The Road to Serfdom

If you haven't heard of it, The Road to Serfdom is an essay by economist Friedrich A. Hayek and it was first published in 1944. It is Hayek's warning against the potential of centrally planned economies to be easily taken over by dictators and oligarchies.  Hayek felt that the free market could do a much better job in shaping society for the best than any government.  He is often thought of as a sort of nemesis of the economist John Maynard Keynes, whose theories were based in using government to influence and direct the economy. It's been a long road for me to understanding how this essay has been used by the Right as propaganda to influence public opinion about the Obama administration's handling of the economic crisis of recent years.

A couple years ago, I heard an irate teenager in the diner of the conservative bible belt town where I live “educating” a few elderly women about what was being perpetrated by the Obama administration. I listened in with astonishment as the boy told these women, who had been alive since before WWII, about how the world worked. He said that Obama was a socialist and that socialism was one step away from dictatorship. The elderly women listened politely, but though they were probably conservative too, seemed to look with knowing pity on the kid. They probably weren't as politically minded as he was, but a lifetime of experience had made them wise enough to be skeptical. I didn't understand where the kid's logic was coming from, but he sounded like someone who had just been made aware of some great “truth” by an idol, and by the ignorance of the kid's claims, I figured it had to have been a conservative pundit, likely someone like Glenn Beck.

Months later I was listening to a Planet Money podcast where Hayek was compared to Keynes in light of the battle going on in Washington about how to best go about solving the country's economic problems. They mentioned The Road to Serfdom, so wanting to better understand the views of Hayek, I looked up the essay and read it. What I was immediately struck by was how dated it was. It was obviously written at the height of the Nazi regime and would have served well as anti-Nazi propaganda, but was likely meant to be something different. Democratic countries with leanings towards socialist policies,in other words, countries that had government control of certain sectors of the economy, were compared and likened to the Nazi regime. He predicted that these governments were only steps away from authoritarian regimes like the Nazis. The reason the essay seems dated to me is that history has shown his predictions to be wrong.

 

His basic premise in thinking that government control of the economy would lead to dictatorship makes sense. In a system where the government doesn't own the means of production in all industries, it's much more difficult for a dictator to maintain control, because in seizing power, he would likely bring about the collapse of consumer confidence and the economy, as well. In a country where the government already controls all industry, a dictator could easily take over and control the entire economy. But since WWII, history has shown what he predicted to be wrong. Authoritarian regimes came about in the Soviet bloc countries (because of expansion of the Soviet regime into eastern Europe through invasion), but not in the democratic socialist countries of western Europe or the United States as he predicted. Many of these countries did have government control of major sectors of the economy, and were considered democratic socialist, but they were never taken over by authoritarian regimes.

In other ways, his analysis seems appropriate for the era he lived in and not for the economies of today. He lived in a time when countries were in the grips of war and had wartime government systems that were more far reaching than their peacetime equivalents had been. In times of war, the government took on more power to direct the economy toward the war effort. Wartime governments placed far more restrictions on the economy and on civil liberties. Although in recent decades in the US our federal government has been trying to gradually (and more radically in spurts) erode civil liberties with legislation like the Patriot Act, what conservative pundits view as socialist policies are far from what was seen in WWII. But a lack of knowledge of history keeps these conservatives from putting the Obama administration's supposed government takeovers of the private sector into historical context. They also fail to recognize that this is not a takeover by government, but a marriage of government and business for the sole benefit of business.

He says that collectivists won't think twice about killing the old and the sick for the sake of expediency, when today those that support democratic socialism favor programs that specifically help these groups and it is the free market libertarians who think they should be left to the will of the market. Back then, under Stalin and Hitler, there was no doubt that this is the way the centrally planned economies worked, but today that is not the case, though China still has an appalling human rights record. Not many in this country look critically at the Chinese anymore, though, because we are all dependent on their cheap exports. I think this is another sign of the datedness of this essay. Unfortunately, no doubt, ignorant conservatives who wave Hayek's ideas in our faces don't know anything about history or what socialism means today and how it might differ from the past. And they know even less about how far away from socialism are the policies of the Obama administration.
 

I suspected that Glenn Beck was the pundit who was spreading the misinformation about Hayek, so I did a google search of Beck and The Road to Serfdom and quickly found a youtube video of Beck doing a special show on the essay. During his monologue Beck says a lot of nothing, though he makes a point of stressing that we have to understand history to understand what our Socialist president is up to. So he gives a spiel on the Glenn Beck version of history, where he's sure to mention a bunch of references his viewers probably don't understand, but are sure makes him sound like he knows what he's talking about. (The most enlightening segment is when Beck shows a film clip of George Bernard Shaw, the famous playwright, and calls him an evil socialist, a mass murderer, and a Nazi sympathizer. The film is supposedly the proof, though in it Shaw mentions nothing about support for the Nazis. Someone with very little brains might watch the clip and be convinced that Shaw thought all humans worthless and wanted to kill them all. I was skeptical of the clip, because by the jerky and obvious edits, I thought it possible something had been deleted and that the entire sequence had been taken out of context. Maybe Beck fans don't have a basic ability to question such obvious shams, but I looked into the clip further and found that the original oration had been about eugenics and was meant to be a satire against the more radical elements of the eugenics movement. One commenter on the video said that there had been parts cut out of it and that Shaw had been talking about euthanasia, which could be seen as part of a eugenics philosophy. In reality Shaw was a humanist who was very concerned with the oppressed in society and, though a socialist, wanted a gradual and peaceful transformation of society) Beck goes on to explain how Obama has taken over the auto industry and the banks. Of course, anyone who knows what they're talking about knows that Obama was just continuing what Bush started in giving out the biggest corporate welfare check in the history of the country. Likely all those banks and corporations that got bailout loans were not thinking they were being oppressed by a government intent on taking them over. They were more likely happy they had a cash cow like the US government to help them out, despite the fact that their greed had royally fucked over the entire US economy.
 

So getting back to the point, Beck was trying to equate this bailout of corporate America and all its crooked bankers with socialism and eventual dictatorship in much the same way he was trying to equate Shaw's satiric oratory on eugenics to his support for the Nazi regime. It takes some creativity and a lot of incredible ignorance to make the stretch, but there are plenty of weak minds out there. Which brings us back to the kid in the diner talking to the elderly women. I'm sure that clip of Shaw was convincing for him, and I'm sure the re-election of Obama is just another sign that dictatorship isn't far off. The following quote from Hayek is telling and might explain a strategy Beck relies on to get support for his own ideas:
 

It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party.
 

But then again, on the liberal side of things, Naomi Wolf was predicting the Bush Administration would become a dictatorship before long and it never did. Many liberals fell for that.
 

Now continuing with The Road to Serfdom, it's interesting that despite Hayek's warnings about authoritarianism that conservatives now quote, he was supportive of the Pinochet dictatorship in Chile because of its embrace of a free market economy. Yes, it was a perfect environment for business, without any cumbersome and costly labor laws or assurances of basic human rights. Of course, there are plenty of restrictions on freedom in an authoritarian regime. This shows Hayek's views must have strayed since the time when he wrote the Road to Serfdom, because in that essay he stated:
 

There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.
 

I'm not sure that the Pinochet regime, being too busy catering to the business elite (along with the CIA) and of course slaughtering, disappearing, and torturing its own people, would have felt the same. This also shows that though conservatives seem to ignore the fact completely, in the RTS Hayek never advocated doing away with all government control of the economy. He supported having a social safety net. The above quote states this clearly. Hayek just didn't want the government to be involved in the market where it didn't need to be, where the market would do a better job of providing for society. He recognized that the market was not good at providing for people in hard times, and it was at that time the state could provide for people. He also seemed to recognize that the market could not protect society in certain areas:
 

The successful use of competition does not preclude some types of government interference. For instance, to limit working hours, to require certain sanitary arrangements, to provide an extensive system of social services is fully compatible with the preservation of competition. There are, too, certain fields where the system of competition is impracticable. For example, the harmful effects of deforestation or of the smoke of factories cannot be confined to the owner of the property in question.
 

This is not something free market conservatives would accept, yet they are the ones waving this essay in their campaigns for smaller government. This is likely because Hayek later changed his views and abandoned any support for government involvement and was an outspoken critic of the government safety net. This would also explain why Hayek supported what happened in Chile. Though apparently in his old age, Hayek corresponded with Charles Koch, billionaire and founder of the conservative think tank the CATO Institute, who urged him to try to collect medicare and social security that he was due. 1

 

In reality, Hayek never got the upper hand over Keynes in the US and in many other rich capitalist countries because the government today is very involved in manipulation of the economy, for good or bad. Our economy in the US is centrally planned in many ways. The federal reserve, though chaired by someone chosen by the government, is a private organization and is controlled by an elite group of bankers. But they still have a huge influence on what can happen in the US economy. This is not a good system either, and is the reason why corporate crooks can ruin the economy, walk away with billions, and still get government bailouts. But we don't have central planning in the manner Hayek is criticizing, where everyone's occupation is determined for them by the government, where all industries and all agriculture is owned and run by the government. Still, even in the US, everyone expects their politicians to solve any economic crisis that comes along. We expect them to “create jobs”, to turn around the downturn, to create prosperity, to continually grow the economy(something the laws of physics just don't allow), and that requires government meddling in the economy.

Yet this is all to say nothing of the influence of the market on our government. There is a revolving door between government and the corporate world, and the political system along with the laws of the land are heavily influenced by who has the most money to give. Corporations get billions in tax breaks, get favorable legislation to give them an advantage over other companies or over society in general, and get sweetheart government contracts. They see the government as their cash cow, not as their enemy (though that's not what conservative propaganda leads us to believe). Campaign finance reform could go some way toward reducing influence of the market on government, but real reform will probably never happen because of the influence of the market on government.

Hayek's claim in the Road to Serfdom is basically that a freer market will create a better economy and thus a more robust society. Yet there are examples of countries where centralized control of the economy has led a country through a great crisis with an effectiveness that country with a freer market would likely not be able to accomplish. When the Soviet Union collapsed and Cuba lost all the economic support it was getting, instead of society falling apart and failing utterly, the government was able to implement massive changes throughout the country quickly to avert a failure of the economy. The loss of support from the USSR meant a loss of resources that had been integral to the operation of Cuba's food systems, the loss of chemicals and equipment needed for large scale chemical agriculture. Cuba started what it called a “special period” of reforms that promoted a decentralization of food production and a switch to organic agriculture. They were successful in avoiding an economic calamity that probably would have led to a breakdown of society in a country like the US in the face of a similar crisis.

But to point out the possibility that success or failure of a centralized economy depends largely on the skill of those doing the planning, there is North Korea, whose food systems collapsed following the loss of support from the USSR, causing the starvation of about 3 million. North Korea stuck with large scale chemical agriculture though they could no longer support that kind of centralized industrial scale of food production, and their economy failed. Another example of a successful centralized economy is China, whose government not only in recent years has been successful in leading its country to economic success through centralized planning, but in the past, over a period of a few centuries, was able to keep the largest population in the world fed through state control of its granaries (that is during times when the country wasn't being controlled by colonialism). Many of the reforms the Chinese government is able to make quickly on a massive scale would never have flown in countries like the US, where too much control of the economy and of some personal freedoms is frowned upon. And as most people know, Cuba's medical system is second to none in Latin America and considering the fact that it gives basic health care access to all of Cuba's population, far surpasses the US in health care security for it's people.