I was only familiar with Hayek as an important figure in the Austrian school of economics who enjoyed strong affection among right- and libertarian-leaning thinkers in American politics. I had been told that Road to Serfdom formed a major pillar of the conservative critique of Big Government, heavy-handed industrial policy, and interventionist public policy in general. I had also listened to Grover Norquist (not exactly a nuanced political activist) give a strong endorsement of the book on a podcast.
I suspected that Road to Serfdom would be a tirade against the evils of “government” and that Hayek would come across as a polemicist. With the reputation it has garnered in contemporary politics, together with its provocative title, I was effectively primed against generosity towards Hayek, and I strongly doubted that I would learn anything useful from the book.
The first aspect of Hayek’s argument that forced me to reconsider my priors emerges in the Introduction itself: Road to Serfdom is not primarily concerned about the welfare state. There, and throughout the book, Hayek is at great pains to stress that the implementation of progressive taxes and other redistributive policies need not overlap with the kind of state interventions that worry him. At one point he even suggests that “demand management” – countercyclical public spending, as Keynes advocated – is not inconsistent with his conception of a liberal state. These can all exist comfortably, subject to particular (but important) constraints, in a free society.
Rather, Hayek’s concern lies in “planning,” a catch-all term for public interference in markets. In the early 1940s, the British intellectual zeitgeist accepted as a priori the superiority of Soviet and Nazi-style state controls on commerce and expression. This was supported by good-faith assessments of recent history. The previous 20 years saw the corrupting hubris of financial speculation and the debilitating chaos of Depression and solvency crises. While America and Britain generally avoided the worst totalitarian impulses that emerged in the Depression’s wake, nor had they satisfactorily escaped them, and it seemed that Nazi Germany and the USSR, both having adopted significant state controls over social and industrial policy, had accomplished substantive recoveries. The extent to which ineffectual fiscal and monetary policy determined the economic trajectories of the remaining democratic countries of that era was still unknown. To the reasonable observer, it appeared instead that the failures of the capitalist system were categorical rather than conditional, whose solutions required the adoption of radically collectivist approaches to organizing the state and society.
Moreover, economics as a profession, which had only recently begun to apply mathematical formalism to its theory, used a constructed (benevolent) social planner with which to decide the allocation of capital and labor in the macroeconomy. The contemporary political motivation for this was clear, and despite the broad acceptance of the major results of microeconomics (such as the welfare theorems) that recommended policies of noninterference, many economists sought to syncretize democratic and liberal values with the strengths of centralized planning.
Hayek understood this project to be impossible. Without doubting the sincerity of his colleagues (and friends) in their commitment to democracy, he suggested that they would find the actions needed to establish the planning on their desired scale totally unacceptable:
That democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something so utterly different that few of those who wish it would be prepared to accept the consequences, many will not believe until the connection has been laid bare in all its aspects.
The path from the liberal systems in America and Britain to the planned societies imagined by his colleagues is Hayek’s road to serfdom. The arc of the book details the contradictions Hayek identifies between liberalism and planning, and how Hayek understands the eventual erosion of individual rights and political constraints by the planners to achieve their goals. Majority-rule necessitates rule-by-committee; planning powers require centralized powers; opposition constituencies – political, cultural, even scientific – are obstacles to the goals of the collective. To Hayek, the more one accepts the logic of planning, the less one can tolerate the ethos of liberalism.
Importantly, the critique that Hayek offers here is methodological and structural: the state of serfdom is the necessary consequence to planning. As a critique, it is emphatically agnostic to the value of the desired ends of planning. If those ends be accomplished without compromising the liberal components of a free society, then Hayek offers no condemnation. A genuine sensitivity to the argument of Road to Serfdom is perfectly consistent with, for example, the desire to eradicate poverty and to use the levers of public policy to do so. When Hayek does make value judgments, as when he states his preference for regulation of a natural monopoly rather than the alternative of a purely public ownership, he is careful to frame these as subject to empirical “facts on the ground” and admits that liberals need not side one way or the other to be consistent with the book’s main thrust.
The resulting picture does indeed provide hard limits to the scope of state power but leaves significant opportunities for public policy to achieve social objectives without approaching these limits. As he repeats throughout, societies responsible for improving the welfare of its members can (and should) be pursued without engaging in the planning that detriments all.
Hayek emerges from Road to Serfdom far more sympathetically than I anticipated. Whether I believe in the necessity of illiberalism as a product of planning as Hayek does is not crucial to my sensitivity to his overall argument. The case against planning was certainly strongest in the immediate aftermath of 1945, but in Britain and America many forms of planning, from industrial policy to nationalized industries, did emerge in the postwar environment. It reached a zenith immediately prior to the advent of Thatcherism and Reaganomics, and at the time, the intellectual impetus for these movements certainly included Hayek’s critique of planning.
I am more familiar with the aftermath of the crude liberalizations and deregulation of the era of Reagan and Thatcher than I am with the planning zeal of the postwar era. The fact that Thatcher gave no thought to the pain induced by her industrial privatizations, or the fact that the Reagan administration took a hacksaw approach to deregulate the financial industry, need not diminish the strength of the Hayekian case for reform in 1980. We live in a world in which the consequences of careless liberalizations are evident, but we don’t observe the counterfactual world that slogged along without them. Hayek himself fought against what he perceived to be the inevitable tide of Nazism and Soviet Communism, whose apparent merits had become foregone conclusions by 1944.
It’s not clear to me that we would presently live in totalitarian serfdom without the reforms of Thatcher and Reagan, but Hayek helps me to better appreciate the weight of that alternative.
In the end, Hayek surprised me by maintaining a restrained critique of socialism and planning, sympathising with the general goals of the democratic socialists of his generation while opposing their methods. From the vantage of Road to Serfdom, at least, Hayek’s case is eminently reasonable: if one values both liberalism and social welfare, then the design of public policy and vigilance towards the corrosive power of state overreach take on utmost importance.
I honestly struggle to understand the support he receives from his admirers. Road to Serfdom, at least, never advocates for libertarianism, and has nothing to say about the general tax rates of a country. But I suppose these are not inconsistent with the ethos of the book either. Did Hayek preserve the nuance of his book in himself? I honestly don’t know, though some suggest not. He would probably take issue with parts of my center-left reading of his work. Then again, I wonder how his thinking would have evolved from the 2008 financial crisis, the aftermath of which has not seen the rise of totalitarian alternatives like those which haunted Hayek in 1944.
Now that Reagan’s grip on the intellectual core of the American right is fading, his successor would do well to heed the dedication of Road to Serfdom: “To the socialists of all parties.” The ugly illiberalism of planning is apparent not just when applied to industrial policy but, as we continue to discover, in immigration policy, too. Frequently, Hayek appears prescient to the modern moment, but as a critique of present-day American conservatism as much as left-wing socialism. In all, the book contains real insights into the essential nature of planning, along with the dangers latent inside it. Its critique is worth understanding, whether the inevitability of serfdom it fears is as clear as Hayek maintains.