Andrew Farrant and Ed McPhail on The Road to Serfdom

|Peter Boettke| The July/August issue of Challenge has an interesting article by Andrew and Ed on whether Hayek's work deserves the renewed attention it has gotten.

Comments

[Roger Koppl]

Farrant and McPhail have really looked into the question of whether Hayek did or did not view the welfare state as a slippery slope to totalitarianism. They had a nice piece in JEBO recently. Barkley discussed their Challenge paper at Econospeak last week (?) and that's discussion is worth a look. Adrew Sullivan picked up on Barkley's discussion:
http://andrewsullivan.theatlantic.com/the_daily_dish/2010/07/is-hayek-spinning-around-in-his-grave.html

[Peter Boettke]

Barkley's position that Hayek's warning of the slippery slope has been proven bunk runs into a problem -- what Ulrich Witt referred to as the "endogenous public choice theorist.". In other words, the warning itself altered the path.

Hayek does distinguish between hot socialism which is more or less Soviet and Nazi, and cold socialism which is milder forms of social democracy. But I believe the commentators are missing Hayek's limits on democratic agreement argument. When cold socialist policies are pushed beyond general rules, the ability to get democratic consensus collapses. Then we are faced by a Hayekian form of Arrow's theorem; I first made this argument in my EEJ paper (1995) and then again in more detail in a paper with Pete Leeson on Hayek, Arrow, and Democratic Decision-Making.

So Hayek's analysis is applicable to both hot and cold socialism and cold socialism has exhibited many of the problems predicted. As Lavoie argued in National Economic Planning (1985), one of the real issues is militarization of the economy. This result is not only a result of bad intentions, but the logic of the situation -- check out the Wash Post series on the secret military world in the US since 9/11.

Commitment to the generality norm plus the endogenous process of heeding the warning, results in cold socialism not becoming hot socialism.

[Rafe Champion]

The Obama administration has made Hayek's warning look better every day.

It is only necessary to see it as a warning and not a prediction.

http://organizationsandmarkets.com/2010/07/21/summary-of-dodd-frank-act/

http://catallaxyfiles.com/2010/07/22/america%e2%80%99s-ruling-class/

[Barkley Rosser]

Pete,

I do agree that there is some substance to the endogeneity issue here. Hayek's warning probably did help put the kibbosh on the more radical pushes towards central planning in particular that were very much in the air all over the place in the 1940s.

I am also disturbed by the ongoing expansion of the military state, which has always been the core for any centrally planned economy. After all, it was the Prussian military planners in WW I who were the immediate inspiration for Lenin's approach to economic policy, there being mightly little in Marx or Engels about central planning beyond some vague hand waving (more in Engels than in Marx).

However, I am not sure that this expansion is due to some kind of Arrow Impossibility Theorem result rather than in fact that a lot of people, at least in the US, really do want to have a big military to "combat our enemies." The deeper issue on that one may be, how the heck did we get to having so many "enemies" (and I think that the US really does have real enemies, for whatever reason)?

Regarding the broader discussion of the resurgence of RTS and the discussion of this over at Econospeak, I note a real peculiarity, which I think is at the heart of Farrant and McPhail's argument. So, there is this ongoing debate over the slippery slope argument, with Caldwell and Ransom and Hayek at certain points criticizing Samuelson for saying that Hayek believed in the slippery slope argument. OTOH, we have Samuelson and F and M pushing back to some extent basically by saying that, well, Hayek may have rejected in this place, but then appears to support it in some other place. This is not an easily resolved argument.

However, we now have this phenomenon where certain commentators are pushing the sales of RTS precisely on the grounds that it supports the slippery slope argument. Here it is folks, Hayek's great book that proves that Obama's health care plan is putting us on the slippery slope to fascism-socialism-nazi-communism with concentration camps and gulags. But then in some of the discussions, some of these people then denounce that evil Samuelson for having refused to accept Hayek's arguments that he was not making the slippery slope argument. Ooops!

[Richard Ebeling]

When I read Hayek, he is not saying that every form of government intervention or welfare redistribution leads to the totalitarian, centrally planned society.

Indeed, in "The Road to Serfdom," he makes many concessions, indeed, supportive statements for social "safety nets" that a free and generally prosperous society can afford and should provide for those who are unable to fully provide for themselves.

But what he is arguing is that there is a certain mind set (which he tries to trace out in outline in German history in the late 19th and early 20th centuries) about the desirability of and ability for government to extend further and further in the direction of more and more control, which if not stopped has the logic of leading to a fully planned society.

And if that road is followed a sufficient way, the social transformation is no longer one of degree but of kind. At which point freedom in many forms (personal, civil, political) is threatened because of the overarching power and authority that the state takes upon itself.

Does a society have to follow this path to the bitter end, once it has been entered? Hayek also argues, "no." First, if once entered upon no exit is possible, why would Hayek have bothered to write a book raising warning signs that the road taken needs to be changed?

And, further, Hayek is arguing that ideas, not "history" nor the "complexity" of modern society has set society on this road. And it can be turned back from, and a limited government political order and a fairly free market economy can be restored and secured.

In the current circumstance, many see government to be expanding its role and authority in a number of directions at a rate not seen since the New Deal and the war years of the 1940s, and the same concerns can be reasonably raised about where we are going and to what it could lead if we are not careful.

As for Hayek's ideas helping to halt the process down a road toward Soviet or Nazi-style planning in the immediate aftermath of World War II, I think that there can be little doubt that it was one of the major works of the time that got people to think, and think twice, about how far government control should be taken without the danger of "excessives" that even many social democratics came to consider too extreme.

It is partly why, I think, that the social democratics moved away from the ideal of full central planning in the the 1950s and 1960s to the less extreme and less totalitarian system of interventionist-welfare statism.

Richard Ebeling

[Barkley Rosser]

Richard,

Looks pretty reasonable. Obviously different people have different views about how scarily dangerous Obama's policy pushes are (which are likely to come largely to a halt after the midterm elections anyway, except for maybe in the military state area). But it is certainly the case that his central focus was German history where indeed a Social Democratic government was followed by a Nazi government, with consequences we all know.

With regard to Hayek's postwar influence on Social Democrats, particularly in Germany, it may well be that the most important link was Hayek's link with the Ordo-Liberals of Freiburg, who were very important in formulating that social market policies of postwar West Germany. That is a matter that many continue to discuss and has its own twists and turns and peculiarities, but certainly the link was there.

[Peter Boettke]

What Richard says.

[Peter Boettke]

Barkley,

The generality norm is quite consistent with many government social policies, but it is not consistent with the churning or rent-seeking state. The question then becomes by what mechanism does one keep the rent-seeking state in check. Perhaps Hayek failed to see violations of his generality norm when in fact they were there.

Hayek's slippery slope argument is not an inevitability thesis, it is more along the lines of a "mechanism" as developed in recent books such as Hardin's Indeterminancy and Elster's Explaining Social Behavior.

[Hayek is cool]

http://pileusblog.wordpress.com/2010/07/09/are-we-on-the-road-to-serfdom/

http://offsettingbehaviour.blogspot.com/2010/07/stopping-points-on-road-to-serfdom.html

[Greg Ransom]

The Social Democrats renounced Marx -- and the appropriation of the means of production by the proletariat -- sometime in the 1950s.

It's impossible to causally explain exactly.

But if ideas had anything to do with it, the most significant and most widely known and most widely influential and most directly pertinent were those of Hayek ...

Barkley writes.

"With regard to Hayek's postwar influence on Social Democrats, particularly in Germany"

[Greg Ransom]

I've taught informal fallacies as part of a logic and critical thinking class.

Hayek does not offer a slippery slope argument.

He provides specific causal mechanisms, e.g. ratchet mechanisms, and character change mechanisms, an ideas have consequences mechanism, etc.

This whole "slippery slope "debate oon a content level is not worthy of taking seriously.

I challenge those politically hostile to Hayek to engage the substance -- something Samuelson, and Keynes and a host of others demonstrably failed ever to do. These men preferred rhetorical techniques for marginalizing scientific rivals over engagement of substantive content.

To their ever disgrace.

"Hayek's slippery slope argument"

[Hayek is tres cool]

Hayek does indeed posit mechanisms. This blog looks at some of them.

http://offsettingbehaviour.blogspot.com/2010/07/stopping-points-on-road-to-serfdom.html

Has anyone actually read Hayek as positing something other than mechanisms? I recall Dr Boettke having used slippery slope in published articles somewhere.

Are Beck and the crazy right-wing nuts invoking Hayek wrong?

[Peter Boettke]

There is a loose meaning and a rigorous meaning of slippery slope. I don't believe I've ever argued for slippery slope, but I might be suffering faulty memories. But I don't consider slippery slope arguments to ruled out of bounds logically. See Rizzo's essay "Camel's Nose Under the Tent."

But as I said before, Hayek gives throughout the specific mechanisms along the slope.

[Peter Boettke]

Btw, in Eric Crampton's post on this topic referenced above he claims that people are pushing the inevitability argument, and then states the argument as that there is a great risk of small steps along the road slipping down the road to totalitarianism. Aren't these two claims inconsistent with each other? And isn't this error (if I have indeed identified an error) the reason for the confusion in the readings in Hayek? An argument about risk and probability is about mechanisms and the logic of the situation, and inevitability argument is not really probabilistic because it is an argument for 100%.

[Eric Crampton]

The claim I was (perhaps hamfistedly) trying to make was that Beck and the like are making an inevitability argument (which is driving current sales), that a very plausible reading of RTS is that starting down the road gives you a very very high risk of reaching serfdom, and that Beck's inevitability reading is closer to that plausible reading of RTS than is the "cautionary tale" version.

[Rafe Champion]

Serfdom was a tract for the times when socialism was so deeply entrenched among intellectuals that the prospect for the rise of classical liberalism and the deregulation of recent decades would have looked incredibly unlikely, like whistling Dixie.

However despite this progress, big government has bipartisan support in the US and it is realistic to wonder if we are approaching a tipping point due to the number of vested interests that are pushing that process. It is not a matter of concentration camps and gulags, more a matter of maintaining a vibrant civil society and keeping alive the tradition of personal responsibilty.

Regarding the new ruling class described in an American Spectator piece, compare with Hayek's chapter on why the worst get the top.

http://spectator.org/archives/2010/07/16/americas-ruling-class-and-the

That looks like an incomplete link, there is a summary of the key point here

http://catallaxyfiles.com/2010/07/22/america%e2%80%99s-ruling-class/

[Peter Boettke]

In my 1995 paper "Hayek's The Road to Serfdom Revisited," EEJ, I try to specify the public choice logic of Hayek's position. That paper at that time was well received by various audiences and I received letters and commentary from Friedman, Becker, and Buchanan besides the usual suspects. I learned a lot during the various stages of that project from draft to publication. Btw, EEJ was the only journal I sent the paper to, so it didn't go through the usual revisions at that stage. The point of the exercise was to place Hayek's book in the history of public choice theory, and thus my focus was on various economic arguments about why democratic socialism cannot achieve it's goals by democratic means. The starting point is the complete acceptance of Mises's argument and then the unintended and undesierable consequence of pursuing the socialist goals by socialist means in practice and how those consequences are inconsisistent with democratic values.

I think that message is still relevant today as it was in 1944.

[Steve Horwitz]

It's interesting that the "critics" seem to be seeing what Beck and others are saying as RTS "proves that Obama's health care plan is putting us on the slippery slope to fascism-socialism-nazi-communism with concentration camps and gulags" to quote Barkley.

I don't watch Beck, so I'm not going to make a claim about what he might or might not be saying, but isn't it at least possible that the intent of tying Hayek into current events is something more along the lines of "we've taken another step down a dangerous path and this book shows what might well happen if we don't realize the dangers associated with more government intervention into more parts of the economy"?

I haven't read the AF/EM pieces, but I never read RTS as being an "inevitability" argument, but rather an Orwell-like warning about what could happen if we didn't begin to understand the planning mentality and recognize the way it undermines fundamental liberal institutions. There's not a straight line/slippery slope from ObamaCare to the gulag, but that doesn't mean that there isn't a set of beliefs about the nature of the social world (e.g., the "planning mentality") that might underlie them both and that liberal might wish to push back against.

[Ted Burczak]

How does attempting to expand the realm of rights (the goal of the health bill, I think) relate to the gulag? What are the general ideas and beliefs that tie the expansion of rights together with the gulag? Is it that if don't pay your taxes to fund the rights expansion, you'll go to jail?

[Steve Horwitz]

Ted - I'm not at all convinced that was either the goal or the actual effects of the health bill. In the end, it simply gives the gov't-insurance complex more power with which to set ends and narrow the scope of means with respect to health care. In that sense, it's a form of planning - or at the very least, it's a set of regulations that restricts the ability of individuals, households, and firms to find bottom up, mutually beneficial ways of providing health care. To that degree it does, from where I sit, it reflects the idea that the emergent properties of markets are not to be trusted and are to be substituted for by command-type rules from the top down.

No, the Obama administration is not a bunch of Nazis or Stalinists. But I do think, especially on this issue (e.g, the new Medicare guy Berwick), they are prone to the belief that experts can design outcomes that are better than what emerges from unhampered interactions from the bottom up. In its extreme versions, that "gestalt" underlies a lot of nastiness.

My reading of RTS, and I do think it's a stronger reading in the 1940s than today, has always been that Hayek was warning us of the seeds that the planning mentality was planting in the UK in the 1940s and how they *could* (but not inevitably) turn into something much nastier if we weren't (aren't?) vigilant. What he was seeing in the 40s was, to him, evidence of that same underlying rejection of spontaneous order that was at its most extreme in Germany and Russia.

RTS was written when Hayek was also preparing the work that became the published parts of the "Abuse of Reason" project. I think RTS has to be seen in that light: UK style planning reflected the same unreasonable concept of reason and rejection of spontaneous order that Hayek saw as part of the really nasty stuff.

His intellectual history may have been wrong, but that's a different argument than saying he thought it was inevitable.

[Rafe Champion]

Ted there is not an immediate slide from the expansion of rights to the gulag, but Hayek's point was to become aware of the tendencies of certain policies and processes in case they do not lead to the desired results. It was an appeal to socialists of good will to be careful in case they got what they they wished for. That was the value-free content of the von Mises arguments against socialism from 1920 onward.

The danger is the mentality of the coercive utopian, the constructivist rationalist who thinks that things can be fixed up by legislation, regulation and redistribution regardless of the costs, regime uncertainty, the distorion of incentives and the erosion of the rule of law.

There is also the danger that the concept of limited government under the rule of law is being lost in place of the concept that democracy equals majority rule, so if a party wins an election it is widely accepted that they can do pretty much what they want.

[Roger Koppl]

I think it is fair to say that Hayek didn't really know what to say about the Nordic states. I think Farrant and McPhail's JEBO paper shows that he at least sometimes seemed to say that they were on the road to serfdom. Personally, I don't really care if Hayek was at least sometimes kind of off on some of these points. Big deal. I don't think "Austrian economics" is somehow tarred if one of our heroes said a couple of stupid things. The thesis in RTS was by no means stupid and Richard's version seems about right from a history of thought perspective. We should probably remind ourselves how very red most intellectuals and policy wonks were in the 1940s when Hayek was engaged in a pitched battle to save the West from itself. Now that the storm has passed we look up to the sky and ask why people were so excited over a couple of passing clouds.

It does seem that some of Hayek's critics were giving RTS a rather unsophisticated interpretation. Shame on them, I guess. But if you honestly think "unbridled capitalism" is this big danger and so on, then Hayek's warning might seem little more than the grumbling of a crank. In other words, they may have easily missed the point, Hayek's careful analysis notwithstanding. Hayek did not ease misunderstanding when he waffled on the significance of the Nordic countries.

@ Ted: It is, like, unfair that Obama gets all the opprobrium for policies and tendencies well entrenched before he got into office. It is unfair that the relatively mild reform of healthcare is the lightening rod for popular fury against statist tendencies that Bush put into place and Obama merely forwarded. Boo hoo. I feel sad for Obama. It is more important, however, that we resist militarism, the threat to habeas corpus, and all the other statists dangers of the day than that we should weigh justly the relative sins of the last two administrations. Oh, and I really do not think the *purpose* of the bill was to promote any good end whatsoever. I think somewhat lower motives were at work.

[Hayek is cool]

More good commentary

http://offsettingbehaviour.blogspot.com/

Why does everyone assume the 'planning' mentality (whatever that means) was rife in Western Europe in the 40's?

Hasn't Jeff Friedman argued somewhere that Hayek is just wrong on the history of the left and the supposed planning mentality-constructivist rationalist (to invoke Rafe's slogans) mentality stuff?

Does anyone have the reference?

"There's not a straight line/slippery slope from ObamaCare to the gulag"

Really? Tell that to Glenn Beck. As Rosser said in an earlier thread, where are the Ransom's when it comes to calling Beck's BS?

[Barkley Rosser]

Greg,

I misspoke in referring to Hayek and the Social Democrats. It was the Christian Democrats. While it is true that the Soc Dems did not formally abjure Marx until 1959, they made no moves towards either nationalizations or central planning when they were in power in the 1920s. They did expand the welfare state and made early moves towards having labor leaders on management boards, which became standard policy after WW II after being undone by Hitler.

As for ratchet mechanisms, a term taken from discussions of central planning with another meaning, we have certainly seen backwards moves from "socialist" policies in many countries, thus suggesting that the ratchets are hardly definite. The scaling back of nationalizations in Britain and many other countries in the 1980s is one example. Another is the scaling back of the 90+% marginal income tax rates that were in place in the US and UK and other countries for quite a few decades after the Great Depression.

On a more general point, Greg, you have often argued that those who claimed Hayek endorsed the Reader's Digest and comic book versions of RTS were wrong, and that this is evidence that he did not push the slippery slope argument, as those versions certainly do so. OTOH, he never repudiated any of those versions either, which leaves the situation somewhat ambiguous, I would say.

This is somewhat relevant to now given that there is no question that Beck and Limbaugh are certainly pushing sales of RTS on slippery slope argument grounds, as if it were the comic book or Reader's Digest version, despite the scholarly intro by Bruce Caldwell in which he argues against the idea that Hayek held to the slippery slope argument unequivocally. A number of us are wondering when established authorities on Hayek such as yourself will publicly point out how misguided these salespeople are.

[Steve Horwitz]

Ok, now I get it. The Hayekian academics are at fault for not screaming bloody murder about the abuse of Hayek by crazy right-wing commentators. Silence is tacit agreement, or something like that? Or at least thinking they are "useful idiots" or the like. Or are we just being bad for thinking it's a good thing that people read RTS, regardless of the pitch? (My own position, to be honest with you - I'd rather have people reading a great book for the wrong reason than not reading it at all, as I have some faith that they'll get more good out of doing so than bad.)

I have better things to do than add to the piles of evidence already out there that Beck and Limbaugh say a lot of stupid stuff.

[Barkley Rosser]

Steve,

Don't worry. Nobody expects a notorious "neuro-Hayekian" such as yourself to take on the responsibility. Arguably Caldwell has already done so in his scholarly introduction, if any of the people buying the book at the urging of B and L actually bother to read it.

[Nasty]

As one joker put it, it does not really matter if Beck loses his sight, its not - as Rosser has pointed out - like he or any of his idiot viewers ever read Hayek anyhow.

[Current]

> Why does everyone assume the 'planning'
> mentality (whatever that means) was rife in
> Western Europe in the 40's?

To give you an idea of what happened in England when the Labour government was elected after WWII....

The following industries were nationalised:
* Railways
* Long distance lorry transport
* The Iron and Steel industry
* Coal Mining
* Hospitals & Doctors (the NHS)
* Electricity generation
* Gas supply
* Long distance telegraphs
* Inland water transport
* Many bus, tram and trolleybus systems
* The biggest travel agent Thomas Cook
* Many obscure small businesses linked to the above, such as some ferry companies and hotels.

All those industries sound very retro, but they were very big at the time.

Various other industries were informally cartelised.

The original idea of "central planning" is that all of these industries should be planned together. In fact, the Labour party intended to go much further and nationalize much more, but they couldn't find the support. They also never really planned these industries together as a whole, but that was the original intention.

Though Thatcher is famous for privatisation it's often forgotten how much of this was undone in the 50s and 60s.

[Nasty]

How far 1-10 on RTS - anyone?

The following industries were nationalised:
* Railways
* Long distance lorry transport
* The Iron and Steel industry
* Coal Mining
* Hospitals & Doctors (the NHS)
* Electricity generation
* Gas supply
* Long distance telegraphs
* Inland water transport
* Many bus, tram and trolleybus systems
* The biggest travel agent Thomas Cook
* Many obscure small businesses linked to the above, such as some ferry companies and hotels.

[The Cuttlefish of Cthulu]

When Beck and Limbaugh start recommending Rothbard's For a New Liberty, THEN I'll be impressed.

[Rafe Champion]

I suppose it would be a shame to undermine sales of Serfdom by telling people that the condensed version is on line. There is also a cartoon edition on line.

In some ways Popper's Open Society is a deeper and more important book, and it is a shame that Readers Digest did not condense that 800 page tome as well. As a community service I have rectified that situation. It is interesting to see that Chapter 23 is a critique of the sociology of knowledge and central planning as well.

The sociology of knowledge.http://www.the-rathouse.com/OpenSocietyOnLIne/Chapter-23-Sociology-of-Knowledge.html

Popper's critique of the Platonic concept of justice can be read as a companion to Hayek's critique of social justice which is another avenue of advancing on the road to serfdom under cover of justice. Again it is not a matter of concentration camps and midnight murders just the slow and steady shift from equalitarian justice to a program of (racist) affirmative action and redistribution.

http://www.the-rathouse.com/OpenSocietyOnLIne/Chapter-6-Platonic-Justice.html

[Nasty]

With 'deep thinkers' like Rafe Champion on hand who has any need for hacks like Beck and Limbaugh.

I'm off to the Mises blog.

[Rafe Champion]

Please give my best regards to Hans-Hermann Hoppe:)

[K Sralla]

"Hayek did not ease misunderstanding when he waffled on the significance of the Nordic countries"

I am not sure that the Scandinavian experiment in social democracy has run it course yet. Some like to use the example of Sweden to say "see there, Hayek is wrong". However, the specific mechanisms proposed by Hayek have no set time component. Some of the mechanisms might well act as tipping points, giving rise to a quick transition to a totalitarian state. Others might work much more slowly, pushing society slowly in a certain direction over hundreds of years. We cannot now divine how Swedish or other current social democracies might evolve over the next century or two, and which specific "planning" policies have pushed in one direction or another. It will be left to future economists and historians to perform the look back. What we can say, is that the logic of Hayek's main arguments is sound, and RTS should stand even today as a warning of where statism run amuck can lead.

In that sense, I am not sure why anyone is afraid of RTS being read by the masses. Remember that Hayek himself approved a condensed Readers Digest version of RTS for all to read.

[Barkley Rosser]

The Nordic countries do not and never have had central planning to any important degree. They have also had very low rates of nationalization, most of those carried out by conservative governments to keep certain sectors out of the hands of foreign interestes, usually German. The only "socialist" aspect of their societies is their high taxes and large social safety nets. In terms of business regulations, they are among the most classically liberal countries in the world.

[K Sralla]

Barkley,

I largely agree with you. In many ways, nationalization and corporatism certainly appear more virulent in the US at present.

Although we may argue about which subtle forms of planning are more or less benign, let's not paint the Nordic countries as classical liberal utopias. They are not. The "planning" virus is alive in well in the Nordic psyche. Let's face it. All the Western social democracies are basically playing with different degrees and variations of the same thing, ie central bank, crony capitalism, high tax rates, massive social saftey nets, militarization. Some a little more of this, others a little more of that, but all in all, pretty darn similar.

One more point: Until this year, the Försvarsmakten carred out a draft in peaceful Sweden. The Norwegians continue with their draft.