 1930s and 1940s—has noted that Hayek
is somewhat too apt to . . . assume that deviations from his norm lead cumulatively to disaster. . . . For instance, in my judgment Professor Hayek is justifiably critical of some contemporary arrangements regarding old age pensions and apprehensive of the difficulties which may arise should the burden be greatly increased. But why should he argue as if these were at all likely to lead us to social disintegration and the concentration camp. (Robbins 1961, 80, emphasis added)
Is Robbins engaging in mere hyperbole? Robbins, of course, unlike a right-wing fanatic such as Beck, is a serious scholar. We refer the reader to Hayek himself: “[T]he fact that the young supply the police and the army will decide the issue: concentration camps for the aged unable to maintain themselves are likely to be the fate of an old generation
whose income is entirely dependent on coercing the young” (Hayek 1960, 297, emphasis added).
I really like Hayek's "The Use of Knowledge in Society". The Road to Serfdom provides a nice explanation of why central planning is incompatible with personal liberty. But reading beyond that, following what Hayek seems to have intended, in reckoning that every divergence from market liberalism runs great risk of totalitarianism, is simply wrong. It's the right reading of Hayek, but the wrong reading of the world.


  1. Wish I could agree with you. The only thing that may require adjustment is the definition/description of "concentration camp".
    Just visit one of the less salubrious "homes for the elderly" and then think about it again....

  2. @Anon1: there was a massive retreat from state planning in the post WW2 era: elimination of state monopolies throughout Europe followed by deregulation in the US. It's hard to show that countries with larger welfare systems are less committed to personal liberty than countries with smaller welfare systems. The overall picture doesn't fit well with the inevitability hypothesis.