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FA Hayek The Road to Serfdom

FA Hayek The Road to Serfdom What impressed me most about the doctrine put forth by F.A. Hayek in The Road to Serfdom was how subtle and well reasoned yet logical and clear, philosophical yet concrete and realistic his theories are. It is little wonder way this book has had a great influence on so many. One must wonder how profound a writing this was when it first appeared, never mind the influence today. However, the message Hayek argues is taken granted for today and may not be as persuasive to today as when he first put forth his ideas. The struggles of WWII and the dramatic change after its conclusion that Hayek uses to illustrate his thesis are lost to many today. But we are faced with different problems that many still believe are best solved by ‘central planning’, ‘production for use’, and a need for ‘conscious direction’ of resources. Instead of direct tyranny, the problems are urban and environmental crisis that are said to be the result of selfish businessmen and corporations who disregard any social responsibility for profit. The desire for profit has led these same rapacious individuals to create the social crisis by promoting false values and immoral vices. Of course this has resulted in the welfare and poverty crisis and how can it be possible to have ‘poverty in the midst of plenty.’ The only way to solve this crisis, to get selfish individuals to except some social responsibility requires an expanded, collective government. Fortunately, today any promotion of collectivism is paralleled with a promotion of individualism. The experience with big collective government will only result in strengthens the protest against any rise in the establishment, and aid in the promotion for freedom. It is clear that government ought first and foremost protect the right to freedom and secondly promote the virtues of society. However, this is under constant attack by many who despite the miserable failure of collectivism cling to the vain hope that it will solve our social ills. Hayek argued against this misplaced hope and presents a doctrine that is more promising for the greatest amount of freedom and prosperity. Why Freedom Must be First by Tibor R. Machan (1) Machan wrote this paper as a research paper at the Hoover Institution, in Stanford, California. Machan believes that the political ideal of individual rights is morally sound and makes possible the most peaceful and prosperous community life for human’s beings anywhere. He argues against any form of collectivism, communitarianism, and market socialism, and suggests that it is more promising for humans to work out the implications of individualism. He is parallel to Hayek in his believe that humans search for answers, and by nature are creative. For Machan, it is best that humans do things on their own initiative. This he feels explains better than anything else all our developments, cultural changes and so on. Allowing the diversity that comes from individuality furthers communities ends the most. Humans distinguishes themselves as rational animals, so the be rational there must be individual effort and initiative. This is what places each individual in the decisive role of there life. Machan states we can persuade people but can never guarantee that one can get many people to think along a certain line. To be free, the mind must always be able to reject any argument and try and come up with a better one. Private Property is the Most Important Guaranty of Freedom, by Glen Whitman (2) (Department of Economics, New York University) According to Whitman, private ownership of one’s domain implies an ability to dispose of or alienate parts of that domain as one sees fit. As an individual’s vision changes, so does their domain. Voluntary redistribution is a natural feature in a free society. Because of this Whitman argues that there is no need to invade an individual domain in order to give individuals the ability to improve and prosper. A free society consists of many individuals all of whom have a desire in achieving a better situation between their ultimate desires or values and there present circumstance. In such a society individuals have the best chance of finding someone else who is willing to deal and exchange for things they each want. Whitman, as the many other classical liberals agree, there is no guarantees that every individual will succeed in achieving their goals. The best a free society can do is provide a set of rules that promote the achievements of individuals. For Whitman, private property is the strongest foundation that promotes a sincere respect for individuals’ values judgments and a commitment to the ideal of peaceful cooperation. I Must Speak Out, The best of the Voluntaryist, by Carl Watner (3) The Voluntaryist a dedicated to exploring the possibility of a completely free society, far more radical than Hayek or anyone else mentioned in this paper. Their purpose is to advocate a non-political strategy to achieve what they believe is the freest society. They reject all electoral politics; they view politics as incompatible with libertarian principles. A government can only cover over all its actions in a cloud of moral legitimacy in order to maintain power. Voluntaryist desire to delegitimize the State with the use of education, they also advocate the removal of the support and implicit consent on which State powers lays. This is a view and theory I can say I have little time for. The Libertarian Theology of Freedom, by Reverend Edmund A. Opitz (4) Rev. Opitz concludes that people of faith in the Untied States and England embraced individualism up to mid way through this century. There was a belief among the religious that the best way to improve the world was to promote and reform individuals. Opitz states that with the rise of the “Social Gospels”, which for him means big government, whose promotion was that liberty is a doctrine of the corrupt, ruthless and, selfish in society. Optiz tries to revert this idea by promoting liberty that exemplifies a true meaning of Jesus. F. A. Hayek’s aim, he said, was to “restate” or systematize those basic principles whose observance generated and sustain Western constitutional government and the free society (5). The “classical liberal” principles that inspired and guided Hayek were the same that Smith, Burke and Locke promoted. Hayek represented the same political tradition. Not only did he hold the same political philosophy, but also he had similar views regarding the nature of society, the role reason played in society, the proper tasks of government, and even though Hayek was not very religious he had somewhat the same views on moral rules. As Hayek made clear in The Road to Serfdom, classical liberalism’s conflict with central planning was not over the shared goal of enhancing the well being of the greatest possible number of people but over the way to achieve that goal. Hayek’s thesis in The Road to Serfdom is that one intervention inevitably leads to another (6). The unintended consequences of each market intervention are economic distortions and pitfalls in a system. Each intervention generates further interventions to correct the previous one. This interventionist theory leads society down the road to serfdom. We must remember that The Road to Serfdom was written in 1944 at the height of the naīve leftist faith of control and planned economic policy. Central to Hayek’s doctrine is the believe that self-interested behavior can be the source for great societal good. In addition, Hayek also holds dear the Whigian hatred of arbitrary power, and how to prevent arbitrary action by a government becoming part of society. John Locke was one, who said it best about the harmful effects of arbitrary action, “freedom . . . to have a standing rule to live by, common to every one of that society, . . . a liberty to follow one’s own will in all things, where that rule prescribes not; and not to be subject to the inconstant, uncertain, arbitrary will of another man. . . . Whoever has the legislative or supreme power of any commonwealth is bound to govern by established standing laws promulgated and known to the people and not by extemporary decrees. . . . Even the legislature has no absolute arbitrary power, . . . but is bound to dispense justice, . . . while the supreme executor of the law . . . has no will, no power, but that of the law. . . . The ultimate aim is to . . . limit the power and moderate the dominion of every part and member of that society.”(7) Time has shown that central planning not only robbed many people of their basic freedoms but, destroyed the economies of their societies. After reading much of Hayek’s work, I am struck by his vision of how disastrous central planning would be to political policy and economics. To believe that we must centrally direct economic activity if we want to make the distribution of income conform to the current ideas of social justice, Hayek stated. He continues, “Planning”, therefore, is wanted by all those who demand that production for use be substituted for production for profit (8). But such planning is no less indispensable if the distribution of incomes is to be regulated in a way that to us appears to be the opposite of just. Humans, for Hayek, are creative by nature and are not merely responsive to others. Humans do things on their own initiative explains better than anything else all our developments, cultural changes, diversity of approaches to life, varied philosophies, and religions, as well as much of our disagreements, conflicts, even animosities (9). Human beings change and adapt to their environment more often than any other living species. Humans are always coming up with new ideas, plans and solutions to problems. Hayek put forward that knowledge is discovered only through a trial and error process involving many people. Hayek believed that we all hold various beliefs about objective facts due the many influences one has throughout their lives. Humans generate their ideas by use of deduction and analogy or likeness. Every individual for Hayek has some advantage over all others because the individual possesses unique information of which beneficial use might be made. (10) However use of the knowledge can be made only if the decisions depending on it are left to the individual and are made with the individual co-operation. Knowledge and initiative play an integral role in Hayek’s argument for the success of competition as a means of generating the most amount of wealth for the most amount people in society. Hayek recognized the power of free markets and he explained how a government might seek to regulate the market without distorting the power. To make the most of all these ideas they need to compete in society, were the ideas that are successful would survive and become common Knowledge. Similar in a way to the theory of evolution, knowledge that is weak will not succeed whereas strong ideas will blend with other strong ideas to become even better than the original idea. Hayek describes Knowledge discovery as evolutionary, but does point out that it is not he same as “the survival of the fittest” theory, in so far as all knowledge has value. So even the poorest mind can potentially acquire valuable knowledge that can be used to acquire wealth. Hayek also points out that truth and knowledge are different. He said that unrecognized knowledge is an entrepreneurial opportunity. (11) If an entrepreneur can convert undiscovered truth into common knowledge in society, he provides himself an opportunity to generate wealth. Hayek considered free markets powerful because they generate wealth in the most efficient way. The total quantity of wealth constantly increases due to productivity increases allowing all to acquire some of the increased wealth. In a world where free markets and globalization are becoming the accepted mean of economic survival, education becomes an extremely important debate. Hayek recognized the importance of education especially when due to technology jobs of low productivity and knowledge value are eliminated. As we all know this forces people to re-train themselves. The invisible hand and trickle down effect that the market will only succeed in Hayek’s view if individuals are able to retrain and perform the new function that there is demand for. The individual needs to know what skills are marketable and were the skills are most effective, the resources to obtain these skills and most importantly for Hayek, the desire to be trained and to use these skills. A method of providing these requirements would be the best free market, knowledge efficient cure to inequality. (12) Something socialism tried unsuccessfully to remove through unpopular and ineffective wealth distribution schemes. Free markets are powerful at generate wealth because they find the solution to a given problem by allowing any number of people provide a solution. All ideas try something different, with the successful ideas being emulated. This process of continuous discovery of what sells in the market, how to produce and provide the best product and service is the best way of increasing wealth and equality. As mentioned above, the dispute between central planning and Hayek’s ideas is not a dispute on how we ought to choose the various possible organization of society. And, it is not a dispute on the use of systematic and foresighted thinking in planning our common affairs. (13) It is about what is the best way of doing so. The question of planning for Hayek is whether for the purpose of planning it is better for the holder of coercive power should limit their actions to creating the best conditions for the knowledge and initiative of individuals are given the best possibility so that they can plan the success of society. Or is the rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed Blueprint. (14) The socialists of the world have determined the use of the latter understanding of planning. It is important for Hayek that one does not confuse his opposition of central planning with a dogmatic laissez faire attitude. His argument is in favour of making the best possible use of the forces of competition as a means of coordinating human efforts, and is not an argument for just leaving things as they are. Hayek’s conviction is that where effective competition can be created, it is the best way of guiding individual efforts. He does not deny but even emphasizes that in order to for competition to work, there is the need for a while thought-out legal system. In addition to this he recognizes that past laws are not free from having defects. Nor does he dismiss, where it is impossible to create the conditions to make competition work, society has to resort to guiding some economic activity. He does stress however, that the superiority of competition in most circumstances is the most efficient method known and more importantly because it is the only method that can adjust our activities to each other without the coercive or arbitrary intervention of authority. Hayek stress the necessity that all involved in a free market must be free to sell and buy at any price which they can find another to transact with. Also, anybody should be free to produce, sell, and buy anything that may be produced or sold at all. One must assume that he is referring to anything that is producible within the law of the land. The entry into the many trades need to be open to all on equal terms and the law can not tolerate any individuals or groups who restrict entry. Attempts by any to control prices or quantities deprive competition of its ability of allowing an effective co-ordination of individual efforts. (15) Hayek does point out however that this is not true of production, so long as the restriction affects all producers equally. An example Hayek gives is to prohibit the use of poisonous substances or to require all to use special precautions while in use, to limit working hours or to require sanitary codes. If the advantages gained by such restrictions are greater than the social cost or inconvenience they impose, than intervention of competition is compatible. It is this vain of thought that Hayek stress the importance of a well thought of legal system. The competitive system requires the organization of many institutions like money, markets, and channels of information, but most importantly the existence of a suitable legal system. The legal system must be designed to preserve competition and enable it to operate as efficiently as possible. It is not sufficient that the law only recognize the basic principle of private property and freedom of contract. (16) Much will depend on the precise definition of the right of property applied to many different things. Again Hayek points out the how no legal system can cover all possible circumstances that will arise from the free competitive system. In the perfect case the owner benefits from all that is rendered by his property and suffers all the damages caused to others by it use. Yet, the price competition system will become ineffective when the damage caused by the use of property cannot be effectively charged to the owner. When this is the case some other method may be found. An example given by Hayek is the signposts on the roads or in most circumstances every individual user cannot pay for the roads themselves. Nor can the effects of deforestation or the smoke and pollution from factories be confined to the owner of each property in question. (17) Here the necessity for some sort of regulation is evident. A common argument presented by many who promote collectivism as the deliberate organization of the labors of society for a single goal. And the free competitive system lacks any mindful direction toward an aim, and its activities are controlled by the whims and fancies of rapacious individuals. The ‘common good’ or ‘general welfare,’ for which society is to be organized in a socialists mind does not take much to see the welfare of a nation of people cannot be summed into a single idea. The welfare of people, like the happiness of man, depends on a great many things. (18). Hayek believes that in order to direct all our activities on a single plan assumes that every one of our needs and desires be given a rank in order of its value to that plan. The plan assumes the existence of an ‘ethical code’ by which all-human values are given their place. Hayek clearly believes as I do that no such code can exist without the need for an arbitrary authority. Based on the impossibility of such an ethical code Hayek puts forth what I believe is his theory on the nature of man is. This is an area of political and economic philosophy that is great cause for debate. I do believe however that Hayeks idea is one of the most compelling I have read. There is a minor importance placed on whether the ends of a person are based on his own needs, or whether they include the needs of others. In other words, whether the individual is egoistic or altruistic. The important point is the basic fact that it is impossible for any man to be aware of the urgency of more than a limited numbers of needs. Whether they be his own physical needs, or that he takes an interest in the welfare of all others he knows. These ends, which any person is concerned, will always be only a minute fraction of the needs of all men. (19). This is the fundamental fact on which individualism is based. It does not assume that man is naturally selfish or egoistic or that he even should be. It merely states the indisputable fact that the limits placed on our powers of imagination make it impossible to have a code of values applicable to all. Hayek goes on to conclude what he believes are the social ends in society. They are merely identical ends of many individuals, or in more detail, ends to an achievement of which individuals contribute to a group. And in return, receive the satisfaction of their own desires. (20). When people come together to satisfy an end they share, the organizations, like a state, form its own ends and means. The extent of the organization is determined by the extent to which the many individuals are in agreement with the ends. Now if one was to use central planning, the does not agree to the ends. This would be like a group of people who set out on a journey without agreeing on where to go. Resulting in many of the group making a journey to a place that they may not have wanted to go to. The flip side to this is understanding human nature, nothing would ever be agreed upon if always left up having the agreement of all in a group or society. However, when groups become, as many parliaments do, ineffective talking shops it is apparent the direction of the group be put in the hands of an expert. On many occasions there will be a sacrifice of some ends to achieve others, and who best to choose ends over others than the individuals who know the most of the facts. Fortunately today, most people view the idea of complete centralization of economic activity with revulsion. Today we are in the lucky position to have witnessed the demise of Soviet socialism, and how stupendous a task it was to build such a society. Yet, the fear of everything being directed from a single authority brings a far greater view of distaste for collectivism. The greatness of Hayek however was he saw this before the growth of the Soviet Union and even before the end of WWII. Bibliography: Bibliography 1. Why freedom must be First, by Tibor R. Machan. Hoover Essays: www.hoover.stanford.edu 2. Private Property is the Most Important Guaranty of Freedom, by Glen Whitman. Olive W. Garvey Essays, The Independent Institute. www.independent .org 3. I Must Speak Out, The Best of the Voluntaryist, by Carl Watner. (Fox & Wilkes, 1999). 4. The Libertarian Theology of Freedom, by Rev. Edmund A. Opitz. (Hallburg Publishing, 1999). 5. The Liberalism/Conservatism of Edmund Burk and F.A. Hayek: A critical Comparison, by Linda C. Raeder. HUMANITAS, Vol. X, No. 1, 1997. National Humanities Institute. Washington DC. 6. The Meaning of Hayek, by Gerald P. O’Driscoll Jr. Senior fellow of the Cato Institute. Remarks delivered at the dedication of Cato’s F.A. Hayek Auditorium on May 9, 1995. 7. The Liberalism/Conservatism of Edmund Burk and F.A. Hayek: A critical Comparison, by Linda C. Raeder. HUMANITAS, Vol. X, No. 1, 1997. National Humanities Institute. Washington DC. John Locke, cited in Hayek, Constitution, 170. 8. The Road to Serfdom, by F.A. Hayek, 38. (The University of Chicago Press, Chicago, 1944) 9. Why freedom must be First, by Tibor R. Machan. Hoover Essays: www.hoover.stanford.edu/publications 10. The Use of Knowledge In Society, F.A. Hayek, Reprinted by the American Economic Review, XXXV, No.4 ; Sep. 1945. 11. Knowledge Theory & Regulating Free Markets, by Karun Philip, 1998, ‘99 www.k-capital.com 12. Knowledge Theory, Education, & Poverty, by Karun Philip, 1998, ‘99 www.k-capital.com 13. The Road to Serfdom, by F.A. Hayek, 40. (The University of Chicago Press, Chicago, 1944) 14. The Road to Serfdom, by F.A. Hayek, 40-41. (The University of Chicago Press, Chicago, 1944) 15. The Road to Serfdom, by F.A. Hayek, 41. (The University of Chicago Press, Chicago, 1944) 16. The Road to Serfdom, by F.A. Hayek, 43. (The University of Chicago Press, Chicago, 1944) 17. The Road to Serfdom, by F.A. Hayek, 44. (The University of Chicago Press, Chicago, 1944) 18. The Road to Serfdom, by F.A. Hayek, 64. (The University of Chicago Press, Chicago, 1944) 19. The Road to Serfdom, by F.A. Hayek, 66. (The University of Chicago Press, Chicago, 1944) 20. The Road to Serfdom, by F.A. Hayek, 67. (The University of Chicago Press, Chicago, 1944)

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