Disclaimer: This is published under the Routledge Classics label, an imprint of Taylor & Francis, which is a wholly owned Division of the company that, at the time of reading and reviewing, I work for. I bought it at retail price and was not asked to review it by anyone I work with. As ever, I review it of my own volition and the opinions expressed here are wholly my own and should not be taken as indicative of the publisher or the parent company.
At the start of the year, I wrote a blog piece about books that would challenge my worldview. This was one I chose myself, rather than having it suggested to me by anyone else. Known as one of the fathers of neoliberalism, Hayek’s economics stand is stark contrast to my kind socialism. And I am a firm believer that one should, from time to time, read and engage with those who hold a vastly different opinions than you do.
Hayek’s opening premise is one that is a distinct product of his time. The Road to Serfdom was first published in 1944. As such, many of the horrors of fascist Germany were known to the world. An Austrian by birth, Hayek was living and working in England at the time. His opening assertion is that the rise of fascism was the natural outcome of socialism in Germany. He is here issuing a warning that England is in danger of following along the same path.
He speaks of socialism as having, as its essential feature, the idea of planning. i.e. that central government decides what needs to be done and then plans to do it. This view rather misses the point. He mistakes process for outcome. In order for the realisation of a socialist society (i.e. one where people are paid fairly, where none are left behind, where people are treated fairly instead of being exploited and where those who gain from the benefits of living in a civilised world pay their fair share of taxes) it is inevitable that some planning is necessary. But Hayek is too short-sighted and sees only the planning, not the goal. It like saying that the construction of a block of flats is all about cranes and heavy lifting. There is some truth in that, insofar as it is the means, but it omits from the narrative the idea that there will be homes where people will eventually live.
While it is absolutely right that any number of political/economic systems should come under scrutiny, there are further flaws in Hayek’s reasoning. Implicit in his writing that there are two possible systems: liberalism and socialism. He frequently puts capitalism into scare quotes, implying that there’s no such thing. This seems to be because he so keen to appropriate the positive connotations of the word ‘liberal’ that he wishes to push aside other, more accurate terms, in favour of a terminology that puts his own views in the most rosey light. In so doing he sets up the logical fallacy of a false dichotomy. He posits these two ideals and attempts to trash one, thus leaving only one left – Hayek’s neoliberalism. Yet this in itself is assumed by default. It is an early example of the ide of TINA (There Is No Alternative), yet the consequences of neoliberalism are not adequately explored in Hayek’s work. Like a mediocre chess player he considers possible moves, rules each one out in turn and opts for the one he has thought about the least, not examined with the same critical eye that he has applied to the others.
Hayek is, in effect, telling us a ghost story. It is the story of how evil has come to rise, and it is because of certain views that have been held in the past. Like John the baptiser, he calls us to repent of our socialist ways and make straight the way for free enterprise. But Hayek’s messiah is not Jesus, it is a certain kind of freedom. It is the freedom for any individual to do as they please. Here, he comes up with the ultimate statement of laissez-faire fundamentalism: “It is necessary in the first instance that the parties in the market should be free to sell and buy at any price at which they can find a partner to the transaction, and that anybody should be free to produce, sell, and buy anything that may be produced or sold at all.”
Wow, that sounds good doesn’t it? Yes. Until you think about it. If followed through, there is nothing here to prevent a manufacturer from making weapons of mass destruction and selling them to terrorist organisations or hostile governments, providing they pay the right fee. There’s nothing here to prevent the sale of narcotics to children, if they’ve got the cash on them and can negotiate a price amenable to all. There’s nothing here that protects the rights of workers, ensuring that they are given a fair day’s pay for a fair day’s work or any legal protection as to whether they can rely on the ongoing nature of their employment.
Another underlying assumption that the kind of liberty Hayek is so desperate for exists and is readily attainable.
Here are just a few more quotes that demonstrate the paucity of Hayek’s thinking:
“…recognition of the individual as the ultimate judge of his ends, the belief that as far as possible his own views ought to govern his actions, that forms the essence of the individualist position.”
Here, Hayek shows his contempt for the rule of law. It’s no different in substance from the philosophy of Sheryl Crow (“If it make you happy, it can’t be that bad”).
On property & privilege:
“It would indeed be privilege if, for example, as has sometimes been the case in the past, landed property were reserved to members of the nobility. And it is privilege if, as is true in our time, the right to produce or sell particular things is reserved to particular people designated by authority. But to call private property as such, which all can acquire under the same rules, a privilege, because only some succeed in acquiring it, is depriving the word privilege of its meaning.”
This misses the point by an almost unbelievable amount. We may have the same rules, but not all have the same means. Private property remains (and possibly more so than ever) the reserve the richest elite in the country. I’ve written before on the generational gap that those under the age of 34 will possibly never be able to own their own home.
Probably no part of the book turned my stomach as when Hayek came onto the subject of inequality. In it, he states that a person who loses their job out of sheer misfortune is bound to feel less hard done by than someone who has had their job taken away from because of the actions of the state. That may have some truth in it, but if we dig under the surface we find a level of denialism firstly that the state may be the provider of jobs and secondly that private enterprise is ever in any way at fault for causing people to become unemployed. It is merely attributed to market forces. Further, Hayek states a flat contradiction to a statement of Jesus that “the worker deserves his wages”. What Hayek proposes is that if a person, employed to do a job, does it, only for the end product to, for some reason or other, be rendered redundant, then the worker should not be paid. In other words, the worker should bear the cost of the labour, while his employer takes no financial hit. This is an idea that I find morally repugnant and should be shunned by any person who takes seriously the idea that workers should be treated with dignity and fairness.
Hayek acknowledges that his form of economic liberalism will inevitably result in ineqaulity. In effect, though, he says “[tough titty]” to this, as it is of little consequence compared to the dangers inherent in striving for a fairer society. For in Hayek’s view there is no such thing as moderation; any economic planning that is designed to curb the increase in, or reverse, inequality must be wholly totalitarian and therefore the temptation to go down this route must be resisted. In effect, Hayek holds the liberty of the individual to do act as they want is the highest, most sacrosanct of all things, and that inequality is a justifiable expense of maintaining this freedom, even if it is the freedom of the individual to economically oppress another.
In a chapter entitled ‘The End of Truth’, Hayek puts forward the idea of the power within narratives and that such narratives may be constructed as a post hoc rationalisation for the prejudices which one holds. In this, he is quite correct and I understand the theme was later picked up by the philosopher Mary Midgely in The Myths We Live By. For example, he states, “The need to rationalise the likes and dislikes which, for lack of anything else, must guide the planner in many of his decisions, and the necessity of stating his reasons in a form in which they will appeal to as many people as possible, will force him to construct theories, i.e. assertions about the connections between facts, which then become an integral part of the governing doctrine.”
Hayek is here speaking of the speck in the eye of his opponents. But the log is own eye is just around the corner. It is somewhat apt that immediately following ‘The End of Truth’ we catch Hayek doing exactly what he has just warned about. For he rationalises his dislike of socialists by stating, in ways that are designed to appeal to many, a theory that socialism is at the heart of Nazism. This is indeed the heart of Hayek’s doctrine. In so doing, he makes the foolish mistake that many on the right still make, by supposing that because the German regime was called National Socialism, that that is demonstrative of what socialism is. Such thinking would also lead one to look to the Democratic People’s Republic of Korea as a model of democracy. It is sheer idiocy.
As he tries to make his case, one will note some absurd statements. For example:
“”The ideas of 1789″ – Liberty, Equality Fraternity – are characteristically commercial ideals which have no other purpose but to secure certain advantages to individuals.”
This displays a crass ignorance of the French Revolution. Equality is one of the things that Hayek denounces over and over in this work. As for fraternity, that is by no means a bad thing, but it is the very opposite of the individualism which is the hallmark of the society Hayek wishes to build. It should be plain by now to the reader that Hayek’s view of liberty is a rather warped one indeed; a kind of liberty where one individual or corporation should not be prohibited from economically oppressing another individual, a community or even a democracy.
“To regard war as inhuman and senseless is a product of commercial views.”
Frankly, this bullshit. To regard war as inhuman and senseless is a product of humanity and sense. Loss of life is far more important than loss of profit, but Hayek seems not to have grasped this.
In what passes for analysis, such non-sequiters are not in isolation. Though it is interesting to note what Hayek doesn’t say as what he does. In his account of the rise of Nazism, the figure of Hitler is barely mentioned. Neither are the crippling war reparations that were imposed on Germany after the first world war. Nor is there any sign of the great depression. These are all vital factors that any reasonable person would need to consider amongst the many circumstances of history, culture and geography that saw the rise of the Third Reich. So why might Hayek have missed them out? It seems that he has already found his scapegoat: socialists. Those democratically minded lovers of justice and equality must have been the cause of the the totalitarian, evil regime, convinced of its own superiority over other races that the 20th century ever witnessed.
These are but only a glimpse of the flaws in Hayek’s thinking.
So what became of his fears? Ultimately, Hayek was proved to be wrong. His warnings weren’t heeded and Labour ended up leading a socialist government after the end of the second world war, just a couple of years after Hayek wrote his thesis. Did this result in the inevitable slide into totalitarianism? No. It resulted in the most progressive government this country saw in the 20th century. It kick-started the rebuilding of the country, established the welfare state and the National Health Service, under the leadership of Clement Attlee and with the vision of Nye Bevan. It wasn’t really until the 1980s, under Thatcher, that we really saw the outplay of Hayek’s philosophy, though usually through the lens of Friedman. Mass privatisation and deregulation of the markets sowed the seeds for the 2008 crash, the biggest economic failure since Hayek’s time, which came about not because of socialist planning, but because of the neoliberal lack of good governance and oversight that is dismissed as “big government”.
So read Hayek, not because he speaks a warning from history, but because he is a warning from history. Sadly, it is a history that is still being played out today.