Roads, Serfdom
I’ve been meaning for quite a while to write about how The Road to Serfdom doesn’t say anything like what most people think it says. Because Conor Friedersdorf’s post about the book is getting all kinds of love in my Twitter feed, right now might just be the time. Friedersdorf writes:
Every day, more see that the road to serfdom in America does not involve a knock in the night or a jack-booted thug. It starts with smooth-talking politicians offering seemingly innocuous compromises, and an opportunistic leadership that chooses not to stand up for America’s enduring principles of freedom and entrepreneurship.
– Arthur C. Brooks and Rep. Paul Ryan, writing in The Wall Street Journal
The size and scope of the federal government is alarming. Spending is out of control. The budget deficit and the national debt are long term threats to American prosperity. On all these subjects, I am in agreement with Messieurs Brooks and Ryan. I share both their preference for a free enterprise system and their aversion to European-style socialist economy.
Seven decades have passed since The Road to Serfdom was published. Social democracy hasn’t yet led Europe or any of its diverse countries into serfdom. On the contrary, they’re are among the most free and prosperous countries in the history of human civilization. I prefer the American system. It’s better, all things considered. In order to make the case for it, we need not pretend that the people of Europe are in chains.
On the other hand, “the jack booted thug” and “the knock in the night” aren’t consigned to history merely because the authors act as though they’re quaint vestiges of history — to be read about in Holocaust memoirs and dystopian novels, but ignored when it comes time to assess how best to guard our liberty.
The United States is not on the brink of turning into Oceania, or even Singapore. But anyone with their eyes open ought to notice that the United States is already too close for comfort to “knocks in the night” and “jackbooted thugs.”
To which I agree in full. And zombie Friedrich Hayek, who has lately taken up residence in Brink Lindsey’s old office, would probably agree as well. Here he is in chapter five of The Road to Serfdom:
The effect of the people’s agreeing that there must be central planning, without agreeing on the ends, will be rather as if a group of people were to commit themselves to take a journey together without agreeing where they want to go: with the result that they may all have to make a journey which most of them do not want at all…
It may be the unanimously expressed will of the people that its parliament should prepare a comprehensive economic plan, yet neither the people nor its representatives need therefore be able to agree on any particular plan. The inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions. Parliaments come to be regarded as ineffective ‘talking shops,’ unable or incompetent to carry out the tasks for which they have been chosen. The conviction grows that if efficient planning is to be done, the direction must be ‘taken out of politics’ and placed in the hands of experts — permanent officials or independent autonomous bodies…
Yet agreement that planning is necessary, together with the inability of democratic assemblies to produce a plan, will evoke stronger and stronger demands that the government or some single individual should be given powers to act on their own responsibility. The belief is becoming more and more widespread that, if things are to get done, the responsible authorities must be freed from the fetters of democratic procedure.
In short, the road to serfdom isn’t paved with social democracy, which may after all be modest and well-contained. It’s paved with an overweening faith in the democratic process to solve complex, detailed problems of economic allocation. This faith eventually turns sour when (as inevitably happens) the democratic process can’t do the impossible.
Democracy, social or otherwise, fails when we start out with too much faith in its ability to plan. We may imagine that democracy can produce a more rational and efficient economic system, but this is absolutely beyond its powers. As a result, we stand to lose faith in democratic institutions. We might even demand that broad discretion be given to experts, or to dictators. That’s the road to serfdom.
By contrast, it’s certainly possible to have a social democratic government that isn’t on the road to serfdom. This is true both by empirical observation and by Hayek’s own very clear statements about the matter. To imagine anything other is both to ignore history and to admit that you don’t really know your Hayek.
None of this is to say that I personally approve of social democracy or think that more of it, in whatever form you may be imagining, would necessarily be better for our country. But there are meaningful differences between social insurance and comprehensive economic planning. These differences seemed readily apparent to Hayek even if his fans don’t all agree.
It’s paved with an overweening faith in the democratic process to solve complex, detailed problems of economic allocation.
It’s paved by unconditional faith in the Myth of the “Free Market” whereby corporations own the government (becoming the barons [again]), free to dictate terms of employment to the peasants. The “Jobless Recovery” is just what the corporations want. Millions unemployed and begging to work for scraps? It’s nirvana, baby.
None of this is to say that I personally approve of social democracy or think that more of it
Of course not. Despite it working quite well in Europe (by your own admission) and Corporatism causing major disasters here , we don’t need no steeekin’ social democracy!
So why not have more social democracy?Report
@Jeff,
Yes. I’m all in favor of pain and suffering. (Chomps on cigar.)
Seriously. I’d even abolish patents and copyrights, and you’re calling me a corporate shill? Wow.Report
@Jason Kuznicki, could you fight your inclination to skirt his question?
Considering Conor’s recognition of the historic freedom and prosperity seen in some social democratic nations in Europe and your acknowledgement of the empirical evidence of that success, why not more social democracy in the US? If there are meaningful differences between social insurance and full bore central planning, why pull out “The State” bogeyman whenever the balance tilts slightly more toward the former?Report
@62across, The question as phrased didn’t exactly show a sincere interest in an answer, did it?
If you’re actually interested, we need to define parameters. There’s so single European Social Democratic model, so if you’re interested in importing it into the US, you need to explain a bit more about precisely which elements you’re concerned with.
If you want a more universal welfare state, that’s in some ways the least objectionable component, at least from my rather eccentric point of view (Jason probably doesn’t agree). It would be exceptionally hard to implement in the US given the constitutional obstacles, and coverage for significant powerful groups would drop – the way unemployment payments are distributed would have to be tilted further towards the less well off, social security would need to be scaled back, and medicare would have to go. In exchange you’d get universal (but rationed or priced) healthcare, and more help for those who actually need it. I see this as a good trade off personally, but good luck selling it to the American public. Its worth noting that while the Nordic countries have very active welfare states, state interference in the rest of the economy is very low – again this is a good tradeoff in my view, but state interference in many parts of the US economy would have to scale back. When I tell friends who still live in Europe that American states license realtors, barbers and interior designers they look at me with horror.
The second thing is active industrial policy. There’s no necessary tie between this and the welfare state – and the tradeoff is different. The state creates a security blanket for certain business and for certain jobs, and give unions official roles in their companies. In turn, business creation becomes harder, and you get a higher level of fixed, structural unemployment. This is where there’s probably a real difference of opinion – I think this is a terrible idea and based on a complete misunderstanding of production in a capitalist economy. Unless you’re a member of a unionized profession and have no interest in ever being anything else, I can’t see the attraction.Report
@Simon K, I actually am interested, though my sense is that we are not at a point where parameters can be defined. We are mired in a more fundamental place where empirical evidence gets discounted out of hand when it doesn’t sit right with the ideological perspective you’ve married yourself to. That’s why I asked why Jason was so quick to disavow social democracy when faced with examples of it working.
I don’t know that I’m interested in importing a particular flavor of European social democracy into the US as much as I’m open to looking at what works and why from the full menu of applications, then developing similar policies here. I recognize the inherent difficulties. I’d favor less interference in the markets in the US, but only after efforts to dismantle the collusion set up between Big Government and Big Business (which is the big C Corporatism Jeff is getting at above) that is so out of whack in our economy. Market principles won’t work in a system as thoroughly gamed as ours currently is. This arrangement is a much bigger problem than the unions are.Report
@62across,
“only after efforts to dismantle the collusion set up between Big Government and Big Business”
So you want to keep Big Government’s role in controlling half or more of GDP. And I’d like to pay you the compliment of assuming you are aware that very Big Businesses indeed are a critical component of European social democratic economies, or that very close collusion between the two is another critical component of European social democracies. But you don’t seem that clued in.
It sounds like your blind ideological, cultural, and nationalistic prejudices prevent you from understanding that the collusion is inevitable, because it’s much easier and cheaper to bribe a civil servant to give you a billion-dollar contract than it is to persuade each of a million customers to buy a thousand-dollar product. Kickbacks only work if the guy you’re paying off is spending somebody else’s money: If you pay me $10 for $100 of my brother’s money, I’m $10 ahead. If you pay me $10 for $100 of my own money, I’m $90 behind.
Reality, after all, is a special case.Report
@Matthew Walker, no, I don’t want Big Government to maintain control of half or more of GDP. But I’m not going to assume in the absence of Big Government, Big Business will then wholeheartedly embrace the free market. Removing the civil servant from your equation does not suddenly make convincing a million customers to buy a thousand-dollar product any cheaper or easier, does it? What will that money that once was used to bribe the civil servant go to now? Improved product quality or better marketing? Or will it go to buy the next available apparatus for gaming the system? What would that be in the absence of Big Government anyway? The military? The courts?Report
@62across, How do you figure gov’t controls ‘half of GDP’?Report
@62across,
Your reply to my comment has no “reply” link, so I’ll reply here.
OK, if you can’t bribe a civil servant to give you other people’s money, then you’re absolutely correct, the next best way of making money (assuming the laws against brigandage are enforced), is to earn it honestly, and that’s a harder dollar than corruption. You have correctly repeated back to me what I was telling you: People make money corruptly because it’s easier than making it honestly. People lobby Congress for trade restrictions because it’s cheaper to ban competitors than to compete honestly with them.
Well? So what? If they can’t hack the competition, the hell with them. Let somebody competent lure their customers away. Let them go bankrupt. It makes no sense to leave perfectly good capital, resources, and workers tied up in an organization that can’t produce anything anybody wants at a competitive price. I don’t mind unemployment insurance so nobody starves in between jobs when some imbecile in the corner office runs a company into the ground, but on a corporate level, you have to let the customers reward the vendors that serve them best.
In the absence of bribing our loving masters in DC, they can spend their money on improved products or better marketing or liquor and whores; I couldn’t care less. They can burn it in a golden trash can, if they think it’ll help. As for me, I’ll go shop with the guys who in my opinion least rip me off, and so will everybody else. We will give our money to whoever we think serves us best. None of this will never be ideal (news flash: Nothing is ever ideal. Nothing. Ever), but historically this kind of try-it-your-way chaos has been better for everybody than letting civil servants allocate resources “for our own good” on the basis of what serves THEM best. Because even the people with the very bestest of best intentions, will at best still have an unconscious bias in favor of what benefits them and the people they most know about and identify with. When it’s your skin in the game, you play differently and much more resonsibly than if it’s somebody else’s.
They only way to “game” my “system” is to please the customer. What the hell is wrong with pleasing the customer?
And the idiots who bought houses at the peak of the market, and now they’re underwater? Screw them too. If it’s not your own skin in the game, you play like a retard. I lived within my means and had a lot less fun than they did because of it. They made their choice. If they don’t learn now, they never will, and it is a lesson we as a society MUST LEARN or we are hopelessly screwed.Report
@62across,
Further on underwater mortgages: Sure it hurts. T.S. Life as a migrant laborer hurts too. Life in the post office hurts. People everywhere hurt every day, a lot more than these creeps ever will. Who the hell do these people think they are, the queen of f*****g England, that the world’s number one moral priority must be to support them in the style to which they couldn’t actually afford to become accustomed?
Oh, and other guy: Government isn’t yet 50% of GDP in the US, though my debating partner may well wish it were, judging from the systems he admires. It’s creeping up on it, and I expect it to get there well within my lifetime. But it isn’t there yet. I spoke casually and expansively. My bad.Report
@Matthew Walker, you’re putting a lot of words in my mouth and with quite a bit of anger, so perhaps you should take a deep breath. Queen of England, seriously????
I’m not exonerating government. From the beginning, I’ve claimed collusion between government and business. And collusion, like the tango, takes two.
You assume the laws against brigandage will be enforced and I make no such assumptions. The credit default swap crap that brought the economy to its knees was legal and it impacted the financial well-being of many people who were not stakeholders of AIG. If you believe you can insulate yourself from the effects of these actions by only shopping from those who serve you best, think again.Report
Seriously. I’d even abolish patents and copyrights, and you’re calling me a corporate shill? Wow.
Not you. I make no claim about any specific person — but I also notice that you don’t refute my points: that Corporatism is taking us down the Road to Serfdom more than any other thing , that both the Blue Dogs and the Republicans, including the Tea Party as is, are foursquare in favor of Corporatism, and that you decry social democracy while agreeing that it can be a Good Thing.Report
@Jeff, What exactly do you mean by Corporatism? And by Social Democracy?Report
[[Sorry, I’m having trouble getting the anchors to work]]
“Corporatism” is a faith, based on the premise that Corporations are the Ultimate Good. Its credo is “A corporation is a person and money is speech”. It wraps itself in “free market” mythology, when it is far from free.
“Social Democracy” is the use of government to improve the lives of its citizens. The FAA, FDA, Clean Air & Water Acts, DMVs, etc — the regulatory agencies that some libertarians rail against (Grover Norquist is a particularly loathsome example) — that are needed to keep the Corporations in check are examples of tools of Social Democracy.
As for unions, the only other real alternative would be even more government regulation and intrusion, unless one wants to return to the days of the Triangle Shirtwaist Factory. Some unions have become corrupt at the top — we need to fix those unions, not remove unions altogether. Surely the latest coal-mining disaster should have made that obvious.Report
@Jeff, See, this is where political language gets us into trouble. You’re right to identify corporatism as a major threat and that corporatist policies are often dressed up in free-market rhetoric by scumbags like Grover Norquist. But its very important to distinguish between libertarians like Jason who are arguing in good faith and politicians who are just using libertarian rhetoric for instrumental purposes.
Its not correct to identify all positive functions of government as “Social Democracy”. Social Democracy is the democratic variant of socialism, where socialism is the ideology that says individuals exist not merely for themselves but for the needs of all. Government has positive functions that are quite consistent with liberalism and do not require socialist beliefs (at least in my view – Jason may disagree). Protecting road and air users and whatever common goods may exist are certainly among them. Its really very important to distinguish liberal and socialist ideas because they tend to use the same means, but they have very different goals.Report
@Jeff,
I’d actually classify regulating agencies as a different aspect of government. By social democracy, I had in mind the welfare state, at least as it helps the poor rather than the middle class. I find regulatory agencies are better discussed using other paradigms, and mostly they’re beyond the scope of what I’m talking about here. For one thing, they don’t cost nearly as much.Report
@Jeff, I don’t know if I’m right here, but when I use the term corporatism what I mean is a political system with a high level of coordination between the state and certain corporations, so that it’s not quite socialism because they’re not state industries, but there’s enough coordination of efforts, special favors, large contracts, etc that you have most of the problems that come with state industries anyway. I think my use of the term is totally reconcilable with yours though, and I would note that corporatism is, in my opinion, a much more serious threat in the United States than actual socialism.
As for socialism, I usually mean the belief that private property should be abolished in order to form a more equitable society, as well as political parties that aim at the abolition of private property. Most of them call for something like worker-owned industries; however, socialist governments have thus far tended much more often to state-owned industries. Again, I see the threat of the United States turning to socialism as much lower than the threat of its continuing embrace of corporatism bringing all of the same problems.Report
See, this is why your question really annoyed me — I agree with you that corporatism is largely the problem nowadays. Both the major parties are implicated, as is the Tea Party.
I am skeptical of further social welfare in part because I don’t trust our political process to deliver anything remotely equitable. I can imagine better social welfare systems than our own, both on equality and on efficiency grounds. I can also imagine them serving the poor much better than the current setup now does, while costing much less. I can’t imagine getting there from here, at least not until the political climate changes in a very big way.Report
@Jason Kuznicki, In regards to your second point, which I’ve heard, i think, a lot of libertarians make, I understand your point. Our screwed up politics makes it hard to do things right. But the thing is, that also give tremendous power, almost complete veto power, to the cranks and fuck ups. If its possible to completely derail the process by breaking it, then that is what some people will do. It will never be possible to do things correctly since the unscrupulous always have ultimate say. And as long as those people have their veto why the hell would they ever fix the system when they can always get their way. Talk about twisted incentives.Report
@Jason Kuznicki, this is the rub. How do you change a political climate? First you have to encourage people to get off of their ideological hobbyhorses.
And with corporatism largely the problem, you have to be open to the possibility that solutions lie where unexpected. I completely appreciate your lack of faith in our political process. How do you break up the cozy relationship between Congress and K Street? Unfortunately, since the average Joe almost no leverage to bring to bear on Big Business to get them to give up their sweet deal voluntarily, we’re left with relying on reforming Big Government through our nominal influence as voters.Report
How do you break up the cozy relationship between Congress and K Street?
This is one area where I think “progressives” have a better track record than libertarians (and MUCH better than the Tea Party). Most progressives, such as Franken, push toward reducing the influence of K Street. I haven’t seen much of a push from any “major” libertarian. But then, I don’t hang out with libertarians much, other than occasional visits here.Report
@Jeff,
Having the dual premises that corporations have no power in Europe and that ‘Corporations’ are a monolithic bloc in the US makes Kuznicki’s initial snarky dismissal the right call.Report
You & Conor are making the mistake of actually thinking about what Hayek was saying. All true Conservatives know that the only thing you need to take away from TRTS is that any & all social welfare programs inexorably lead to full-on communist dictatorships. The whys and wherefores are just for egghead elites … and what do they know anyway?
P.S. Did Hayek say anything about the effect of stealth muslims in Gov’t on the whole process? What about stealth muslims who secretly work to institute Shariah in their countries?Report
Hey, thats a good idea for a new book: “The Road to Shariah”.
Basically, it’ll be “the Road to Serfdom” for the anti-Muslims. It can explain how even the slightest accomodation to Islam or the religious sensibilities of Muslims inexorably leads to a Caliphate.
Total bullcrap, of course, Regenery will publish it for sure. Could be a money-maker in todays market.Report
You know the suprising thing about the real Caliphate in the Ottoman empire is how tolerant it was of christianity, and far far more tolerant of Judaism than Europe. Basically if a person of the book, you paid your tax and that was that and could live under the groups law. (If not a person of the book, well thats a different story).Report
@Lyle, That attitude was once the norm with empires- believe what you want but pay your taxes and don’t kill each other- and is a probably a point in their favor over the nation-states that came out of them.
In terms of the Ottomans, I was recently (Friday) reading consular records from Beirut in the 1840s about the feud between the Maronite Christians and the Druze (sort of neo-Platonic mystics associated, somewhat incorrectly, with Islam) that eventually became a civil war in Lebanon in the 1860s. Anyway, one consular report stated the Ottoman position fairly well: “The Turks remain completely neutral in the feud, although they demand that fighting cease because it threatens to interfere with tax collection”.
Of course, that was the old imperial attitude, which was torn apart by various forms of nationalism in Europe and the Ottoman Empire. The Turks were already falling prey to that threat by that time and would eventually fall to the inability of every “Young ____” nationalist group to live with other ethnicities.
In a lot of ways, the ideology of nationalism is replicated in what we call “Islamism”- maybe it should be called “Pan-Islamism” and really dates back to the 1920s Egyptian political movements; particularly the Muslim Brotherhood. There’s more than a smidgen of fascist ideology in there as well. In other words, Islamism is not nearly as venerable as the fundamentalists would have it, and it owes a greater intellectual debt to western Europe than any of them would like to admit. Of course, we remember how nationalism turned out in European history.
Which is all a roundabout way of agreeing with you!Report
At one point the Islamic regions were more liberal than the Christian west, but that changed and these regions fell back into ignorance and despotism.Report
Excellent post. The problem is that Serfdom is a good book on an outdated topic. As a result conservatives tend to make an unwarrented and ill informed assumption:
social democracy != planning!!!
In the 30’s and 40’s there were serious advocates of economic planning. This DID NOT mean ‘stimulus’ or unemployment or even social security. This meant the gov’t allocating production, usually in conjunction with major industries. An archtypical example might be the UK’s nationalization of the coal mines. The logic was that it would be a win-win. Gov’t would lower coal prices and raise worker’s wages so the mine would zero out its profit or even have a slight loss.
A less drastic idea in the same school would be ‘planning’ wherin, for example, the major auto companies would sit down and project next year’s production and the gov’t would allocate steel to the auto industry. Variations of this were tried briefly in the New Deal with the NRA and planning became a very big policy in WWII where various industries had to deal with the gov’t before being allowed to buy ‘essential’ materials.
It’s not difficult to see why this idea gained so much currency. The USSR was directly planning its economy and it appeared to have made a large leap from a backward mostly agricultural economy to an industrial one. WWII seemed to work very well also. More importantly, though, someone looking at history at the turn of the last century would have seen a narrative that began with Adam Smith’s ‘perfect competition’ model with small shops and producers competiting against each other giving way to oligachy and monopoly as the industrical revolution climaxed. The perfect competition model did not seem to accomodate the fact that many industrial activities had economies of scale where the larger the producer, the cheaper to produce. At the cheapest point though, producers were so large that only a few could be accomodated by the marketplace. It certainly must have seemed like history was going to show ‘perfect competition’ was a quaint model for a small piece of the economy (the coffee shop, the bagel maker maybe), but for most of it production would take place on such a large scale that only gov’t could handle it.
Hayek was excellent in pointing out the problems with planning and history has mostly shown him right. But where a lot on the right are getting it all wrong is equating Keynes and social democracy with planning. (And this is an easy area to get confused because Hayek was a critic of Keynes, but you’ll find little in Serfdom about Keynes or even social democracy). Let’s tackle them to see the problem:
Social Democracy – This mostly is not about planning the economy. The key ideas here tend to be taxing the economy to fund outcomes that are more socially tolerable. Hence observe Social Security. SSI taxes your pay and then pays you when you’re old. There’s no ‘planning’ here in the Serfdom sense. SSI doesn’t assign you a job, doesn’t tell you when or even if to retire. It doesn’t lower tax rates on jobs it thinks are ‘important’ and raise them on those it thinks are ‘unwanted’. What job you have, how much you make, all this isn’t ‘planned’ but is the result of the market. Now you can validly point out that this has a distortionary effect on the market but it isn’t ‘planning’.
Keynes – While history is never a clean story the fact is Keynesian stimulus isn’t planning either. Stimulus spends in a recession to boost demand. That’s it. For example, take extending unemployment benefits and boosting food stamps which was a portion of what the actual stimulus package did. Individuals get funds but where they spend it is up to them (Wal-Mart or Target, food or gas, pay down the mortgage or move). Likewise how the economy responds to demand increasing is not planned (more Wal-Marts or GM assembly lines?, more Iron Man movies or Starbucks outlets?)Report
@Boonton, You’re in denial. We’ve been living under five- and ten-year plans for the last forty or sixty years, they’re just concealed from the public.
Also: black helicopters. Purity of Essence.Report
The so called Industrial Revolution was an example of failed democratic meddling in economic planning. It should definitely be undone, so we can avoid serfdom.Report
I’ve just read the replies from the 25th, and I think we might be in agreement (somewhat). I find it hard to separate social democracy, as you are using it here, from the rest of liberalism.
I tend to be in favor of worker-owned companies, and think that one of the tragedies is the way that GM murdered Saturn[*] (if a corporation is indeed a person, then a charge of infanticide should be possible…), mostly because the experiment seemed to be working TOO well.
Rufus, I think the difference between a state-owned industry and an industry-owned state is the power to change. The biggest blow to the individual by the corporations came from the Supreme Court (“Citizens United” is judicial activism at its worst), not from any elected body. Franken, Frank and Greyson show that if enough people get involved, anti-corporists can get elected. Impacting a Board of Directors is well-nigh impossible.
I haven’t had a chance to talk with libertarians who weren’t all “gubment is bad” and “taxes are theft”in years. It’s challenging and refreshing.
[*] GM withheld new models from Saturn, keeping them behind the other marques. I’ve heard that this is one of the major things that led to Saturn’s demise.Report
@Jeff,
I’m all in favor of worker-owned corporations. We’d part ways on Citizens United, but we do have to disagree about something. (Just… not right now.)Report