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This is how you fabricate moral panic about social programs.
This is a difficult book to review because it was written in the 1940s within a certain cultural and political milieu but I’m also reading it as a person living in 2021 where this book has grown in prominence and has taken on new meaning. I will therefore give a brief review of what I think of this famous work in isolation and which is followed by a critique of the modern significance and the harm that its ideology has perpetrated. Unfortunately for Hayek, we have the benefit of the last 50 years which serve as repudiation of his doctrine. There is incredible irony that the very neoliberal policies put in place in the 1970s, highly influenced by people like Hayek, have led to what could be described as a neo feudal state today.
It extremely important to nail down definitions. The Road to Serfdom is a polemic against socialism. Here is where definition is crucial: socialism for Hayek specifically means total state control over the economy. So socialism for Hayek is probably what we would call communism today. Hayek’s conclusions about communism are fairly self-evident: it’s bad. Having the government control the means of production and set prices? No one wants that. Hayek has a lot of common sense stating that, of course, the state must provide an appropriate legal framework in which free trade can operate to suppress monopolization and labor exploitation. He also discusses the inevitable disruption and monopolization that comes with tech advancements and how there should be state measures in place to step in. I agree with him when he says that if the state had all control over the economy, they would have to assign arbitrary moral value to jobs and that the government would be in total control of employment, salary and livelihood. He states that this would inevitably lead to the in-group (probably the racial dominant group) inevitably exploiting the minority group. Keep in mind, Hayek is highly influenced by Nazi Germany and these are the conclusions he is drawing and witnessing within the borders of Germany.
The basis and foundation of his argument about central economic planning is sound, his slippery slope reasoning that follows is mostly entirely invalid. Hayek believes that any amount of social planning or social programs will invariably lead to totalitarianism. He makes this assertion many times with the debate fallacy of slippery slope reasoning. Hayek has an incredibly naive trust in laissez faire economics. The man actually believes in the Adam Smith myth of free markets. He believes that free markets operate separately from the state without recognizing the truth: the markets have always been in collusion with the state. They are two sides of the same coin. He also went as far to say that social planning cannot happen because of racial and ethnic differences—that the racial majority will never bow to the needs of the outgroup. He also, incredulously, believes that socialism is to blame for monopolized markets and has unfettered trust that free markets will limit monopolization. It was at this point I was really rolling my eyes. Hayek doesn't see the truth: no society is purely capitalistic or socialistic. That's a fairy tale.Not once does Hayek provide any support for his argument that even the meekest social welfare program will inevitably lead to totalitarianism. Basically, he starts on a foundation against communism and runs with it with very little evidence thereafter.
It’s important to review the impact of people like Hayek, Friedman and the Chicago boys at the time. People like Hayek helped the winds turn in the 1970s with the famed Powell memo and the Business Round Table which redefined freedom as unfettered corporate latitude. The public listened and agreed. Hayek helped usher in the age of neoliberalism from 1970 to present day. And what has been the fallout? Well, we have the greatest wealth inequality in perhaps the history of humankind. You have 40 year wage stagnation for half of all Amercans with no “reinvestment” into the labor class that trickle down economics is supposed to employ. We have vast financialization, leveraged buyouts, increased shareholder power, stock buybacks, enhanced dividends and CEO golden parachutes. We possibly have the most monopolized markets that have ever existed in which the average American rents their labor for not even a living wage. Sounds a little like serfdom doesn’t it?
And what about the social programs used by the US, UK and other western countries? Have we had a totalitarian regime suddenly fall out from all this terrible “socialism”? Of course not. Social welfare does not lead to Nazism. Sorry, that is completely nonsensical. This is how you fabricate moral panic. This is how you fabricate wars that have destabilized, destroyed and killed millions of people in Asia and South America. There is nothing more dangerous than an idealistic economist. I believe Hayek was well intentioned when he wrote this book but his theories have been used to exercise extreme and flagrantly brutal economic and foreign policies that have resulted in poverty, war and death. I make no exaggeration, the Chicago Boys ideas have resulted in economic devastation and have enriched the very few.
It’s time to reject neoliberalism, the myth of free markets and see the truth: totalitarianism can come from any ideology. We are living with the worst wealth disparity in history directly from ideas promulgated by Hayek’s acolytes. It’s time to move on
This is a difficult book to review because it was written in the 1940s within a certain cultural and political milieu but I’m also reading it as a person living in 2021 where this book has grown in prominence and has taken on new meaning. I will therefore give a brief review of what I think of this famous work in isolation and which is followed by a critique of the modern significance and the harm that its ideology has perpetrated. Unfortunately for Hayek, we have the benefit of the last 50 years which serve as repudiation of his doctrine. There is incredible irony that the very neoliberal policies put in place in the 1970s, highly influenced by people like Hayek, have led to what could be described as a neo feudal state today.
It extremely important to nail down definitions. The Road to Serfdom is a polemic against socialism. Here is where definition is crucial: socialism for Hayek specifically means total state control over the economy. So socialism for Hayek is probably what we would call communism today. Hayek’s conclusions about communism are fairly self-evident: it’s bad. Having the government control the means of production and set prices? No one wants that. Hayek has a lot of common sense stating that, of course, the state must provide an appropriate legal framework in which free trade can operate to suppress monopolization and labor exploitation. He also discusses the inevitable disruption and monopolization that comes with tech advancements and how there should be state measures in place to step in. I agree with him when he says that if the state had all control over the economy, they would have to assign arbitrary moral value to jobs and that the government would be in total control of employment, salary and livelihood. He states that this would inevitably lead to the in-group (probably the racial dominant group) inevitably exploiting the minority group. Keep in mind, Hayek is highly influenced by Nazi Germany and these are the conclusions he is drawing and witnessing within the borders of Germany.
The basis and foundation of his argument about central economic planning is sound, his slippery slope reasoning that follows is mostly entirely invalid. Hayek believes that any amount of social planning or social programs will invariably lead to totalitarianism. He makes this assertion many times with the debate fallacy of slippery slope reasoning. Hayek has an incredibly naive trust in laissez faire economics. The man actually believes in the Adam Smith myth of free markets. He believes that free markets operate separately from the state without recognizing the truth: the markets have always been in collusion with the state. They are two sides of the same coin. He also went as far to say that social planning cannot happen because of racial and ethnic differences—that the racial majority will never bow to the needs of the outgroup. He also, incredulously, believes that socialism is to blame for monopolized markets and has unfettered trust that free markets will limit monopolization. It was at this point I was really rolling my eyes. Hayek doesn't see the truth: no society is purely capitalistic or socialistic. That's a fairy tale.Not once does Hayek provide any support for his argument that even the meekest social welfare program will inevitably lead to totalitarianism. Basically, he starts on a foundation against communism and runs with it with very little evidence thereafter.
It’s important to review the impact of people like Hayek, Friedman and the Chicago boys at the time. People like Hayek helped the winds turn in the 1970s with the famed Powell memo and the Business Round Table which redefined freedom as unfettered corporate latitude. The public listened and agreed. Hayek helped usher in the age of neoliberalism from 1970 to present day. And what has been the fallout? Well, we have the greatest wealth inequality in perhaps the history of humankind. You have 40 year wage stagnation for half of all Amercans with no “reinvestment” into the labor class that trickle down economics is supposed to employ. We have vast financialization, leveraged buyouts, increased shareholder power, stock buybacks, enhanced dividends and CEO golden parachutes. We possibly have the most monopolized markets that have ever existed in which the average American rents their labor for not even a living wage. Sounds a little like serfdom doesn’t it?
And what about the social programs used by the US, UK and other western countries? Have we had a totalitarian regime suddenly fall out from all this terrible “socialism”? Of course not. Social welfare does not lead to Nazism. Sorry, that is completely nonsensical. This is how you fabricate moral panic. This is how you fabricate wars that have destabilized, destroyed and killed millions of people in Asia and South America. There is nothing more dangerous than an idealistic economist. I believe Hayek was well intentioned when he wrote this book but his theories have been used to exercise extreme and flagrantly brutal economic and foreign policies that have resulted in poverty, war and death. I make no exaggeration, the Chicago Boys ideas have resulted in economic devastation and have enriched the very few.
It’s time to reject neoliberalism, the myth of free markets and see the truth: totalitarianism can come from any ideology. We are living with the worst wealth disparity in history directly from ideas promulgated by Hayek’s acolytes. It’s time to move on