This is another story about a book, a curious book that went from
bestseller to oblivion and back several times over. The millions of
copies it sold in a score of languages "completely discredited" its
author, exactly as he foresaw it would. Although he was regarded as
one of the leading theoretical economists of the century, the
economists of the University of Chicago (whose university press had
published the offending book) refused to have him on their faculty.
No matter, by living to be over ninety he buried not only them but
also the very notion of a planned economy, which had been the target
of his essay. The book in question is Friedrich Hayek's The Road to
Serfdom. Looking back to its publication fifty-four years ago one can
easily see the reasons both for its enduring fame and for the
discredit it brought on its author.

Published in the United States and Britain while the war against Nazi
Germany was still raging, the book said that the democracies risked
going the same way as Germany because their politicians and their
intellectuals had fallen for the idea that an economy could be
centrally planned, and they would soon be putting that idea into
practice under the name of postwar reconstruction. In fact, Hayek
said, central planning led, via cumulative attempts to mend its
inevitable failures, to "a servile state" (he recalled Hilaire
Belloc's 1913 book of that name). It led to serfdom, to a condition
"scarcely distinguishable from slavery." Moreover, any attempt at
getting a little bit pregnant in this domain, by toying with moderate
planning and a "middle way" between capitalism and socialism, would
set the democracies on a slippery slope that would end, more slowly
but just as surely, in that same serfdom. The free market was not
only more efficient economically but indispensable for political and
cultural freedom. Its enemies were intellectuals, meddling
politicians--and unbridled democracy, which is to say, oppression and
spoilation by demagogues invoking the unrestricted will of the
majority.

Hayek began by saying, "This is a political book." That is what
economists say when they want to disarm criticism, and to be judged
by looser standards. In fact, it was not a political book but a quite
unpolitical one, in that it took no account of the political climate
of the day--which happened to be a climate that would persist for the
next thirty years, "les trente glorieuses", as they are now called.
Schumpeter's review noted that it "takes surprisingly little account
of the political structure of our time", and Eric Roll meant the same
thing when he called it "a wholly unhistorical book." Still, Hayek
was right to see that it contained enough politics, cut across enough
academic demarcation lines, to outrage the economists--especially
since most of them at the time were working for the government and
taking its view of the economy. It would, he said, "damage my
professional standing" and "alienate my colleagues." Indeed, it did:
"After The Road to Serfdom, I felt that I had so discredited myself
professionally I didn't want to give offense again. I wanted to be
accepted in the scientific community." He never was: "I can feel it
to the present day [1979]. Economists very largely tend to treat me
as an outsider, somebody who had discredited himself by writing a
book like The Road to Serfdom. . . . Some of my more leftish
acquaintances (with considerable cheek) gave me to understand that in
their opinion I had ceased to be a scientist and had become a
propagandist."

Similar prejudice had almost prevented the book being published at
all. Like Orwell's Animal Farm a few months later, and for comparable
reasons, it was turned down by several publishers, one of whose
readers said it was "unfit for publication by a reputable house." In
the event, it was an instant popular success on both sides of the
Atlantic and has been continuously in print in one or other of twenty
languages ever since; there was a new French edition in 1993 and a
fiftieth anniversary edition in English in 1994. Most readers
probably knew it through a Reader's Digest condensation, prepared by
Max Eastman, of which over one million copies were distributed
through the American Book of the Month Club. Hayek got no money out
of that version, for the University of Chicago gave it to the
Reader's Digest for nothing. This led to accusations that the
publication was being subsidized by Big Business, which it probably
was.

Though always available, Hayek's ideas have been in and out of
fashion to a degree unusual even in the modish subject of economics.
He was Keynes' peer as a technical economist in the 1920s but he
disappeared under "the Keynesian avalanche" of the 1930s. He
resurfaced as a prophet in 1944 but thereafter fell to the rank of an
intellectual outcast and hate figure whose new books, said Samuel
Brittan, were greeted with scorn that constituted "an intellectual
disgrace." The Nobel Prize of 1974 (which Hayek had to share with
that arch-economic planner Gunnar Myrdal) prepared his resurrection
as a cult figure of the Radical Right, supposedly influential in the
counsels of Ronald Reagan and Margaret Thatcher. The collapse of
communism was seen as vindicating his work and, more importantly, it
produced a new generation of Hayekians among the economists of the
former Soviet empire. In the West, however, he is now promised a new
spell in oblivion by the communitarians and by all those who dismiss
as mere "Cold War liberalism" the impressive achievement of Isaiah
Berlin, Arthur Koestler, Karl Popper, and Friedrich Hayek. The last
named would no doubt have taken this vicissitude as he took all the
others, with the patient courtesy of the petty nobility of
Austro-Hungarian Vienna.

Born there in 1899 into a family of academics on both sides, Hayek
fought for the Habsburgs in the Great War as an airborne artillery
spotter on the Italian front. In chaotic postwar Vienna he had Fabian
sympathies until he came under the formidable influence of Ludwig von
Mises, for whom he worked as a researcher after taking degrees in
economics and law. His brilliance at theoretical economics induced
Lionel (later Lord) Robbins to offer him a chair at the London School
of Economics in 1931. His assignment was to take on Cambridge, from
where Keynes reigned supreme. He did so, and if Keynes won the
ensuing stoush, some economists are no longer sure he deserved to.
Hayek moved to Chicago (not the economics department) in 1950, and
later taught at Freiburg in Breisgau and Salzburg. He died in 1992,
too far into dotage to appreciate that his ideas had won out in the
Soviet Union. Those ideas had first been set before the public from
the LSE, a school founded by the Webbs, where, after working for
years under the administration of William Beveridge (father of
Britain's welfare state) and alongside Harold Laski (chairman of the
Labour Party), Hayek had produced The Road to Serfdom, an
extraordinary solecism.

The way it came about helps to explain the book's odd mixture of
sound theory and wild exaggeration. The LSE was evacuated to
Cambridge when London was bombed, and Hayek found himself in quarters
generously provided by Keynes, with very few students and fewer
colleagues, because economists were called up for war duties. Hayek
always said that working for the government corrupted economists, and
in this case war service had won them over to planning, no doubt
necessary for victory but which many now contemplated extending into
peacetime. There was no danger of Hayek being called up because,
although he had taken out British nationality in 1938, he was too
recently an enemy alien to be trusted. After all, other refugee
scholars had been rounded up and shipped on the infamous Dunera to
concentration camps in Australia, and Popper was in New Zealand.

"I was in an extraordinarily privileged position", he said later. It
produced in him the conviction that he was alone on the watch; all
the other competent men were busy, economic questions had fallen into
the hands of "amateurs and cranks", and a vast socialist conspiracy
was afoot to hand free markets over to the planners. He wrote, said
Samuel Brittan, "as if he were a voice crying in the wilderness, as if
most of his friends were socialists, as if almost all intellectuals
are socialists, as if socialism had become a kind of official
religion."

There had indeed been, during the war, extensive regimentation of the
economy and of much social and intellectual life. The Atlantic
Charter had appealed to democracy's least enterprising, most servile
inclinations by promising government-purveyed "freedom from want" and
"freedom from fear", no doubt at the cost of vast new bureaucratic
interventions. Beveridge had already produced his model for a welfare
state, to which the Tories were as committed as the Labour Party--and
which would be copied across Europe. A year before Hayek's book
appeared, the Scottish philosopher John Anderson had anticipated many
of its arguments in his article "The Servile State" (to be found in
his Studies in Empirical Philosophy):

It can scarcely be denied . . . that the capitalist countries are
moving in the direction of regimentation and that the ideology of
servility is rapidly gaining ground. The process has, of course, been
greatly accelerated by the war. . . . The absurdity of the pretences
of the advocates of a 'planned society' should be noted here. . . .
There is no one who is competent to make provision for all
departments and aspects of social life. . . . The expectation of such
benefits [as the Atlantic Charter promised] is of course delusive;
there is no system which can abolish insecurity and guarantee
sufficiency. But, by the time that is realized, it will not be
possible to have back for the asking the rights that have been
surrendered in the name of solidarity.

Hayek's main ideas, stated in Anderson's more moderate form, were not
unfamiliar in Britain, which is why his book was greeted there "along
party lines." Labour mp Barbara Wootton wrote a courteous rebuttal
(Freedom Under Planning) and LSE Fabian Herman Finer wrote one so
discourteous (Road to Reaction) that Hayek threatened libel action.
Churchill read the book during the 1945 election campaign and
incautiously told electors that Labour would "bring in a Gestapo",
which helped lose him the election. Chastened, he later told Hayek,
"You are absolutely right, but that will never happen in Britain."

The book's reception in the United States was another matter, a
tumult of acclaim and vituperation. An initial print run of 2,000 was
followed the next week by 5,000 more, and then the million-odd
condensations by Max Eastman. The New Republic said chambers of
commerce were placing bulk orders to inflate demand. There were think
pieces in the New York Times and Fortune, two contradictory reviews
in one issue of the American Economic Review, an angry radio debate
between Hayek and socialist academics, followed by a lecture tour to
overflow audiences across the country that lasted three months. Hayek
had hit the New Deal intellectuals on a raw nerve. Those of them
ensconced in Washington to run the war economy hoped to stay there
when capitalism, which had lurched from the Great Crash to war, fell
into the expected hole of postwar deflation, which they were sure it
would do unless it were planned into full employment. Hayek's assault
on their ideal of rational social reconstruction, and the new heart
it gave their opponents, caused panic. Milton Friedman said that,
thanks to Hayek, libertarianism and capitalism had become
intellectually defensible again. H. Stuart Hughes agreed in 1954:
"The publication ten years ago of F.A. Hayek's The Road to Serfdom
was a major event in the intellectual history of the United States...
it marked the beginning of that slow reorientation of
sentiment--both in academic circles and among the general
public--toward a more positive evaluation of the capitalist system
which has marked the past decade." Hayek assisted this reevaluation
of capitalism by rejecting laisser faire in the very first pages of
The Road to Serfdom, and saying that he favored government
intervention for monetary, environmental, and anti-trust policies.

Translations into European languages began at once, but the German
version (by Eva Röpke, Wilhelm's wife) published in Switzerland in
1945 met a curious fate. The four occupying powers in Germany had a
deal to ban books hostile to any one of them. Hayek's book hardly
mentioned the Soviet Union, taking Nazi Germany as the archetypal
planned economy, but the Russians saw it was directed at them, and
insisted on the ban. Typescript versions (Samizdat avant la lettre)
were soon circulating. In contrast, pamphlets about Beveridge's
projected welfare state not only circulated freely but had been
dropped from the air onto German cities during hostilities. In
Hitler's Berlin bunker were found minutes from officials on how to
respond. Hayek would have been gratified to learn that they
recommended saying that the Allies were just copying the Nazis'
social security system. (Beveridge would have preferred another
comparison. Ever tactless, he said to a journalist when his plan
was adopted, "Now we're half way to Moscow"; a horrified British
government made him recant.)

Actually, for all its polemical success, Hayek's book seems to have
had little influence on economic policy, anywhere, for a generation.
The socialists took over in Britain in 1945 and proceeded to do most
of the things Hayek said were fatal to democracy. When Churchill
returned to office, he remained loyal to the welfare liberalism he
had inaugurated in 1909 and 1911, and did little to dismantle
Labour's welfare state; the expression, welfare "from the cradle to
the grave" is Churchill's coinage, by the way. For thirty years after
Hayek's book, British governments followed policies nicknamed
Butskellism (from Tory Rab Butler and Labour's Hugh Gaitskell) and
later MacWilsonism--policies that reflected the quest for The Middle
Way that had been the title of a book Macmillan wrote in 1938. That
included flirting with central economic planning through such bodies
as the Industrial Reorganization Corporation and the National
Economic Development Councils (the Neddies).

In the United States, the 1946 full employment legislation
inaugurated a generation of Keynesian policies, accompanied by
generalized government intervention in favor of farm price supports,
minimum wages, pro-union discrimination, rent controls, protective
tariffs, and middle class welfare in various forms. Planning was so
little discredited that Hubert Humphrey and economist Wassily
Leontief campaigned in 1974-76 for a national economic planning
board. In continental Europe, France's "indicative planning" and even
many features of West Germany's social market economy were anathema
to Hayek.

Ignored by policymakers, Hayek took the long way round and rallied
several score apostles of the free market to a movement he founded,
the Mont Pelerin Society, named for its first meeting place, near
Vevey in Switzerland, in 1947. Hayek denied it was a propaganda
organization and indeed attendance at its annual gatherings did not
mean accepting the prophecies of The Road to Serfdom. Milton
Friedman, a member who is popularly linked with Hayek, was, as an
economic theorist, poles apart from him. Other members implemented
economic reforms in Europe (Ludwig Erhard in West Germany, Jacques
Rueff in France, Luigi Einaudi in Italy, and Reinhard Kamitz in
Austria), but not by following Hayek's prescriptions. Those ideas
moved nearer to practice with the foundation, sponsored by Hayek, of
the Institute of Economic Affairs in London in 1957, followed by
similar free-market think tanks from America to Australia. The
accession to office of Margaret Thatcher in 1979 and Ronald Reagan in
1981 marked the triumph of two avowed readers and admirers of The
Road to Serfdom.

By then "serfdom" and the "servile state" had been renamed, less
theatrically and more clinically, "dependency culture", and some
attempts were now made to curb it. This was described by opponents as
gutting the welfare state, but nothing of the sort happened in the
United States or the United Kingdom. Reagan reduced the
appropriations desired by Congress, but social outlays and spending
on the poor continued to grow under his administration. The British
welfare budget, in constant expansion from 1945 to 1976, leveled out
at a steady two-thirds of government spending, or one quarter of GNP.
Elsewhere, welfare flourished; in France, for example, the minimum
wage has continued to increase as a proportion of the median wage,
and 75 percent of French families now get family allowances.
Worldwide, recent adjustments made to social budgets have been
responses, not to Hayekian or any other ideology, but to cruel
necessity: the growing number of the elderly, the proliferation of
one-parent families, increased consumption of medical services and,
in most advanced economies, high levels of unemployment have combined
to make the burden intolerable.

The next surge of interest in The Road to Serfdom came with the
crumbling of the Soviet empire. The economists in Poland and Russia
who emerged as the first wave of reformers had long before secretly
made Friedrich Hayek and Milton Friedman their patron saints. All the
former satellites soon followed: "Whereas in the West it may still be
fashionable to decry The Road to Serfdom as a 'mere political
pamphlet', it is widely read in newly democratized countries like
Czechoslovakia and Hungary", said Willem Keizer in 1994. That being
so, these converts to capitalism would soon discover that Hayek
demonstrated not only the impossibility of central planning but also
the futility of other centrally organized quick fixes such as instant
capitalism, the "leap into the market", "capitalism by design", "free
markets in 500 days", and other disasters visited upon these
disorganized societies by zealots. The professor of international
economics at a Budapest academy says that in Hungary at least it is
now understood that Hayek showed that capitalism must evolve slowly,
organically; it cannot be bestowed by social engineers on societies
suffering institutional void, insecure and uncertain property rights,
and coordination failures.

Having reviewed the reception of The Road to Serfdom first at the
popular level and then by the policymakers, it is time to consider
what Hayek's peers, the economists and political scientists, made of
it. Apart from some rearguard skirmishes by retreating socialist
economists, there was agreement that Hayek had won his main point,
the one that shook many left-leaning intellectuals from their
dogmatism: what he called the synoptic illusion. There is no one
point where all the information that can bear on an economy (and
should bear, in a free society) can be concentrated, no one man's
head, no committee, no planning board. Such information is hopelessly
dispersed, and it is changing faster than it could ever be collected.
Some of it is not even articulate, but it nevertheless becomes
effective in the bids and offers of market participants. The market
is thus the only place where all relevant information becomes
available, revealing in price mismatches and anomalies opportunities
for entrepreneurs. Once that is accepted, the possibility of central
direction or control vanishes, and with it Karl Marx's vision of
society as "the product of freely associated men . . . consciously
regulated by them in accordance with a settled plan." Any attempt at
such a thing would be either (Hayek varied on this) bound to fail or
enormously inefficient.

This was the conclusion that Hayek, for his part, drew from an arcane
debate between economists about whether socialist managers could
calculate least-cost production in the absence of market prices. The
"socialist calculation" debate began in the last century, but Mises
brought it into focus in 1920 and Hayek thereafter played an active
role in it. Mises was not satisfied with the conclusions Hayek drew,
saying Hayek put too much emphasis on recent information and too
little on property owners' calculations of future prices. (So bigger
and better computers would be no help.) But Hayek's achievement was
to show that the upshot of this highly technical dispute told against
many current proposals for social reconstruction, planning, and
government regulation. Socialism would not work, not because citizens
were not virtuous enough but because there was a knowledge deficit at
the center, and there always would be. Those who were reluctant to
accept Hayek's case against the unified central plan were left to be
convinced by the grotesque misallocation of resources in the Soviet
Union.

Equally convincing was Hayek's demonstration of how and why the
central plan is incompatible with political and cultural freedoms. A
plan requires, imperatively, prior agreement on what and how to
produce, and subsequent agreement to stick with it and accept its
outcomes. Such agreement is not to be found, and there arises the
temptation to fudge it, by propaganda and eventually by repression of
disagreement, and by delegating decisions from divided parliaments to
arbitrary bureaucrats. This part of the book is written with a
passionate eloquence (written, incidentally, by a foreigner composing
his first book in English) that drew the admiration of critics like
Keynes, and the dismay of nominated targets like Harold Laski, Karl
Mannheim, and E.H. Carr.

What drew much incredulity was Hayek's strange choice of Nazi Germany
as the type of serfdom produced by economic planning. He had little
else to say against it except that it practiced planning, and he
ascribed the spread of planning ideas in Britain to the influence of
Germans such as Sombart, Plenge, Lensch, and Moeller van den Bruck.
Most of his readers had never heard of them, and the British Left and
U.S. liberals were, reasonably enough, offended by the suggestion
that they got their policies from the sorry bunch whom Fritz Stern
was later to describe in The Politics of Cultural Despair (1961). The
implication that the regimes of Hitler and Mussolini were the end
result of dabbling in state planning, of gradual and piecemeal
departures from free markets, was seen to be absurd by those who had
read Elie Halevy's demonstration, in L'Ère des tyrannies (1938), that
the dictatorships were born of violent revolution. Pigou said in his
1944 review that Hayek's history was all wrong: Hitler's and
Mussolini's resort to central planning was a means, not the cause, of
tyranny. To be sure, Nazi ideology rejected the free market of
Western liberalism and the calculating rationality of economic man,
but it was not for all that to be defined as an economic heresy.

In deploring the regimentation of wartime, Hayek said, "During the
war we all had to go to some extent totalitarian." So it should have
been evident that a regime whose whole purpose was war would practice
a command economy, Wirtschaft unter Zwang. Trying to frighten naughty
little socialists by saying they would grow up to be wicked Nazis was
poor rhetoric and it put many critics off the book. The Soviet regime
was a better target, and its moral, economic, and political
affiliation with Nazism had already been established by Franz
Borkenau. Hayek was right to dismiss the leftist myth that Nazism was
capitalism's answer to communism, for they were in many ways birds of
a feather, given to imitating each other. But even so, it would have
to be admitted that Bolshevism began with the aim of a central plan,
to be implemented by ruthless coercion. That was its ideological
starting point, not the end result of cumulative government
intervention in free markets. As it was, Hayek had little to say
about the Soviet Union, possibly because it was still a wartime ally.

All of this could be disregarded as an inept presentation of his
case. Not so the dogma of the slippery slope, which was at the heart
of Hayek's argument and probably the real reason he wrote the book.
The epigraph of The Road to Serfdom is David Hume's line, "It is
seldom that liberty of any kind is lost all at once", a counterverity
that shows how much less they knew in 1770 about revolutions and
coups d'état than we do. It prefigures the slippery slope, of which
Hayek's teacher Mises had said (in the 1940 Geneva edition of Human
Action), "Every step a government takes beyond the fulfilment of its
essential functions of protecting the smooth operation of the market
economy against aggression, whether on the part of domestic or
foreign disturbers, is a step forward on a road that directly leads
into the totalitarian system where there is no freedom at all."
Furthermore, in 1944 Hayek said of that road, "Yet, though the road
be long, it is one on which it becomes more difficult to turn back as
one advances." He offered to explain why government interventions in
the economy were cumulative and eventually irreversible. Central
allocation of resources meant that labor had to be directed, like
other factors, so the state began to control individuals, notably in
their role of producers. Planners got drawn into detailed economic
decisions, rather than setting general rules, so they inevitably
started favoring some interests, disadvantaging others. When one
intervention failed (e.g., price controls), further intervention was
resorted to (say, requisitions or rationing or subsidies).

It was because of this tendency to cumulative involvement that Hayek
insisted there could be no halfway house between competition and
planning, no social democratic mixed economy. The middle way, says
John Gray, became "the principal target" of The Road to Serfdom. As
Eamonn Butler said in his Hayek (1983), "One of the most powerful
themes of The Road to Serfdom is that even modest economic planning
has the effect of slowly but inexorably eroding the values and
attitudes which are vital if freedom is to exist." Hayek even argued
that attempts to combine competition and planning produced the worst
effects of both, the benefits of neither. When he wrote a new
introduction to a 1976 edition of the book, Hayek admitted that
socialism no longer meant central planning but "chiefly the extensive
redistribution of incomes through taxation and the institutions of
the welfare state", but he added defiantly that "the ultimate outcome
tends to be very much the same."

Critics protested from the start that to go from saying that central
planning is a disaster to condemning interventionist policies is a
non sequitur. Such policies would indeed have unintended
consequences, notably market impairment, but "none of the arguments
mentioned here demonstrates that what lies at the bottom of the slope
is socialism" (Frank Van Dun). Paul Samuelson asked in his 1948
economics textbook whether it was true that each step away from the
market system and toward the social reforms of the welfare state is
inevitably a journey that must end in a totalitarian state with
neither efficiency nor liberty? The opposing view, held by such
evolutionists as Roosevelt, Churchill, and Nehru is that gradual
reforms are the only way to prevent a cataclysmic descent through
revolution into a communist dictatorship. If the evolutionists are
right, Hayek is quite wrong.

Samuelson evidently thought he was. Lionel Robbins said the dangers
Hayek foresaw might happen, but Hayek was alarmist to say they must
happen. Welfare, for example old age pensions, could become a burden
but why say it must lead to "social disintegration and the
concentration camp"? Some interventions do have cumulative effects,
like price controls, but not all taxes and subsidies or all forms of
government ownership and control do. There is therefore no logical or
historical reason to fear for the stability of the mixed economies.

Raymond Aron told an audience at Berkeley in 1963 that the
proposition that intervention inexorably leads to total planning and
totalitarianism was so manifestly false that Hayek could not have
meant it. The trouble is he said it. When challenged, Hayek would say
that he was issuing a warning, not a prophecy (and promptly return to
prophesying with all the confidence of a Marxist). This cavalier
attitude to political discussion is common among those who come to it
only occasionally. It is negligent to say that X must happen (a
prophecy) without saying whether such and such circumstances might
avert it. But it is positively thoughtless to say that X can happen
(a warning) and not bother to specify the conditions of its
appearance and non-appearance. Of course in the present case most of
those conditions would be political: all the social forces, political
institutions, traditions, customs, and moralities that defend freedom
(more precisely, exemplify and practice it) ensure there is no
slippery slope--and they are not waiting for an outsider's "warnings"
or "prophecies" to play their role.

Keynes pointed this out in a letter to Hayek when The Road to Serfdom
came out: "I accuse you of perhaps confusing a little bit the moral
and the material issues. Dangerous acts can be done safely in a
community which thinks and feels rightly, which would be the way to
hell if they were executed by those who think and feel wrongly." (The
text of this letter, in which Keynes calls for more planning, not
less, and says Hayek's philosophy will end in failure and disillusion
in the United States, is in Harrod's Life, p. 436-7.) Giovanni
Malagodi put it in this Crocean way: "This brings us to reflect again
on the immense spiritual and human force of liberty. When it is
deeply rooted in the history and in the mind of the citizen, it can
withstand larger doses of centralized or semi-centralized planning
without withering away. In fact, it constitutes by itself a barrier
against the spreading of total dirigism."

As years went by it was plain to see that the road to serfdom was opened up by the Red Army and not by the mixed economy and the welfare state. Apologists of Hayek's 1944 book therefore had to resort to various saving hypotheses. Hayek himself led the way. In lectures he gave in Australia in 1976 (collected as Social Justice, Socialism and Democracy) he said that

socialist parties in the West have almost all for the time being abandoned the most obviously dangerous demands for a centrally planned economy.... [This] has much slowed down the process that I had predicted.... But can it lastingly avoid the same effects? There are strong reasons for doubting that.... Though the process may be slow and gradual, a government which begins to control prices is bound to be driven step by step towards the control of all prices, and, since this must destroy the functioning of the market, to a central direction of the economy.

Attempts to establish a "just distribution" of incomes entail "being driven to establish an essentially totalitarian system." This was said when most governments had been induced by the "oil shock" to impose price controls if not prices-and-incomes policies. None of these policies led to serfdom; none of them was very successful either, and that was enough (combined with a natural resentment of such controls) to ensure they were soon abandoned, with no sign of cumulative state intervention.

One contributor to the 1977 Essays on Hayek (edited by Fritz Machlup) said "the West" had indeed given up the centralized planning that would have led to serfdom, but "Instead we have taken the road of inflation, governmental profligacy, and uncoordinated governmental intervention into the market; and this must lead us to the serfdom that Hayek foresaw just as certainly as centralized planning, if perhaps more slowly." Another contributor averred that serfdom had already arrived:

Such has been the process by which the freedom of the individual has been reduced in our time. No violent revolution; no armed dictatorship; every thing appears in its usual form. Constitutions are still in force and democracy still functions, creating the illusion that all is well and that the people still rule. But what a monstrous deception! Beneath the hollow forms of constitutional government grows an increasingly powerful state, manipulating democracy to serve its own ends.

This comes close to the paranoid rhetoric of the wildest American dissidents.

Contributors to a similar volume in 1984 (The Political Economy of Freedom: Essays in honor of F.A. Hayek) said the forty years since The Road to Serfdom had shown the ineptitude of the mixed economy, there had been "an unnoticed loss of liberty", while Sweden had become "a benign servitude", and concluded, "Perhaps it is time to heed Hayek's warning." Some contributors conceded that Hayek's references to serfdom and slavery were polemical, vague, and careless. Yet in another collection in that year (Hayek's Serfdom Revisited, edited by John Burton), John Gray declared, "No one could say today, 40 years later, that Hayek's argument missed its mark.... We are well on the road to serfdom."

Mention of John Gray, fellow of Jesus College and professor of politics at Oxford, reminds us that if we are following the history of changing attitudes to Hayek, there is no need to go poring over dozens of different writers; it is enough to read Gray's output over the years, for it has evolved mightily. In a 1980 paper in the Journal of Libertarian Studies, "Hayek on Liberty and Tradition", Gray commended him on four grounds: skepticism about the government's ability to promote public good; awareness of the danger of unlimited democracy; his critique of distributive "social justice"; and opposition to large-scale social engineering. Gray's reservations about Hayek concerned his epistemology and his evolutionist view of moral codes.

Gray contributed to the 1984 Burton volume mentioned above an essay that sought "the road from serfdom." It was true that, in apparent contradiction to Hayek's Road to Serfdom, nowhere had unlimited democracy led to hyperinflation, nor government regulation to totalitarianism. Nevertheless, liberties, Gray maintained, had been lost, and the ground won back so far by Reagan and Thatcher should not be exaggerated. Rent control and price control restricted freedom, and servility induced by the welfare state further endangered liberty. There was still a danger of hyperinflation, a "terminal boom" that must "mortally imperil" the cause of liberty. In a more scholarly book Gray published in the same year, Hayek on Liberty (1984), most of Hayek's later, voluminous work on social philosophy is traced back to its first outline in The Road to Serfdom. In particular, Hayek's arch-conservative notion that uncritical observance of traditional rules is the basis of social life is set out with complaisance. In Liberalism (1986), Gray praised The Road to Serfdom for its "bold and striking thesis" that Nazism was the result of socialism. Hayek's work was "without doubt the most profound and distinguished statement of the case for liberty this century." It had "fallen on deaf ears" until Reagan and Thatcher gave it "a real political importance." But at this date, Gray's first doubts about Hayek appeared: he wondered whether liberal ideas were being tainted by contact with "free market conservatism, with its illiberal policies in the areas of personal and civil liberties."

By the time he wrote Enlightenment's Wake (1995), the Thatcherite era had run its course and Gray's opinion of Hayek had changed utterly. Hayek's neo-liberalism is now mockingly called "paleo-liberalism", "a Maoism of the Right." Free market economics have ruined communities and destroyed the Tory party:

The undoing of conservatism has come about as an unintended consequence of Hayekian policy. The hegemony, within conservative thought and practice, of neo-liberal ideology has had the effect of destroying conservatism as a viable political project in our time and in any foreseeable future ... inherited institutions and practices have been swept away by the market forces which neo-liberal policies release or reinforce.

Hayek had unleashed "a managerialist Cultural Revolution seeking to refashion the entire national life on the impoverished model of contract and market exchange ... a permanent revolution of unfettered market processes ... a self-undermining political project." Thatcher's reliance on free markets is denounced as "Hayek's wager", "market fundamentalism", "Manchester redivivus." Britain was never on a road to serfdom but was now on the road to anomie, ungovernability, the loss of authority, governments made impotent by judicial activists. The tone actually gets shriller after that. Projects such as the World Trade Organization and the European Union are "neo-liberal rationalist utopias that will founder on the reefs of history and human nature, with costs in human suffering that may come to rival those of 20th century experiments in central economic planning." If one takes those words literally, Gray is warning of tens of millions of deaths as a result of what he takes for Hayekian liberalism.

Gray returned to the attack in Endgames: Questions in late modern political thought (1997). Hayek is there dismissed as "a neo-liberal ideologue" guilty of "peddling an Enlightenment project of the most primitive variety - the free market utopia of paleo-liberals such as Herbert Spencer." His baleful influence over Thatcher had destroyed England and the Conservative Party. His economic policies had failed and now, Gray announced well before the elections that brought Labour to office, "the neo-liberal hegemony in Britain is over." The world of The Road to Serfdom, in which conservatives were obsessed with the danger of state tyranny, has quite passed away. The threats to freedom and well-being now come from the disintegration of the state, the ruination of common cultures, and the loss of popular traditions of fairness and justice.

When the election of last May confirmed the discomfiture of the Conservatives, Gray joined Demos, a think tank that advises Prime Minister Tony Blair. In a newspaper article on "The Tasks Ahead", he read the obituary of "the primitive ideology of market liberalism", of "the ideologies of the New Right (such as Hayek's)." They had been thrown out because they were insensitive to the popular longing for fairness, indifferent to vital human needs for community, and because they severed the link between economic rewards and meritorious performance. Communitarianism has arisen to correct these errors.

Hayek's ideas, we began by saying, and particularly those set out in The Road to Serfdom, have been subject to extraordinary ups and downs in learned, as well as in popular and political, estimation. This latest descent into obloquy at the hands of an eminent political philosopher who was once a sympathetic expositor might not be typical; it is evident from the few quotations I have given that in order to achieve his change of mind Professor Gray had to go from being a liberal suspicious of moral conservatism to being a conservative dismissive of economic liberalism, and not everyone is so versatile. Besides, whatever may be said of the "ravages" of Thatcherism, much of Gray's attack is unfair to Hayek. He never preached laissez faire and he tolerated a level of governmental intervention that would make Milton Friedman blanch. He came to endorse basic social services in health, education, and minimum incomes (though not of course minimum wages) as long as there was no control of prices or quantities, i.e., no impairment of competitive markets. Moreover, as a lifelong Catholic, he insisted on the observance of traditional rules of conduct, some of which we could never rationally justify, as the basis of society.

For all that, there was no doubt that much of what Gray now calls community, fairness, and merit, Hayek would reject as the morality of "tribalism", the myopic morals of small face-to-face groups where a good deed (and a bad one, for that matter) concerns a known neighbor. Against that tribalism (we would now say communitarianism) Hayek set "the extended social order" where doing good means living in accordance with abstract rules, and where no one relies on the benevolence of a neighbor but on the self-interest of unknown strangers who participate in the same market; in other words, the open society. Popper's two volume celebration of the open society, as against an "oppressively social morality", was in press when he read The Road to Serfdom and he got his publisher to put in a note making clear that Popper had finished his book first and could not have borrowed from Hayek. Later Popper suggested that The Road to Serfdom could well be read as volume three of The Open Society and its Enemies. Actually, he was not as close to Hayek as he liked to think, mainly because his knowledge of economics was primitive and Hayek was too polite to tell him so. But on the main point of devaluing the cozy tribal Gemeinschaft as against the vast, open, and anonymous Gesellschaft, these two Viennese were in harmony.

Ernest Gellner thought this needed explaining, and he called his explanation "the Viennese theory." He said that from the middle of the last century "the individualistic, atomized, cultivated bourgeoisie of the Habsburg capital had to contend with the influx of swarms of kin-bound, collectivistic, rule-ignoring migrants from ... the Balkans and Galicia." (He could have added Moravia and thus included the Freud family's move to Vienna.) The Viennese were marked by the experience, and people like Hayek and Popper "would seem to be haunted by the contrast between the creativity of an individualist bourgeoisie and the cultural sterility of kin-hugging gregarious migrants from some Balkan zadruga, whose clannish and collectivist feelings threaten liberty and progress." That, suggested Gellner, was why Hayek was horrified by the thought of enslavement to communal, affectionate cooperation toward agreed ends, as in a plan, much preferring the liberation that came with abstract, impersonal, rule-bound market society.

There could be something in this but the main point would not be the psychological one, about two contrasting attitudes to social life. The main point is the political one, namely that there is a large array of stable positions in between the extremes, and just because you abandon one extremity does not mean you are "on the road" to the other. There is serfdom - there was a massive case of it until just the other day - and a unified economic plan is one sure way to it, among other ways. Likewise there is the open, anonymous society, though one must doubt that it was ever, or ever could be, as frigidly impersonal and rule-bound as Hayek imagined. But there are a number of workable, livable, viable compromises in between. To try one of them is not to venture onto a slippery slope.

Neil McInnes, a regular contributor, has written for Encounter, Survey, and Quadrant. He divides his time between Canberra and Paris.

Essay Types: Book Review