The Road to Serfdom after 60 Years

March 14, 2004 • Commentary
This article appeared in the Washington Times on March 14, 2004

F. A. Hayek, one of the greatest liberals of the 20th century, wrote his classic book The Road to Serfdom 60 years ago to warn against the dangers posed by postwar socialism. He believed with David Hume that “it is seldom that liberty of any kind is lost all at once.” To stem the growth of big government and the erosion of economic and personal freedom that accompanies that growth, Hayek argued passionately for a liberal international order grounded in limited government, free trade and the rule of law. His message is as relevant today as it was in 1944.

Although Soviet‐​style central planning is no longer in vogue, governments around the world continue to envision and implement programs designed to suppress markets and enlarge the state. The forces of collectivism are softer today, but they have not gone away.

Take the U.S., for example. Instead of being a beacon for free markets, the U.S. is too often seen protecting special interests and denying freedom of choice. During the last fours years, we have witnessed tariffs on imported steel, calls for unilateral tariffs on China unless the renminbi is revalued, and the creeping socialization of health care with the addition of prescription drugs to an already bankrupt Medicare system. What we haven’t seen is fundamental reform in Social Security to give individuals ownership rights to future benefits by allowing private accounts. Moreover, Republicans have failed to contain government spending: non‐​defense discretionary spending increased by 41.3 percent over the last four years.

Democracy, if not limited by what Hayek called a “constitution of liberty,” will lead to the use of government to redistribute rather than to protect private property and wealth. Politicians on both sides of the aisle appear to be more interested in equality of outcome than in protecting taxpayer’s property rights and freedom.

The lapse of the U.S. from the liberal principles that Hayek advocated appears minor compared to most countries. Corruption is endemic in many Third World countries today because economic life has not been insulated from politics — the force of law is used to plunder property rather than to protect it. As such, economic decisions are politicized. This is especially evident in the former Soviet Union. The U.S., as the leader of the free world, needs to reinvigorate market liberalism and be a bulwark for private property, freedom of contract, and limited government.

Countries like China that are striving to develop a market economy, as well as those that already have one, need to appreciate the wisdom of Adam Smith and other 18th‐​century liberals upon whose shoulders Hayek’s vision rests. A central concept in that body of work is the notion of spontaneous order or what Smith called a “simple system of natural liberty.” According to Smith, when “all systems either of preference or of restraint” are abolished, “the obvious and simple system of natural liberty establishes itself of its own accord.” In such a system, “every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring forth his industry and capital into competition with those of any other man, or order of men.”

In The Road to Serfdom and other works, Hayek expounded those liberal principles and warned against protectionism and other forms of social planning. He understood that substituting socialist ends — in particular, “freedom from want” — for capitalist means — competition and choice — would destroy the very freedom necessary for a great society. He certainly would have agreed with the great French liberal Frederic Bastiat, who in 1850 wrote: “It is under the law of justice, under the rule of right, under the influence of liberty, security, stability, and responsibility, that every man will attain to the full worth and dignity of his being, and that mankind will achieve … the progress to which it is destined.”

Attempts to plan economic life and achieve “social justice” wrought havoc in the 20th century. The Soviet Union, the People’s Republic of China, East Germany, and other totalitarian states learned the hard way that Marx was wrong and Hayek was right. What still needs to be emphasized, however, is Hayek’s message that “political freedom is meaningless without economic freedom.” When private property rights are violated and economic freedom is attenuated by various forms of government intervention, our other freedoms are threatened. The Jews in Nazi Germany first had their economic liberties violated. The rest of the horrors followed.

Any infringement of economic liberty must be nipped in the bud. Constant vigilance is necessary to prevent the erosion of the principles of a market‐​liberal order.

As Nobel Laureate economist James Buchanan has written, “Liberals should not lean back and say, ‘our work is done.’ The organization and the intellectual bankruptcy of socialism in our time have not removed the relevance of a renewed and continuing discourse in political philosophy. We need discourse to preserve, save, and recreate that which we may, properly, call the soul of classical liberalism.”

Many emerging market countries still have a long way to go before they reach the level of economic and personal freedom envisioned by Hayek. Many developed countries, including the United States and have expanded the welfare state without recognizing the danger it poses to the future of freedom. The political challenge for the 21st century is to hold on to and strengthen economic freedom and limited government while at the same time creating new constitutional democracies that support, rather than erode, liberal principles.

About the Author
James A. Dorn

Vice President for Monetary Studies, Senior Fellow, and Editor of Cato Journal