“The Road to Serfdom (1944) – F.A. Hayek, Chapter 8 – Who, Whom?

  • A common complaint about competition is that it’s blind, even though justice has historically been portrayed as blind. It’s important that we not know who will succeed either through luck or skill & not based on someone’s views on particular people.
    • The choice is where it’s the will of a few people that decides who gets what & a system of unforeseeable circumstances where ability & chance are the determinants of outcomes.
    • In a free enterprise system, chances aren’t equal because it’s based on private property & inheritance. There might be a case for reducing the inequality based on inheritance.
    • While the poor have fewer opportunities in a competitive system than the rich, they are freer than a planned system. In competition, a man who starts off poor is less probable than one who inherits property. But it depends solely on him & not on the favors of the powerful. Nor is anyone stopping him from trying to get ahead.
    • We forget that badly paid unskilled labor has more freedom than entrepreneurs in collectivist countries or engineers & managers for that matter.
      • He can change jobs, change location, state his views, spend his leisure as he likes. He may have to pay a high price but nothing is stopping him from doing so.
    • The ideal of justice socialists would be satisfied by is abolition of private property but with present income differences as they are now. Transferring all that property in means of production would be done to affect all income. The demands that the state should use to plan – to make wealth disappear & subsequently incomes would all be the same.
    • But this is not just taking power from individuals & giving it to the state. There’s a power created that doesn’t exist under competition. As long as property is divided, no one person has exclusive power & nobody is tied to a property.
    • The system of private property is the best guarantee of freedom for those who own it & those who don’t. Control over the means of production being dispersed means no one has complete power over us & individuals can decide what to do for themselves. If the means were in a single hand, that hand would have complete control over us.
      • Would a religious or racial minority be freer without property so long as his fellow members can hire him than if he no one owned any property at all?
      • Would the power a millionaire has over us under a competitive system not be less than a bureaucrat would have under a planned system?
    • Communist, Max Eastman saw this. He noted that private property was the thing that gives man a degree of freedom & equality. Marx had hoped by abolishing it, the freedom would be infinite. But he also said the evolution of private capitalism was necessary for democratic freedoms. He never thought they’d disappear once the market disappeared.
  • The planner’s job seems impossible – juggling social & political difficulties. He might hesitate before meting out authority. Those who realize what it involves would most likely confine planning to production as a “rational organization of industry” & leaving the distribution of income to impersonal forces. However, given the choice, this distribution would be preferred to rules of equity & fairness – avoiding extremes.
    • There’s a close interdependence of all economic phenomena which makes it hard to stop planning. The planner will have to make controls all-comprehensive. Economic considerations would be reinforced by social & political tendencies.
    • Once the individual’s life is determined by the authority, people’s attitudes change. There’ll always be “unjust” inequalities, unmerited disappointments, misfortunes, etc. When those happen in a consciously  planned society, the feeling will be different.
    • Inequality seems more tolerable as a result of impersonal forces than by design. Prolonged mass unemployment may be bad but it’s more tolerable if as the result of the market than through a bureaucrat’s planning. The planner decides if a person is needed or useful for a job & society.
    • People will be more upset that a government authority has chosen joblessness, poverty, etc. arbitrarily for us for some plan.
    • Once the government has started planning for justice, it can’t refuse responsibility for anyone’s fate or position. We’ll know who’s better or worse off not because of uncontrollable forces but because of an authority’s will. Our efforts to improve our lot won’t be toward work but toward influencing the authority to make our lives better.
  • Once the government starts planning, the economic problem becomes a political problem. If the coercive power of the state is the only thing that decides who gets what, this power is the only one worth having. No economic or social questions would not be political.
    • Even Lenin asked “Who? Whom?” I.e. Who plans whom? Who directs & dominates whom? These becoem the forces of politics – who has supreme power?
    • 2 distinctions are to be made:
      • 1 – Measures will be taken without knowing who’ll they’ll affect.
      • 2 – The extent to which government activity decides what a person gets depends on the government. The difference between a free & totalitarian system.
    • The difference between a liberal & planned system is best demonstrated by Nazi complaints of “artificial separation of economics & politics” & the demand for politics to dominate the economy.
      • The complaint is that the economic is independent of government aim & direction. But the alternative is that there should be a single power with control over all human ends & positions in society.
  • A government wants to direct economic activity will use its power to realize someone’s ideal of distributive justice. How will it use that power? What principles will it follow? What is the scale of values it will use?
    • Only one general principle: equality, complete & absolute of all individuals in all things subject to human control. If that were desirable, it’d give the vague idea of distributive justice a clear meaning & would give the planner some guidance.
    • No socialist movement aimed a complete equality has ever had big support. It has promised to give a more just & more equal distribution – not absolute. Absolute equality would determine the planner’s goals.
      • Problems of merit would be answered under absolute equality. But under greater equality, there is no answer. Using terms like “common good” or “social welfare” is not definite. That doesn’t free us from deciding every instance of merit & gives us no help. It only says, take from the rich.
  • Most people can’t admit that we don’t have the moral standards to answer such questions. We all have an idea of a “just price” & “fair wage”. Even if we don’t agree on what those are, you could consolidate definite standards.
    • Our standards are derived from the competitive regime. Once competition left, the standards would no longer hold.
    • “Just” price usually means customary price in past experience people expect without monopolistic exploitation. The exception to this used to be the claim that workers had to “full produce of labor” that social doctrine draws from.
      • Few socialists today believe output under a socialist regime would be the same as in a competitive system.
      • Once the worker is denied the “full produce of labor”, the problem of how to divide the produce among the workers arises.
    • “Just price” or “fair wage” could conceivably be determined objectively if the quantities need were independently fixed. If given irrespective of cost, the planner might try to find what price & wage is necessary to produce enough to satisfy demand.
      • This means he will exercise direct control over people by determining wages, prices & employment in industries.
    • We are likely to think of incomes in a given trade as uniform. The differences between the incomes of the most successful & least successful. There’d be an attempt at standardization by creating categories but there’d have to be a sort of discrimination between individuals fixing individual incomes or allocating them to categories.
      • JS Mill – A fixed rule might be acquiesced in, so might be chance or external necessity. But having a handful of human beings weigh everybody in the balance to give & take away at their pleasure would not be accepted except that they are seen as more than mean with supernatural terrors.
  • Difficulties don’t lead to clashes so long as socialism is just the aspiration of a limited & homogeneous group. The clashes come only when socialist policy is attempted with groups compromising a majority.
    • The question comes to which set of ideals will be impose. Successful planning requires the creation of a common view.
    • Socialists hoped to solve the problem with education. But knowledge can’t create new ethical values. The acceptance of a creed is required to justify a particular plan – required of a common Weltanschauung.
    • The Fascists & Nazis weren’t innovators. Things they did were originally done by socialists – the idea that a political party embracing all activities from the cradle to the grave as a matter of government affairs.
      • It wasn’t the Fascists who first collected children to indoctrinate them but the Socialists. The kids were removed from outside society so they wouldn’t be infected by other views.
      • It also got them used to organization of cells & devices for the permanent supervision of private life. Balilla & Hitler Youth were modeled after socialist programs.
  • As long as the Socialist movement is confined to the interests of a particular group, creating a common view is pretty simple. The movement is concerned with the status of one group & raise it with respect to others.
    • The problem changes when, in advancing toward Socialism, it becomes clear that everyone’s status & income are determined by the state. An individual then can only maintain or improve his status as a member of an organized group.
    • The battle among various pressure groups at this point won’t actually get the poor’s or majority’s interests to win. The older socialist groups who looked after a particular group, used to look after industrial workers.
      • Once that movement succeeded, other lower classes looked to improved their status.
    • Social theory & tactics are based on the idea of division of society into 2 classes with conflicting interests: capitalists & industrial workers. Socialism relies on the disappearance of the middle class. This class is usually the source of the leaders of the labor movement. As the position of the middle class deteriorated, the middle class began to dislike the capitalist system & wanted a sharing of wealth according to their ideas of justice which ended up different from those of the older socialists.
      • The older socialist groups focused on the support for one group. Once that group’s status rose, the relative position of others worsened. Those whose position worsened wanted to improve it. By this, the industrial labor class lost its power in the socialist movement.
    • No single economic factor has contributed more to help these movements than the envy of the unsuccessful professions whose incomes were less than the industrial workers.
      • The average salary of the rank & file Nazis & Fascists was much lower than the trade-unionists & members of older socialist parties.
    • The conflict between the Fascists or Nazis & older socialist parties must be regarded as the kind of conflict bound to arise between rival socialist factions. There was no difference between them about the will of the state which should assign to each person his proper place. But there were big differences about what the proper places of different classes & groups would be.
  • Old socialist leaders found it hard to understand with every extension in use of socialist methods, the resentment of poor large classes should turn against them. Older socialist parties could easily do joint action with employers & large classes were left out of this.
    • The more prosperous sections of the labor movement seemed to belong to the exploiting rather than to the exploited class.
    • The resentment of the lower middle class that Fascists recruited from was intensified by the fact that their education made them aspire to directing positions & felt entitled to be there.
      • Younger generations went into jobs where risk was gone & security was guaranteed.
      • They were ready to use the methods of older socialists but wanted to use them for a different class. The movement attracted all those who didn’t want the methods to be used for industrial workers.
    • The new socialists used the old tactics & took over ideals of liberalism. They believed socialism would solve all problems. Fascism grew out of an experience of an increasingly regulated society learning that democracy & socialism were incompatible. Their tactics had already been developed by socialists.
    • They knew the strongest group which rallied enough supporters in favor of a new hierarchy for society & promised privileges to the classes to which they appealed.

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