Hayek, Obama and Serfdom

The Road To Serfdom

By Monty Pelerin: Frederich Hayek’s “The Road to Serfdom” describes how societies deteriorate from prosperity to poverty and from liberty to authoritarianism.
This instant classic described what Hayek saw in Germany and how he saw the same mistakes being repeated in Great Britain and the United States in the 1940s. According to Hayek, these mistakes would lead to a similar destination — serfdom.
Hayek believed the path was  being followed unwittingly. He attributed the deterioration to men of good will who didn’t understand the perverse outcomes that resulted from what seemed noble policies.
He knew that a weakening in the social and political fabric always opened the door for men of bad intention to assume control. “Why The Worst Get On Top,” Chapter Ten in the book, detailed the process.
Few would argue that Hayek’s feared outcome has come to pass (yet!). More, however are concerned about the process and movement further down his Road as evidenced by a renewed interest in this book. Remarkably, more than half a century after it was written, it reached number one on Amazon. Gene Healy, in June of 2010, described its success:

… F.A. Hayek’s classic The Road to Serfdom, written 66 years ago, has been in the top 100 on Amazon’s bestseller list for the last six days, and hit number 1 today.
 (Here’s why.  h/t Greg Mankiw).

Amazon describes the book:

An unimpeachable classic work in political philosophy, intellectual and cultural history, and economics,The Road to Serfdom has inspired and infuriated politicians, scholars, and general readers for half a century. Originally published in 1944; when Eleanor Roosevelt supported the efforts of Stalin, and Albert Einstein subscribed lock, stock, and barrel to the socialist program—The Road to Serfdom was seen as heretical for its passionate warning against the dangers of state control over the means of production. For F. A. Hayek, the collectivist idea of empowering government with increasing economic control would lead not to a utopia but to the horrors of Nazi Germany and Fascist Italy.

Hayek’s analysis was correct. His prescience was remarkable. His timing was wrong. Like many other societal and institutional decline predictions, the survival abilities of social and other institutions were underestimated. The book is still relevant because we are still on Hayek’s road and closer than to his feared destination. His story is correct and still playing out.
Unintended Consequences

Hayek’s predictions were based on the plans of well-meaning people who insisted on changes they believed proper. Serfdom was not considered  a possible outcome. Policy proponents were men of good will who aimed to improve society. The Road to Serfdom was a book about “unintended consequences” before the phrase became popular. 
Historical Context
Central planning reached its zenith immediately following World War II. Command and control was used  to mobilize the economy and defeat the world’s greatest horror. Surely the wisdom of our “best and brightest” could improve the seemingly chaotic manner in which society developed.
Economic and social methods developed in a manner that seemed to be haphazard. There was no central plan, merely a long evolutionary process based on trial and error. The power of rationality could certainly improve outcomes. That was the intellectual Kultursmog post World War II.
The Soviet Union adopted the communist model and was praised for their approach and (lied about) successes. Right up until their collapse, most  favoring the Soviet approach believed it to have succeeded spectacularly. Paul Samuelson, probably the leading economist at the time, offered these assessments in his leading economics text:

“Every economy has its contradictions …. What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth.” — Paul Samuelson,Economics, 1985 edition
“Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive.” — Paul Samuelson, Economics, 1989 edition

Hayek was an exception. Before the war he continued the work of his mentor, Ludwig von Mises, on the theoretical case for why a Socialist economy would fail. He lived to see this prediction come true, at least with respect to the USSR.
Today the historical context is different. Theoretical arguments have been supported by economic outcomes. Socialism and the centrally-controlled economy has been proven to be inefficient at best and unsustainable at worst. Reasonable men outside of direct government influence no longer believe in full-blown Socialism. Government is no longer seen as the solution to economic problems outside of capitols like Washington, DC. 

Barack Obama and His “Intended Consequences”

Barack Obama entered office with the stated goal of transforming America. It is now apparent what he meant by the phrase — President Obama, quite simply,wants to implement full-blown Socialism in the United States. “Social justice” (whatever that means) or political power motivate the man. Common sense does not.
Regardless of  how you feel about Socialism, the world is different from that which Hayek confronted in his “Road To Serfdom.” Hayek dealt with the issue of unwittingly transforming society into something never intended or desired. Today the current President of the United States aims directly at what Hayek feared. Hayek’s unintended consequences are now Obama’s intended consequences. 
Socialism has been discredited in the eyes of all but the most stubborn ideologues. The Welfare States of Europe have been struggling for decades with its pernicious effects. Economic growth is anemic at best in these countries. Governments there are insolvent, having committed much more than their economies can support. Promises and obligations need to be and will be dishonored.
Eastern Europeans remember life under Socialism and are among its strongest opponents.  
No man in America’s highest office has ever openly advocated for Socialism until this current president. His effort comes at a time when Socialism is discredited and on the wane. Both theory and history are inconsistent with his position. Blind ideology seems to be his guide.

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