Road to Serfdom
A Road to Serfdom is a classical economic and political philosophy book by Friedrich Hayek that warns against the dangers of central planning and socialism. In my opinion, this book is as relevant today as it was when it was first published in 1944. Hayek offers a stark warning about the dangers of giving too much power to the state. Movements that begin as socialist end as fascist or Marxist or Nazis even though that wasn’t their original goal. Hayek remarks about the German society and how the people of that time had good intentions that eventually allowed for fascism to arise.
Many people have probably heard the quote- "the road to hell is paved with good intentions." This could not be truer for those in power in Germany in the time leading to the second World War.
Planning vs Power
Socialist think that by transferring power from the individual and giving it to the collective society they are extinguishing the controlling power over them, but it actually just concentrates the power to a single plan. It makes me think of the idea of synergy- where the impact of all the individual power is greater than the sum of the individual power put together. That seems to be the initiative of the central planners but in actuality, the impact of synergy only seems to thrive when the individuals are properly incentivized and in a free economy.
A competitive system is the only way to systematically limit the control one man has over another. A socialist planning board possesses greater power than private boards of directors because their influence is of much larger range. The misconception is that a skewed distribution of wealth is where the unbalanced power comes from. To remedy this, socialists advocate to give power to the state as a way to reallocate wealth and resources. This new source of power, though, is of much greater magnitude than the mixture of rich people in a community.
Hayek says that having economic power is a form of coercion but it is never the complete control over a person like a dictator or socialist regime that controls all means of production. If economic power is an instrument of political power, we are essentially bound to the will of the political power. The economy is interwoven into almost every part of life and by guaranteeing economic freedom, people are essentially given the foundation of wholistic societal freedom. Private property, Hayek claims at one point, is the most important guarantee of freedom, but he does not spend much time expanding on this point. My assumption is that Hayek is considering property a byproduct of economic prowess and thus supporting this claim.
Individualism vs Totalitarianism
Individualism gives men the respect to develop individual gifts and desires unlike totalitarian society where a lifestyle is practically decided for you. Hayek claims that nobody could have imagined that the economic principles and societal advancements over the last century, but now we experience exponential improvements from what they saw. That trend of growth has exploded with the implementation of technology and population rises. The individualism is what made this growth happen but it is began to be replaced with a “collective and conscious direction” when Hayek was composing his book.
In Germany, the liberalism became socialism or as the people of that time would say “organization.” Hayek claims that the practice of socialism began long before the Nazis and that they influenced many countries with their actions by attacking individualism- whether that be politically in democracy or economically in capitalism. Some of those socialist practices included indoctrination in Germany and Italy by bringing children into political organizations.
Transitioning from socialism to fascism is seemingly unavoidable. As parties try to reach democratic socialism, they are destroying the very freedom they are trying to achieve. So far, every country or government that has tried to create the utopia of socialism has ended up in a worse political and economic state for the individuals. In order to give power or freedom to a group as a whole, the power or freedom must be taken from another entity. That entity is the individual.
Central Planning Leads to Bad Leadership
Liberal planning was originally presented as a way to mitigate future common problems. However, liberalism is opposed to supplanting competition by guiding economic activity. Competition should give an individual the ability to decide if the risk is worth the reward to pursue a particular occupation. The ideal of the planning is to miraculously have a whole society in agreement on the direction of a society, but it should be evident from the difficulty of getting small groups to agree that an entire society is near impossible. Then the focus is shifted to the largest single group whose members align most similar and their views guide the direction for the whole.
Large groups usually are comprised of the “worst elements of society.” But why does Hayek say this? He believes that the largest uniform group of people are those of the lowest standards because the majority of people do not have a high education. He claims that high education is correlated to higher morals and standards which is evident in society today. Higher education is associated with higher wages, typically, and higher wages can associated with altruism and ethics. This is a difficult subject because higher wages can also create a dependency of money and diminishing morals.
The people also need to be docile and gullible. Gullibility typically related to a lack of education because education helps form the use of critical and independent thinking. This action is known as propaganda.
In regards to human nature, it has been shown that leaders have more success in getting people to agree on a negative program as opposed to a positive one. For example, a common enemy or envy of the more affluent is a stronger motivator than philanthropy or a universal betterment of some degree. The discussion of human nature can be difficult because of the influencers that cause people to act certain ways.
Differences in Totalitarian and Individualist Parties
The totalitarian view is partly based on the principle that the ends justifies the means while the individualist believes this the the pinnacle of immorality. For the immorality to not seem immoral, those in control must use propaganda. In order to effectively use propaganda, they must also control all sources of information. So essentially, the collectivism is controlling how people work, the economy they live in, and now the media they are subjected to. The leaders would change definitions and build ideas off of peoples already held beliefs but in a twisted way. Liberty is converted to “collective freedom” in the planning society.
Rules of Law
If laws were universal and objectively moral, there would likely be no need to change them once they are established. In the socialist society, however, rules are changed or updated regularly to fit the agenda at a certain period in time. By defining rules, it restricts a governing power from reacting to the populace.
Hayek rejects the view of central planners that argue that our complexity in modern civilization warrants new problems that can only be effectively dealt with the help of oversight and control. No group or person can ever know all of the ins and outs of the economy. They will never know the exact supply and demand of resources. They will never know the intent of consumers and the corresponding actions of the market in very diverse region of a nation. Under competition, though, the dollar is the ultimate form of communication which is spoken eloquently by entrepreneurs and businessmen of all backgrounds. As I have said before in previous blog posts, prices convey scarcity in which we can assign value to items. Entrepreneurs don’t need to know another entrepreneur’s plan if they can see the price of products. Central planning wants to take that away.
Sometimes the socialists will say that by giving up the economic freedom we hold, we can pursue freedom in areas of much higher value, but economic freedom is tied to almost all other ends of life and impractical for actual prosperity. Even just implementing government controlled monopolies of take away our freedom of choice and we would be subject to the wishes of the central planning and the ideologies they hold.
I definitely agree with the position Hayek brought up about the way society has shifted the view of our youth towards salaried jobs on a corporate schedule as opposed to the riskier enterprise. School and media represents the spirit of entrepreneurs as disreputable and immoral in the fashion in which they make profit. As an entrepreneur myself and from reviewing history, I believe that some of the best advancements ever known have come about because of perseverance and curious mindsets. In my opinion, where there is no risk, there should be no reward!