The Road to Serfdom Revisited

Alongside Ayn Rand’s The Fountainhead (1943), The Road to Serfdom (1944) by Friedrich A. Hayek is one of the foundational texts for libertarian American conservatism as exemplified by Milton Friedman’s economics writings and Ronald Reagan’s assertions that “government is the problem.”  I was therefore fascinated by a recent article in an economics journal on “The Road to Serfdom after 75 Years.”[1]

The author of the article, Bruce Caldwell, is a professor at Duke and editor of the Collected Works of F.A. Hayek.

The article starts out by describing the book as:

“a work known by far more people than have read it. And it is probably safe to say that many believe they know its theme: a defense of what might be termed laissez-faire economics, together with the prediction that any deviation from that path will put a society on the road to serfdom, with the ultimate outcome being the suppression of political, civil, and personal liberty.”

But Caldwell then goes on to say:

“Even a cursory glance at the book will show that there are problems with such an interpretation. For example, Hayek not only did not recommend, he actually decried laissez faire: “Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principles of laissez faire” (Hayek 2007b [1944], p. 71). Whatever meaning one might attach to the phrase “laissez faire,” this does not sound like the words of an advocate for it. And indeed, much of the economics in the book would today be considered mainstream. Hayek stated clearly that provision of “an extensive system of social services,” of a safety net, and of various forms of regulation (e.g., of poisonous materials, to ensure sanitary conditions, on working hours, to combat what we would today categorize as negative externalities, and to provide public goods), were all compatible with the sort of liberal system he supported (ibid., pp. 86–87).”

Whoa!  That’s a total surprise! So rather than shunning the book as a right-wing rant, I decided that it’s actually a must read.  It’s pretty dense going, but fascinating. As explained in Caldwell’s article, Hayek was writing during the Hitler years, as an immigrant to England from Austria who was appalled by the strength of socialist sentiment in England. His argument was a warning about how central planning and nationalization of businesses essentially required authoritarian government and the demise of individual freedoms. And yet Caldwell is entirely on point in insisting that Hayek was not a libertarian as we know it today.

True, the book strongly emphasizes the evils of “hard socialism.” But Hayek’s argument also embraces vital departures from laissez-faire, as cited above. These qualifications are almost universally overlooked these days. One reason for this, according to Caldwell, is that Readers Digest came out with a widely circulated condensation that “emphasized the more provocative points,” followed by a cartoon version (literally) in Life Magazine, caricaturing life under central planning as slavery.  As explained by Caldwell: “These summaries virtually guaranteed that Hayek would be misunderstood by the vast majority of those whose knowledge of the book derived from such sources.” Indeed, if today you try googling “Hayek Road to Serfdom” you’ll get the Reader’s Digest version in full text, but not the book itself. Another source of misdirection stemmed from an Introduction to a later edition of “The Road to Serfdom,” written by Milton Friedman, in which Friedman moves the goal post to include not just centralization and state ownership, but also the tendency towards big government in general.

Two chapters of “The Road” especially resonate in the context of recent political conditions in the United States: Chapter Ten, entitled “Why the Worst Get on Top;” and Chapter Eleven on “The End of Truth.” The socio-political analysis in these two chapters is remarkably prescient and well worth reading even if you don’t try plowing through the whole book.

Let me close with a few observations of my own to supplement the Caldwell quotation (above). Page numbers here refer to the version in Volume 2 of Collected Works.

• P. 85. “It is important not to confuse opposition against this kind of planning [central direction of the economy] with a dogmatic laissez faire attitude.”
• P. 129. “Here as elsewhere the state can do a great deal to help the spreading of knowledge and information…”  In several passages, Hayek clearly endorses government actions that promote competition, assist markets to function better, and strengthen incentives for individual initiative and choice. Not surprisingly, he strongly advocates free trade.
• P. 148. “Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”  Also, “The case for the state’s helping to organize a comprehensive system of social insurance is very strong.”
• P.151. Planning means “the application of engineering technique to the whole nation.” He recognizes that this is necessary during wartime, as in 1944, but warns sternly against continuing such controls once the war ends.
• P. 152. “Indeed, some voluntary labor service on military lines might well be the best for the state to provide the certainty of opportunity for work and a minimum income for all.”
• P. 156. “There can be no question that adequate security against severe privation…will have to be one of the main goals of policy. But…security must be provided outside the market and competition be left to function unobstructed. Some security is essential if freedom is to be preserved….”
• P. 172. Totalitarian propaganda “undermine one of the foundations of all morals: the sense of and respect for truth.”
• P. 206-7.  A diatribe against monopoly in all forms.
• P. 215. “Let a uniform minimum be secured to everybody by all means; but let us admit at the same time that with this assurance of a basic minimum all claims for a privileged security of particular classes must lapse….”

To place the quotations in context and fill in my ellipses (used to shorten the passages), please go ahead and read the book. You’ll find cogent and thought-provoking arguments against many forms of government control. Hayek was indeed adamantly opposed to centralizing economic authority. But you’ll also see that he was not a libertarian free-marketeer.

[1] Bruce Caldwell, “The Road to Serfdom after 75 Years,” Journal of Economic Literature 2020 58(3), 720-748.