Venezuela's Path to Serfdom

To keep everyone from falling asleep, I’ve broken up this post into two parts. Today I’ll summarize the background of Hayek’s Road to Serfdom and what it means. Tomorrow, we’ll take a look at its application in the 21st century.

In 1944, as the Second World War drew to a close, an Austrian economist named Friedrich von Hayek wrote what would become one of the most influential books of the 20th century. The Road to Serfdom was a relatively short account of what Hayek believed were the root causes of totalitarianism. While most at that time viewed fascism and communism as polar opposites, Hayek argued the two were virtually identical: they both placed the needs and wants of the State over that of individual economic and social liberty. If anyone is looking for some good Spring reading, I strongly recommend this one. It truly helped me change the way I view individual freedom and the threat that political organization can and will always pose to it.

Hayek’s audience wasn’t the Russians or the Germans or those wishing to adopt similar regimes (his book was surely banned in those places anyway). Instead, Hayek’s words were directed squarely at British and American readers. Politicians on both sides of the pond at that time were making calls for government control, central planning, nationalization of industries, and price controls. All of this would be necessary, they argued, to “plan for the peace” and create a "collectivist" society where people would be put over profits, where everyone would be entitled to so-called “positive” freedoms (which is a total misnomer, because they require coercion of one individual for the benefit of another) like “freedom from unemployment,” “freedom from want or need,” “freedom from poverty,” “freedom from poor health” etc., where the common good would trump the purported “excesses” of free-market capitalism.

The central thrust of Hayek’s argument was that, despite the best intentions of the planners, it was this same kind of government intervention and coercion that led to the creation of the same framework that allowed people like Hitler and Stalin to rise to power. Germany, in the 1880s, was the first industrialized country to impose a social security system and a welfare state, for example. Continental Europe and Russia, he argued, were by nature much less skeptical of government and much more willing to accept intervention. And while Hayek conceded that Anglo society, with its deep-rooted respect for property rights, profits, and individualism, was a long way from becoming totalitarian, he nonetheless believed it would be heading down the same road if the “planners” had their way. Another one of Hayek’s assertions was that once a society starts on the “road” and the longer and further it ventures down it, the harder it becomes to turn things back around.

Well short story long, both America and Britain stayed on this road for about three decades, but the intellectual tide started to change in the late 1970s. The world slowly began to see things Hayek's way, and finally began to adopt policies of economic liberalization and privitization during the Reagan-Thatcher era of 1980s. The pendulum swung from government back to market, where it was at the beginning of the century. Since 1983, government intervention in the U.S. has generally remained at about the same level, although Bush’s vast entitlement spending spree in the past 6 years has made things worse again.

Tomorrow, we’ll take a look at the Road to Serfdom at work in 2007, namely in Hugo Chavez’s Venezuela. Thanks for tuning in.