The Bookshelf: Hayek’s Vision of Human Complexity 

Writing last month about Whittaker Chambers’s Witness made me think of Ronald Reagan, who awarded the Medal of Freedom to him posthumously in 1984 (see here at the 6:38 mark for that moment in history). Reagan did not share Chambers’s pessimism about the outcome of the Cold War—to the country’s great benefit, Reagan seemed congenitally incapable of pessimism—but he had read Witness and agreed with the author about what was at stake in the struggle against Communism. 

Another mid-century author who influenced Reagan was Friedrich A. Hayek, who was invited to the Oval Office in 1983 (see here at the 6:07 mark). Alas, Hayek got no medal that day, just a pair of cufflinks. (It was left to George H. W. Bush to give Hayek the Medal of Freedom, in 1991.) But Reagan had plainly read some of Hayek’s work, and the book that was most likely to have been in the president’s hands was The Road to Serfdom. Like Witness, Hayek’s most famous book has been on my shelves for years, and I have only recently read it for the first time. 

I had read some of Hayek’s other writings before, including parts of his later works The Constitution of Liberty and Law, Legislation, and Liberty. And I did not need persuading about the virtues of free markets or about the inefficiencies at best, and evils at worst, of socialist depredations on economic freedom. But I suppose that somewhere in the back of my mind I suspected that an economist would be drily technical on the subject, and would not write very well. The Road to Serfdom was, therefore, a delightful surprise. Though English was not the first language of the Austrian economist, and Hayek would say in a foreword to a later edition that the book was “not intended for popular consumption,” Road to Serfdom is fluidly written, with a clarity of expression and a passionate moral teaching that together account for both its astounding success in 1944 and its staying power over the last eight decades.  

Hayek calls himself a liberal, by which he means a classical liberal, a partisan of liberty. (The famous “postscript” to The Constitution of Liberty is titled “Why I Am Not a Conservative.”) He succinctly states liberalism’s “fundamental principle that in the ordering of our affairs we should make as much use as possible of the spontaneous forces of society, and resort as little as possible to coercion.” In other places, instead of “liberalism,” he refers to the “philosophy of individualism.” Hayek always has his eye on the impact of political power on the life of the individual, whatever his station in life. What each of us chooses to value, to strive for, to plan, to develop as our own place in the world—or to forgo, to sacrifice, to deny ourselves in pursuit of something else: this is the freedom that matters to Hayek.  

The payoff of that freedom is huge—in scientific progress, in economic growth and prosperity, in the conquest of sufferings and privations, as well as in the private satisfactions of each person’s work. But it is the political preconditions of that freedom that concern Hayek, for in the midst of the Second World War he sees worrying signs that they are breaking down in the West. Those preconditions are the rule of law, the protection of private property, and the preservation of a competitive marketplace in which risks and prices, successes and failures reflect the choices made by countless individual producers and consumers on the ground, not the choices made by “experts” attempting to plan the economy from above. 

Hayek’s bête noire is planning—more precisely, he denounces “planning against competition,” the effort by governments to direct, control, or supplant competition by individual economic actors. Planning for competition is a form of positive political action, in Hayek’s view; that governments foster sound money and economic transparency, maintain good roads and harbors, enforce legitimate contracts, protect the natural environment, and do a hundred other things that lubricate a liberal economy, is all to the good. Anticipating caricatures of his view, he rejects any “dogmatic laissez faire attitude” that would cripple the government’s ability to undertake such positive policies. Hayek accepts laws “to limit working hours,” with the caveat that “the advantages gained” should be “greater than the social costs which they impose.” Ditto for “an extensive system of social services,” or even the idea that “a uniform minimum be secured to everybody”; “the case for the state’s helping to organize a comprehensive system of social insurance is very strong.” No lurid portrait of predatory capitalism can be produced by any fair-minded reader of Hayek’s book. 

But this same solicitude that he extends to the unfortunate and the vulnerable is what underlies Hayek’s implacable opposition to the “expert” planning that would presume to fix prices, to set production quotas, to prop up failing enterprises, to protect favored industries from competition, to guarantee jobs, and to equalize incomes. The fundamental error in such planning is the failure to understand how little information the planner can master, out of all the constantly churning data of a modern market economy. No person, no merely human mind, can take it all in and direct every variable. The market’s great virtue is that it is impersonal, that as a system it has no more intentionality than the weather. It gives us rain in one season, sunshine in the next. Each human being pursuing his own aims is a discrete input in a blizzard of information, and each of those human beings is better off in the long run if no one attempts the superhuman feat of mastering the climate. For such attempted mastery is doomed to fail. 

Hayek understands the temptation to try such planning, and he notes that in the nineteenth century the argument first emerged that, because of increasing market complexity, expert control was more necessary than ever. But this has things backward, he argues: such complexity makes it more impossible than ever, thanks to the increasing quantity of information the expert would have to comprehend. All that the expert’s planning against competition can do is cripple and impoverish an otherwise self-correcting and growing market. And, in a line that our current policymakers should memorize, Hayek writes: “The one thing modern democracy will not bear without cracking is the necessity of a substantial lowering of the standards of living in peacetime or even prolonged stationariness of its economic conditions.” 

As that sentence suggests, The Road to Serfdom is a work of political economy, with an emphasis on the politics. The impulse to direct and control the market leads inexorably to the growth and concentration of political power, and this in turn to the arbitrary exercise of such power, when rulers discover that a scrupulously rules-based order hampers their discretion too much. Corruption inevitably follows, with rulers playing favorites and feathering their own nests, and finally nothing will satisfy the partisans of planning but that a dictator command the economy. “And whoever controls all economic activity controls the means for all our ends and must therefore decide which are to be satisfied and which not.” Thus does a demand for planned control of the market eventuate in a tyranny over every facet of life.  

Hayek does not shrink from calling the end of this road a “totalitarian” society, in which propaganda and lies supplant the free pursuit of truth, and the rule of unconstrained and arbitrary force replaces the rule of law: “while the last resort of a competitive economy is the bailiff, the ultimate sanction of a planned economy is the hangman.” In such a system, he writes, “there will be special opportunities for the ruthless and unscrupulous.”  

Hayek’s forceful argument—that every species of socialism, if not arrested or checked somehow, will lead to the same totalitarianism that readers in 1944 could see in Hitler’s Third Reich or Stalin’s Soviet Union—caused considerable outrage on the Left. The Second World War was not yet won, and the Soviet Union was still the ally of the West. And even those on the Left who could see Stalin’s Russia clearly, like George Orwell, resisted Hayek’s paean to market liberalism. The most virulent response to Hayek came from the Fabian socialist political scientist Herman Finer, who published a whole book the following year responding to him, titled The Road to Reaction—an unhinged screed in which one can almost see the author’s spittle sprayed over every page. 

It is a blessing to the memory of Professor Finer that his book is out of print. Hayek’s has never been, and its success in 1944 and 1945 far exceeded the author’s expectations. It was respectfully (in some cases enthusiastically) reviewed in both academic and popular venues by such luminaries as Aaron Director, Joseph Schumpeter, Michael Polanyi, and Henry Hazlitt. Following its UK publication by Routledge, The Road to Serfdom was published in the US by the University of Chicago Press, but more importantly, it was condensed in the April 1945 Reader’s Digest, and placed (uniquely in the Digest’s history) at the front of the magazine. This caused such a sensation that when Hayek came to lecture in the United States later that spring, he found himself speaking before immense crowds. He was suddenly a rock star avant la lettre. 

Coming to The Road to Serfdom for the first time, what I find most interesting about it is Hayek’s humility about what his own profession can know and predict, let alone aspire to control. There is an implicit philosophy of science at work in this book, informing Hayek’s conviction that only harm can come to the economy from efforts to plan and direct its operation, because the complexity of human affairs defies all attempts at beneficent mastery. One can find this philosophy of science more explicitly spelled out in his 1952 book The Counter-Revolution of Science: Studies on the Abuse of Reason (now available under a modified form of its original subtitle). Here Hayek explains what a mistake it is for economists, or social scientists generally, to believe they do the same kind of work that natural scientists do. The latter “necessarily begin with the complex phenomena of nature and work backward to infer the elements from which they are composed.” But the social scientist, Hayek observes, “must start from what men think and mean to do”—that is, from subjective elements of human thought, opinion, belief, and will—and then attempt to grasp or conceptualize a complex picture made up of them.  

The natural and social sciences, one might say, run in opposite directions to and from parts and wholes. And in human affairs, “the wholes as such are never given to our observation but are without exception constructions of our mind.” And so “the economy” is nothing like “the earth.” The latter exists; we can till it, we can extract oil from it, and we can be buried in it. The former is not an objectively existing thing, but a construct, an agglomeration of data—some useful, some pointless (think of “trade deficits”). Hayek’s thoughts on thought itself ground his classic warning against the dangers of the temptation to control the freedom of others as they make their own way in that complex world of human action and interaction that surpasses our ability to understand.