Tuesday, August 17, 2010

The Cartoon "Road to Serfdom"

In 1944, during the war against collectivism that we call WWII, F.A. Hayek published a book in Britian. The book was called The Road to Serfdom. This book was published in the United States later the same year. Hayek was an Austrian School economist working in London at the time. He was concerned about the role of central planning in the inevitable descent of collectivism into barbarism that he had watched happen on Continental Europe. He pointed out that although such economic theory was generally begun by people of good purpose, that the Road to Serfdom is paved with such good intentions. He said:

However much we may differ when we name the culprit . . . we all are, or at least until recently, certain of one thing: that the leading ideas which in the last generation have become common to most people of good will and have determined the major changes in our social life cannot have been wrong. We are ready to accept almost any explanation of the present crisis of our civilization except one: that the present state of the world may be the result of genuine error on our part and that pursuit of our most cherished ideal have apparently produced results utterly different from those which we expected."
(F.A. Hayek (1944). The Abandoned Road. In Bruce Caldwell (Ed.). The Road to Serfdom: Text and Documents (The Definitive Edition). p. 65-66).

I first read The Road to Serfdom in college, but re-read it two years ago, and as I have often found for myself, I appreciated and understood Hayek's reasoning more fully with the passage of time. Part of the reason for this may be that my understanding of the world improved with age, and another part may indeed be that the United States has traveled further along the Road to Serfdom in the 30 years that have passed since I first read the book, and so its meaning and importance have become more immediate.

The book itself is written for the layman, and is not a text in economics. Rather, it explains the importance of economic theory to human action, particularly with respect to the problem of central planning. However, it was written in a style suited to its time, and in this age of bits, bytes, and soundbytes, where our time has become limited, those who are scrambling for a living in increasingly precarious situations may not have the time to read it.

In the early 1950's Look Magazine developed the main theme of each chapter into an illustrated pamphlet. Although the ideas are not fleshed out as carefully as Hayek did in the book, the main progression down the Road to Serfdom is well done. Here, as forshpice to actually reading the book, is a You Tube video of the Look Magazine pamphlet:

It is my hope that if you haven't yet read the book, this will whet your appetite.

CAVEAT: In the book, and even in this pamplet, the defintion of socialism that Hayek used necessarily included central planning. At that time, there was no soft, European-style socialism that had as its central focus the so-called "redistribution" of wealth via taxes and the welfare state. Hayek discusses this in his 1976 Preface to the book, which can be found in the Caldweller Edition cited above. That the work pre-dates this kind of "social democracy" does not mean that this kind of economic system is immune from the consequences of collectivism on human liberty, it only means that this way of limiting human liberty had not been invented yet.


Lily said...

I have often been thinking lately that America might be headed down the road to serfdom. I have never heard of this book - it sounds fascinating.

I think that in the case of our country, corporations will and are playing a major role in turning the citizenry into peasants. The rise of credit cards is a prime example. How many of us are in credit card debt so high it will take us years to pay it off? And then there is the health care issue - whether you approve of a government system or not, you have to agree that it is a threat to our Democracy when so many people go bankrupt trying to cover health care costs. Corporations exist for one reason, and if people's lives get destroyed in their quest for profit, that is just too bad.

--Lily Ribeiro (505stop.com)

Elisheva Hannah Levin said...

Lily, the situation with regard to mega-coporations is complex. This is because corporations that use their influence with governments to get regulations written to favor them, are indeed part of the problem. But collectivism allows this, by encouraging citizens to believe that it is government's job to do this, thus enshrining corporatism as our economic system, rather than the free market.

With respect to credit card debt, blaming the corporations is disingenuous. "The fault, dear Brutus, is not in our stars but in ourselves . . ." No one forced you or anyone else to go into debt to these large extents. Perhaps I am bit older than you, but in my day, only very wealthy people who could afford them had credit cards. The rest of us lived within our means.
Credit Cards are an easy way to borrow money, but they carry a high rate for the use of that money because there is no collateral. They should be reserved for emergencies or used to make purchases within the means of the user to pay off every month. No one forced Americans to go into debt to these absurd extremes, rather it was lack of maturity in the population, the refusal to delay gratification that created the mess for individuals who chose to go far beyond their means into debt.
Caveat emptor! Let the buyer beware!

With respect to your statement on health care, first a correction. Our country is not a democracy. It is a Constitutional Republic. Our founders understood that democracies fall quickly as soon as people learn that they can vote themselves continuing bread and circuses on the backs of those who are forced to pay for it. A Constitutional Republic means that not everything can be voted upon, because the individual rights of each citizen cannot be violated by the government. Further, in our Republic, the mission of the federal government is limited to the protection of the rights of individual citizens.

With respect to healthcare, the high costs have been caused in large part by regulation of the insurance system, which was put in place by--you guessed it--a few large insurance companies that didn't want any innovation that would cause them to have actually compete with new products.

All business is about profit--because people expect to get paid for their work and to increase their wealth. There is nothing wrong with that! What is wrong is that over the years our government has colluded with certain corporations to favor them over others, so that the customer has no power to take his money elsewhere.

Elisheva Hannah Levin said...
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Lily said...

Yes - you got me on the Constitutional Republic thing - but it still sounds better to say "a threat to our Democracy" than "a threat to our Constitutional Republic." So much cleaner and shorter...

But factual inaccuracies aside, my main point in the previous post simply is this: Corporations have one purpose - to make money for their shareholders. They do not operate with the public's best interest at heart, and they have no conscience. Many times their products and services help society, but other times they do the opposite.

We the People of the United States have let ourselves be blown to the left and right by every wind of corporate advertising that tells us what we should want out of life, what we need to be happy, and how we can "keep up with the Jones's." Ultimately, the fault rests with us, the American People for not educating ourselves on the dangers of credit cards, fast food, whatever, for falling temptation to adjustable rate mortgages, big SUV's, and thinking that events in the Middle East don't affect us.

This process of Americans becoming less attuned to world events and more susceptible to buying products we shouldn't, has been exacerbated by a mainstream media that has also become enslaved to the bottom line. A few decades ago, many TV stations and newspapers were run at a loss, and had large foreign bureaus. In the 80's and 90's many of these companies merged or were bought, and the focus turned to news that was less costly to produce, such as "fluff" stories and grisly murders. On the eve of September 11, most stations were speculating on the disappearance of Chandra Levy, and in fall of 2008, the focus was on gas prices. The corporate-run media does not tell us what we need to know, and that is why sites like yours and mine are so important.

Americans need to get to the point where we regard global corporations with calculating shrewdness. Do we really need what they are offering? Can we see past the clever manipulations and stand strong in the face of tricky financial gambles and yummy, cheap food that may pose a threat to our health? If America is to avoid the road to serfdom, we need to all wake up and throw off the chains of debt, and educate ourselves into enlightened citizens. Nobody else is going to do it for us - not global corporations, and not the government that has become their puppet.

Elisheva Hannah Levin said...


2) Calling something by the wrong name because it comes more trippingly off the tongue is an odd way to have a discussion. It makes your words an evasion of reality, and only confuses the others in the discussion as to what you mean. A good shorthand for our system of government is to simply say "Republic"--that's not terribly convoluted.

2) You seem terribly confused about the purpose of a corporation. It exists to produce something, pay the workers and turn a profit in order to make a return on the investment of the stockholders. That's it. A corporation that does not turn a profit would--in a free market--go out of business quickly, and the capital would be sold to return some money to the investors. The sale would put that capital to work again in order to create wealth.

3) I don't know what you mean by "public interest." That's a collectivist term that implies that a group of people are all the same in some way. Individuals have interests, and they differ. One thing I learned as a biologist is that even siblings or related individuals in packs have different interests. There is no such thing as "public interest" except the differig interests of members of a community. And human beings, like certain other social mammals, have very highly developed individual personalities and desires. This is why we place such a high value on our liberty.

I agree with your assessment of the desires of our society, but the fault once again lies within ourselves. Media outlets are corporations--and their job in the world is to provide a service that people will pay for so that they can pay their overhead and turn a profit. I spent some time in the 1970's in the Soviet Union, where people were forced to memorize the "news" that the Party apparatchiks thought was important. It was pathetic--the people had no way of discerning that much of what they "knew" about the world was incomplete or outrigt lies. At least with all the niches for information in a somewhat free society, people can get the information important to their interests, and have an opportunity to discern what is true or not.

Lily said...

Research the history of the corporation. When our country was founded, the only corporations that were allowed to exist were ones that were founded for a particular purpose, ie, building bridges. They were only allowed to exist for a limited time, ie 20 years. When the time period was up, they were disbanded and their assets divided among the members. If a corporation engaged in activities that harmed the public interest, states had the authority to disband them. It was only in the late 1800's that corporations came to be vested with all kinds of "rights" that ultimately gave them more power than individuals. It was only in the last 100 years that the profit motive became their sole purpose for existence. As I stated in my earlier comment, the profit motive has led to many amazing technological developments, but it has also led to a situation where our lives are "cheapened" (this is just an opinion - some people think global corporations are the greatest thing since the invention of writing). Anyway, like I said in my last comment, Americans simply need to realize that corporations do not exist to provide us great customer service, or to make us happy. They want our money, pure and simple.

If you want a really exhaustive definition of the public interest, a good starting point is this blog post http://www.anselmphilosophy.com/read/?p=57. My concept of the public interest comes from the Bible - basically it is the Golden Rule. Some think the Bible is an outdated book, but I believe that one day we all will stand before God and give an accounting of our deeds. The profit motive will not be an excuse for leaders of those corporations who have destroyed the homes of indigenous people, fouled the air, and paid their employees barely enough to survive while their CEO's fly around on corporate jets.

I am a business person too, but I believe it is possible to make a profit without making other people's lives miserable. There are many corporations making great profits without destroying anybody's lives.

Elisheva Hannah Levin said...


(This time, I've had coffee and I'll get the numbering right:

1) the history of corporations pre-dates the United States, and began in Holland and England. The purpose of these companies was trade--and the reason to incorporate was to limit the liability of individual investors--creating a "veil" between the liability of an individual and his family and the liability of the corporation. This is what made such ventures as the East India Company, the Dutch East Indies Company, the Virginia Company and so forth, possible. Nevertheless, from the beginning, their markets were not free because of too much coziness and control between governments and the companies. Favored companies did not have to have a good business plan and did not have to suceed, because they'd be bailed out by the government of England. Other companies were hit with regulation to make sure they didn't challenge to status quo too much. In the American colonies, which were left alone, the colonists side-stepped regulations (smuggling, blockade running, etc.) in order to avoid ruinous tariffs and taxes. It was not in their interest to enrich the English Crown at their own expense. That set up the economic conditions that led to the American Revolution.

2) the late 19th century corporate law in the United States brought in the idea of "public interest"--which is a collectivst notion--in order to allow the government and favored corporations to control and collect the wealth created by others. The progressives believed that because they were more educated and powerful, that they had the right and the duty to define the interests of the "public". The "public interest" became identical to the interests of certain politicians, bankers and their cronies. Check out the trifecta of 1913--the 16th and 17th amendments and the founding of the FED--to see whose interest was being served as the "public interest." This leads me to our fundamental disagreement:

3) There is no such thing as "society" or "the public interest" except when discussed as the loose aggregation of individual decisions and interests. This is so because human beings are autonomous individuals--we are not members of a hive, and we resist being "assimilated" into the Borg Collective. Each individual has his or her own separate interest. When it coincides with that of another or others, trades may be made to the benefit of all. To be in the interest of both/all parties, that trade must be made freely and without force. The outcome must be in the interest of every party to the trade. This is the "trader principle."
The only alternative to free association and trade is force. Force can be defined as physical (violence) or as mental (fraud, intimidation).
I believe that the INITIATION of force against another human being(s) is always immoral. (I capitalize the word initiation to emphasize it, since most people skip over it or fail to comprehend what it means. I do believe a person has the right to defend his life, liberty and property by whatever force is necessary against the person(s) who initiated force against him.)

In summmary, you and I disagree on two points:
1) that there is such a thing as a collective interest ("public interest")that can be meaningfully defined; and
2) that a collective has the right to initiate force against the rights of individuals because it is a collective.
On point 1, I say "no" and you say "yes."
On point 2, I say "no" and you say "yes."

My questions to you remain: What is the "public interest"? How is it determined? Who gets to determine it?

Elisheva Hannah Levin said...
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