The Road to Serfdom (1944) – F.A. Hayek, Chapter 7 – Economic Control & Totalitarianism

  • Most planners don’t doubt a planned economy must be run as a dictatorship. A complex system of interrelated activities must be a single staff of experts & ultimate power must be in the hands of a commander who must not be fettered by democracy.
    • The planners then claim that authoritarian direction will only be for economic matters. They say that political democracy can remain so long as it only surrenders economic matters. They say we’re only surrendering the least important aspects of our lives to attain greater freedom to pursue higher values.
      • People who hate the idea of political dictatorship want an economic dictatorship.
    • If planning to free us, why belittle it like that? If economic activity only was about inferior sides of life, we ought to relieve ourselves of material things to be left to a utilitarian machinery to free us for better things.
      • This is due to an erroneous belief that economic ends are separate from other parts of life. The ultimate goal for people is never economic but there are economic factors that condition our other ends.
      • Limitation of our income makes us feel the relative poverty still imposed on us & many hate money because they see it as the cause of those restriction. But money is only a medium & not a cause of the limits.
      • In fact, money frees us to a wide range of choice, especially to the poor, which previously were only available to the rich.
      • Socialists wish to switch to non-economic incentives by offering rewards like public distinctions or privileges, power over others instead of money.
  • Once we see there’s no separate economic motive, but only economic gain or loss is necessarily a part of personal gain & loss, it is still left to us whether not that thing gained or lost will or won’t be the least important consideration.
    • So long as we can spend our money freely, economic loss will only cause us to suffer in things we care least about because we’ll choose to forgo those things we care least about long before the things we care most about.
      • This makes many people believe that anything that affects only our economic interests can’t seriously interfere with the basic values of life.
    • But economic values are less important to us because in economic matters we’re free to decide what’s important to us. It is the people who have to solve the economic problems for themselves. To be controlled in economic pursuits means to be controlled unless we declare our specific purpose. We will have to get it approved for it to happen.
      • The question is not just whether we can satisfy needs but whether the people will decide what’s important for us or if it’ll be done by a planner. Planning wouldn’t just affect marginal needs because we can no longer decide what’s marginal.
    • The authority wouldn’t just control the small part of our lives for inferior things but for all our needs. Whoever controls economic activity controls the means for all our ends & must then decide what’s to be satisfied & what’s not.
      • Economic control is control of a sector of human life & means for all our ends. Whoever has sole control of means must also determine which ends are to be served & what’s to be valued higher & lower. Planning means that the economic problem is to be solved by the community instead of the individual.
    • The economic freedom that planners promise we’ll be relieved of having to solve our own economic problems. Since today we rely on others for so much to survive & the government will control all exchanges, there’s no area it won’t control.
  • The power the planner would have over our private lives wouldn’t be less complete if he chose not to exercise it. His power doesn’t depend on if the consumer was nominally free to consume as he likes. The source of power is mostly control over production.
    • Freedom of choice in a competitive society is based on the fact that if one person refuses to satisfy our wishes, we can go elsewhere. But if we have to deal with a monopolist, we’re screwed. An authority planning the economy would be a very powerful monopolist.
      • The purpose wouldn’t be to extort maximum financial gain but would have complete power to decide what we can get & on what terms, not only what commodities but quantities & prices. They direct distribution between districts & groups & could discriminate between people. That’s why people want planning.
    • Power conferred by control over production & prices is nearly unlimited. In a competitive society, prices  depend on quantities of other things. This price isn’t determined by conscious will. If one thing is too expensive, we can try something else. Obstacles aren’t due to someone disapproving of our ends but that the means are wanted elsewhere.
      • In a directed economy, the planner would use its powers to help some & prevent the realization for others, not in our view but that of someone else of what we ought to like or dislike. It’d control what we’d consume.
  • In our capacity as consumers the will of authority will shape & “guide” our daily lives. It will be more so as producers. The 2 can’t be separated because a lot of our lives are spent at work. Work determines where we live. Our freedom to choose work is more important to our happiness than freedom to spend income during our leisure.
    • In the best circumstances, this freedom will be limited, with few choices. But we can’t be tied to one job chosen for us. If the job or the situation becomes bad, ordinarily, a man can make a sacrifice to achieve his goal. Knowing you can’t change your job makes life hell. Knowing hard working & sacrifice to make a change can make life more bearable
    • There is a role for government to facilitate information & mobility but that would involve the opposite of “planning”. Most planners promise in a world free from choice of work, we’ll be preserved. In order to plan, the must control the entry into different industries & jobs or the salaries. They’d establish control over all aspects of work. Freedom of choice will be over.
    • Even if planners just stuck to terms of employment & regulating numbers it’d be no different. Setting terms would essentially bar certain groups from entering trades.
      • In a competitive society, those with difficulty entering a field can get a start by taking financial hit & make up for it later.
      • But when an authority fixes salaries that option is gone & selection is made purely “objectively”, desire for the job plays no role in selection. Those with little qualifications or those with unconventional backgrounds are excluded permanently.
      • We will all be forced to conform to some prescribed standard that the authority fixes to simplify the task. The authority reduces the diversity of human capacities to a few categories of interchangeable units.
        • The goal of planning claims to look our for men, it’s impossible to take into account all individual likes & dislikes. The individual becomes a means to serve the “social welfare” or “the good of the community”.
  • In a competitive society most things can be had at a price. The alternative isn’t complete freedom of choice 0 but orders & prohibitions to be obeyed.
    • It’s a common reproach that anything can be had at a price. They protest the higher values brought into the market – meaning we shouldn’t be allowed to sacrifice our lesser needs to preserve the higher. They think the choice should be made for us. Important things – life, health, beauty, virtue, honor, etc. can often only be preserved at a cost & someone’s got to make a choice of what’s to be sacrificed to maintain what we want.
      • We could make deaths by cars zero if we banned cars but people don’t really want to do that. They don’t want others making that choice for us.
      • People who want this don’t want some choice made for them, they just wish that choice wasn’t necessary. They just wish to blame the economic system. They simply resent that there is an economic problem – scarcity.
    • There’s talks of “potential plenty” – hoping for economic problems to disappear. Those who use this propaganda tool can produce a plan to abolish what we call poverty. Talking about it is either stupid or dishonest.
      • But the movement still uses this tool – they claim a planned society would produce more output. But this claim is being abandoned somewhat. Socialists now support planning not because of higher output but for a just & equitable distribution of wealth – the only serious argument for planning, i.e. if we want a distribution of wealth along the lines of a pre-set standard, we have to plan everything.
        • Will this re-distribution of wealth cause more discontent & oppression than if it had never happened?
  • We’d be lying to ourselves if we opted for comfort & security of central planning thinking our personal liberties would still be intact.
    • Even in European history with regimented economic life, the planning was fairly limited. The tools they had in the past were too crude to control everything.
    • But now since the expansion of division of labor, every activity is a part of a social process. Population is too large. Switching to planning would control so much of society that it wouldn’t stop at purely economic activity because even “non-economic” activities require someone else’s activity… lead to totalitarianism.
    • It’s said that political freedom is meaningless without economic freedom but the planners don’t agree. Economic freedom isn’t freedom from care. It’s just allowing people to choose what they want & how to get it. There’s a risk & responsibility that go with that right.

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