Edward Feser (Claremont Review, paywall) argues that Hayek has been widely misinterpreted. Feser says that Hayek thought that only comprehensive socialist central planning was the road to serfdom.
the planner has to dictate, rather than learn, what individual economic actors need and how they will behave. For the only sure way to know what they want and what they will do is to decide for them what they should want and what they should do. And the more closely the economic planner wants outcomes to conform to his plan, the more thorough this dictatorial control will have to be. This is the sense in which Hayek thought socialism entails “serfdom.” He was saying that centrally planning large-scale economic outcomes requires large-scale control of economic behavior. Planners will have to increase control, if they are intent on realizing the plan.
But of course, they could instead just give up large-scale central planning. That is exactly what happened in Western regulatory welfare states. They never ended up becoming dictatorships, precisely because they pulled back from going whole hog for socialism. Hayek was hardly surprised by this. On the contrary, it was exactly what he was trying to convince them to do. He wouldn’t have wasted time writing The Road to Serfdom if he thought the economic regulation that already existed made socialist dictatorship inevitable. Nor was he opposed in the first place to all regulatory and welfare measures. For example, in The Road to Serfdom itself he explicitly allows for regulations to ensure safe working conditions, and for a safety net for those unable to provide adequate food, shelter, and health care for themselves. The Hayek who thought that the smallest tax increase is but the first step toward the Gulag exists only in the imaginations of uncharitable critics and simpleminded admirers.
That raises the question of how comprehensive and whole-hog the central planning, state-involvement, and regulation has to get before one starts to have Hayekian worries about it.
“Never” isn’t the right word in such a sentence. It assumes a conclusion to a process.
There are two main types of government economic intervention:
1. Control over a country’s production
2. Control over distribution of the proceeds from production
Both types of intervention impact the other. For example, industrial regulation reduces businesses’ capacity to create wealth, and wealth redistribution reduces incentives to produce it.
The Scandinavian countries went down both paths during the 1960s and 1970s, but the malign results forced them to privatize and deregulate industry. For a time, it appeared that the result – extensive welfare states supported by capitalist engines – was sustainable. However, this model is now failing as well. While problems have been exacerbated by immigration, cracks were beginning to show even before the Syrian exodus.
Theodore Dalrymple’s book, “Life at the Bottom: The Worldview That Makes the Underclass,” provides a vivid, if horrifying, look at the world created by the welfare state. One of Dalrymple’s key observations is the loss of agency experienced by those for whom the state provides their every material need. Their mindset tends to be oddly passive – they do not act, the world acts on them. Dalrymple, a medical doctor and psychiatrist, worked with inmates at a British prison for some fifteen years. He recounts the words of a man confined for murder, who talked about the knife going into the victim; as if it was the knife, and not he, who had committed the crime.
Every government intervention into the market spawns unintended consequences that can be addressed by either removing the original intervention or instituting new ones. New interventions, in turn, create new unintended consequences that present new decision points. The Nordic countries have chosen to unwind their controls of their economic engines and are beginning to unwind their redistribution systems. Other countries – like North Korea, Zimbabwe, and Venezuela – have chosen to grimly stay the course.
Perhaps it comes down to how much dysfunction a nation’s leaders and people are willing to accept.
This is an inside debate among economists, and mostly irrelevant.
The answer is that governments cause volatility, cannot be avoided. The best defense is to expense the volatility as soon as it is observed. This is the PSST solution, pay for the mess as we cause it then the volatility is sustainable.
So instead of serfdom we got serfdom lite?
F.A. Hayek (8 May 1899 – 23 March 1992) lived a full life. Indeed—poetic justice!—would have it, he lived long enough to witness the collapse of communism.
Surely, in the course of his long life, Hayek observed how others interpreted and developed his ideas; for example, ‘the road to serfdom.’ If perchance intellectuals widely and persistently misinterpreted Hayek’s fundamental insights, then wouldn’t Hayek have pointed out their major mistakes in interpretation, and wouldn’t he have clarified the proper scope of his analysis of the road to serfdom?
So, Hayek thought central planning would be fine if a state turned all its knowledge over to bureaucrats? From whence do these administrators obtain the knowledge and information not known to the state? It wouldn’t be from meeting a payroll, facing electoral competition, or worrying about the source of their wages.
And how do these geniuses avoid capture by the politicians and lobbyists currying each other’s favor?