Mark Twain tells us in his book Tom Sawyer that when Tom was punished by having to whitewash his Aunt Polly’s fence, he tried, as was his custom, to shirk the obligation. By making the work look fun, however, he interested the other boys in painting the fence. After arousing their interest, he still pretended to be reluctant to share this rare pleasure with them. Well, with such an attitude, it wasn’t long before all the neighborhood boys were actually paying Tom from out of their boyhood treasures so as to “have a go” at painting the fence. In the end, the fence was not only painted once, but three times! Mark Twain explains that Tom had learned an important economic lesson: “He had discovered a great law of human action – without knowing it – namely, that in order to make a man or a boy covet a thing, it was only necessary to make the thing difficult to attain.”
In the present political and economic circumstances of the United States, the difficulty of attaining true liberty should have made us all covetous of it long ago. Instead, we seem to have whitewashed the fence that keeps liberty out while congratulating ourselves we were doing something worthwhile. But the warnings of the futility of our efforts have come from various sources over the decades and the one we are to remember this evening is, in fact, half a century old, namely, Friedrich A. Hayek’s The Road to Serfdom.
Why is this fifty-year old book worth commemorating and contemplating in the present social and political climate? Can there be anything left that has not long since been out-dated? There are two major reasons for taking Hayek’s work seriously today. First, because in the period between the two great world wars, certain collectivist enthusiasms were dominant not only among intellectuals, who could be forgiven for not knowing better, but also, to some extent perhaps, among the populace at large and among certain political leaders, who cannot. Attacking these enthusiasms and showing their deficiencies in such an age took courage. Secondly, where Professor Hayek falls short or is incomplete in the discussion, especially in the circumstances facing us today, we need to re-examine not only the present enthusiasms of collectivism but tighten more completely our understanding of their nature and origin.
In the interwar period, it was increasingly popular to believe that capitalism was inevitably doomed. Had not the rise of the great trusts shown that monopolies were the inevitable result of competition in free markets? Had not modern technology shown that monopolies were the natural and fated result of technical progress? So it seemed at the time. Add to this the devastation of World War I among capitalist countries, the stock market crash of 1929 and the following Great Depression, unemployment, poverty and a host of other economic and social ills, and it became self-evident that something had to be done about capitalism. That meant increasingly, that governments were looked upon to take a hand in planning both the distribution and the production of wealth. Some looked with enthusiasm on the new experiment being unfolded in the Soviet Union. Others were more cautious and moderate in their socialism. Still others combined nationalism and socialism successfully to give the world National Socialism, that is, the Nazis. Whatever problems there were, whatever weaknesses there may be, everyone knew that this route, the road of planning by government to ameliorate social ills, was the road to prosperity, peace, and social justice. Only a few thinkers disagreed, insisting instead that this was the road to serfdom. F.A. Hayek was among these few.
The book appeared in England in the spring of 1944 and later in the United States on September 18, 1944, almost fifty years ago to the month. According to George Nash, the reaction in England was immediate and vigorous. Two book-length refutations appeared, one even by a Labour Party M.P. At one point in an election period, Clement Atlee accused the conservative party of embracing the Austrian economist’s principles. But these reactions were mild compared to those of the United States. After being rejected by three publishing houses, the University of Chicago Press finally was destined to publish it. But since it was not intended for popular consumption, only 2,000 volumes were printed. Yet the book proved to be tremendously popular and influential. A successful condensed version was published in Reader’s Digest and it received good reviews from Henry Hazlitt in the New York Times Book Review and from John Davenport in Fortune. On the other hand, Nash reports that the New Republic claimed it was having little scholarly impact and was simply being used by “reactionary business interests.” But if this were true, asks Nash, why were so many left-of-center liberals angry with the book? Why not dismiss and ignore it? Hayek himself supplies the answer: because unlike England where socialistic ideas had been tried, the U.S. was still at an early stage of doctrinaire enthusiasm for collectivist planning. Hayek writes that the English had already experienced some disappointing results: “There was already a disillusionment about these ideals under way, which their critical examination merely made more vocal or explicit.” But he says: “In the United States, on the other hand, these ideals were still fresh and more virulent.” These ideals were still seen as the “glittering hope of a better world.”
For Hayek himself, the writing of this book marked a significant change in his work, away from technical economics and toward a broader view of society, even a philosophy of liberty. As Ronald Hartwell describes it:
“The Road to Serfdom undoubtedly marked a turning point in Hayek’s intellectual development, beyond which he became increasingly concerned, not so much with analysis of market and command systems, but with determining the conditions of freedom, with the definition of constitutions that minimize the role of coercion in human affairs and that reduce human obstacles to the exercise of individual choice.”
But what was it that set Hayek apart and gave him what we recognize today as the correct and penetrating insight into the malady of collectivist planning? Undoubtedly, one reason was his experience of the same thinking on the continent of Europe before coming to England in 1931 and becoming a British subject in 1938. It must have been an exercise in deja vu for him as he wrote about the German intellectual atmosphere that dominated much of the thinking of intellectuals and politicians in England. He was surprised and shocked, certainly dismayed, to see the same arguments spinning their ensnaring webs in the country he had adopted as a refuge from the consequences of these very tyrannizing notions. As he writes in the introduction of the book (p. 3):
“The author has spent about half of his adult life in his native Austria, in close touch with German intellectual life, and the other half in the United States and England. In the latter period he has become increasingly convinced that at least some of the forces which have destroyed freedom in Germany are also at work here and that the character and the source of this danger are, if possible, even less understood than they were in Germany.”
Hayek wondered why this poorly understood trend existed in England. And why was it thought to be inevitable? Hayek concluded: “It is because nearly everybody wants it that we are moving in this direction. There are no objective facts which make it inevitable.” His reasons for maintaining this are the substance of his book.
The Arguments of the Book
Hayek develops his arguments around the simple premise that economic planning is incompatible with respect for the individual and for freedom. Even socialists, he points out, shy away from the coercion needed to implement their vision because planning necessarily leads to totalitarianism.
From here Hayek focuses on the two aspects of socialist planning: the goals and the means to attain them. The goals ultimately aim at economic security and an equal distribution of wealth, or a combination of democracy and equality. Their basic method to achieve these ends is the abolition of the private means of production in favor of planned economy. The problem for the socialist was that his ends and his methods were ultimately incompatible. The goal to subordinate all of society to one over-riding purpose, much as a country experiences in war-time; the ends of individuals must be suppressed in favor of this singular national purpose. Such a goal requires a complete ethical code properly ranking in its comprehensive plan all human values. Putting it this way, he forcefully showed that socialism is truly totalitarian.
To elaborate this last point, Hayek explains that in planning, the difficulty primarily arises when we try to move from a general agreement on the need for planning to the specifics of particular ends that need to be addressed. This presupposes more agreement in society and among individuals than actually exists. As Hayek states (p. 62):
“That planning creates a situation in which it is necessary for us to agree on a much larger number of topics than we have been used to, and that in a planned system we cannot confine collective action to the tasks on which we can agree but are forced to produce agreement on everything in order that any action can be taken at all, is one of the features which contributes more than most to determining the character of a planned system.”
Ultimately, the need for extremely wide agreement on particulars will produce dissatisfaction with democratic and parliamentary procedures and so require the short-cutting of these procedures by passing the responsibility for producing a unified plan onto “experts” who will be empowered to impose their preferences on society as a whole. There may even come a cry for an “economic dictator.”
The fact that these planning powers are still under the control of a democratic government is small comfort. “There is no justification for the belief that, so long as power is conferred by democratic procedure, it cannot be arbitrary; … it is not the source but the limitation of power which prevents it from being arbitrary.” (p. 71) Democracy is no guarantee against tyranny even in economic planning.
Hayek insists it is only the Rule of Law that prevents tyranny by limiting power (p. 72):
“Nothing distinguishes more clearly conditions in a free country from those in a country under arbitrary government than the observance in the former of the great principles known as the Rule of Law. Stripped of all technicalities, this means that government in all its actions is bound by rules fixed and announced beforehand – rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge.”
Hayek goes on to say that in the Rule of Law approach law is “merely instrumental in the pursuit of people’s various individual ends.” In fact, he sees law as a kind of aid in economic production: “They [the laws] could almost be described as a kind of instrument of production, helping people to predict the behavior of those with whom they must collaborate, rather than as efforts toward the satisfaction of particular needs.” (p. 73) Under a collectivist planning system, the law, on the other hand, becomes instead an instrument of the lawgiver against the people for his particular ends. This is the nature of planning: arbitrary and oppressive rule.
Hayek’s conception of the Rule of Law particularly emphasizes predictability of government action. The content of the law, he says, is often less important than its predictability. The idea is both to limit the power of the state and make the application of its power foreseeable.
The reasons for this desirability are two-fold. First, in order for the individual to use the law as an instrument of individual planning, the law must be independent of time and circumstances which cannot be foreseen and thus the particular effects of actions based on such a fixed rule remain unpredictable. If the state on the other hand were to direct individual action it would require full knowledge of the particulars of time and place and thus, being bogged down in this level of detail and transient phenomena, its actions would be unpredictable and so “arbitrary.”
In other words, there is a kind of symmetry here: the individual has knowledge of the particulars of circumstances and can apply the law to those circumstances to accomplish his own planning, the effects of which are especially unpredictable for the state. On the other hand, if the state were to try to acquire this knowledge of particulars, it could not make general laws and so the effects of its actions would be unpredictable to the individuals (who would need to know how the state will use its power for purposes of their own private planning).
Hayek’s second reason is the belief that when the state does acquire knowledge of particulars, the effects of a particular course of action on people, it is the state which chooses between different ends. The legislation then will not be impartial. So Hayek concludes at this point: “The state ceases to be a piece of utilitarian machinery intended to help individuals in the fullest development of their individual personality…” (p. 77) Only this Rule of Law can safeguard impartiality and equality before the law. Choosing ends is another feature of oppressive government.
As the law is instrumental to individual purposes, so is the economy. Hayek agrees there is a kernel of truth in saying that in a sense economics is relatively trivial. But if people look contemptuously on it as an activity of lower endeavors, says he, this is true only in a free market economy where we have the power to dispose of our income and possessions as we choose. He writes: “Economic values are less important to us than many things precisely because in economic matters we are free to decide what to us is more, and what less, important.” (p. 91) Gains and losses are “merely economic” (trivial) if they are adjustable at the margin, i.e., if we can absorb these changes where we want them to take place, not where they may originally fall. (If we must accept the gain or loss where it originally falls, i.e., we can’t adjust, we tend to say it is not an economic matter – but more important.) Thus, the very power or freedom to choose which relatively trivializes economic affairs is also claimed paradoxically to be the very font of its importance.
In a planned economy we, as individuals, would no longer be able to say what is marginal to us; the planning authority would tell us. Whoever controls the means to the ends controls what ends get realized. In a planned economy no alternatives will be available and we are stuck with what we are assigned by the planning hand of government. This is true not only for our roles as consumers but also as producers. We would be assigned a social and economic position for the good of the whole and not be able to choose an alternative occupation. Economic action is not so trivial after all.
All of this boils down to the conclusion that our only real choice is between a system in which what we get is determined by a few persons making arbitrary decisions for people, or one depending at least somewhat on the ability and enterprise of those concerned. In the latter system, it is private property that guarantees freedom even to those who don’t have property. He explains how this freedom is achieved (p. 104):
“It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves. If all the means of production were vested in a single hand, whether it be nominally that of “society” as a whole or that of a dictator, whoever exercises this control has complete power over us.”
And further, because of the close interdependence of all economic phenomena, the planner can’t stop where he may wish. Thus, economic planning necessarily tends toward total direction of the whole of our life.
Furthermore, when people realize that their inequalities stem not from impersonal market forces but from deliberate policies of the government, their attitude changes for the worse. Thus, planning becomes a major political problem. Enduring a misfortune that could have hit anyone is more bearable than one deliberately inflicted on us by a governmental authority. “Dissatisfaction of everybody with his lot will inevitably grow with the consciousness that it is the result of deliberate human decision.” (p. 107) As soon as the State takes upon itself the responsibility of planning all of economic life, it will inevitably have to face the issue of assigning people and groups their social and economic stations and this, too, will become a central political problem. In fact, under planning, all economic questions will finally become political ones whereas in a liberal society these questions are separate.
But what about the basic questions which socialists raise concerning social justice? Is it not right and possible to ameliorate a world full of inequity, economical and otherwise? Hayek answers that it is not simple, and perhaps not likely, that we can eliminate such differences. And the European experience made this quite plain. So bewildering are the questions of distributive justice, says Hayek, that the simplest answer is to insist on complete equality. All other (intermediate) answers are too difficult. Even the lesser goal of striving for simply “more equality” is fraught with difficulty because it still requires the planner to decide among ends that individuals might pursue and with that he also decides the relative importance of different groups or persons. This is especially clear when determining the incomes of various groups or individuals. It is a can of worms that has no end until the entire society is run by the government.
Professor Hayek likewise considers the socialist goal of security. Security and freedom conflict with one another in the real world and we must trade some amount of the one for the other. Hayek allows for a limited security but not total security of the kind envisioned by collectivistic planners. A limited security is most desirable for a liberal economic order. What does he include in this allowance? He means unemployment compensation and some poverty relief. In free and risk-taking entrepreneurial society, some protection against destitution is necessary even for the survival of a market system. But however necessary this may be, it cannot include protection against loss of income or guarantee protection of an income level, secure from all losses. Payment for services rendered depends on the economic usefulness of other members of society, not on subjective merit of the individual involved. Furthermore, if we begin to provide this kind of income security for some, others will demand it also and we will not be able to stop until we have determined the income level of all and so, intending to or not, we will have again, on this question, too, transformed ourselves into a totalitarian system. We cannot have both complete security and independence. We must choose.
Hayek also characterizes this important choice as one between two fundamental types of societies: commercial or military. The former is characterized by openness, freedom of choice in consumption and occupation, respect for the individual. The latter, meanwhile, is characterized by adherence to one single overriding objective to which all must yield, controlled by the all- pervasive state. Individual freedom can’t be reconciled with the supremacy of one single purpose to which the whole of society must be entirely and permanently subordinated. (Exceptions would be war and temporary national disasters, say, from nature.)
In addressing socialists who pretend to seize the moral high ground, claiming that planning is moral while capitalism and freedom are immoral, Hayek writes (p. 211):
“What our generation is in danger of forgetting is not only that morals are of necessity a phenomenon of individual conduct but also that they can exist only in the sphere in which the individual is free to decide for himself and is called upon voluntarily to sacrifice personal advantage to the observance of a moral rule. Outside the sphere of individual responsibility there is neither goodness nor badness, neither opportunity for moral merit nor the chance of proving one’s conviction by sacrificing one’s desires to what one thinks right.”
He also cites the great English poet John Milton who said (p. 211): “If every action which is good or evil in a man of ripe years were under pittance and prescription and compulsion, what were virtue but a name, what praise should then be due to well-doing, what gramercy to be sober, just, or continent?” We can be moral only if we are free.
So after the war, Hayek argues, given the stress and difficulties England will then face, if it wants to avoid socialism, it must have “rapid economic progress.” The main condition for this progress is that “we should all be ready to adapt ourselves quickly to a very much changed world…” He further claims that “[t]he adjustments that will be needed if we are to recover and surpass our former standards will be greater than similar adjustments we had to make in the past; and only if every one of us is ready individually to obey the necessities of this readjustment shall we be able to get through a difficult period as free men who can choose their own way of life.” And finally: “The one thing modern democracy will not bear without cracking is the necessity of a substantial lowering of the standards of living in peace time or even prolonged stationariness of its economic conditions.” (p. 210)
At the end of his book Hayek digresses on the needs of international order after the war. He argues for an international federated system with power to enforce its rules. He wants a night-watchman or libertarian-style government whose powers are mostly negative. But he rejects any attempt to set up a one-world government involving the destruction of individual nations or the amalgamation of all nations into one world-wide system of government. As he writes: “It means merely that there must be a power which can restrain the different nations from action harmful to their neighbors, a set of rules which defines what a state may do, and an authority capable of enforcing these rules.” (p. 232) We need an international federation whose strictly defined powers are surrendered from the member nations (p. 233): “We must not deceive ourselves that, in the past, in calling the rules of international behavior international law, we were doing more than expressing a pious wish. When we want to prevent people from killing each other, we are not content to issue a declaration that killing is undesirable, but we give an authority power to prevent it. In the same way there can be no international law without a power to enforce it.” Ironically, the older obstacle to the creation of such an authority was the view that it would have to have all the unlimited powers of the state – just as he argues planning would inevitably lead to at the national level. But with a federalist division of powers this would not be necessary. It also allows a limited planning to occur where true agreement is possible. The best of planning can prevail here and the worst will be eliminated under the federal system.
It is important for such a federation to keep its aims small, at least at first, by not trying to do too much. Its goals should be limited and apply to only a few nations. Otherwise, by attempting to do too much all at once, it will fail and so discredit itself. This was the fault of the League of Nations says Hayek.
While there are several other interesting aspects in the book, such as his explanation of why the worst get on top in collectivist societies, these are sufficient to show the general mode of his criticism. It is fair in our turn now to examine critically some of these arguments.
A Critique of Hayek
Does Professor Hayek offer us a guiding light today? Now that Soviet Communism as well as National Socialism have been defeated, of what use is this fifty-year old book for us at the close of the twentieth century?
It is one of the charms of good books, that they touch on fundamental issues or enduring concerns, and so are not easily outdated. Professor Hayek’s small volume is of such a nature. In the United States, as well as in Western Europe, the tendency of our times is unfortunately still in the direction of a growing serfdom, perhaps not exactly in the form envisioned by him here but a serfdom nonetheless. With the rising forcefulness of the illegitimate, national government in our domestic affairs, with the growth of a one-world ideology, with multi-culturalism regnant at universities and national politics, where is there room left for the individual, for cultural variety, indeed, for our European heritage? With the usurping powers in Washington, D.C. ignoring the U.S. Constitution, thus violating their oaths of office, and making repeated efforts to surrender our sovereignty to new-fangled institutions such as the World Trade Organization (WTO) in the name of material and commercial progress, and recommending that every new-born baby be given an IRS taxpayer identification number, it is a pathetic understatement to say with some, that if we continue in this way, we could be in trouble. We are in trouble now! We are well along the road to serfdom as it is and stand before the vestibule of hell.
Hayek’s concern for liberty thus has even more merit, more urgency today, for making it clear how our freedoms are in fact being lost. If what he says sounds to some conservatives rather familiar, it is only because we have learned from Hayek the attributes of this serfdom.
Yet our present purgatorial, if not infernal, position is distinguished by important differences requiring us to tighten our grip on the nature of serfdom and to recognize there is more than one path to perdition. Because we are presently well-along another road to slavery, we are obliged to take a closer look at Hayek’s work and, where possible, to improve upon it. There are two important questions that require further thought, questions arising directly from Hayek’s defense of freedom and dignity of the individual.
First are his concepts of the nature of values and our knowledge of them and secondly, an understanding of why this centralizing impulse moving us along other paths of perdition arose, not only in this interwar period, but why they also continue today.
Society and Government
How does Hayek defend individual liberty? By a complete subjectivism in values. A scale of values is quite partial and imperfect, existing only in the minds of individuals with limited knowledge. Because their scales of value are “inevitably different and often inconsistent with each other,” it is wise to let these individuals pursue their various subjective goals. “It is this recognition of the individual as the ultimate judge of his ends,” says Hayek, “the belief that as far as possible his own views ought to govern his actions” (p. 59) that a liberal society is to be recommended.
When Hayek speaks of “social ends” he means merely subjective preferences or tastes of individuals which coincidentally happen to be in agreement. “The limits of this sphere are determined by the extent to which the individuals agree on particular ends….” (p.60) But when he indicates that successful propaganda on the part of socialist governments has produced a greater unity of thought than found in individualist societies, one wonders to what extent the disunity between societies is due to such propaganda. Does the propaganda of individualism produce the variety of views which is subsequently used to justify limited government in the name of that variety (freedom)? How is a socialist government oppressive if, once installed, it can (seemingly) justify itself after the fact by intensive propaganda so that its victims eventually come to share the same ends, or at least more so than in an individualist society?
Nor is it clear how subjective agreement among the majority will prevent collectivism. What if enough people agree to seize power at the expense of some minority or of another nation? How would they be faulted in his system? How does the Rule of Law prevent the well-known tyranny of the majority? It seems that Hayek’s only protection here is an implicit faith or hope that such a dilemma, such a level of agreement, will never be very large or arbitrary.
Hayek’s commitment to complete subjectivism, then, leaves him without any solid basis for defending the values which we would agree are important and good and right. In such a world there is no objective reason to prefer individualism and liberty over totalitarian oppression. Yet if all values are subjective, Hayek’s value of individualism and the development of personality is also subjective, as is obvious. The more recent lessons of the West, especially in regard to the fall of Soviet Communism, reinforces the conclusion that “values” are not subjective preferences on the same level as our personal tastes.
In the Market
As mentioned above, Hayek argues that democracy is no proof against arbitrariness of power. Hayek actually absolutizes the market in his elevation of its “co-ordination” – which he claims takes into account what no one individual can. A tyranny of the majority is a tyranny still. He is, of course, absolutely right. But in the marketplace, we sometimes have majorities where individual decisions of the many squeeze out the choices and ability to realize preferences of the few. If collectivism’s god is power over men in government, in the market the desire is also for power. Instead of power of some men over other men with government planning as its instrument, it is as C.S. Lewis rightly said, power of some men over other men with nature as its instrument. The one wants to manipulate society, the other nature. This, too, is a tyranny. Even the majority that gets its way in the short-run may end up with long-run cumulative results that they themselves disapprove of. Is it possible that this is part of our problem, that people become dissatisfied with market tyrannies and so, wrongly if understandably, turn to government for answers? And further, Hayek displays no awareness of the limits of people to adjust to the changes wrought by industrial society. Socialism was historically a response to those changes. And it is not enough to point out that their solutions are wrong without also addressing the problems which have given and continue to give rise to socialist ideologies. One of the problems is itself a cause of susceptibility to socialist ideologies: massive urban living. As Wilhelm Roepke writes: “A little honest introspection will force us to admit mass society and industrial and urban civilization are threatening to condemn us to conditions of life which are simply beyond the human scale.”
What is more troublesome is Hayek’s further unqualified claim that commercialism is a civilizing force. One can grant that is true in within narrow limits, and certainly historically, free market advocates have rightly pointed this out. Yet it seems one caution and recognition of limits is order here. Commerce is a two-edged sword. For example, it is difficult to read 19th century German history and find a dominant civilizing tendency within the chaos of an intensifying commercialism and industrialization. The 19th century peasant won his independence from serfdom only to face financial ruin and exploitation as a dependent proletarian in the new economy of commerce and industrialism. Commerce did not civilize the landed nobility and prevent it from treating peasants (now proletarians) harshly. Nor did it prevent urban masses, peasants, and bourgeoisie from taking to violence over these matters in 1848. As historian Theodore Hamerow explains, the German people “in their agitation began to mutter, complain, and threaten, and finally they rose in open revolt against the effects of technological progress.” The benefits of the new commercialized “civilization” in Germany had very uneven effects, generally placing peasants, the yeomanry of the land, in positions of severe debt, so that, Hamerow concludes: “Even those peasants who were able to commute and liquidate their obligations discovered that they had not freed themselves from economic bondage but only altered its form.” When Hayek says Germans are not likely worse than anyone else, one can only wonder how the origin of the German brutality of which he speaks can be explained. Even more broadly, how is his statement to be credited in a century where some of the most massive brutalities in history are practiced by highly commercialized countries?
Roepke, himself a close student of German history, derives a similar answer to Hamerow’s and concludes that the excessively competitive market in a commercial and industrial economy is socially debilitating, destructive and “uncivilizing.” This is why it must be contained, limited, and supported with moral and spiritual reserves from outside the economic system. Otherwise commercialism barbarizes. You can’t take a savage and throw him into the marketplace and expect him to come out civilized.
While Hayek is right about the worst getting on top in government, it applies also to private firms if nothing is allowed to stand in the way of profits. Lenin said that when it comes time to hang the capitalists, businessmen will trip over each other to sell the Communists the rope to hang them. There are still differences, of course, the manner and the rate of decay, for example, but perhaps it is even more thorough: it does not even have the virtue of duty, discipline, and heroism, only self-interest which decays to selfishness.
What’s wrong with Hayek’s conception of law? It is not rooted in the traditional concept of “justice.” It is, instead, utilitarian and pragmatic. It prides itself on ignorance of particular effects, not on the rightfulness of the content of the Law. It makes Law a mere instrument of individual prediction while the Rule of Law in the Western tradition is deeply rooted in the classical and Hebrew/Christian worldview. This basically means that LAW is DIVINE and only GOD is a true LAWGIVER. Kings and legislators merely declare the law; they do not and cannot constitute it. Though predictability is a desirable feature of the law, its essential character is its justice, not its instrumental usefulness in economic planning for the individual.
There is, of course, some agreement here but for importantly different reasons. In the traditional conception, justice involves the common good and the law embodies eternal and objective values for the common good based on the nature of man, whereas injustice is rulership exercised for private good – that is, it benefits particular individuals. For Hayek, law is merely a convenient tool for individual manipulation. Instead of the state manipulating the individual, the individual manipulates the state. Although in the long go of things, it would seem surely that the habit of telling a people, and having them practice, the view that the state and the law are merely convenient instruments for their economic manipulation would seem eventually to bring us to the present condition whereby everyone seeks to lobby the government for his own private advantage.
Hayek criticizes positivist law in his later works. Positivism strictly speaking is the acceptance of the Comtean view which exalts modern science. But Hayek seems to mean by this, only ad hoc, arbitrary law-making according to the will or whim of one man. There is more to it than this and it comprehends Hayek’s own views. Hayek prefers that laws change slowly and reflect the broader thought of the community or of other writers and thinkers. These thoughts may have been sitting around for a long time, being gradually assimilated into the thinking of others. Granted, this makes law less likely to be arbitrary, but it still is no guarantee. If evil is incremental and slow, that does not make it less evil. Corruption usually does not occur all at one fell stroke. Hayek himself quotes Lord Acton on liberty: we seldom lose it all at once; corruption occurs slowly. We witness this process of slow decay in our own time in many ways (feminism, welfarism, etc.).
While Hayek speaks out rightfully against scientism (and empiricism) elsewhere, he himself promotes it in a different form: predictability of law is a view taken over from modernism and its consequent manipulability by citizens. Hayek’s positivism is especially of a pragmatic form. Even more importantly Hayek, like Comte, seeks to exclude or minimize reliance on metaphysical, religious or transcendent concepts in his views of law and society. Finally, he is positivistic/scientistic in the sense that his entire approach to society and social order is one huge application of the mythology of Darwinism which represents itself as science. Gradualism, incrementalism… but always change is exalted.
The difference then between Hayek and the positivists he criticizes is one of time only. Or if he really believes that substantive changes occur, then he can have no objection to what he calls “positivism” because that could be one of these legitimate Darwinian changes.
Another criticism of Hayek centers on his own objections to “distributive justice.” There is no such thing as “social justice” or the just distribution of wealth. It is impossible to determine any rational criteria or ethical code that would answer the necessary questions of who is to get what, etc. He likens this to the stupidity of the “just price” notion of the Middle Ages. Ultimately, the only ethic that can be brought to bear on this question is that all efforts at distributive justice are merely exercises in envy. Having dismissed an important concern that has troubled philosophers and theologians for centuries, he is prepared to let these questions be settled exclusively under the slogan of “free trade.” Whatever fallout occurs, it is to be accepted. Yet the reliance on one ethical concept, such as envy, can be and has been played both ways. Obviously, the alternative criticism is that absolutizing free trade is nothing more than an elaborate exercise in “greed.”
In the case of Germany in the last century it is precisely the issue of distributive justice that, because it was inadequately dealt with, wreaked social, political and moral havoc among the people. General and abstract laws on property rights failed to deal with substantive consequences of their application given the circumstances in which the peasants found themselves. Hamerow says: “He [the peasant] thus won his independence by enlarging the economic resources of the aristocracy, and his liberation consequently contributed to his ultimate decline.” And later: “In the final analysis, the peasant was a victim of far-reaching economic changes which he did not initiate and which he could not control…Emancipation in the abstract was an act of justice, but in practice it proved to be a dangerous policy. Had the state protected the rural population in freedom as it had done in serfdom, the agrarian problem would not have assumed so serious a character.” Speaking of the just price and thus of distributive justice, Francis Schaeffer writes: “However much one may argue about the success of these attempts at economic control in the name of love for one’s neighbor, it would be false to assume no difference between a society which at least makes repeated public efforts to control greed and economic cruelty and a society which tends to glorify the most expert economic manipulators of their fellow citizens.”
Values and choices
No distinction is made between economic “values” and social or moral values in Hayek’s thinking. Hence, no distinction is seen between a limited economic sphere where freedom of choice is reasonably allowed and moral values where agreement transcending individual preferences is vital to the community, a vitality which is also important to the individual even if he disagrees.
It is not enough to argue for freedom of choice. It is important to know exactly what the nature of the set of choices is. It is the old difference between existence and essence, “thatness” and “whatness.” That choices exist is necessary but not sufficient for the good society and the good economy. One must also know what these choices are substantively, the structure of choice.
There are two main kinds of choices in the world, those that promote character and those that don’t. It would imprudent socially as well as morally to promote the wrong kind in the name of a misunderstood freedom. The practice of self-denial, of course, competes side by side with self-indulgence. But it is not enough to claim that formally we all have the opportunity to be as virtuous as we want; opportunities for practicing self-denial are there. True enough but given our fallen human nature, we need the right kind of encouragement to do good. We need the upward pull that comes in a society acknowledging and explicitly affirming transcendent values and that requires knowing the legitimate limits on the market. It requires establishing freedom because we know truth, not because we are ignorant of it and have only very partial values. When the array of choices is biased to the self-indulgent choices, when propaganda through government and private firms encourages only the exercise of the unlimited self, acts of self-denying are necessarily discouraged. Indeed, we cannot be surprised when they are diminished and certainly cannot maintain, as some secular conservatives do, that this diminished practice reflects free and uncoerced choice, implying we should be content. What is needed is a society committed to honouring and encouraging the spiritual even in the economy. But this requires a belief that moral values are objective, not subjective like preferences in ice cream flavors.
Let me revisit Hayek’s statement, explained earlier, where he agrees that economics is, in a properly understood sense, trivial, but only in a free market economy where we have the power to choose how to adjust to economic changes. It is like saying that the benefit of a free economy is that economic affairs will be held in contempt. This sounds a little like Mark Twain’s confession that as a boy, he and his friends hoped that if they were very good, God would permit them to become pirates when they grew up. Some misunderstanding of the nature of the beast stalks Hayek’s statement here. Or, it is like the Cretan implicitly assuming his veracity while declaring Cretans always lie, or similar arguments purporting to show the invalidity of human reason but inevitably relying on that very reason. Similarly, if the consequences of using this instrument of the free market (free economy) is that it trivializes itself (diminishes its own importance in the eyes of those practicing it), it is hardly rational to recommend it on that basis, i.e., it doesn’t recommend itself to us as something valuable.
The source of this problem, surely, is again located in Hayek’s insistence on the subjectivity of all “values.” I would rather say that economic affairs are not trivial if we understand that, taken as a whole, in economic action we are exercising responsibility over our own affairs which involves the practice of virtue (prudence, industry, etc.) conducive to good character. Thus, economic activity in a free economy helps us fulfill our earthly probation. It is linked to the moral world and involves both objective and ultimate ends. Despite Hayek’s rhetorical flourishes about the development of personality in freedom, that development is not possible in a world of total subjectivism. A good economy is constituted not just in its locus of choosing power but also in its nature – a reality that requires metaphysical and moral considerations of a kind that accept the transcendence of values.
But the relation of choice and meaning is not as straightforward as his philosophy allows. As he himself states, one objection of collectivist planners is that almost everything can be had for a price in a competitive economy. There is excessive commercialization. Yet this is merely another name for extension of choice and so of freedom as comprehended in Hayek’s social and economic thought.
But is it possible to overextend choice, to allow too much of it? Dostoyevsky remarked that if there is no God, all things are permitted. Without God, there is no meaning and nothing is forbidden. A nation that allows all things is a nation acting as if there were no God, and certainly is living without Him. Restrictions reflect meaning in limiting choice to appropriate spheres, affirming obligation and duty and thus ultimate value. This “anything goes” mentality is both reflected in and promoted by a materialistic society, excessively commercialized. Its members naturally seek short-cut methods to achieve their goals, including the use of manipulating government policy for private purposes.
Let me describe the syndrome Hayek’s subjectivism leads him to another way. Since all values are merely subjective preferences, the individual’s power or freedom to choose, so it is argued, should be correspondingly extended. But it is gradually realized that if everything is just a matter of personal subjective choice, nothing is meaningful and ultimately fulfilling, not even the newly extended power or freedom to choose. Until this is understood, or from the erosion of moral character which it causes, the cycle of extended freedom/boredom/extended freedom is repeated. Each go-around, however, involves an ever-widening circle of social and moral destruction as more and more spheres of human action are brought under the umbrella of the arbitrariness of personal preferences (total subjectivism) or what may rightly be called the “tyranny of the trivial.” And from this it is inevitable to enthrone the tyrannical and the arbitrary in government, for here, too, there can be no standard but personal taste. Man is simply not capable of living in the absence of objective, transcendent standards to which he must submit. He craves meaning and purpose above all things but he cannot find them by making his desire his god.
Economic choice is meaningful only if life is meaningful. And further, life is meaningful only because God is who He is and the hierarchy of liberties of choice derive their meaning from this primary datum. This means, among other things, that in our economic life we should expect to have some relationship with higher values, especially in the earning of our daily bread. In our choice of occupation, where our power of choosing is more limited, Hayek himself recognizes its important link to human happiness. The ancient church dictum summarizes my concern well here in the phrase: Laborare est orare: to work is to pray, or more loosely, work is worship.
As the late Richard Weaver of the University of Chicago reminds us, meaningful work requires the worker to identity with and submit to the ideal in his task. Because there is a transcendent end within the economic sphere, economics is saved from being merely a means. German historian Theodor Mommsen warns us about purely instrumental notions of work: “When a man no longer enjoys his work but works merely in order to procure himself enjoyments as quickly as possible, then it is only an accident if he does not become a criminal.” Likewise, Wilhelm Roepke argues that we must see an “inner necessity” in our work for it to be meaningful and this, too, links us to objective values and the transcendent and so saves our work-a-day world from being reduced to mere instrumentality.
Hayek himself is compelled finally to contradict his argument from choice at a crucial point. So long as he criticizes the planners, he can emphasize freedom of choice, but when he affirms his own program for England after the war, he does something quite different: he presents us with what I call the argument from inevitability – like the one he earlier opposes which socialists make. Because of so-called “progress” in the division of labor, we are compelled, says Hayek, in all of our activities to become part of an elaborate social process (due to population growth and technology) which cannot be reversed. This hypostatized social and historical process forces us to take more of “the hair of the dog that bit us,” namely, still more rapid economic expansion. In other words, because past economic growth has eliminated or reduced some of our present choices (hence, no reversal), we are driven to go still further along this road. This homeopathic remedy is supposed to substitute for a sounder, more traditional philosophy.
Summary and Conclusion
Mark Twain’s Huck Finn expresses a view of perhaps all too many folks about the importance of reading dead authors. Being practically an orphan, Huck was compelled to stay with the Widow Douglas whose wholesome way of life was significantly inconsistent with his own. Huck describes one evening this way: “After supper she got out her book and learned me about Moses and the Bullrushers, and I was in a sweat to find out all about him. But by and by she let out that Moses had been dead a considerable long time; so then I didn’t care no more about him, because I don’t take no stock in dead people.” While Huck may have agreed with Henry Ford that history is bunk, the civilized man and the Christian especially do take stock in dead people and recognize the importance of the past and of past literary and social contributions as being instructive and wholesome for the living. There is, after all, continuity in human history, nature and destiny.
So, after half a century, what can we say about Hayek’s contribution of The Road To Serfdom? First, it should be clear from the foregoing that his contribution is significant historically for the fight against the dominant collectivist trends of his day. If the United States did not follow the recommendations of many socialists of the time, it is in no small part because of the tremendous impact this volume had on the American mind and on its contribution in particular to the conservative intellectual movement that was started after WWII.
Secondly, it is important because many of its insights apply today as strongly as fifty years ago. Our present baptism of tortuous social and political and economic troubles is in part because the insights of Hayek have gone unheeded. He laid bare the nature of the working of the market and why it produces liberty without chaos and why the planning hand of government produces chaos without liberty. For this we are, or ought to be, his grateful heirs.
Still, if we see farther, or more deeply in some aspects than Professor Hayek did, it surely is partly due to his own very valuable contribution. As T.S. Eliot commented about studying dead authors: “Someone said: dead writers are remote from us because we know so much more than they did.’ Precisely, [says Eliot] and they are that which we know.” In this particular case, that means, in getting to know Hayek’s The Road to Serfdom and with the above indicated qualifications, the cause of liberty is well-served.
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[This paper was presented to faculty and students at the Franciscan University of Steubenville in Steubenville, Ohio, on October 27, 1994, to commemorate the fiftieth anniversary of the publication of Austrian economist F.A. Hayek’s famous book The Road to Serfdom. In a time of cries for more government, Hayek’s voice was one of the few that insisted extensive government was not an answer to the pressing problems of our age. In the following the strengths and weaknesses of his views are assessed.]