The Road to Serfdom
A colleague of mine once said “we’re all heading toward Socialism – Democrats take big steps, Republicans are taking little ones.” The demand for more and more public services, and the demand for more and more government intervention in our daily affairs, is pushing us further and further into a centrally planned – socialist – state.
Many of us understand intuitively that socialism doesn’t work. Half a century ago, an Austrian-born economist wrote a book that explains why.
Friedrich A. Hayek, while living in England during World War II, realized that the increased government control during wartime would eventually pose a threat to the basic freedoms of the Western world.
In response to that potential threat, Hayek wrote “The Road to Serfdom.” Although paper was in short supply in 1944, the book went through 6 printings in 16 months, and was translated into several different languages.
Fifty-five years later, Heritage Foundation President Edward Fuelner wrote “it is no exaggeration to say that ‘The Road to Serfdom’ simultaneously prevented the emergence of full-blown socialism…and planted seeds of freedom in the Soviet Union.”
The book’s point is simple: a society based on individual decision making works, because the very nature of that society creates efficiency and protects freedom. A controlled economy does neither of those things.
In our society, individuals make decisions. Individuals making decisions (in seeming chaos) is what makes up the market. The market drives our economy. It’s messy, but it works.
In a centrally planned society, a central planner takes over the decision-making power which, in a capitalist society, belongs to individuals. This central planner decides how many people make what kind of shoes, how many buildings of certain types are needed, etc.
Hayek wrote: “When all the means of production are vested in a single hand, whether it be nominally that of ‘society’ as a whole of that of a dictator, whoever exercises this control has complete power over us.” It doesn’t matter what the individual wants: what matters is what the central planner thinks we need.
Why won’t central planning work? Because it’s not possible for one person or a group of people to be aware of local conditions in Green Bay, Los Angeles, and Miami all at the same time, much less those in Europe and Asia.
In a capitalist society, the kinds and numbers of shoes that are made is determined by the people who buy the shoes. That creates efficiency – individual shoemakers get the message faster that they’re making a product nobody wants. Central planning will never get it right.
Capitalism also protects freedom, by removing the controls a centrally planned society places around individual choice. “It is only because the control of the means of production is divided among many people acting independently that we as individuals can decide what to do with ourselves,” Hayek wrote.
The capitalist system is messy, imperfect, and does need constraints to protect individuals. It requires the rule of law to make it work.
The rule of law, while not always perfect, is at least impartial. The rule of man (central planning) is subjective and subject to corruption, therefore inherently unfair.
Like the decision-making process, the rule of law is also something better done locally. Just like economic decision-making, a central planner can’t know the conditions everywhere. That’s why the Founding Fathers reserved power for the states.
States which have more sensible (not necessarily weaker) regulation, including lower tax rates, have better economies. Their citizens have higher rates of pay, which broadens their individual decision-making ability. Like an economy that places all the authority in its bureaucracy, a state with high taxes and lots of regulation will suffer for it, as more economic activity moves to those states which don’t.
Click here for some select quotes from the book.
Click here for a pdf version of “The Road to Serfdom.”
I urge you to read it. It’s a quick and easy read, and you’ll be amazed at how valid it still is today.
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Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.
Many of us understand intuitively that socialism doesn’t work. Half a century ago, an Austrian-born economist wrote a book that explains why.
Friedrich A. Hayek, while living in England during World War II, realized that the increased government control during wartime would eventually pose a threat to the basic freedoms of the Western world.
In response to that potential threat, Hayek wrote “The Road to Serfdom.” Although paper was in short supply in 1944, the book went through 6 printings in 16 months, and was translated into several different languages.
Fifty-five years later, Heritage Foundation President Edward Fuelner wrote “it is no exaggeration to say that ‘The Road to Serfdom’ simultaneously prevented the emergence of full-blown socialism…and planted seeds of freedom in the Soviet Union.”
The book’s point is simple: a society based on individual decision making works, because the very nature of that society creates efficiency and protects freedom. A controlled economy does neither of those things.
In our society, individuals make decisions. Individuals making decisions (in seeming chaos) is what makes up the market. The market drives our economy. It’s messy, but it works.
In a centrally planned society, a central planner takes over the decision-making power which, in a capitalist society, belongs to individuals. This central planner decides how many people make what kind of shoes, how many buildings of certain types are needed, etc.
Hayek wrote: “When all the means of production are vested in a single hand, whether it be nominally that of ‘society’ as a whole of that of a dictator, whoever exercises this control has complete power over us.” It doesn’t matter what the individual wants: what matters is what the central planner thinks we need.
Why won’t central planning work? Because it’s not possible for one person or a group of people to be aware of local conditions in Green Bay, Los Angeles, and Miami all at the same time, much less those in Europe and Asia.
In a capitalist society, the kinds and numbers of shoes that are made is determined by the people who buy the shoes. That creates efficiency – individual shoemakers get the message faster that they’re making a product nobody wants. Central planning will never get it right.
Capitalism also protects freedom, by removing the controls a centrally planned society places around individual choice. “It is only because the control of the means of production is divided among many people acting independently that we as individuals can decide what to do with ourselves,” Hayek wrote.
The capitalist system is messy, imperfect, and does need constraints to protect individuals. It requires the rule of law to make it work.
The rule of law, while not always perfect, is at least impartial. The rule of man (central planning) is subjective and subject to corruption, therefore inherently unfair.
Like the decision-making process, the rule of law is also something better done locally. Just like economic decision-making, a central planner can’t know the conditions everywhere. That’s why the Founding Fathers reserved power for the states.
States which have more sensible (not necessarily weaker) regulation, including lower tax rates, have better economies. Their citizens have higher rates of pay, which broadens their individual decision-making ability. Like an economy that places all the authority in its bureaucracy, a state with high taxes and lots of regulation will suffer for it, as more economic activity moves to those states which don’t.
Click here for some select quotes from the book.
Click here for a pdf version of “The Road to Serfdom.”
I urge you to read it. It’s a quick and easy read, and you’ll be amazed at how valid it still is today.
------------------------------------------------------------------------------------
Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.
posted by John Q Cheesehead | 10:13 AM
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