Wednesday, October 07, 2009

Book Review: The Road To Serfdom

My recent cruise afforded me the opportunity to work my way through Hayek's The Road To Serfdom; doing so was certainly a worthwhile excercise. It's an excellent example of both brevity and clarity, articulately tackling a host of related issued in a slim 219 pages. Written in 1944 in Britain it's totally untainted by the stupidity that the two-party system and its associated partisanship has brought to the bulk of contemporary political writing. Moreover, even though it was written 60+ years ago in an effort to convince the British to avoid a planned economy, its remarkable how much is highly relevant in the here and now. It seems that the players may change but the story essentially remains the same. Rather than try to summarize the work in its entirety (which has been done before much better than I ever could) I'll just comment on some selections which seemed particularly interesting to me.

"Freedom" and "Priviledge"

Fairly early on Hayek spends some time discussing the meaning of the terms "freedom"1 and "priviledge"2 and how their respective meanings had subtley drifted from the period of classical liberalism to the time in which he was writing. In classical liberalism "freedom" specifically indicated the state in which a person was at liberty to guide their own destiny free from undue coercion (by the state or private parties), but by Hayek's time it had also come to mean liberation from the "despotism of physical want". Similarly, "priviledge" was a violation of the rule of formal equality before the law (e.g. some people had more rights than others by virtue of birth or station), whereas the word had come to mean any sort of (usually material) advantage that one person might have over another.

It's instructive to see how these two words have fared between then and now. "Freedom" maintains both senses to some degree; we recognize it in the sense of personal liberty but also in the sense of "freedom from want". The second meaning of "priviledge", on the other hand, has universally come to dominate. Perhaps its a sign of how deeply entrenched democratic ideals have become in the fabric of US society that we've essentially forgotten the original meaning of the word. Formal equality of persons before the law is taken for granted, thus when we speak of priviledge we're almost always talking about socio-economic differences between persons that lack the force of law.

Hayek makes a good argument that the two senses of each word are mutually incompatible, and characterized this conflict as one of procedural vs. substantive justice/equality. The new sense of freedom was "only another name for the old demand for an equal distribution of wealth" and could only be achieved by means of a violation of its old sense. Similarly, to eliminate "priviledge" in its new sense one would have to treat different individuals differently, thus ushering in the return of priviledge in the classical sense.

Barack's Not A Socialist (Yet)

This being a book whose primary purpose is to argue strongly against collectivism, Hayek spends a good deal of time documenting the progression towards such behavior both in pre-war Germany and contemporary (for him) Britain. We're not even close; the people who've been yammering on and on and on recently about Barack Obama wanting to turn this into a socialist country are, to be charitable, premature and unduly alarmist. Bestowing favors and funds on various industries is not, in and of itself, socialism except in a very broad (to the point of being near meaningless) sense of the word. Hayek wrote Serfdom to counter people who were advocating for wholescale economic planning and publically questioning the value of liberty, freedom, etc. No one in the Obama administration, to the best of my knowledge, has even come close to that.

That said, its also fair to argue that certain initiatives which the Obama administration has undertaken share some traits with these historical socialists. The bailout of Detroit is a good example. Propping up the automotive industry rather than letting them fail is sketchy, but not socialism. Telling them that they've got to make "green" cars... that starts to look like centralized planning at that point. In particular, the contemporary US auto industry looks an awful lot like the capitalist/labor chimeras which Hayek discusses on pp. 200 - 206. This section contains a particularly salient quote to that effect:

The decisions which the managers of such an organised industry would constantly have to make are not decisions which any society will long leave to private individuals. A state which allows such enormous aggregations of power to grow up cannot afford to let this power rest entirely in private control.3

If the auto industry is too big to fail does it follow from there that it's too important to be left in the hands of a handful of managers?

Hayek on Killing Granny

It's gratifying to see Hayek raising the same complaints about the expansion of healthcare that I've noted elsewhere, if for no other reason than it lets me know that I'm not completely smoking crack:

When we have to choose between higher wages for nurses and doctors and more extensive services for the sick, more milk for children and better wages for agricultural workers, or between employment for the unemployed or better wages for those already employed, nothing short of a complete system of values in which every want of every person or group has a definite place is necessary to provide an answer.

There seems to be little or no recognition among progressive that, given finite resources, extending benefits to one person necessarily deprives another of their use. On a purely theoretical level you run into trouble since it's essentially impossible to come up with the system of values (or even a reasonable approximation thereof) to which Hayek refers.

Your Boss is a Fascist

Probably the most entertaining part of the book for me was this quote from Soviet Communism by S. and B. Webb:

Whilst the work is in progress, any public expression of doubt, or even fear that the plan will not be successful, is an act of disloyalty and even of treachery because of its possible effects on the will and on the efforts of the rest of the staff.5

God, this happens at work all the time. We recently had a VP chew someone out for expressing entirely reasonable doubts in public about a particular development effort. I, myself, have been remonstrated on more than one occassion for insufficient cheerleading in this regard. I'm tempted to find a copy of Soviet Communism and give it to the VP in question as a gift.

Some Unresolved Questions

Lastly I'd like to comment on a few points where I feel that Hayek's analysis was incomplete or self-contradictory. He seemed to take it as a given that, during wartime, centralized planning would be needed in order to efficiently combat whatever opponent a nation might find itself up against. At the same time, however, he makes the following statement:

We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may also prevent its use for desirable purposes.6

In light of the above what makes wartime unique enough that Hayek is willing to grant a dispensation for centralized planning? I suppose that he was operating from the proposition that Britain would have to be self-sufficient in its own defense and that the requisite resources were scarce enough that the country could ill afford to spend them on anything else. Even if we were to so stipulate it strikes me that there must be some rough heuristic which tells us whether the government has been ceeded too much/not enough authority for that purpose. Elsewise how are we to know when to grant the dispensation and when to take it back?

At several points in the book Hayek also makes reference to the government ensuring a certain minimum threshold of subsistence (see p. 124 for example). But it strikes me that the comment above regarding "higher wages for nurses and doctors" applies here as well. Is there a general consensus regarding what that minimum threshold entails? I would hazard that the answer to that question is "No", in which case we need the same "complete system of values" which he earlier writes off as a practical impossibility.

1 p. 25
2 p. 83
3 p. 200
4 p. 81
5 p. 164
6 p. 242


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