The Road To Serfdom

Hayek warns that central planning will not generate the benefits it promises, but instead will create a society in many ways the opposite of what its supporters want. Marketplaces are unpredictable systems, where prices fluctuate and workers migrate toward better opportunities. They are a daunting challenge for planners, who can never grasp in their hands the millions of threads that make up the fabric of trade among people. Try though they might, planners will be unable to control economic events, and they must, in the end, resort to the use of force to compel people to stay in place and accept the positions and wages they are assigned. At first, the people will merely lose their economic freedom, but as the problems of planning accumulate, soon the government will feel compelled to rein in complaints and protests, until finally the citizenry will discover that their civil liberties have been taken from them. Hayek sees this as an inevitable process, and he points to two socialist societies, Russia and Germany, that demonstrate the likely outcomes for any country, including democratic ones, that attempt the journey from free markets to planned ones.

For Hayek, the most beneficial political development of recent centuries has been the movement toward liberty, toward freedom from government oppression and freedom for individuals to follow their own paths. It is freedom that has sparked a revolution in prosperity, especially in Western nations that practice respect for the individual. A society that largely leaves free the marketplace, with its natural system of pricing and resource allocation, quickly becomes economically successful.

The ideal of liberty has been tarnished by accusations that it aggravates poverty and oppression. Hayek responds that freedom has lifted countless millions from poverty, and that freedom of choice is precisely the opposite of oppression. He blames such attacks on the self-indulgence of people whose very success gives them the luxury to doubt its source. Modern impatience with the pace of growth—which Hayek argues is faster under freedom than with any other system—leads people to condemn the principles on which their prosperity rests. They would learn, too late, that the reality of collectivism would quash their freedoms and create instead a society of restrictions and poverty, as proven by the Soviet and Nazi experiences. Thus, people in the West show a knack for, as it were, trying to kill the Golden Goose of freedom.

While Western intellectuals praise the virtues of a planned economy, they ignore—either from ignorance or deliberately—the clear example of two centrally-planned dictatorships, Soviet Russia and Nazi Germany. Hayek points to them as proof that socialism not only fails to deliver on its promises but destroys respect for the individual and indentures populations to its demands.

Hayek argues that this must happen in any planned economy, as the planners cannot achieve full employment and wage equality without suppressing people’s individual needs and wants. Eventually, even the best-intentioned planners must resort to draconian regulation, propaganda campaigns, and arbitrary decision-making if they are even to hope to accomplish their goals. In the process, respect for individual rights, the Rule of Law, and prosperity itself must go out the window.