One sign of a classic book is that the critiques it offers remain valid for years after being penned. F. A. Hayek’s famous book, The Road to Serfdom, demonstrates that quality. As the battle continues to rage between advocates of free market systems and various forms of socialism, Hayek’s diagnosis of the likely end of directed economic systems—namely, tyranny—illustrates why advocates of markets have not simply rolled over and played dead, despite the economic and social realities of economic problems.
Another sign of a classic book is that it has explanatory power and offers brief summaries that could have been expanded to book length treatises. The Road to Serfdom contains dozens of examples of succinct statement of a deep, complex economic and social problems that arise from attempts to plan the economy.
The book, overall, is a masterpiece that deserves to be read and that contemporary supporters of socialism should be forced to reckon with. A few points, however, arise from the wider tapestry of the work that deserve especial note.
First, contrary to popular representations that attempt to associate free markets to National Socialism, Hayek shows that the fascism promoted by the Nazi’s was an exacerbation of the socialist ideals that had been embedded in German society for several generations rather than a market response. This, of course, violates Godwin’s Law by invoking the Nazis. However, to be fair, the volume was written during World War II. However, the close connection between the totalitarianism of Nazism, much like Italian fascism and Stalinist communism, is a significant point of the entire volume. Attempts to plan the economy centrally lead to tyranny of various degrees.
Second, Hayek is careful to differentiate the welfare state from economic socialism. He actually lauds the work of the British safety net in helping to ensure the basic needs of people are met when they are out of work. At the same time, he cautions against welfare efforts that that undermine the market.
An element that is missing from Hayek is a discussion of why liberty is a worthy end. That is, after all, the great advantage he lauds in the market system. Despite its inequities, the market system enables a greater freedom of choice for people. He argues for individualism, which is not quite the bogeyman contemporary opponents of markets make it out to be, but an effort to value the individual and to assert the rights of the individual even amidst the collective. Because of this lack, this work by Hayek is open to criticism that it can result in atomistic selfishness, but there are answers that are implied by the context. Hayek represents there are limits to human freedom, which should be enshrined in law. He is, therefore, not arguing for a Randian version of anarcho-capitalism. Hayek also recognizes there are externalities (like pollution) that may need to be regulated apart from market influences.
In short, despite the lack of explicit reasoning about certain moral assumptions, the market economy that Hayek lauds in this text is a far cry from the strawman constructed by many of capitalism’s critics. It is also quite a distance from the dangerous individualistic vision of market participation that is offered by some of the free markets popular supporters. There is a moral thickness to Hayek that, while still falling short of biblical adequacy, represents a better foundation than many, both supporters and detractors, assume.
A strength of the text is that Hayek shows that good intentions in economic planning do not make up for the inability of humans to adequately plan. The range of social goods that are valued by different people make it impossible for central planners to prioritized the preferred goods of the population, since there will always be competition between those goods. The priority of goods must, therefore, be imposed rather than derived and will thus lead to the constraint of reasonable and warranted freedoms of many to meet the goods of the empowered few planners.
Here again, the lack of an ethical consensus that can drive the social action of the planners reveals that economic reasoning is second order. That is, moral virtue must precede the economic system. Any economic system is doomed to reveal the moral failings of its constituent members. Hayek’s argument and historical economic evidence reveals that markets have the best internal mechanism for mitigating vices apart from centralized planning. Still, a market driven by an immoral people will merely enlarge their immoralities. There is, perhaps, greater danger in enforcing evil as an intended “good” in collectivist economics that makes the ability in a market system of to refuse to participate in immorality preferable.
Hayek also reveals that today’s arguments that “socialism must be implemented because of impending doom” is nothing new. There is nothing new under the sun. Human nature is consistent in any economic system. Our task is to work toward the best possible system of economics that will encourage human flourishing. There are many who believe, as Hayek does, that free markets tend to do that better than various forms of collectivist economics.