A Road to Serfdom? Rethinking Hayek’s Libertarian Map

In her Iowa City Press-Citizen column of April 11 (“Emancipation from Taxation”), Beth Cody presents another of her many spirited defenses of the Libertarians’ thinking about government and taxation. Readers of that newspaper will not be surprised to learn that I do not agree with her.

This does not mean, however, that I casually dismiss her ideas or those of Libertarians in general. To understand Libertarianism better I’ve been reading F.A. Hayek’s 1944 book The Road to Serfdom, as edited by Bruce Caldwell in 2007.

I really admire the clarity with which Hayek begins drawing his map of the road. He is quite forthright when, in the opening lines of his preface, he states: “When a professional student of social affairs writes a political book, his first duty is plainly to say so. This is a political book. I do not wish to disguise this…[A]ll I shall have to say is derived from certain ultimate values. I hope…to make it clear beyond doubt what these ultimate values are on which the whole argument depends” (p. 37).

I also find his critique of central economic planning to be insightful and important, especially on pages 100-123. I would agree with Hayek when he writes, “there could hardly be a more unbearable—and more irrational—world than one in which the most eminent specialists in each field were allowed to proceed unchecked with the realization of their ideals” (p. 99). As is well-documented in other posts of this site, I’ve always been critical of unchecked expertise, primarily because it offers no opportunity for democratic participation in its processes.

Despite these merits, I find his map of the terrain to be seriously flawed in two respects: first, while rightly emphasizing the value of individual freedom and liberty, he leaves far too much out; and second, he mistakenly equates planning with totalitarianism. When combined, these two flaws in his mapping leave readers unable to judge wisely about when governmental action and planning is called for, and how to do it well.

Freedom and Liberty

What are the ultimate values that matter most to Hayek and hence shape his mapping? For him, they are individual liberty and freedom, the essential features of which “are the respect for the individual man qua man, that is, the recognition of his own views and tastes as supreme in his own sphere, however narrowly that may be circumscribed, and the belief that it is desirable that men should develop their own individual gifts and bents” (p. 68). In brief, he defends the “freedom to shape our life according to our own ideas” (p. 60).

Hayek’s spirited defense of individual freedom rightly appeals to many people, myself included. But by placing his emphasis on the freedom of the individual he disregards the countless ways in which each of us is profoundly influenced by the social, cultural, and environmental contexts in which we are immersed. He also fails to distinguish between the freedom to do something, and freedom from certain kinds of oppressions and constraints.

When I read Hayek, therefore, I consistently find myself asking, to whose freedom and whose liberty does he refer? If I read him correctly, he means that producers and consumers should be free to do what they want with their property and income. But this raises an enormously important topic that Hayek simply ignores, namely slavery and its legacy.

Prior to the Civil War of 1861-65, almost all African-Americans were slaves and had no rights. They were merely property to be bought, fed, bred, used, and sold. The majority of voters in the southern states, a few of whom owned these pieces of property called slaves, saw no reason to change their “peculiar institution.” Hayek does not address this situation, so one has to infer what he would have said about it. If he applied his Libertarian philosophy consistently to this situation, he would have concluded that this institution—as serious an intrusion on individual liberty as can be imagined—should not have been changed unless the owners of the property voluntarily agreed. Why? Because changing the institution would have required an unjustifiable intrusion on their liberty and freedom to use their property as they saw fit.

To be worthy of serious consideration, therefore, any viable Libertarian philosophy must make space within its own reasoning for other values, such as social justice and ecological sustainability. It is neither desirable nor reasonable to let competitive market actors alone decide what moral/ethical principles should constrain their behavior. These principles must instead arise from spirited argumentation in the public arena.

Planning and Totalitarianism

Hayek roundly condemns planning as being equivalent to totalitarianism; that is, as “the road to serfdom.” But to understand what he means, one has to understand how he defined his terms and the context in which he was writing.

Having written his book in the 1930s and early 1940s, and having lived in Austria and England, Hayek was deeply influenced by the context in which he wrote. This fact becomes clear when one reads his treatment of Socialism and Fascism, and when one sees that he writes not one word about race and racism, about exploitation of the natural environment, about the role of women in society, about the treatment of gays and lesbians, and so on.

For him, planning meant “central economic planning” by the national government. “What our planners demand,” he writes, “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” (p. 85). For him, central economic planning equals socialism, which equals collectivism, which equals Soviet Communism, which equals Fascism, which equals totalitarianism. As Hayek put it, “fascism and communism are merely variants of the same totalitarianism which central control of all economic activity tends to produce” (p. 43).

Although events of the 1930s gave Hayek good reasons to equate planning with central economic planning, he was arguing against something that does not exist in contemporary Europe or America, and which most definitely is not advocated by the planners I know. In fact, one might reasonably say that Hayek’s often quite insightful critique of central economic planning helps explain why planning scholars in the U. S. have not advocated anything like it for at least the past forty years. The closest approximation in the contemporary U. S. is the Federal Reserve System, in which expert economists (not planners) exert a significant degree of control.

Questions Left Unanswered

Although Hayek was quite critical of central economic planning, he did not embrace a laissez-faire economy in which markets would function entirely free of government influence. (See p. 71.) To the contrary, he believed there are legitimate fields of government activity.

Alas, he did not clarify what that would mean in practice. The closest he came was on p. 85, where he writes, “The dispute between the modern planners and their opponents is…not a dispute on whether we ought to employ foresight and systemic thinking in planning our common affairs. It is a dispute about what is the best way of doing so. The question is whether for this purpose it is better that the holder of coercive power should confine 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; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed ‘blueprint.’”

Consequently, as John Maynard Keynes wrote Hayek, “You agree that the line [between good and bad planning] has to be drawn somewhere, and that the logical extreme is not possible. But you give us no guidance whatever about where to draw it” (p. 24).

For those of us living in the present day United States, it is especially important to see that Hayek explicitly justifies the necessity of government action in the face of what we now call “negative externalities.” (See pp. 85-88). Perhaps more important given the recent public conflict over national health care policy, is Hayek’s discussion of the state’s role in ensuring security in the face of risks. He distinguishes between two types of security: “security against severe physical deprivation, the certainty of a given minimum of sustenance for all,” and “security of a given standard of life, or of the relative position which one person or group enjoys compared with others” (pp. 147-148). He fears the latter, but advocates the former. “[T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody.…Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance—where, in short, we deal with genuinely insurable risks—the case for the state’s helping to organize a comprehensive system of social insurance is very strong.…There is, finally, the supremely important problem of combating general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany them. This is, of course, one of the gravest and most pressing problems of our time.…[I]ts solution will require much planning in the good sense” (pp. 148-149).

In this regard, it is worth noting that Hayek insists that “true liberalism,” by which he means Libertarianism, differs from Conservatism. “[I]n its paternalistic, nationalistic, and power-adoring tendencies it [Conservatism] is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place. A conservative movement, by its very nature, is bound to be a defender of established privilege and to lean on the power of government for the protection of privilege” (pp. 45-46).

Hayek’s comments about Conservatism make me wonder how he (and contemporary Libertarians) would stop the tendency of global-scale transnational corporations to gain and retain control of the state’s economic instruments and policy.

I also find it quite interesting to discover that Hayek praises individual liberty and denounces “collectivism,” while simultaneously advocating political (that is collective or coordinated) action on behalf of the Libertarian agenda. One can see the consequences in the contemporary U. S. American situation, wherein Libertarians are cooperating with religious fundamentalists and conventional Conservatives to carry out their agenda. How can Libertarians work collectively for political change, and cooperate with temporary allies who have different objectives, while still remaining true to their fundamental values?

In the end, one has to conclude that Hayek did not oppose either government action or planning. Although he did vigorously oppose central economic planning, he also rejected laissez-faire economics. Instead he advocated “good planning,” which would leave most decisions to individuals acting within “the rule of law.” As Keynes observed, Hayek did not clarify where and how to draw the line between good and bad planning.

In my view, the scope and limits of government action must, of necessity, be a matter of practical judgment involving both experts and citizens. When drawing a road map, it is wise to consult people who know the terrain, but it is also wise to call upon people who know how to draw maps.

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