Originally written in 2014 for my personal blogsite, For the Desk Drawer that no longer exists, this post missed a transfer over to Progress in Political Economy (PPE). I have dusted it off without any major changes so that it can appear on PPE.
This year (2014) marks the 70th anniversary of Friedrich von Hayek’s The Road to Serfdom and will no doubt generate much congratulatory back slapping and warmth from the cognoscenti of the right-wing establishment. Elsewhere, at a forthcoming workshop on the utopian springs of market economy, to be held at the University of Sydney, there is a revisiting of both Hayek and his contemporary Karl Polanyi, whose classic The Great Transformation was also published in 1944 (the proceedings from that conference were published here as Questioning the Utopian Springs of Market Economy). With the binaries of planning versus market competition, or fascism and socialism versus capitalism, the figure of Hayek and the text of The Road to Serfdom have both become lodestars for defending freedom based on nineteenth-century liberalism and the rights of the individual. As the then Prime Minister of the UK, Margaret Thatcher, stated in her letter to Hayek, dated 17 February 1982, ‘The progression from Allende’s Socialism to the free enterprise capitalist economy of the 1980s is a striking example of economic reform from which we can learn many lessons’; albeit while distancing herself from the ‘quite unacceptable’ measures introduced under Augusto Pinochet in Chile. Indeed, the Margaret Thatcher Foundation has released hundreds of documents covering her correspondence with Hayek. Hayek also granted support to Pinochet as well as articulating an intellectual defence of dictatorship, as noted by Corey Robin in The Reactionary Mind and in his blog post ‘Hayek von Pinochet’. As William Scheuerman also notes, Hayek maintained intellectual dialogue with Carl Schmitt, referred to in The Road to Serfdom as ‘the leading Nazi theoretician of totalitarianism, and, in fact, the essence of the definition of totalitarianism’. So, seventy years on, what the heck’s going on with Hayek’s The Road to Serfdom and how can we make sense of the text today?
My aim here is not to deliver a comprehensive assessment of The Road to Serfdom or of Friedrich von Hayek himself. Instead, I want to highlight some pertinent issues in The Road to Serfdom germane to debates about political economy today. These will principally cover the guarantee of truth that emerges from The Road to Serfdom and its contradictions; how this is linked to Hayek’s view of laissez faire and his vision of remodelling society; the background feature in the book of the role of coercion in establishing capitalist “freedom”; and Hayek’s defence of monopoly capitalism. Much is left out here, not least Hayek’s focus on international order, encompassing his views on the scalar problems of planning and his advocating the absorption of separate states in a federal organisation – what could be seen as a radical Kantian view of the states-system. That focus can be left for the future.
I.
On seeking the guarantee of truth, it is instructive that Hayek starts The Road to Serfdom with the admission that he is writing a ‘political book’ but is certain in his position that this is not determined by his personal interests and is rather on the plane of universal interests. ‘I can discover no reason why the kind of society which seems to me desirable should offer greater advantages to me than to the great majority of the people of this country’ (Preface, vii). Later, Hayek upholds the notion of a ‘disinterested search for truth’ (165) which is juxtaposed against the disciplines of history, law, or economics. ‘These disciplines have indeed in all totalitarian countries become the most fertile factories of the official myths which the rulers use to guide the minds and wills of their subjects’ (165). Hayek’s assumption is that human activity is conducted ‘without ulterior purpose’ in a world where ‘science for science’s sake, art for art’s sake’ exists (166).
By seeking the guarantee of truth in objectivity, my claim is that Hayek is being disingenuous to his reader. In concluding The Road to Serfdom this tenor is repeated. ‘The purpose of this book has not been to sketch a detailed programme of a desirable future order of society’ (245). Yet in the accompanying ‘bibliographical note’ to the book, Hayek recommends several books ‘in which the essentially critical character of the present essay is supplemented by a fuller discussion of the structure of a desirable future society’ (247). Two issues can be raised here: 1) that there is no view from nowhere, meaning that there is no such thing as theory in itself, divorced from a standpoint in time and space; and 2) that laissez faire, in general, has definite utopian and normative foundations and that Hayek, in particular, is precisely seeking to forge these specific conditions for policy choices in the name of liberalist individual “freedom”. This is what Karl Polanyi in The Great Transformation called ‘the utopian springs of the dogma of laissez-faire’. Hence The Road to Serfdom is highly value-bound. While presenting himself on the plane of universal interests, Hayek nevertheless has a clear normative perspective that has to be laid bare, revealed rather than concealed, within power relations serving a particular purpose. That particular purpose is itself the articulation, defence, and constitution of the liberal creed.
II.
Moving on to laissez faire principles, Hayek is against the ‘wooden insistence’ of laissez faire, as it is precisely harmful to the liberal cause, leading to its regard as a negative creed. What this neglects, he argues, is the necessity of a ‘complete remodelling of society’ in defending and articulating the individualism of Western civilisation (18-20). It is that “freedom”, associated in Hayek’s thinking with English ideas, that ‘travelled in space’ to reach their easternmost limits in Germany by the late nineteenth century. Thereafter, Germany became the centre of ideas destined to govern the world [through Hegel, Marx, List, Schmoller, Sombart and Mannheim] in the twentieth century where “freedom” ultimately became gripped by totalitarianism (21). This Eurocentric and culturally relativist treatment of the travelling of ideas is unacknowledged. Instead, what is apparent about this articulation of laissez faire is Hayek’s insistence that ‘planning and competition can be combined only by planning for competition, but not by planning against competition’ (43). As Polanyi states in The Great Transformation, ‘the road to the free market was opened by an enormous increase in continuous, centrally organised and controlled interventionism’. Significantly, Hayek is not unaware of this, although he admits that he does not develop a discussion of the ‘very necessary planning which is required to make competition as effective and beneficial as possible’ (44). This is a looming hole in the concrete organisation of capitalist “freedom” and security in The Road to Serfdom or, alternatively, it is its polyvalent strength: it can be meaningful to all people and places based on its claim to appeal to hold general validity and objectivity. But that meaningfulness is itself an empty one, devoid of any specificity and historical concreteness.
III.
More ominous still is the statement in The Road to Serfdom that ‘the substitution of central planning for competition would require central direction of a much greater part of our lives than was ever attempted before’ (103). Competition must flourish and where it is impossible to create those conditions through a legal framework, ‘we must resort to other methods of guiding economic activity’ (37, emphasis added). Again these “other methods” are not explicitly spelt out but coercion (and the coercive role of the market) in conditions of the labour process do enter the picture. Within capitalist “unfreedom” workers only have their labour to sell, once divorced from their means of subsistence. There is implicit awareness and acceptance of this process and its coercive implications in The Road to Serfdom. Thus, for Hayek, ‘economic power’ can be an instrument of coercion but in the hands of individuals it is regarded as never exclusive or complete (150). The planning implied by the market is therefore acceptable because the holder of coercive power can be confined to creating conditions under which the knowledge of individuals can flourish so they can be successful (37). But, especially if trade unions are successful, ‘coercion will have to be used’ directly to transfer individuals to less well paid positions or enforce conditions of unemployment until people are willing to accept work at a relatively lower wage. ‘The point that is relevant for us is that if we are determined not to allow unemployment at any price, and are not willing to use coercion, we shall be driven to all sorts of desperate expedients’ (213). On pain of starvation, then, workers are compelled to sell their labour power in order to subsist and reproduce. If market conditions do not sufficiently organise this compulsion, then direct coercion alone may be sanctioned to organise society, something that is tangible in the present era of neoliberalisation. This defence of social order and dictatorship in Hayek is what Corey Robin has traced in wider detail. In The Road to Serfdom it is noted how, in relation to war, ‘it is sensible temporarily to sacrifice freedom in order to make it more secure in the future’, while admitting that this should not be a permanent arrangement. When there is a confluence between market compulsion (the rise of authoritarian neoliberalism) and war (the global war on terror) the question left begging then is: where does “freedom” exist?
IV.
For Hayek, the defence against totalitarianism and the insurance of “freedom” unequivocally come through enabling monopoly capitalism, which is regarded as separate from the state. To cite him directly,
when we have to deal with many different monopolistic industries, there is much to be said for leaving them in different private hands rather than combining them under the single control of the state. Even if railways, road and air transport, or the supply of gas and electricity, were all inevitably monopolies, the consumer is unquestionably in a much stronger position so long as they remain separate monopolies than when they are “co-ordinated” by a central control (203).
What Hayek is against, therefore, is not the dominance of monopolies but state-protected monopolies. Yet those monopolies “in private hands” are themselves, of course, created, constituted, and launched by state intervention. Regardless, for Hayek, even when ‘the services of the monopolistic industries . . . become less satisfactory than they might be, this would be a small price to pay for an effective check on the powers of monopoly’ (204). Monopolies in “private hands” are therefore good in securing the road to “freedom”, although how that translates into an endorsement of monopolies in energy, agro-food production, transport, private security, defence contractors or media conglomerations is again problematic in the contemporary age.
I will close with one perhaps prophetic comment from Hayek. He states in The Road to Serfdom, ‘It should never be forgotten that the one decisive factor in the rise of totalitarianism on the Continent, which is yet absent in this country [Britain], is the existence of a large recently dispossessed middle class’ (215). With authoritarian neoliberalism on the rise, the permanency of the global war on terror, and a dispossessed “middle class” resulting from ever more acute austerity cuts, the prospects look bleak indeed for those continuing to ground market-based conditions of “freedom” and security within monopoly capitalism.
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