Best-seller changed history
Sixty years ago this month, Nobel laureate F.A. Hayek published “The Road to
Serfdom” and set off a reversal of the then prevailing trend towards socialism
when social and economic planning was seen as the antidote to the “chaos” of
capitalism.
Hayek’s book, explaining the dangers of socialism and why
the free market allowed more individual freedom, was a runaway best seller in
the UK
and lauded by such disparate intellects as John Meynard Keynes and George
Orwell. It experienced the same success when published in the U.S. as a Book
of the Month Club selection and condensed in Reader’s Digest (see my webpage to
download).[1]
It is difficult for most people today to imagine that the
mood of those times was for government ownership to be thought better for the average
citizen than private ownership.
For example, around this time Britain socialized its mines,
trains, telephone systems and much else. In the U.S., President Truman called for socializing
the steel industry and only the Supreme Court ruling against its
constitutionality prevented it. And price controls were in place in both
countries across the board.
Hayek noted that, "The younger generation of today has
grown up in a world in which the spirit of commercial enterprise has been
represented as disreputable and the making of profit as immoral”[2]
and where to employ people is exploitation but to politically to coerce them is
seen as honorable.
‘Serfdom’ provided an
explanation for the seeming contradictions in the superiority of free markets
vs. socialist planning; why so-called ‘greed’ produces better outcomes for
everyone than ‘selfless public service.’ In addition, he discussed Adam Smith’s
observation that the businessman seeking “only his own gain is led by an
invisible hand to promote an end which was no part of his intention,”[3] and showed
how individual liberty is closely associated with the growth of commerce.[4]
Hayek’s case was that
free market competition is preferable to government coercion because not only
is it economically more efficient “but even more because it is the only method
by which our activities can be adjusted to each other without coercive or
arbitrary intervention of authority."[5] And the reduced ‘intervention of authority’
necessarily minimizes the amount of coercion that may be exercised by one
person over another.[6]
Hayek made the case that society needs to define the rules
rather than the ends. Defining the ends presupposes a known and inevitable
future and assumes prescience on the part of the planners. However, the
knowledge needed to plan anything beyond a very limited future is not knowable
by any one person, or group, and thus the planning process, by definition,
limits outcomes.
Hayek always assumed good intentions on the part of those with
whom he disagreed and ‘Serfdom’ was a warning to people of goodwill when he
asked, Is there a greater tragedy than while attempting together to
idealistically shape a beneficial future, we should produce the very opposite?[7]
‘Serfdom’ would profoundly influence Herb Cornuelle, later a
prominent Honolulu businessman, who helped begin the Foundation for Economic
Education in New York shortly after ‘Serfdom’ appeared, later became head of
the Volker Fund and through it was able to significantly assist Hayek and other
free-market scholars.
Hayek dedicated his book “To the Socialists of all Parties”
and that alone makes it particularly relevant for today.
Cliff Slater is a
regular columnist whose footnoted columns are at: www.lava.net/cslater
Footnotes:
[2] Hayek, Friedrich. The Road to Serfdom. University
of Chicago Press. 1944. pp.
130-1.
[3] “…generally, indeed, neither intends to promote the
public interest, nor knows how much he is promoting it… he intends only his own
security; and by directing that industry in such a manner as its produce may be
of the greatest value, he intends only his own gain, and he is in this, as in
many other cases, led by an invisible hand to promote an end which was no part
of his intention… By pursuing his own interest he frequently promotes that of
the society more effectually than when he really intends to promote it. I have
never known much good done by those who affected to trade for the public good.”
Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations.
Volume I. Liberty Fund. 1981. p.
456.
[4] Hayek, Friedrich. The Road to Serfdom. University
of Chicago Press. 1944.
p. 14.
Another to see through the apparent contradiction in
property ownership was Max Eastman, a former Marxist,
friend of Lenin and Trotsky biographer, who said, “It seems obvious to me now —
though I have been slow, I must say, in coming to the conclusion — that the
institution of private property is one of the main things that have given man
the limited amount of freedom and equal-ness that Marx hoped to render infinite
by abolishing this institution. Strangely enough Marx was the first to see
this. He is the one who informed us, looking backwards, that the evolution of
private capitalism with its free market had been a precondition for the
evolution of all our democratic freedoms. It never occurred to him, looking forward,
that if this was so, these other freedoms might disappear with the abolition of
the free market."
(Max Eastman in the Readers Digest, July, 1941, p. 39. Quoted by, F. A. Hayek
"The Road to Serfdom" 1944, p116.)
[5] Hayek, Friedrich. The Road to Serfdom. University
of Chicago Press. 1944. p.
36.
[6] Hayek, Friedrich. The Road to Serfdom. University
of Chicago Press. 1944.
p. 145. "To split or decentralize power is necessarily to reduce the
absolute amount of power, and the competitive system is the only system
designed to minimize by decentralization the power exercised by man over
man."
[7] Hayek, Friedrich.
The Road to Serfdom. University of Chicago Press. 1944. “Is there a
greater tragedy imaginable than that in our endeavor consciously to shape our
future in accordance with high ideals we should in fact unwittingly produce the
very opposite of what we have been striving for?”
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