Friedrich Hayek ex Wiki
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Friedrich August Hayek CH (8 May 1899 – 23 March 1992), born in Austria-Hungary as Friedrich August von Hayek and frequently known as F. A. Hayek, was an Austrian, later British,[1] economist[2] and philosopher best known for his defense of classical liberalism. In 1974, Hayek shared the Nobel Memorial Prize in Economic Sciences (with Gunnar Myrdal) for his "pioneering work in the theory of money and economic fluctuations and ... penetrating analysis of the interdependence of economic, social and institutional phenomena".[3]Hayek was a major political thinker of the twentieth century,[4] and his account of how changing prices communicate information which enables individuals to coordinate their plans is widely regarded as an important achievement in economics.[5] He also contributed to the fields of systems thinking, jurisprudence, neuroscience, and the history of ideas.[6]
Hayek served in World War I and said that his experience in the war and his desire to help avoid the mistakes that had led to the war led him to his career. Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. He spent most of his academic life at the London School of Economics (LSE), the University of Chicago, and the University of Freiburg.
In 1984, he was appointed as a member of the Order of the Companions of Honour by Queen Elizabeth II on the advice of Prime Minister Margaret Thatcher for his "services to the study of economics".[7] He was the first recipient of the Hanns Martin Schleyer Prize in 1984.[8] He also received the US Presidential Medal of Freedom in 1991 from president George H. W. Bush.[9] In 2011, his article The Use of Knowledge in Society was selected as one of the top 20 articles published in the American Economic Review during its first 100 years.[10]
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A good bloke.
The Road to Serfdom - available from Amazon
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The Road to Serfdom is a book written by the Austrian-born economist and philosopher Friedrich von Hayek (1899–1992) between 1940–1943, in which he "warned of the danger of tyranny that inevitably results from government control of economic decision-making through central planning",[1] and in which he argues that the abandonment of individualism and classical liberalism inevitably leads to a loss of freedom, the creation of an oppressive society, the tyranny of a dictator and the serfdom of the individual. Significantly, Hayek challenged the general view among British academics that fascism was a capitalist reaction against socialism, instead arguing that fascism and socialism had common roots in central economic planning and the power of the state over the individual.The Road to Serfdom is among the most influential and popular expositions of market libertarianism and remains a popular and influential work in contemporary discourse, selling over two million copies, and remaining a best-seller.[2][3]
The Road to Serfdom was to be the popular edition of the second volume of Hayek’s treatise entitled “The Abuse and Decline of Reason”,[4] and the title was inspired by the writings of the 19th century French classical liberal thinker Alexis de Tocqueville on the “road to servitude”.[5] The book was first published in Britain by Routledge in March 1944, during World War II, and was quite popular, leading Hayek to call it “that unobtainable book”, also due in part to wartime paper rationing.[6] It was published in the United States by the University of Chicago Press in September 1944 and achieved great popularity. At the arrangement of editor Max Eastman, the American magazine Reader's Digest published an abridged version in April 1945, enabling The Road to Serfdom to reach a wider popular audience beyond academics.
The Road to Serfdom has had a significant impact on twentieth-century conservative and libertarian economic and political discourse, and is often cited today by commentators.
Publication
But when economic power is centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery. It has been well said that, in a country where the sole employer is the state, opposition means death by slow starvation.
The Road to Serfdom, "Planning and Power."[7]The book was originally published for a British audience by Routledge Press in March 1944 in the United Kingdom and then by the University of Chicago Press in September 1944. The U.S. publisher’s expectation was that the book would sell between 900 and 3,000 copies. The initial printing run of 2,000 copies was quickly sold out, and 30,000 copies were sold within six months. In 2007, the University of Chicago Press estimated that more than 350,000 copies had been sold.[8]
A 20 page version of the book was then published in the April 1945 issue of Reader's Digest,[9] with a press run of several million copies. A 95 page abridged version was also published in 1945 and 1946.[10] In February 1945 a picture-book version[11] was published in Look magazine, later made into a pamphlet and distributed by General Motors. The book has been translated into approximately 20 languages and is dedicated to “The socialists of all parties”. The introduction to the 50th anniversary edition is written by Milton Friedman (another recipient of the Nobel Prize in Economics 1976).
In 2007, the University of Chicago Press issued a “Definitive Edition”, Volume 2 in the “Collected Works of F. A. Hayek” series. In June 2010, the book achieved new popularity by rising to the top of the Amazon.com bestseller list following extended coverage of the book on The Glenn Beck Program. Since that date, it has sold another 250,000 copies in its print and digital editions.
Summary
Hayek argues that Western democracies, including the United Kingdom and the United States, have “progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past”.[12] Society has mistakenly tried to ensure continuing prosperity by centralized planning, which inevitably leads to totalitarianism. “We have in effect undertaken to dispense with the forces which produced unforeseen results and to replace the impersonal and anonymous mechanism of the market by collective and ‘conscious’ direction of all social forces to deliberately chosen goals.”[13] Socialism, while presented as a means of assuring equality, does so through “restraint and servitude”, while “democracy seeks equality in liberty”.[14] Planning, because coercive, is an inferior method of regulation, while the competition of a free market is superior “because it is the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority”.[15]Centralized planning is inherently undemocratic in Hayek's view, because it requires "that the will of a small minority be imposed upon the people".[16] The power of these minorities to act by taking money or property in pursuit of centralized goals, destroys the Rule of Law and individual freedoms.[17] Where there is centralized planning, "the individual would more than ever become a mere means, to be used by the authority in the service of such abstractions as the 'social welfare' or the 'good of the community'".[18] Even the very poor have more personal freedom in an open society than a centrally planned one.[19] "[W]hile the last resort of a competitive economy is the bailiff, the ultimate sanction of a planned economy is the hangman."[20] Socialism is a hypocritical system, because its professed humanitarian goals can only be put into practice by brutal methods "of which most socialists disapprove".[21] Such centralized systems also require effective propaganda, so that the people come to believe that the state's goals are theirs.[22]
Hayek argues that the roots of Nazism lie in socialism,[23] and then draws parallels to the thought of British leaders:
The increasing veneration for the state, the admiration of power, and of bigness for bigness' sake, the enthusiasm for "organization" of everything (we now call it "planning") and that "inability to leave anything to the simple power of organic growth"...are all scarcely less marked in England now than they were in Germany.[24]
Hayek believed that after World War II, "wisdom in the management of our economic affairs will be even more important than before and that the fate of our civilization will ultimately depend on how we solve the economic problems we shall then face".[25] The only chance to build a decent world is "to improve the general level of wealth" via the activities of free markets.[26] He saw international organization as involving a further threat to individual freedom.[27] He concluded: "The guiding principle that a policy of freedom for the individual is the only truly progressive policy remains as true today as it was in the nineteenth century."[28]
A role for government
Although Hayek believed that government intervention in markets would lead to a loss of freedom, he recognized a limited role for government to perform tasks of which free markets were not capable:The successful use of competition as the principle of social organization precludes certain types of coercive interference with economic life, but it admits of others which sometimes may very considerably assist its work and even requires certain kinds of government action.[29]
While Hayek is opposed to regulations which restrict the freedom to enter a trade, or to buy and sell at any price, or to control quantities, he acknowledges the utility of regulations which restrict allowed methods of production, so long as these are applied equally to everyone and not used as an indirect way of controlling prices or quantities, and without forgetting the cost of such restrictions:
To prohibit the use of certain poisonous substances, or to require special precautions in their use, to limit working hours or to require certain sanitary arrangements, is fully compatible with the preservation of competition. The only question here is whether in the particular instance the advantages gained are greater than the social costs which they impose.[30]
He notes that there are certain areas, such as the environment, where activities which cause damage to third parties (known to economists as "negative externalities") cannot effectively be regulated solely by the marketplace:
Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories, be confined to the owner of the property in question, or to those who are willing to submit to the damage for an agreed compensation.[31]
The government also has a role in preventing fraud:
Even the most essential prerequisite of its [the market's] proper functioning, the prevention of fraud and deception (including exploitation of ignorance), provides a great and by no means fully accomplished object of legislative activity.[32]
The government also has a role in creating a safety net:
There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.[33][34]
He concludes: "In no system that could be rationally defended would the state just do nothing."[32]
Contemporary commentary
John Maynard Keynes said of it: "In my opinion it is a grand book...Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement."[35] Having said that, Keynes did not think Hayek's philosophy was of practical use; this was explained later in the same letter, commenting: "What we need therefore, in my opinion, is not a change in our economic programmes, which would only lead in practice to disillusion with the results of your philosophy; but perhaps even the contrary, namely, an enlargement of them. Your greatest danger is the probable practical failure of the application of your philosophy in the United States."[36]George Orwell responded with both praise and criticism, stating, "in the negative part of Professor Hayek's thesis there is a great deal of truth. It cannot be said too often – at any rate, it is not being said nearly often enough – that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamt of." Yet he also warned, "[A] return to 'free' competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the state."[37]
Hayek's work was influential enough to warrant mention during the 1945 British general election, when according to Harold Macmillan, Winston Churchill was "fortified in his apprehensions [of a Labour government] by reading Professor Hayek's The Road to Serfdom"[38] when he warned in an election broadcast in 1945 that a socialist system would "have to fall back on some form of Gestapo". The Labour leader Clement Attlee responded in his election broadcast by claiming that what Churchill had said was the "second-hand version of the academic views of an Austrian professor, Friedrich August von Hayek".[39] The Conservative Central Office sacrificed 1.5 tons of their precious paper ration allocated for the 1945 election so that more copies of The Road to Serfdom could be printed, although to no avail, as Labour won a landslide victory.[40]
The Road to Serfdom was placed fourth on the list of the 100 best non-fiction books of the twentieth century[41] compiled by National Review magazine. It also made #16 in reader selections of the hundred best non-fiction book of the twentieth century administered by Modern Library.[42]
The Road to Serfdom appears on Martin Seymour-Smith's list of the 100 Most Influential Books Ever Written, whilst it made #1 on Human Events: Top Ten Books Every Republican Congressman Should Read[43] in 2006.
Milton Friedman's assessment:
I think the Adam Smith role was played in this cycle [i.e. the late twentieth century collapse of socialism in which the idea of free-markets succeeded first, and then special events catalyzed a complete change of socio-political policy in countries around the world] by Friedrich Hayek’s The Road to Serfdom.[44]
Alan Brinkley's assessment:
CriticismThe publication of two books...helped to galvanize the concerns that were beginning to emerge among intellectuals (and many others) about the implications of totalitarianism. One was James Burnham’s The Managerial Revolution.. [A second] Friedrich A. Hayek’s The Road to Serfdom.. was far more controversial – and influential. Even more than Burnham, Hayek forced into public discourse the question of the compatibility of democracy and statism... In responding to Burnham and Hayek...liberals [in the statist sense of this term as used by some in the United States] were in fact responding to a powerful strain of Jeffersonian anti-statism in American political culture... The result was a subtle but important shift in liberal [i.e. American statist] thinking.[44]
The Road To Serfdom has been criticized on theoretical grounds.
Economic sociologist Karl Polanyi made a case diametrically opposed to Hayek, arguing that unfettered markets had undermined the social order and that economic breakdown had paved the way for the emergence of dictatorship.[45]Herman Finer, a Fabian socialist, published a rebuttal in his The Road to Reaction in 1946. Hayek called Finer's book "a specimen of abuse and invective which is probably unique in contemporary academic discussion".[46]
Barbara Wootton wrote Freedom under Planning[47] after reading an early copy of The Road to Serfdom, provided to her by Hayek. In the introduction to her book, Wootton mentioned The Road to Serfdom and claimed that "Much of what I have written is devoted to criticism of the views put forward by Professor Hayek in this and other books."[48] The central argument made in Freedom under Planning is that "there is nothing in the conscious planning of economic priorities which is inherently incompatible with the freedoms which mean most to the contemporary Englishman or American. Civil liberties are quite unaffected. We can, if we wish, deliberately plan so as to give the fullest possible scope for the pursuit by individuals and social groups of cultural ends which are in no way state-determined."[49] Wootton criticizes Hayek for claiming that planning must lead to oppression, when, in her view, that is merely one possibility among many. She argues that "there seems hardly better case for taking for granted that planning will bring the worst to the top than for the opposite assumption that the seats of office will be filled with angels".[50] Thus, Wootton acknowledges the possibility that planning may exist alongside tyranny, but claims that it is equally possible to combine planning with freedom. She concludes that "A happy and fruitful marriage between freedom and planning can, in short, be arranged."[51]
However, Frank Knight, founder of the Chicago School of Economics, disputes the claim that Freedom under Planning contradicts The Road to Serfdom. He wrote in a scholarly review of the Wootton book: "Let me repeat that the Wootton book is in no logical sense an answer to The Road to Serfdom, whatever may be thought of the cogency of Hayek's argument, or the soundness of his position."[52]
In his review (collected in The Present as History, 1953) Marxist Paul Sweezy joked that Hayek would have you believe that if there was an over-production of baby carriages, the central planners would then order the population to have more babies instead of simply warehousing the temporary excess of carriages and decreasing production for next year. The cybernetic arguments of Stafford Beer in his 1974 CBC Massey Lectures, Designing Freedom – that intelligent adaptive planning can increase freedom – are of interest in this regard, as is the technical work of Herbert A. Simon and Albert Ando on the dynamics of hierarchical nearly decomposable systems in economics – namely, that everything in such a system is not tightly coupled to everything else.[53]
Jeffrey Sachs wrote that the social-welfare states, with high rates of taxation and social outlays, outperform the relatively free-market economies, according to the empirical evidence.[54] William Easterly wrote a rebuttal[55] and Sachs wrote a re-rebuttal.[56]
Eric Zencey wrote that the free market economy Hayek advocated is designed for an infinite planet, and when it runs into physical limits (as any growing system must), the result is a need for centralized planning to mediate the problematic interface of economy and nature. "Planning is planning, whether it's done to minimize poverty and injustice, as socialists were advocating then, or to preserve the minimum flow of ecosystem services that civilization requires, as we are finding increasingly necessary today."[57]
Libertarian/Conservative critics
Mises Institute libertarian/anarcho-capitalist economist Walter Block has observed critically that while The Road to Serfdom makes a strong case against centrally planned economies, it appears only lukewarm in its support of a free market system and laissez-faire capitalism, with Hayek even going so far as to say that "probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all the principle of laissez-faire capitalism". In the book, Hayek writes that the government has a role to play in the economy through the monetary system (a view that he later withdrew),[58] work-hours regulation, social welfare, and institutions for the flow of proper information. Through analysis of this and many other of Hayek's works, Block asserts that: "in making the case against socialism, Hayek was led into making all sort of compromises with what otherwise appeared to be his own philosophical perspective – so much so, that if a system was erected on the basis of them, it would not differ too sharply from what this author explicitly opposed".[59]
Gordon Tullock has argued Hayek's analysis predicted totalitarian governments in much of Europe in the late 20th century. He uses Sweden, in which the government at that time controlled 63 percent of GNP, as an example to support his argument that the basic problem with The Road to Serfdom is "that it offered predictions which turned out to be false. The steady advance of government in places such as Sweden has not led to any loss of non-economic freedoms." While criticizing Hayek, Tullock still praises the classical liberal notion of economic freedom, saying, "Arguments for political freedom are strong, as are the arguments for economic freedom. We needn’t make one set of arguments depend on the other."[60] However, according to Robert Skidelsky, Hayek "safeguarded himself from such retrospective refutation". Skidelsky argues that Hayek's argument was contingent, and that, "By the 1970s there was some evidence of the slippery slope…and then there was Thatcher. Hayek's warning played a critical part in her determination to 'roll back the state.'"[61]
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He set Maggie on the right road.
