I am certain that nothing has done so much to destroy the juridical safeguards of individual freedom as the striving after this mirage of social justice. –Friedrich Hayek
Military strategists divide large-scale conflicts into “theaters of war.” During the Second World War, for instance, Europe was divided into Western, Eastern, North African, and Atlantic theaters. From the perspective of history, there is another important theater: the ideological theater, in which the war of ideas takes place. While warring governments certainly do try to shape the opinions of their citizens through propaganda, it would be a mistake to understand the ideological theater purely in terms of a top-down, coordinated system such as we find in military organizations. The ideological theater encompasses a great deal of voluntary, spontaneous effort—often from well-established intellectuals.
This was certainly the case during the Second World War, and, afterwards, during the Cold War. Isaiah Berlin, Karl Popper, Friedrich Hayek, and many other intellectuals worked hard to undermine the allure of Marxist ideology by linking it to fascism. Both Marxism and fascism were, they argued, instances of a larger pattern: totalitarianism. A totalitarian society is one that attempts to exert “total” control over everything that occurs within it, including the lives and opinions of individuals. It is thus the opposite of an open, or liberal society, in which individuals are free to pursue their own good in their own way, and where the state’s power is sharply restricted by law. If the choice between capitalism and communism could be presented in these terms, there was not much doubt about which way most people would choose.
The Austrian economist Friedrich A. Hayek (1899–1992) was an important contributor to this genre of political writing. His book, The Road to Serfdom (1944), continues to influence debates over liberty and socialism today. In it he made a number of arguments against the possibility of a technocratic, scientifically managed society, which I would like to briefly explore in the rest of this article.
According to Hayek, socialism entails the demand to take economic decision-making out of the hands of individuals. A rationally planned society, however rational and however efficient, is not one in which individuals will have freedom to make their own decisions. That’s just what “planning” means. People might be able to get together and vote on the plan, but once the plan is in place, it is the very antithesis of spontaneity. As we have seen in earlier discussions, a rationally planned system of production is indeed more efficient—tremendously so. This was the central insight of Frederick Taylor (1856–1915), the American scientist of work. But the efficiency we now have as a result of planning has come at a substantial cost to human liberty. In the same way, whatever new efficiencies that might be realized under central planning would almost certainly come at the cost of further liberties.
This brings the concept of economic planning into conflict with democratic norms and institutions. According to Hayek, people who support the idea of central planning often do so in the belief that the plan will allocate resources away from projects they don't like and toward the ones they do. But a moment of reflection will show that no single plan will be able to satisfy all of these expectations. For this reason, it is unlikely that a majority will be found to support any one plan, no matter what its actual contents. Too many promises will have been made.
As the reality of planning forces hard choices on people who had blithely assumed that there would be enough for everyone to get everything they want, the democratic process will prove inadequate to the pressure of popular frustration. The task of planning will have to be delegated to a small clique of technocratic planners, or to a single planner. Thus the need to establish consensus will be abolished by the creation of institutions that do not rule by popular consent, but by fiat. Once this happens we are dealing with, not the rule of law, but the rule of men.
Democracy might survive this process in some form or other, but as a practical matter the country that adopts central planning will not be ruled by its elected representatives, but by the planners. It will have to be, because economic decisions are inextricably caught up with every aspect of an individual's life. People live near their place of work, they spend most of their waking hours at work, and how they dispose of their free time is largely determined by the income they derive from their work. A system that imposes economic decisions on the general public through fiat is a system that ends up regulating pretty much everything. Whoever tells us when, and where, for how much pay, and at what task we work, substantially governs us—but that is just what it means to be under a plan of management, rational and efficient or otherwise.
Thus, according to Hayek, the road to socialism is the road to serfdom—which, in his language, does not so much mean poverty as it does political subjection. If we look at German history specifically, he argued, we will find that this is more or less what happened. The oppressive machinery of the Third Reich was not its own creation, but was rather inherited from the Weimar Republic, where a broad consensus on the desirability of planning had prevailed at all times, and even before the war. It was precisely because the democratic institutions of the Weimar Republic broke down under the strain of an infinite variety of competing plans and squabbling planners that the German people turned to a dictator to solve their problems. If we don't want to go down that road ourselves, he argued, we will have to put up with a certain amount of irrationality in our economic institutions.
In truth, however, the seeming irrationality of these institutions is their greatest strength. The information needed to efficiently manage an economy does not exist in a library, or in the minds of a few specialists, but is rather diffused among the millions of people who participate in that economy. There is no way to collect it all in one place. But all of these people acting in their own interest, however they conceive it, creates a kind of spontaneous order, in which producers who are able to effectively meet demand prosper, and those who, for whatever reason, are not, are eliminated. It is much more efficient to allow spontaneous readjustment of prices to control distribution. If we object to this system on moral grounds, we face the challenge of defining what, for us, counts as a “moral” distribution. It is not an objective or scientifically realizable criteria, Hayek argued, but rather a word for the value preference of some particular group of people. Any economic system can be described as moral or immoral, fair or unfair, just as one pleases.
Does this mean that there is no such thing as political morality? By no means. Hayek held that the greatest political value was freedom, or in other words, the limitation of state power and the ability of individuals to pursue their own good in their own way. Because socialism impinges on that freedom, he held, it has to be rejected.
Daniel Halverson is a graduate student studying the History of Science and Technology of nineteenth-century Germany. He is also a regular contributor to the PEL Facebook page.