Still Trudging Towards Serfdom

The book was dismissed by many leading thinkers, of course. Isaiah Berlin remarked to a friend that he was “still reading the awful Dr. Hayek.” Others said it was a defense of industry’s direction over people’s lives, a reactionary capitalist macroaggression, as contemporary leftists might say. George Orwell said that Hayek had merely picked the poison of monopoly and industrial coercion of workers over the other set of problems brought on by socialism. Why can’t we, Orwell wonders, choose the best fruits of both industry and a large state employed to benefit the laboring classes? The verdict: Hayek was dull, stuck in the discarded ideas of the liberal nineteenth century.

A different verdict came from the market, that is, British and American citizens willing to think anew about the political and economic conditions they had endured for nearly two decades. The book outran publisher sales predictions in both Britain and America. The original print run for 2,000 copies in Britain sold out quickly. Even though the book was written for a British audience, The Road to Serfdom received both enthusiastic and critical reviews in the US, despite the fact that Chicago Press was the third American publisher sought for the book.

Shortly after the book’s release in America in September of 1944, Henry Hazlitt’s front-​page review in the Sunday Times Book Review generated popular interest, sparking calls for translation rights in German, Spanish, Dutch, and other languages. Within 10 days of publication, the book was in its third printing, and bookstores were out of stock, requesting more copies. By the spring of 1945, Reader’s Digest published a condensed version reaching over 600,000 copies. A seventh printing went unfulfilled in 1945 because of a paper shortage. The University of Chicago Press estimates that it has sold over 350,000 copies of the publication, while sales from the many translated editions are hard to track. It’s difficult even to guess how many samizdat copies were printed behind the Iron Curtain during the Cold War.

Hayek feared that socialism’s idealism, the scientific facade of its arguments, and its apparent benevolence and humanitarian aims clouded judgment about how its use of state power extinguished liberty, undermined the rule of law, and led to dictatorial rule. “What our planners demand is a central direction of all economic activity according to a single plan, laying down how the resources of society should be ‘consciously directed’ to serve particular ends in a definite way.” Hayek frames the alternative to collectivist planning as “the holder of coercive power … confin[ing] himself in general to creating conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully” (emphasis original).

In his introduction to the 2007 edition published by the University of Chicago Press, Bruce Caldwell notes that the book began as a memo by Hayek in the early 1930s to the Director of the London School of Economics, Sir William Beveridge, contesting Beveridge’s well-​worn claim that fascism was the dying gasp of a failed capitalist system reacting against socialism. Fascism, Hayek argues, was just socialism in an embedded nationalist framework, embracing statist outcomes through the methods of socialist technique. The capitalists, such as they existed in fascism, were either vanquished or under the direction of the state for its purposes. Hayek’s memo grew into an article in 1938, titled “Freedom and the Economic System,” and then into this book that landed with an unsettling thud on the reading public in both Britain and America in 1944.

While The Road to Serfdom was not an academic text, it was an attempt to state clearly, and with great certainty, that Britain’s leadership class—in its love for planning—was steering the nation in the same direction as Nazi Germany or fascist Italy. To be sure, Hayek argues, Britain in no way resembled or was close to approaching the homicidal mania of Nazi Germany. Yet an intellectual process favoring socialism and planning had been manifest in Britain since he arrived as an émigré in 1931. Once principles are accepted as norms for policy, then their logic begins to run very quickly in official state operations. He who says A must say B.

And Hayek the Austrian reports that he could make this judgment because he had witnessed a process unfolding in Germany that was not unlike that which was transpiring in Britain. Hitler’s Germany did not spontaneously emerge because of ruinous inflation or because of a Prussian spirit that favored aggression and hierarchy. The truth was that Germany, stretching back to Bismarck’s reign, had given its economy over to state control. Corporatism had been accepted by the German legal system before World War I. This organization of industries by the state meant that companies no longer had direct accountability to private interests. The logic of the system emerged over time, and corporate titans who welcomed state favor and protection from competition, domestic and foreign, found that the German state was not content with a public/​private relationship. It demanded that capital and resources be placed under state authority. Legally, corporatism placed these entities in an almost extra-​legal relationship to the state, affording them more benefits and legal protections than individuals received.

More insidious than corporatism, Hayek recalls, was the long train of ideas under Hegel, Marx, List, Schmoller, Sombart, and Mannheim that promoted socialism or “organization” or “planning.” These ideas not only dominated German life but were exported to Britain and other liberal states, including America. The British became convinced that “their own former convictions had merely been rationalizations of selfish interests, that free trade was a doctrine invented to further British interests, and that the political ideals of England and America were hopelessly outmoded and a thing to be ashamed of.” Germany built itself to Hitler, Hayek argues.

What we lack, Hayek intones, is “the intellectual courage to admit to ourselves that we may have been wrong. Few are ready to recognize that the rise of fascism and Naziism was not a reaction against the socialist trends of the preceding period but a necessary outcome of those tendencies.” Elsewhere, Hayek notes, “Scarcely anybody doubts that we must continue to move toward socialism.” Hayek aims to cast light on where such idealism will lead Britain and other liberal states.

But that introduces the obvious critique of The Road to Serfdom, namely, that it overshot its mark. Western countries like Britain and the United States did continue with mixed economies in the postwar period. They deployed bureaucracies and planning, welfare states, and social spending. Totalitarianism did not ensue; instead, there were vast inefficiencies, as the weight of high taxes and the regulatory state pressed on markets. The trenchant French liberal thinker Raymond Aron rejects Hayek’s overall approach, considering that Western economies successfully struck a balance between economic freedom and government planning, a fact that remains true today. Was Hayek wrong? Should he have revisited his thesis?

Hayek addresses this line of criticism in a preface to the 1956 edition. He points out that the book’s thesis never turned on a simple claim that egalitarian government planning always leads immediately to tyranny. Socialism is gone, while state interventionism and welfarism remain, but Hayek contends that his all-​embracing critique demonstrated why and how economic planning fails badly. Meanwhile, an ongoing contest between planning and freedom in Western states has continued to play out between parties and ideas. Aron’s response implies something of a peaceful coexistence between both ideas, with each having merit. But conservatives and classical liberals who contend for the rule of law and markets have limited the full damage that would otherwise have been inflicted by the social democratic demand for ever greater security and control.

Milton Friedman touches on this in his introduction to the Fiftieth Anniversary edition, where he cites the immediate postwar British Labor government’s attempt to direct people in their occupations. It generated a pulsating backlash. In one respect, Hayek’s analysis proved right: Labor policies were coercing people into jobs they wouldn’t choose otherwise. Collectivist coercion was winning out. Yet the public—in their bones—knew it and pushed back hard. Stronger and weaker versions of this struggle have emerged countless times, with contestants knowingly or unknowingly appealing to Hayek’s arguments to establish their opposition to ideological and regulatory overreach.

Other aspects of the book’s critique have become repeatedly confirmed by time and experience. It has become clearer how state interventionism and a welfare state can combine to deform the mores and character of the citizenry. Hayek argues that this process overshadows the traditions of liberty in the understanding of people. This “slow affair” extends “not over a few years but perhaps over one or two generations” as “new institutions and policies … gradually undermine and destroy that spirit.”

Entitlements in American civic culture are now prized and valued so tenaciously that retrenching them is almost impossible, even as mathematical and actuarial tables demonstrate that in current form they will collapse. Hayek, though, did not completely dismiss the possibility that the state might provide a social insurance system, a limited welfare state. Such spending could be reconciled, he thought, with a liberal and free political economy. But Hayek’s social welfare state was different from the providential welfare state that we have erected, brick by brick, yard by yard, slogan by slogan. Criticisms of Hayek note that he approved of social welfare spending that now clogs state budgets, but Hayek didn’t point in the direction of an unlimited entitlement state. Instead, he endorsed provisions for individuals facing difficult episodes or periods in their lives.

Many of us thought that Hayek’s Road—in the form of an ever-​expanding entitlement state—couldn’t be paved, because the spending excesses and dismal demographics would make it impossible. Instead, we are learning the opposite. Concrete facts alone are much weaker than unleashed appetites, fed by the view that citizens are due and owed payments from the state. Both political parties and their constituents embolden and participate in this fraud.

Human beings are creative and flexible, thus enabling a certain degree of economic freedom and creativity to flourish despite the vast web of regulation, spending, and security that every Western state seeks to provide. This is certainly true. The tremendous productivity and profit potential of the American economy, coupled with our global currency status, continues to underwrite the debt that funds our entitlement system. We are, as flawed humans, double-​minded, desirous of a certain spontaneity and prosperity, but also too easily content to live with government propping us up in certain ways. We have never fully reconciled the tensions between these approaches, generating not only economic distortions and compromises with the rule of law, but also, more importantly, deformations of character.

Other insights in the book continue to resound, especially regarding the inherently loose and arbitrary nature of state rulemaking and enforcement outside small zones where a political consensus does exist. Political agreement “to guide the action of the state” is always fairly limited in large modern republics because of the inherently diverse interests and needs of its citizens. But where agreement does not exist, it must be forged by a minority group within government which produces fiction to convince individuals that the sacrifice of individual freedom is needed in the name of the nation, the people, the common good, or equality. To that list, we can now add, equity, diversity, and inclusion. Truth doesn’t exist. What does exist is what the regime can create in our minds as to how we should think properly about a problem. Language must be manipulated to make a common identity apparent, and disincentives must be created to prevent citizens from dissenting or challenging it.

Hayek’s point is evident in the constant depiction of politics and policy as war: War on Terror, War on Drugs, War on Poverty, War against Women, War against the Elderly. Or in the insistence that only a maximal approach to environmental legislation can prevent the very extinction of our planet. “Follow the science,” we were told during Covid lockdowns, as if the data unobjectionably dictated the right policy solutions, to say nothing of how the data was produced and under what assumptions. Government-​backed DEI training sessions in public and private entity settings tee up anyone participating as a racist or sexist or transphobe for merely asking questions, as in, “Bill, that’s easy for someone of your white male cisgender privilege to ask, but what about Steve here whose acquisition of a penis produced his true self. Bill, why are you erasing Steve?”

Hayek poignantly illustrates the problem with legislative delegations of power to the regulatory state, a topic of endless theorizing by our conservative and libertarian legal academics. The problem, he thinks, goes beyond delegation and a bureaucratic class charged with applying and enforcing rules. Some bureaucracy is needed in almost every operation. Delegation has become central, Hayek notes, because as the UK government stated in 1932, “many of the laws affect people’s lives so closely that elasticity is essential!” The result is the “conferment of arbitrary power—power so limited by no fixed principles and which in the opinion of Parliament cannot be limited by definite and unambiguous rules.”

Delegation became widespread in the era of twentieth-​century government interventions because there was no common agreement on general rules, announced in advance, that applied impartially to everyone. The state had to rule by waiver, discretion, and ad hoc committee decisions. The axe must fall on someone, and until he knew the circumstances or identity of the relevant parties, the bureaucrat didn’t know where to swing. How else do you direct whole sections of the economy?

Hayek finishes his book with the most essential truth: collectivism undermines our dignity as human persons. “Responsibility” must not be “to a superior, but to one’s conscience, the awareness of a duty not exacted by compulsion, … and to bear the consequences of one’s own decision, [is] the very essence of any morals which deserve the name.” Ever the advocate of the individualist society, Hayek counted its virtues as “independence, self-​reliance, the willingness to bear risks, the readiness to back one’s convictions against a majority, and the willingness to voluntary cooperation with one’s neighbors.” We need these virtues today, and the tradition that undergirds them.