Fifty years ago, a book was published that itself made history: The Road to Serfdom by F. A. Hayek. The book has since shattered the assumptions of intellectuals, legislators, and political leaders around the world, most of whom believed that the expanded collectivist power of government has been the true and noble road for social and economic progress. The book in fact triggered a new classical liberal revolution, based on the tradition of John Locke, Thomas Jefferson, and Adam Smith, that has since spread worldwide. The Soviet empire has collapsed and economic liberalization has become the cutting edge of change in much of Europe, South America, Asia, and elsewhere. And in the U.S., this movement for decentralization, individual economic and civil liberties, and the Rule of Law continues apace despite the hopefully brief political blip of the Clinton administrations nostalgia for the 1930s heyday of government central planning in its healthcare, employment, environmental, and other proposals.
Hayek himself had emigrated from his homeland in Austria, escaping the Nazi terror that overtook it by 1938. He dedicated The Road to Serfdom to The Socialists of all Parties, and it became an international best-seller, especially in the U.S. where it was even abridged for The Readers Digest. Hayek went on to win the Nobel Prize in Economic Sciences in 1974, and influence world leaders such as Margaret Thatcher, Ronald Reagan, and Václav Klaus.
Why did Hayek, the most reserved and scholarly of men, decide to plunge into the political fray? Basically, because he saw that Western Civilization stood at a historic juncture, and felt he could not keep silent. The year 1944 was perhaps the darkest hour for liberty in all this century. The Allied armed forces were, it is true, closing in on the dictatorial regimes of the Axis powers. But one of the victorious Allies was Stalins Russia, as monstrous a tyranny as any going down in defeat, and Stalin was about to spread his rule over half of Europe and then well into Asia. Even worse for the cause of authentic liberty, the free states of Britain and America had been radically altered by the War itself. Government control and management of every aspect of the life of society was not only accepted but welcomed by a propagandized public, as indispensable to the war effort. Most ominously of all, the mentality of the peoples was undergoing a change. Accustomed by the War to state direction, more and more people looked to the state for guidance, leadership, security, even salvation, in the post-War world. With collectivist-minded intellectuals dominating academy and the media, even such an excellent book as Albert Jay Nocks Our Enemy, The State, had been consigned to oblivion, despite Nocks pre-War literary prominence. It seemed that any rational and progressive person had to accept state planning of economic life as inevitableand eminently desirable.
In less than 250 pages, Hayek shattered the smug complacency of the leftist intellectuals. He showed that while Nazism was being defeated on the battlefield, many of its key assumptions were being hawked as the most advanced thinking by the leftists themselves. Nazism was, after all, National Socialism, and it shared basic traits with both Soviet Communism and the central planning that western socialists were pushing. In a deft theoretical and historical analysis, Hayek demonstrated that all systems of state control would eventuate in the kind of society the Western democracies were allegedly struggling against in the Second World War. It would mean the end of our civilization.
To progressive opinion, Hayeks work was nothing less than a scandal. So venomous were the attacks on it, that it was clear a raw nerve had been hit. But friends of freedom took heart, and, at first little by little, then by longer leaps, a renewal of the classical liberal idea began that continues to this day.
To understand Hayeks social philosophy we must understand his training and background. Hayek came out of the tradition of the Austrian school of economics, founded by Carl Menger in Vienna in 1871. What distinguishes this school is that it takes as its starting point in economics the acting individualhis felt needs and the actions he takes to satisfy them. From this, the whole intricate system of economic interaction is built up through logical deduction. The Austrian school has boasted distinguished scholars, many of whose ideas and insights have been incorporated into the body of generally accepted economic thinking. Most pertinent to Hayeks development was a senior scholar, Ludwig von Mises, whose famous seminar in Vienna Hayek attended.
Like most idealistic young men who returned from the war in 1918, Hayek at first had harbored hazy socialist notionshe was anxious to help create a brave, new world through conscious, scientific planning. This, it was thought, would replace the anarchy of capitalist production, considered the prime cause of social pathologies. Mises, however, was of a very different opinion. In 1922, he published his Socialism, a critique of all forms of collective thought. Throughout Europe, open-minded young men, who had been pondering these crucial issues, were convinced. After reading Misess book, Hayek became an advocate of free enterprise, and a lifelong friend of Mises.
With the rise of the Nazi threat, Mises, too, left Austria, ultimately emigrating to America. In a distinguished career that continued into the 1970s, he published a series of works that marked him as one of the great thinkers of the century, and, together with Hayek, as the most celebrated champion of classical liberalism in our time. Omnipotent Government, also published in 1944, is a trenchant account of modern German history that traced Nazism to the statist ideas and policies of earlier generations. In a brief work, Bureaucracy, Mises refuted the hackneyed notion that bureaucracy is an inevitable feature of the modern world, as prevalent in private enterprise as in government. He showed how, on the contrary, the incessant drive for profit in the private sector militates against bureaucracy, which is necessarily a trait of government operations. By general consensus, Misess greatest work is Human Action, a demanding, but immensely rewarding work.
The efforts of the Austrian school were continued in America by Misess students, perhaps the most prominent being Murray Rothbard. Rothbards great treatise, Man, Economy, and State, is a systematic presentation of how the self-regulating system of free, private enterprise works, and a demolition, one by one, of the fashionable yet profoundly flawed arguments that have been raised against it. Rothbard has also combined his insights with the natural rights concepts of Locke and Jefferson to produce such important books as For a New Liberty, a hard-hitting application of the principles of individual liberty and private property to all major public policy issues.
In The Road to Serfdom, Hayek had punctured a supreme myth of collectivism: the notion of central economic planning as the most rational and scientific form of economic organization. What he, along with Mises, demonstrated was that any socialist state or government bureaucracy, in its abolition of private property and exchangeand hence pricesrenders itself incapable of running economic complexities in anything but chaotic and socially destructive manners. Far from being scientific, socialism was in its essence irrational.
Collectivists of all stripes were appalledHayeks book was nothing less than scandalous. So venomous were the attacks on it, that it was clear a raw and vulnerable point had been hit. In response, they pointed to the alleged achievements of the Soviet Five Year Plans as refutation of the Mises-Hayek thesis. Now of course, after the fall of Soviet Communism, we know that the Austrians were right, that the system was almost unbelievably inefficient, and that it was kept running by black markets, the use of prices gleaned from capitalist countries, and the bits of private property and exchange that were permitted. In Alienation and the Soviet Economy, Paul Craig Roberts further draws upon the Mises-Hayek thesis, showing why Soviet central planning has been utterly flawed, being a necessary consequence of the fallacies of the Marxist idea.
An aspect of The Road to Serfdom that particularly shocked established opinion was Hayeks treatment of the Soviet Union. To the horror of many, he actually treated Stalins RussiaBritain and Americas ally in WWIIas a bloody dictatorship, no better than Hitlers Germany! Again, history has proved that Hayek was right, and information from Soviet archives further confirms the findings of Robert Conquest, the leading historian of the decades of Red atrocities. His The Great Terror remains the classic work on the subject, and in The Harvest of Sorrow, Conquest accounts for one of the great crimes of the centurythe man-made forced famine in the early 1930s. In total, the non-war related holocaust of Soviet collectivism cost the lives of at least 20 million and perhaps as many as 50 million.
Composing The Road to Serfdom in the midst of WWII, Hayek was also well aware of how war promotes the collectivization of society. This insight was recently taken up by Robert Higgs in his brilliant book Crisis and Leviathan, which traces this phenomenon in the U.S. during the 20th century. The growth of state power through wars and revolution around the world, and the further disasters it has wrought, is further depicted on a much broader canvas by Paul Johnson, in his marvelous Modern Times.
Hayek lived to be 92, authoring many masterful books including his last one, The Fatal Conceit, which extends The Road to Serfdom to devastate the notion that imposed rule by one group over others can somehow be beneficial. His earlier monumental book, The Constitution of Liberty, sets forth the philosophical grounds for his classical liberalism, applying its principles to a wide range of social problems. In addition, one of Hayeks most important books is his edited Capitalism and the Historians. Here Hayek, T. S. Ashton, W. H. Hutt, and other economic historians demonstrate that the economic liberalization that produced the industrial revolution led directly to the greatest progress for working people ever witnessed.
Other thinkers who appealed to Hayek were those who understood that liberty required an awareness of history, the growth of institutions, and the moral underpinning of society. The French Baron de Montesquieu, in The Spirit of the Laws, showed both a devotion for liberty and the complexities of establishing and maintaining it. Hayek also held great affection for the American experiment in freedom; The Constitution of Liberty in fact is dedicated To the unknown civilization that is growing in America. Hence, he had a profound admiration for the Founding Fathers such as is found in The Federalist Papers, by Madison, Hamilton, and Jay.
In addition, Hayek was an admirer of the French thinker Benjamin Constant, who living through the Revolution and the dictatorship of Napoleon, foresaw in his superb book, Political Writings, the modern threat from governments claiming absolute power over individuals, all in the name of the people. Following in Constants footsteps, Alexis de Tocqueville investigated the conditions that lead to the tyranny of collectivism. His greatest book, Democracy in America, is both an analysis of these trends, and the best cultural study of the American people ever written. But of all, Hayek probably esteemed Adam Smith the most. Though originally published in 1776, Smiths The Wealth of Nations is a treasure house of political and moral, as well as economic, good sense.
Hayek lived long enough to see the turning of the tide. By the time of his death in 1992, the Soviet Union, the Mecca of so many of the intellectuals he challenged, had ceased to exist. Throughout the world, honest collectivists were compelled to admit, reluctantly, that Hayek had indeed been right. Milton and Rose Friedman have even referred to the rebirth of classical liberalism in the later 20th century as the Hayek wave (the first wave, in this interpretation, being the one inaugurated by Smith, Jefferson, Madison, and others). And in addition to Milton Friedman, we can directly trace the influence of Hayeks thinking in the work of eight other recent economics Nobel Laureates.
Of course, the Friedmans themselves have contributed to this rebirth in no small measure. Their Capitalism and Freedom is a spirited defense of free-market principles, applied to areas hitherto deemed off limits (such as occupational licensing, drugs, military draft, education, etc.). In Free to Choose, the Friedmans produced a bestseller on the moral and economic case for the market economy. Yet, there is no doubt that the Friedmans tribute to Hayek was deserved. Todays worldwide resurgence of classical liberalism that began with The Road to Serfdom in 1944 gives us hope that the all-devouring state, whatever ideological coloration it assumes, may well be destined for the scrap heap of history it so well deserves.