Notes on The Road to Serfdom by Friedrich Hayek (#33)
I don’t endorse these views. I’m writing to learn. Let me know if anything is unclear or misunderstood :)
Hayek argues against the idea that central planning can achieve societal goals more efficiently than a market-based economy. He warns that it can lead to totalitarianism.
Planning
Socialism not only means its ultimate aims of social justice, greater equality and security, but also the particular methods many believe to be the only ways, like abolishing private enterprise and creating a planned economy.
The disagreement between planners and opponents is not whether to plan or not, but what and how.
One view argues that the market economy no longer works due to technological advance erasing competition. But Hayek questions if it’s due to technology, or in fact policies pursued in most countries.
Hayek says improved production efficiency didn't eliminate competition. Confirming events are largely due to the influence of prophecy as such. He warns that we should caution about inevitability, as “in social evolution nothing is inevitable but thinking makes it so.”
Democracy
Some criticize the society lacks a “conscious” direction and its activities are guided by “the whims and fancies of irresponsible individuals.”
Hayek argues that the concept of the “common good” lacks a clear meaning — “The welfare and the happiness of millions cannot be measured on a single scale... [they] depend on a great many things that can be provided in an infinite variety of combinations.”
While individuals have different goals, many have the same ends. Common actions should be limited to common ends. Taking actions beyond these common ends suppresses individual freedom. “It is a superstition to believe that there must be a majority view on everything.”
Under democracy, the majority may not always make sane choices. Democracy is a means to safeguard internal peace and individual freedom. It’s not the will of the majority that prevents arbitrary power, but the limitation of power.
The Rule of Law
Hayek distinguishes between two kinds of rules: 1) rules that set a framework for individuals to freely decide how to use resources; 2) rules that specify how resources should be used for specific purposes. For example, designing a highway code and setting up signposts, versus directing people which road to take.
The first kind of rule can be made in advance without considering specific needs. Economic planning is different — when deciding how many pigs to be raised, it discriminates one group from another.
Totalitarianism
Supporters of economic control claim it can be separate from politics. Hayek believes state planning makes all economic and social questions political, as power decides distribution.
It’s simplistic to say all governments affect the relative position of different people. Measures can be taken without knowing their individual impact. The extent matters: whether anyone gets anything depends on the government, or if the influence is limited to some people in some way at some time.
Planners often face unexpected outcomes after making decisions. They have to create new, sometimes inconsistent rules on the spot to address these issues.
A common strategy to gain acceptance is to convince people that the new values still align with their existing beliefs. For example, both democracy and socialism share the word “equality.” Democracy seeks it in liberty, while socialism seeks it in restraints and servitude. Socialists and liberals say “freedom,” but Hayek sees it as exploitation as socialists want equal wealth distribution.
Another strategy is to unite people against those they dislike or envy, external forces or those better off, rather than towards positive causes. Individual criticism will be suppressed to maintain loyalty to the system, affecting everyday activities and limiting innovation.
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Until next week,
Weichen
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