Source: Wikipedia Commons
In The Road to Serfdom, Friedrich Hayek argues against increasingly socialist tendencies within capitalist economies such as the American or British economies. Hayek focuses heavily on how despite being well meaning, these socialist interventions on a capitalist society deprive the masses of freedom and inevitably lead to power being concentrated into a small minority at the top. In addition, The Road to Serfdom outlines how intervention consequently often leads to further intervention. The controlling minority exerts their will upon the majority below them to pursue an overpromised utopia while in actuality only stripping the economic and therefore personal freedoms from this majority. Hayek specifically argues against the regulation of the economy, which he argues is the cause of increasing insecurity among the lower classes. Instead, he argues that we should be promoting freedoms and creating conditions to foster development rather than restricting people and business with government regulations and limitations. Hayek makes references to money and the pursuit of fulfillment and more than that indulgence. Regulation and socialist leaning interventionism deprive the common citizen from pursuing this gratification from funds.
Allowing the government to intervene in the economy is relinquishing economic power to a sovereign minority. Even when this intervention is well intended, the end result is less power in the hands of the citizens, and more power siphoned from these citizens to the government. The danger in providing the government with economic regulatory power lies in providing them with an avenue for monopoly power. Hayek explains that, “an authority directing the whole economic system would be the most powerful monopolist imaginable.” An example of how damaging well meaning socialist interventionism can be is the current price of insulin primarily as a result of overwhelming government regulation. It is impossible for competition to enter the market and as a result prices are unchecked by competition. Now, more government regulation is being proposed to try and cap the price of a co-pay on insulin under Medicare at thirty-five dollars a bottle. Government regulation tries to solve a problem, creates an unintended consequence that harm citizens and rather than admit that the regulation was unnecessary, socialist convictions encourage the government to instead impose further regulation. The cartoons that are included within depict how these interventions, or “planning” the lives of citizens, leads to more and more planning in pursuit of eventually causing the earlier plans work precisely as intended. In reality, it is not possible for the overwhelming majority of these government regulations to function precisely as intended without consequences. This means that the best course of action should be for the government to allow the citizens to regulate themselves through a free economy that will regulate itself through desire and opportunity cost.
Regulating the economy means removing some form of incentive, no matter the regulation. In order to profit people and businesses must act with reason and follow incentives, so they would not be doing something without an incentive, therefore regulation of business exists to disincentivize. I will argue that some regulations do need to exist regardless of incentive, such as environmental regulations to prevent excessive or poorly disposed of emissions and waste, but this is the only instance of regulation that I see as necessary in any capacity. However, this is a result of the general population not yet caring enough about the emissions in order to pay more for a provider that has more “green” practices than a cheaper alternative, as time goes on seeing as recent generations have been much more concerned about the environment, it’s possible that even this form of regulation would be unnecessary. To return to the issue at hand, Hayek explains that “Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another.” Regulation removes this choice in some capacity, however small. Hayek acknowledges that because our of our increased modern economic capacity, we should be able to provide a safety net of sorts to the impoverished, but he also acknowledges that poverty is a necessary motivator for personal economic betterment. He quotes Benjamin Franklin, stating, “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.” By this he means that those who are incapable of understanding the value of money to sustain their freedom within a fair society and spend it on temporary safety do not deserve said freedom nor safety. With no threat of living without freedom for lack of funds, citizens are left with little to no incentive to seek out the work that would provide them with adequate funds. For these reasons, it is imperative that the government stops regulating and intervening in the economy in order to promote greater freedom of the citizens and protect against the road to serfdom.
