The Road to Serfdom

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The Root of Liberty Discussion – "The Road to Serfdom"

Written by: Friedrich A. Hayek

First Published in 1944

Fundamental Concepts

What F.A. Hayek saw, and what most of his contemporaries missed or intentionally overlooked, was that every step away from the free market and toward government planning represented a compromise of human freedom generally and a step toward a form of dictatorship--and this is true in all times and places. He demonstrated this against every claim that government control was really only a means of increasing social well-being. Hayek said that government planning would make society less livable, more brutal, more despotic. Socialism in all its forms is contrary to freedom.

Liberal

Hayek provides this explanation of terminology:

I use throughout the term “liberal” in the original, nineteenth-century sense.  In current American usage it often means very nearly the opposite of this.  It has been part of the camouflage of leftist movements in the USA helped by the muddle headedness of many who really believe in liberty that liberal has come to mean the advocacy of almost every kind of government control.  I am still puzzled why those in the United States who truly believe in liberty should not only have allowed the left to appropriate this almost indispensable term but should even have assisted by beginning to use it themselves as a term of opprobrium. This seems to be particularly regrettable because of the consequent tendency of many true liberals to describe themselves as conservatives.

The essence of the liberal position, however, is the denial of all privilege, if privilege is understood in its proper and original meaning of the state granting and protecting rights to some which are not available on equal terms to others.

Dedication

To: The Socialists of All Parties

Hayek wrote this book to refute a claim popular in the economics profession that fascism represented the last dying gasp of the failed capitalist system.

Hayek observed that planned economies all eventually descend into totalitarianism.  He contends that the totalitarianism of Communist Russia, Fascist Italy, Nazi Germany, and Imperial Japan all stem from the initialization of central planning.

His point, one that most would accept today as evident, was that fascism and communism both represent totalitarian systems that have much more in common with each other than either does with the sorts of governments and economic systems that exist under liberal free market democracies. The Nazis demonized and persecuted the communists, to be sure, but it was not because they were themselves capitalists. Hayek simply sought to establish the true commonalities.

No less significant is the intellectual history of many of the Nazi and Fascist leaders. Everyone who has watched the growth of these movements in Italy or in Germany has been struck by the number of leading men, from Mussolini downward, who began as socialists and ended as Fascists or Nazis. And what is true of the leaders is even more true of the rank and file of the movement. The relative ease with which a young communist could be converted into a Nazi or vice versa was generally known in Germany, best of all to the propagandists of the two parties. Many a university teacher during the 1930s has seen English and American students return from the Continent uncertain whether they were communists or Nazis and certain only that they hated Western liberal civilization.

While to the Nazi the communist, and to the communist the Nazi, and to both the socialist, are potential recruits who are made of the right timber, although they have listened to false prophets, they both know that there can be no compromise between them and those who really believe in individual freedom.  To both, the real enemy, the man with whom they had nothing in common and whom they could not hope to convince, is the liberal of the old type.

Forward

The Forward to the 1944 edition was written by John Chamberlain (October 28, 1903 – April 9, 1995).  He was an American journalist, business and economic historian, syndicated columnist, and literary critic who was dubbed "one of America's most trusted book reviewers" by the libertarian magazine “The Freeman”.

His “Forward” contains these observations:

Shibboleths of our times are expressed in a variety of terms: "full employment," "planning," "social security," "freedom from want." The facts of our times suggest that none of these things can be had when they are made conscious objects of government policy. They are fool’s-gold words.

But the logic is incontestable: "full employment," "social security," and "freedom from want" cannot be had unless they come as by-products of a system that releases the free energies of individuals. When "society" and the "good of the whole" and "the greatest good of the greatest number" are made the overmastering touchstones of state action, no individual can plan his own existence. For the state "planners" must arrogate to themselves the right to move in on any sector of the economic system if the good of "society" or the "general welfare" is paramount. If the rights of the individual get in the way, the rights of the individual must go.

The threat of state "dynamism" results in a vast, usually unconscious fear among all producing interests that still retain a conditional freedom of action. And the fear affects the springs of action. Men must try to outguess the government as yesterday they tried to outguess the market. But there is this difference; the market factors obeyed at least relatively objective laws, while governments are subject to a good deal of whim. One can stake one's future on a judgment that reckons with inventories, market saturation points, the interest rate, the trend curves of buyers' desires. But how can an individual outguess a government whose aim is to suspend the objective laws of the market whenever and wherever it wishes to do so in the name of "planning"? Shrewdly, Peter Drucker once remarked that the "planners" are all improvisers. They create not certainty but uncertainty—for individuals. And, as Hayek demonstrates, the end result of this uncertainty is civil war or the dictatorship that averts civil war.

Spontaneous order

The concept of spontaneous order is rooted in the notion that complex social systems, such as economies and societies, emerge and evolve organically without central planning or intentional design.  Spontaneous order arises from the decentralized actions of individuals pursuing their own goals and interests. It emphasizes the importance of voluntary cooperation and exchange rather than top-down control or direction from a central authority.

Order emerges as a result of countless individual interactions, choices, and adaptations. No single entity or group possesses complete knowledge or understanding of the entire system, yet the interactions among individuals produce coherent patterns and structures.

The unplanned market economy is a mechanism for coordinating individual actions, with its decentralized decision-making and respect for individual rights, is the best safeguard against tyranny and the most efficient way to allocate resources without requiring central planning. 

Division of labor

The division of labor is a key driver of economic efficiency. By allowing individuals and firms to focus on what they do best, it leads to increased production, lower costs, and more diverse and affordable goods and services.  This process contributes to wealth creation, as it enhances productivity and fosters economic growth. This, in turn, raises the standard of living and improves the overall welfare of societies.

The market economy is the mechanism that naturally coordinates the division of labor. Through voluntary exchanges and price signals, individuals are guided to specialize in areas where they have a comparative advantage.

The division of labor is also viewed as an important factor in creating social harmony and cooperation. It encourages people to rely on one another and discourages conflict, as individuals recognize the mutual benefits of collaboration.

Redistribution of wealth

Democracies that were economically free had become so successful that people began to take their prosperity for granted and chafed at the uneven distribution of wealth. Germany, Russia, and Italy adopted central planning and became dictatorships, but the West assumed that planning and tyranny were unrelated, and heedless, moved toward implementing parts of socialism.

Democratic Socialism

Hayek reflects on how the western world was abandoning a formula of political freedom that spurred unprecedented advances in economic prosperity, security, independence, and science.

As impatience with the slow progression of liberalism grew, Hayek highlights that our attitudes towards societies changed. The idea of free trade was exported towards the East, but gradually the West began to import socialist ideas. Our great liberalization that came in the decades before came to be considered a “rationalization of selfish interests”.

In its place, socialism began to rise. And the movement utilized its greatest propaganda weapon: the promise of a “new freedom” in the form of “democratic socialism”.

But Hayek argues that this concept is nothing more than an illusion. While democracy increases individual freedom, socialism by definition restricts it. Indeed, history underscores how socialism, far from fostering freedom, serves to undermine freedom and create fertile ground for totalitarianism.

Central Planning

There is no such thing as planning that only relates to “economic matters”. Economic planning, by extension, relates to all aspects of human choice.

Society is far too complex for any centralized authority to fully understand or control. The knowledge required to manage all the intricate details of a large economy or society is dispersed among individuals, and much of it is tacit or unarticulated.

Government planning of economies must result in arbitrary and unfair edicts, as well as a loss of individual liberty.  Planning cannot realize a unified purpose because humans don’t share one single goal; further, planning will cause the breakdown of the Rule of Law, without which governments quickly descend into despotism.  Rather than achieving greater autonomy and respect, workers would be treated as cogs in the government machine, their freedoms curtailed. Fair wages would be reserved for groups favored by the planners. A guaranteed income would be possible only at the cost of freedom to choose one’s vocation.

Central planners often argue that planning is an inevitable response to technological advances. But economy of scale doesn’t necessitate monopoly, nor is the complexity of technology best solved in a non-competitive setting.

We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may prevent its use for desirable purposes.

The worst get on top

There are strong reasons for believing that what to us appear the worst features of the existing totalitarian systems are not accidental by-products but phenomena which totalitarianism is certain sooner or later to produce.

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. This remains true even though many liberal socialists are guided in their endeavors by the tragic illusion that by depriving private individuals of the power they possess in an individualist system, and by transferring this power to society, they can thereby extinguish power.

Instead of the best people achieving office, planning attracts the worst among us: those who crave arbitrary power. Totalitarianism isn’t an unfortunate byproduct of some evil people rising to powerful positions. It is collectivism itself that attracts such people to power. This power is then sustained through effective propaganda and the psychology of groups.

Once you admit that the individual is merely a means to serve the ends of the higher entity called society or the nation, most of those features of totalitarianism which horrify us follow of necessity. From the collectivist standpoint intolerance and brutal suppression of dissent, deception and spying, the complete disregard of the life and happiness of the individual are essential and unavoidable. Acts which revolt all our feelings, such as the shooting of hostages or the killing of the old or sick, are treated as mere matters of expediency; the compulsory uprooting and transportation of hundreds of thousands becomes an instrument of policy approved by almost everybody except the victims.  The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule.

To be a useful assistant in the running of a totalitarian state, therefore, a man must be prepared to break every moral rule he has ever known if this seems necessary to achieve the end set for him. In the totalitarian machine there will be special opportunities for the ruthless and unscrupulous. Neither the Gestapo nor the administration of a concentration camp, neither the Ministry of Propaganda nor the SA or SS (or their Russian counterparts) are suitable places for the exercise of humanitarian feelings. Yet it is through such positions that the road to the highest positions in the totalitarian state leads.

A distinguished American economist, Professor Frank H. Knight, correctly notes that the authorities of a collectivist state “would have to do these things whether they wanted to or not: and the probability of the people in power being individuals who would dislike the possession and exercise of power is on a level with the probability that an extremely tender-hearted person would get the job of whipping master in a slave plantation.”

Propaganda and censorship

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.

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. The people are made to transfer their allegiance from the old gods to the new under the pretense that the new gods really are what their sound instinct had always told them but what before they had only dimly seen. And the most efficient technique to this end is to use the old words but change their meaning. Few traits of totalitarian regimes are at the same time so confusing to the superficial observer and yet so characteristic of the whole intellectual climate as the complete perversion of language, the change of meaning of the words by which the ideals of the new regimes are expressed.

To allay these suspicions and to harness to its cart the strongest of all political motives—the craving for freedom—socialism began increasingly to make use of the promise of a “new freedom.” The coming of socialism was to be the leap from the realm of necessity to the realm of freedom. It was to bring “economic freedom,” without which the political freedom already gained was “not worth having.” Only socialism was capable of effecting the consummation of the age-long struggle for freedom, in which the attainment of political freedom was but a first step. The subtle change in meaning to which the word “freedom” was subjected in order that this argument should sound plausible is important. To the great apostles of political freedom, the word had meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached. The new freedom promised, however, was to be freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us, although for some very much more than for others. Before man could be truly free, the “despotism of physical want” had to be broken, the “restraints of the economic system” relaxed.

Sadly, in the 1941 “State of the Union” address Franklin D. Roosevelt redefined freedom.  He presented a new definition “freedom from want”.

Individualism and Collectivism

Before we can progress with our main problem, an obstacle has yet to be surmounted. A confusion largely responsible for the way in which we are drifting into things which nobody wants must be cleared up. This confusion concerns nothing less than the concept of socialism itself. It may mean, and is often used to describe, merely the ideals of social justice, greater equality, and security, which are the ultimate aims of socialism. But it means also the particular method by which most socialists hope to attain these ends and which many competent people regard as the only methods by which they can be fully and quickly attained. In this sense socialism means the abolition of private enterprise, of private ownership of the means of production, and the creation of a system of “planned economy” in which the entrepreneur working for profit is replaced by a central planning body.

The question is whether for this purpose it is better that the holder of coercive power should confine himself in general to creating conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed “blueprint.”

Planning and Democracy

The common features of all collectivist systems may be described, in a phrase ever dear to socialists of all schools, as the deliberate organization of the labors of society for a definite social goal.

The various kinds of collectivism, communism, fascism, etc., differ among themselves in the nature of the goal toward which they want to direct the efforts of society. But they all differ from liberalism and individualism in wanting to organize the whole of society and all its resources for this unitary end and in refusing to recognize autonomous spheres in which the ends of the individuals are supreme.

The Socialist Roots of Naziism

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. The doctrines of National Socialism are the culmination of a long evolution of thought, a process in which thinkers who have had great influence far beyond the confines of Germany have taken part. Whatever one may think of the premises from which they started, 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. It is simply collectivism freed from all traces of an individualist tradition which might hamper its realization.

What, then, caused these views held by a reactionary minority finally to gain the support of the great majority of Germans and practically the whole of her youth? It was not merely the defeat, the suffering, and the wave of nationalism which led to their success. Still less was the cause, as so many people wish to believe, a capitalist reaction against the advance of socialism. On the contrary, the support which brought these ideas to power came precisely from the socialist camp.

Fight against liberalism in all its forms, liberalism that had defeated Germany, was the common idea which united socialists and conservatives in one common front. At first it was mainly in the German Youth Movement, almost entirely socialist in inspiration and outlook, where these ideas were most readily accepted and the fusion of socialism and nationalism completed.

The Road to Serfdom in Cartoons

When reading the cartoon version please note that the person depicted in dark colors is you, the average citizen.  With careful examination you will notice that there is only one cartoon cell in which "you" do not appear.  "You" are not present when a "strong man" leader is chosen.  The "strong man" is selected by the planners in a back room deal.

Conclusion

The young are right if they have little confidence in the ideas which rule most of their elders. But they are mistaken or misled when they believe that these are still the liberal ideas of the nineteenth century, which, in fact, the younger generation hardly knows. Though we neither can wish nor possess the power to go back to the reality of the nineteenth century, we have the opportunity to realize its ideals—and they were not mean. We have little right to feel in this respect superior to our grandfathers; and we should never forget that it is we, the twentieth century, and not they, who have made a mess of things. If they had not yet fully learned what was necessary to create the world they wanted, the experience we have since gained ought to have equipped us better for the task. If in the first attempt to create a world of free men we have failed, we must try again. The guiding principle that a policy of freedom for the individual is the only truly progressive policy remains as true today as it was in the nineteenth century.

Study Questions

1. How does central planning lead to the apparently opposite systems of fascism and socialism?

2. Why is it that in our endeavor consciously to shape our future in accordance with high ideals we unwittingly produce the very opposite of what we have been striving for?

3. How is the system of private property the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not?