The Road To Serfdom

The old sense of the word “liberal” was of limited government and respect for individual freedom and initiative; it’s in that sense that Hayek uses the term. The more modern use of “liberal” refers to what Hayek calls “collectivism,” “socialism,” or “planning,” and, occasionally, “progressivism.”

The Editor’s Introduction states that “Hayek’s immediate objective was to persuade his British audience that their heritage of liberal democracy under the rule of law should be viewed as a national treasure rather than an object of scorn” (30).

A government that obeys the laws set forth by its own democratically-elected legislature is one that obeys the Rule of Law; a government run by the whims of its rulers does not. Without the Rule of Law, civil liberties can quickly be crushed. Hayek believes that, under a collectivist regime, the Rule of Law must collapse, and will be replaced by arbitrary rule.

“The West,” or “Western civilization,” or “Western democracies,” are Britain, the United States, and a group of smaller countries in Europe that have established liberal democratic institutions. The East is Eastern Europe, which has been steeped in autocratic traditions, especially under the German leader Bismarck and the Russian czars and Bolsheviks. Hayek cites evidence that Germany twice fought in world wars partly for the purpose of defeating Western liberal values.

When a government controls an economy—owning or directly overseeing production—it is socialist. The purpose of socialism is to replace corporate profit-seeking and its wealthy and poor classes with a centrally-planned workplace that attempts to equalize workers’ paychecks. In the strictest such regimes, everyone works for the government and there is no private property aside from furniture, clothing, toothbrushes, and the like. Hayek notes that socialism has also come to mean the Welfare State and its social safety net, but he predicts that such policies devolve over time into full-blown socialism.

National Socialism, or Nazism, is a system of social, economic, and political control that ruled Germany from 1933 until the end of World War II. It was anti-capitalist, pro-planning, and nationalistic. It combined a love for old German traditions with a militaristic sense of how society should be organized. Hayek argues that Nazism is essentially a climax version of socialism, but that Western collectivist sympathizers have rejected that criticism on the mistaken belief that the Nazis’ collaboration with large corporations amounted to a support for capitalism.

Hayek uses this term almost interchangeably with “socialism” but formally thinks of socialism as a subspecies of collectivism. He means the theory and practice of collecting all parts of an economy into the hands of a government that presumably serves the voters but effectively dictates through political compromise and bureaucratic whim. Collectivism is inherently hostile toward individual freedom, as people must be tightly organized in a collective economy. Any such regime soon becomes authoritarian.

Planning is the process by which a government manages and controls an economy in a collectivist regime. Its purpose is to equalize workers and their pay, but in practice, planners cannot anticipate all the millions of small changes in supply and demand that frustrate their efforts. Instead, they hand out privileges to the most politically-connected groups. This, in turn, causes upheavals that must be managed or suppressed, until a “planned” economy becomes either chaotic or stultified.