“The Road to Serfdom (1944) – F.A. Hayek, Chapter 9 – Security & Freedom

  • “Economic Security” is often represented as a necessary condition of real liberty. Independence of mind is rarely found in those with no confidence of being able to survive on their own. But the term “economic security” is vague & because of the demand for this security, it may be a danger to freedom.
    • When security is understood in too absolute a sense, striving for it becomes the biggest threat to freedom.
    • There are 2 kinds of security:
      • 1 – Limited – which can be had for all & there’ll be no real privilege in it. It is a security against severe physical privation with minimum sustenance for all.
      • 2 – Absolute – free society can’t have this be achieved for all. It is a security of a given standard of life.
        • The distinction is between something that can actually be done outside of the market & something that can only be done by controlling or abolishing the market.
        • The 1st is doable for the poorest & sickest of society, even without making competition any more or less effective.
    • Economists hope to use monetary policy to prevent mass unemployment or implementing the timing of public works projects.
      • There may be more restrictive acts on competition to follow.
  • Planning for security has an insidious effect on liberty. It is designed to protect individuals against falling income that is inseparable from competition.
    • This is just a demand for a “just” income commensurate with subjective merits & not one’s efforts. This security is irreconcilable with freedom to choose one’s job.
    • In a system where people choose their trade based on desire & skill, the pay in these trades needs to be linked to their usefulness to the rest of society. This usefulness to society may change due to unforeseen circumstances. Inventions often put men out of work.
    • But the demands to be protected from these changes means the government will have to protect people not just from starvation but to secure them in their income & shelter them from the market vicissitudes.
    • Guaranteed income can’t be given to all if we’re to allow freedom to choose one’s job. If given to some & not others, it’d be a privilege for some & at others’ expense.
    • It necessarily extends from one group to another & on to another. Those left outside the security of government protection are in even worse shape than before because their alternate options are increasingly shrinking.
      • The value of privilege of security grows & demand for it grows until there’s no price people won’t pay for it.
    • The authorities will have complete discretion of what is to be done, if it could have been prevented or if the supplicants are worthy of protection.
      • But the usefulness of the job (or lack thereof) doesn’t come into it. In competition, the job stays if it’s useful & disappears if it isn’t.
    • If under a planned system, men can’t respond to market-induced incentives & conditions to urge men away from some industries & into others, they will be ordered to do so.
      • When an income is guaranteed, a man is neither allowed to stay or leave because he likes his job or not, nor allowed to choose another because he hates his current one. The choice is not his to make.
    • The problem of adequate incentives is discussed, as a problem of those willing to do their best. If we want the best from people, we have to make it worth their while. We need to give them the choice if they can judge. They have to have a benchmark for the job’s relative value to society with respect to other occupations.
      • Without this, nothing of value or without value is discernible. He can’t tell if he should enter a trade, stay or leave it based on how well they pay people based on what society wants.
      • Men won’t give their best for long unless they get something out of it. External pressure is needed for them to give their best.
      • Similar problems arise for managers. There’s a problem of discipline. You can’t fire a protected worker. You can’t induce him to work harder through the prospect of more money.
    • In a competitive economy, the last resort is the bailiff (don’t pay your bills, you get evicted from your home). In a planned economy, it is the hangman (you don’t work, you will be executed by the state).
      • The manager’s powers will have to be increase to threaten workers to work & to punish those who do not.
      • The worker can’t do anything based on market incentives but only from threats from the manager & the government. He can’t even leave his job & if he could, where would he go?
        • He might have security as long as he satisfies his superiors but at the expense of his freedom & his life.
    • The conflict is between 2 irreconcilable types of social organization often referred to as commercial & military types of society.
      • The military represents the planned society where the work & worker are allotted by an authority. The individual can be conceded full economic security but it’s inseparable from restrictions on liberty. The hierarchical order of the military is the security of the barracks.
        • It’s feasible for those in a free society to live this way for those who prefer it. It very well could provide a minimum income for people.
        • But proposals based on this are so unpalatable to those unwilling to surrender their freedom. Those who want it demand that the unwilling live that way anyway.
  • In a society used to freedom, most people won’t trade freedom for security. But the policies that hand out privilege of security are creating conditions where striving for security will be greater than love for freedom. The essential element of security competition provides is being crowded out.
    • In the market system, security can be granted to particular groups only through planning called “restrictionism”. In this, control or limitation of output is done so prices secure an “adequate” return – the only way producers can be guaranteed a certain income. That reduces opportunities for others.
      • The producer is protected from underbidding & many are precluded from sharing in its prosperity.
      • Every restriction reduces the security of all those outside it. As the number secured increases, those outside become less secure & the field of opportunities are reduced. The excluded will try even harder to improve wages & security.
    • In England & America, such restrictions are only recent & haven’t realized their full consequences.
    • The hopelessness of those shut out from government security separates them from those who have the highly-coveted secured jobs.
    • The spirit of socialism would have you believe that the privileged would share its security with the unfortunate, & sacrifice on their behalf. But they feel entitled to the income & job/industry security & refuse to do so. There’s no worse exploitation than this – all made possible by “regulation” of competition.
    • The more we try to provide full security, the greater the insecurity becomes of the under-privileged & the wide the gap between the protected & those who are left out in the cold. This makes security more highly prized.
      • A new set of social values appears. Independence no longer gives rank & status but security does. This makes young men suitable for marriage, or else makes them social pariahs.
  • Trying to get security through restriction transform society.
    • The development is sped up by socialist teaching – disparaging all economic activities involving economic risk & moral disapproval on the gains from them. Commercial enterprise is disreputable & profit is immoral, employing 100s is exploitation. But somehow commanding 100s is seen as honorable…
    • The change of society’s structure is due to the victory of the idea of security over independence best shown by Germany. Nothing about Germany had been particularly militaristic. But as civil life became more deliberately organized, people preferred to be functionaries & in almost all spheres of life, income & status were assigned & guaranteed by an authority.
    • It’s unlikely the spirit of freedom can be crushed outright but it’s not sure that people can resist the slow smothering of it as has been done in Germany. There, distinction & rank can only be achieved by becoming a civil servant. There, doing one’s assigned duty is seen as better than being useful to society. The alternative to security is being in a precarious position, being despised for commercial success or failure.
      • Liberty becomes a mockery when it can only be bought by the sacrifice of nearly all good things on earth. Most people wouldn’t do that.
    • Some security is needed if freedom is to prevail. But if they are to survive or succeed, security must be outside of the market & competition is to be left unobstructed.

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