The Road to Serfdom is a Slippery Downward Slope

Eighty years ago (on 10 March 1944) a short but hugely influential book was published: The Road to Serfdom. Written by the prominent economist, social theorist, and later Nobel laureate Friedrich Hayek. It sought to explain how a civilized country could fast descend into a warmongering, totalitarian dictatorship, as Germany had done.

The book certainly caught the imagination of a world still at war. A US edition came out six months after the British publication, then in April 1945, Reader’s Digest published a condensed version that brought it to a mass audience.

But The Road to Serfdom is much more than an explanation of what had gone wrong in the country of Goethe and Beethoven those eighty years ago. It is also a stark warning to future ages of how easy it is to stumble down a road to serfdom of their own — and a warning to us today that we may already have taken fateful steps in that direction.

Probably nobody in a liberal society intends to turn their country into a tyranny like Hitler’s Germany, or for that matter, Stalin’s Soviet Union. But Hayek’s shocking thesis is that public policies that are introduced for the most noble of reasons can, and often do, create the conditions that make this fate more likely.  Then, by the time people have come to understand what is happening, it is already too late.

Even more shocking is his firm belief that it is the pursuit of social democracy that is responsible for this result. Social democrats, and centrists of many varieties, promote policies that they hope will reduce inequality and boost social welfare. Such policies usually demand greater government control over the economic system, the use of taxation to redistribute wealth and income and compensate for other inequalities, and the establishment of a comprehensive welfare state to provide essentials such as housing, education, healthcare, and social benefits.

But these initiatives all require the creation of new levers of political power, and at least some curbs on people’s economic and social freedom. Once those two things are in place, they can potentially be exploited by politicians — not just those trying to make the policies work, but less scrupulous ones who dream of power. Moreover, these policies also give rise to perverse incentives and inefficiencies that stifle individual initiative and undermine the dynamism of markets. The resulting economic stagnation generates calls for yet more, and tougher, central planning and government intervention to correct things — which makes the rise of those unscrupulous politicians more likely.

Historians may argue that this is not exactly what happened in Germany. Hitler’s National Socialist German Workers’ Party came to be seen as an antidote to the economic chaos of the late 1920s and early 1930s. But it did not have all the instruments of power presented to it on a tray. It had to seize power. But the fact that so many people thought that more government was the answer made it easier for it to do so.

Nor did the United Kingdom, its government now furnished with all the power required to win a war, find itself too far down the road to serfdom to turn back. Rather, it found itself on a long road to economic stagnation, inflation, unemployment and decline that made British people yearn for the kind of post-war economic miracle enjoyed by the country they had so recently pummelled into defeat. Their journey down the road to road to privation was halted only in the 1980s, with Margaret Thatcher’s reforms.

Yet still, much of the apparatus of government intervention, planning and control remained in place, slowing any advance in a better direction. That — and its baleful result — is nowhere more obvious than in Britain’s hugely government-heavy planning system for land and property, a post-war creation which the Adam Smith Institute reckons to cost the economy £66bn a year, or 3% of GDP. And much of the other apparatus of government control — in education, healthcare, housing, pensions, transport and insurance — is still there and still holding back innovation and enterprise.

Today, that continuing dominance of government in so many parts of life is seriously eroding individual freedom. The government may not own utilities, transport or manufacturing operations anymore, but through law and regulation it still controls them. And as Hayek pointed out in The Road to Serfdom, if a government controls the economy, it controls freedom itself. How can critical ideas be advanced when the government controls the dominant media outlets? Or when it controls what people can and cannot say in public? How can critical ideas even arise when it sets the school curriculum and when college teachers — along with a fifth of the working population more generally — owe their living to the state? How can people find suitable accommodation when national and local government own a sixth of the land and control every aspect of how the remainder is used? Such a country is free only in name.

Hayek believed that the apparatus of a state was needed to maintain freedom and deliver defence and justice, and essential public goods and services. And these are no small tasks. But he also realised the danger that government could so easily grow into the destroyer of individual freedom. That policies that start with noble intentions — sparing people from hostile views, for example — can turn into something repressive —such as the shutting down of free debate. The road to serfdom is a slippery downward slope. And we appear to be a long way down it.