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Von Hayek: Seventy-Five Years Ago

November 17, 2018 Featured Today No Comments


The release of John J. Mearshimer’s The Great Delusion: Liberal Dreams and International Realities brought to mind a short work written seventy-five years ago by the Austrian economist, F.A. Hayek (1899-1992).
Entitled The Road to Serfdom, the volume is perhaps more relevant today than when it was written. (1) The book is the result of Hayek’s reflection on the socialist drift in Europe that facilitated the rise to power of Hitler, Mussolini, and Stalin.
Written while the outcome of World War II was still uncertain, The Road to Serfdom may be fruitfully read as a historical review of the social and economic policies that prevailed during the first decades of the twentieth century, but that was not Hayek’s primary purpose in writing the book. It was issued as a prophetic warning. The socialist policies endorsed by our “progressive” intellectuals, he feared, are the same as those of the twenties and thirties that created National Socialism.
Hayek was not alone in his analysis of the past or in recognizing the danger that the emerging socialist parties posed for the future of Europe. Aleksandr Solzhenitsyn in The Gulag Archipelago (1973) and in his Harvard University Commencement Address said as much.
Bertrand de Jouvenel, writing in France during the same period, produced a slightly different diagnosis of the events that brought the European dictators to power. De Jouvenel’s book, On Power: Its Nature and the History of Its Growth, will serve a lasting reminder that politics is about power.
“It is in the pursuit of Utopia,” de Jouvenel writes, “that the aggrandizers of state power find their most effective ally, [for] only an immensely powerful apparatus can do all that the preachers of panacea government promise.” (2)
Hayek, much more than Solzhenitsyn or de Jouvenel, was engaged in a debate on economic planning that included Ludwig von Mises, Joseph Schumpeter, Michael Polanyi, Otto Neurath, Walter Schiff, and Karl Popper.
It is significant that the debate focused not so much on social policy per se as it on the method to be employed in systematically arriving at sustainable social policy. The remarkable advances in the natural sciences in the late nineteenth and early twentieth centuries, particularly in theoretical physics, stimulated interest in methodological and epistemological issues normally discussed in the philosophy of science.
The positivism of the Vienna Circle did not remain merely a philosophical outlook but began to have an impact in the social sciences. The methods which had proven successful in natural science were deemed applicable to the sciences of man. Economics was no exception.
Positivism, by eschewing the metaphysical concepts of “nature” and “purpose in nature,” limits knowledge to sense experience, namely to that which can be empirically verified, thereby reducing science to description and prediction. Lost is a sense of an unchangeable human nature, ordered to a divinely ordained end. The implications are manifold, as Malachi Hacohen in his biography of Karl Popper makes clear.
From the positivist’s viewpoint what were traditionally recognized as rights are deemed mere concessions granted by the state or society. Given that rights are not natural rights but the product of law, they are not properly rights at all; they are mere concessions to claims that the individual makes and the state recognizes. As such they can be withdrawn if the state deems such withdrawal in the interest of the general welfare.
No one has stated this more clearly than the American political theorist John H. Hallowell. “There is a great difference,” Hallowell writes, “between freedom from unjust compulsion and freedom from illegal compulsion. When the test of legality, moreover, is ultimately conceived as the force behind law, freedom from illegal compulsion amounts to no more than freedom to do whatever the state does not forbid. This is a conception of freedom much more congenial to tyranny than to the preservation of the inalienable rights of man.” (3)
Viewed from the perspective of positivism, the rights of man are no longer to be called “natural rights”: They are mere “legal rights.”
Hallowell continues, “It was the liberal positivistic jurist long before Hitler who taught (explicitly or implicitly) that might makes right and that rights are not attributes which individuals have by virtue of their humanity; they are simply claims which the state may or may not choose to recognize. Unwittingly, it may be, such liberals prepared the way for Lidice and Dachau.”(4)
Distancing himself from socialist planning, Hayek provides his own perspective on economic planning, that is, by showing how a market economy is actually driven. Most of the knowledge necessary for running an economic system, he holds, is not in the form of scientific knowledge, that is, by a conscious awareness of the rules governing natural or social phenomena.
More important is the knowledge which may be described as “intuitive in character,” idiosyncratic knowledge, consisting of dispersed bits of information and understanding relative to time and place. This tacit knowledge is often not consciously possessed by those who make use of it, and it is of such a nature that it can never be communicated to a central authority. The market tends to use this tacit knowledge as do individuals pursuing their own ends.
Ludwig von Mises had made a similar point in a 1920 article entitled “Economic Calculation in the Socialist Commonwealth,” wherein he wrote:
“In the absence of a capitalist market, production costs and commodity values could not be determined. A central planning board could neither measure costs nor determine prices. Prices reflect not inherent but changing human preferences; they provide producers and distributors necessary information for planning production and distribution. It is precisely in market dealings that market prices are formed, taken as the basis of calculation for all kinds of goods and labor. Where there is no free market, there is no pricing mechanism: without a pricing mechanism there is no economic calculation.”(5)
Karl Popper, mentioned above, like Hayek, was a student of von Mises, and from the start was critical of the Vienna Circle; although in his early years he could be described as a heterodox socialist. Hacohen, in his biography of Popper, tells us that, upon reading The Road to Serfdom, Popper’s progressivism was badly shaken. In a letter to Hayek, Popper called it “one of the most important political books I have ever seen.” (6)
To another correspondent he wrote, “[Hayek] has seen very much sharper than I have that socialism itself leads directly to totalitarianism.” (7)
Popper, in his autobiography, discloses that he would have remained a socialist had not Hayek shown him that socialism puts liberty at risk. In Hacohen’s judgment, it was also mass support for fascism that gave Popper pause. Eventually, Popper came to the conclusion that the paradox of democracy was real: “If the majority was sovereign, then it could decide that it no longer wished a democratic government. It could, as a third of the German electorate did, vote the fascists to power.” (8)
It is worth remembering that both Hayek and Karl Popper, though universally recognized as social theorists, were initially interested in epistemological issues normally encountered in the philosophy of science. In fact, when Hayek arrived at the University of Chicago, he offered a faculty seminar of the philosophy of science that was attended by some of the most notable scientists of the time, including Enrico Fermi, Sewall Wright, and Leo Szilard.

Totalitarian Forces

In The Road to Serfdom, Hayek concedes that socialism, considered in the abstract, may not inexorably lead to totalitarian rule, but experience shows that the unforeseen and inevitable consequences of social planning do create a state of affairs in which, if its policies are to be pursued, totalitarian forces will get the upper hand.
Ironically, socialism can be put into practice only by methods of which socialists disapprove. (9) Hayek’s book is concerned mainly with protecting liberty from the seemingly unstoppable trend in Western democracies to subject their national economies to central planning, which he claims evidence shows will inevitably lead to tyranny.
Even a strong tradition of political liberty, Hayek warns, is no safeguard. The democratic statesman who from the loftiest of motives sets out to plan economic life will soon be confronted with the alternative of assuming dictatorial power or abandoning his plans. In short order he will have to choose between disregard of ordinary morals and failure. Hayek is convinced that the unscrupulous and uninhibited, lacking principle to constrain their activity, are likely to assume positions of authority.
Under their leadership, the moral views that initially inspired the collectivist state are not likely to prevail. The general demand for quick and determined government action will lead to a new morality and the suppression of democratic procedures. Given dissatisfaction with the slow and cumbersome course of constitutional procedures, the man or the party that appears the strongest and seems the most resolute in getting things done will create a new moral tone. (10)
In a planned society it is not merely a question of what the majority of people agree upon but what the largest single or homogeneous group agrees upon. It takes such a core group with like-minded goals to make unified direction possible.
Such a group, Hayek believes, is not likely to be formed by the best elements of society. In general the higher the education and intelligence of individuals, the more their tastes will differ and the less likely they are to agree on a set of ideas. “If we wish to find a high degree of uniformity and similarity of outlook, we have to descend to the regions of moral and intellectual standards where the more primitive and ‘common’ instincts and truths prevail.”
Hayek is convinced: “The largest groups of people whose values are similar are people with low standards.” That said, if a political dictator had to rely entirely on those whose uncomplicated and primitive instincts happen to be similar, their numbers would scarcely give sufficient weight to his campaign. He will have to increase their numbers by converting more to the same creed, a principle that is frequently enunciated in the pages of The Wall Street Journal. The would-be ruler must somehow obtain support of the docile and gullible who have no strong convictions of their own but who are prepared to accept a ready-made system of values if it is drummed into their ears sufficiently loudly and frequently.
It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party. Absent a strong bourgeoisie (middle class), the transition to a dictatorship may be easy, swift, and accomplished with complete legality.
Speaking of the mechanism by which power is achieved, Hayek notes that, where there is dissatisfaction with the policies of the ruling party, a skillful demagogue can weld together a closely, coherent and homogenous body of supporters by calling for a new order.
“It seems almost a law of human nature that it is easier to get people to agree on a negative program — on the hatred of an enemy, or on the envy of those who are better off — than on any positive task.” (11)
Yet pandering to the demands of a minority can lead to the dissolution of democratic governance, for democratic governance can work successfully so long as the functions of the state are limited to policies where agreement among the majority can be achieved. The price we have to pay for a democratic system, Hayek insists, is the restriction of state action to those areas where agreement can be reached.
Government interference in the life of the citizenry, even for benevolent purposes, endangers liberty if it posits a consensus where none exists. Absent consensus, coercion becomes necessary.
Examining the wellsprings of the socialist mentality, Hayek believes that the desire to organize social life according to a unitary plan springs essentially from a desire for power, more so than a desire for the communal good. In order to achieve his end, the socialist must achieve power over others — a perennial allure regardless of the objective. The success of socialist planning depends on the achievement of power over a reluctant citizenry.
When economic power is employed as an instrument of political power, it creates a degree of dependence scarcely distinguishable from slavery. The separation of economic and political aims, Hayek insists, is an essential condition of freedom.
Throughout his long life, Hayek was to return time and again to themes first articulated in the Road to Serfdom, notably in Law, Legislation and Liberty (three volumes, 1973, 1976, and 1979) and The Fatal Conceit: The Errors of Socialism.
In the latter, published when Hayek was eighty-nine years old, he professed to be an agnostic with respect to the existence and nature of God, but he had no doubt about the classical and Christian origins of Western culture. He saw that with the eclipse of Christianity, Europe was losing its force for the good, “the moral high ground,” we may say.
Using history to reinforce his claim, Hayek tells the reader: “The Greeks seem to have been the first to see the connection between private property and individual freedom. From antiquity to the present, no advanced civilization has yet developed without a government which saw its chief aim in the protection of private property. ‘Where there is no property, there is no justice’ is a proposition as certain as any demonstration in Euclid.” (12)

The Role Of Religion

Why then do intelligent people tend to be socialist? Intelligent people, Hayek suggests, tend to overvalue intelligence, and to suppose that we owe all the advantages and opportunities that our civilization offers to bureaucratic design rather than to an inherited wisdom and traditional rules of behavior.
Furthermore the intellectual is likely to suppose that we can, by exercising our reason, eliminate any remaining undesired features of our economy by still more intelligent reflection, and still more appropriate design, and “rational coordination” of our undertakings. This leads one to be favorably disposed to central economic planning and control that lie at the heart of socialism. (13)
“How could,” he rhetorically asks, “the traditions which people do not like and understand, whose effects they usually do not appreciate, and can neither see nor foresee, and which they are still ardently combating, continue to have been passed on from generation to generation?”
We owe to religion, Hayek concludes, that such beneficial traditions have been preserved and transmitted. Those traditions may be no more than “symbolic truths,” but it has been and remains the role of religion in society to preserve our moral traditions. (14)
One must conclude that even at the end of his life, Hayek had not fully escaped the positivism of August Comte and the Vienna Circle to which he had been exposed in his early years. Lacking a metaphysics, he remained confined to the phenomenal order of description and prediction.
Still, like his mentor, Ludwig von Mises, it is to his lasting credit that Hayek by his The Road to Serfdom convinced many an open mind that the main issue in social and political conflict is this: to what extent, in the interest of economic security, one should surrender freedom, private initiative, and individual responsibility to the guardianship of the socialist state. (15)

+ + +

(Dr. Dougherty is a dean emeritus and professor emeritus of Catholic University.)


1. The Road to Serfdom. University of Chicago Press, 1944.
2. Bertrand de Jouvenel. On Power: The Natural History of Its Growth. Les Editions du Cheval Aile, 1945. Many English language editions follow.
3. For a valuable discussion of the impact of the Vienna Circle, see Malachi Haim Hacohen, Karl Popper: The Formative Years, 1902-1945. Cambridge: Cambridge University Press, 2000.
4. John H. Hallowell. Main Currents in Modern Political Thought. New York: Henry Holt and Company, 1950, pp. 289, 327.
5. Ludwig von Mises. Socialism: An Economic and Sociological Analysis. Trans. from the German by J. Kahana. New York: Macmillan, 1900.
6. Hacohen, op. cit., p. 485.
7. Hacohen, p. 485.
8. Hacohen, p. 507.
9. The Road to Serfdom, p. 150.
10. The Road to Serfdom, pp. 152 ff.
11. Fatal Conceit, The Collected Works of F.A. Hayek, ed. W.W. Bartley III. Chicago: Chicago University Press, 1989.
12. Fatal Conceit, p. 32.
13. Ibid., p. 54.
14. Ibid.
15. Cf. Von Mises, “Preface,” Bureaucracy. New Haven: Yale University Press.

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