Hayek's Slippery Slope

Hayek's Slippery Slope

Mini Teaser: Friedrich Hayek's ideas,  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.

by Author(s): Neil McInnes

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.

Essay Types: Book Review