A Highway Out of Yesterday


Ben Wyche V

"You're going the wrong way!"

In the movie "Planes, Trains, and Automobiles", two men drive confidently down a road. They can't see beyond their headlights. They notice a couple driving on a road alongside them, shouting, "You're going the wrong way!" The men mock the couple's warning. Only when they see the headlights of oncoming traffic do they realize they should have paid attention and reversed direction. What happens next makes the movie a comedy.

In the book the Road to Serfdom, Freidrich Hayek shouts out a warning to the socialists of his day that they are going the wrong way. He claimed that the socialist political path would lead not to equality, security nor prosperity. What happens next made Germany a tragedy. The book cries out, that centrally planned societies are doomed to destruction. Their democratic aspects would collide with their coercive drive. His shout echoes today, on the edge of the millenium. Should we still listen?

We have seen the collapse of socialist states like Nazi Germany and Soviet Russia. The Internet runs free throughout the world. New challenges of environmentalism and terrorism are emerging. Is the Road to Serfdom relevant to the twentieth-century?

There are those who think that we are still headed down the road to social serfdom. In the Road to Serfdom's introduction, Milton Friedman says that "In some ways (the book) is even more relevant to the United States today than…on its original publication in 1944." He claims that "government today spends a larger fraction of the national income and is more intrusive than it was in 1950." He argues that today's political leaders "preach individualism and competitive capitalism, and practice socialism."

Where are our leaders leading us? At NATO's 50th anniversary in Washington, D.C., five world leaders gathered to discuss the political direction of their countries. Led by U.S. president Bill Clinton, they talked about the political movement loosely defined as "The Third Way". The May/June 1999 issue of the New Democrat notes that British Prime Minister Tony Blair "described the Third Way as 'a voyage of rediscovery' being undertaken by center-left governments as they seek to strike a balance between the imperatives of economic dynamism and social justice." Blair claimed that "The Old Left tried to resist change…and became associated with high taxes, [special] interests, big government." He argues that "The New Right thought the solution to everything was just to get rid of government…[practice] economics of laissez-faire…indifferent to what was actually breaking apart the bonds of society."

A Third Way out of this problem is suggested by Blair's fellow traveler, German Prime Minister Gerhard Schroeder. He suggests that "we need to make sure that as many people as possible share in the opportunities [and] responsibilities within the society." How? "We need economic growth," he says "to provide economic opportunities for as many people as possible." Once we have economic growth, he says, "in market economies we have a moral right, an entitlement to education [and] a job afterwards." If the state provides this entitlement to those unable to support themselves in a market economy without "social solidarity", Schroeder argues that that social solidarity "is a two-way street". He says that "he who does not comply with his duties and responsibilities should lose his original entitlement to support by the state."

("Otherwise," Schroeder notes knowingly, "the people who earn the money will finally say they're no longer ready to support the weak ones." But that's another book entirely.)

The "Third Way" seeks to solve the conflict between capitalist and socialism by uniting those who seek economic dynamism and social justice within the same society. Italian Prime Minister Massimo D'Alema rhetorically asks, "Is it possible to have a dynamic economy and a society based on solidarity? I think it is." Words like these seem to verify Friedman's claim of a pro-free enterprise preaching, socialist-practicing polity.

Some current observers don't seem to recognize this. Liberal economist Jeff Faux in Dissent Spring 99 argues that the Third Way represents a selling out of liberal ideals to the Right. He quips that "The Third Way has become so wide that it is more like a political parking lot than a highway to anywhere in particular." Not so. The Third Way seems in some respects to be a highway out of yesterday.

It recalls a path out of the past -- the pre-Nazi Germany socialist past. This is particularly true if we see it through the lens of F.A. Hayek's 1944 book "The Road To Serfdom". The Third Way may ultimately lead us down the road to serfdom and back to the time of the Third Reich.

Hayek defines socialism as the ideal and means of creating "freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us, although for some very much more than for others." Specifically, socialists seek release from the "restraints of the economic system" - the uncoerced capitalist system. What this amounted to, for Hayek, "was that the great existing disparities in the range of choice of different people were to disappear…The demand for the new freedom was thus only another name for the old demand for an equal distribution of wealth."

Our leaders seem to echo this demand for socialist equality in their calls for "solidarity". The solidarity of which they speak is that of the forcing the capitalists they leave free to produce to support those who are not as successful in a free market of citizens. As Netherlands Prime Minister Kok remarks, "People who cannot take care of themselves must be protected in a decent way." Who must protect them? Kok has an answer to this. "We have a community [only] if the winners feel responsible for the losers." There is no talk of a time when the winners should not feel responsible for problems they did not cause.

This policy is a shadow of the trend in Hayek's time for central planning. It is distinct from Hayek's fear of forcing prosperity through central planning that is the main thesis of the Road. Taken at face value, with no political double-speak, this represents progress towards freedom. Former socialists can see that central planning for prosperity doesn't work, and don't pursue that path anymore. But they cannot free themselves from the past.

Indeed, they still overtly cling to central planning for charity. As current London School of Economics Director (and Third Way theorist) Dr. Anthony Giddens argues, "No one knows any alternative to capitalism. Marx's alternative is dead. Our problem is to find a global market society that is humane, which follows some of the values Marx identified, that is consistent with solidarity, that doesn't produce polarization. You remember that Marx argued that capitalism produces a polarization between rich and poor. In this he seems to be right. How can we control inequality while delivering the fruits of economic development? is a really basic issue facing us."

Friedman notes that modern-day planners aims have "shifted from governmentally administered production activities to indirect regulation of supposedly private enterprises and even more to governmental transfer programs, involving extracting taxes from some in order to make grants to others--all in the name of equality and the eradication of poverty." The Third Way follows this trend. But as Hayek noted, "Once government has embarked upon planning for the sake of justice, it cannot refuse responsibility for anybody's fate or position. In a planned society we shall know that we are better or worse off than others…because some authority wills it." And authority wills solidarity.

The need for authority to redistribute economic prosperity to the economic "losers" and a consequent increase of "losers" has produced "an erratic and contradictory melange of subsidies to special interest groups" in society. The final end of a force-fed society is "the state in which 'no avenue to wealth and honor would exist save through the government'". Fully successful solidarity, if defined as forced total equalization of society, requires a progressively increasing and gradual takeover of society by government. Thus the Third Way's socialist elements would lead not to freedom from failure, but to serfdom.

As Hayek notes," "Planning leads to dictatorship because dictatorship is the most effective instruments of coercion and the enforcement of ideals and, as such, essential if central planning on a large scale is to be possible. The clash between planning and democracy arises simply from the fact that the latter is an obstacle to the suppression of freedom which the direction of economic activity requires."

How long will it be until those on the path to democratically agreed upon economic freedom collide with those seeking socially guaranteed economic wealth? How long will independent producers and government-dependent "losers" travel along the Third Way until they see the headlights of opposite-traveling traffic, dead straight ahead? How much longer until the next crash? As Hayek aptly observes about properly applied laws, "It does not matter whether we all drive on the left or on the right-hand side of the road so long as we all do the same."

The Third Way must ultimately lead somewhere. Hayek argues that it leads to the Third Reich. "If we are, nevertheless, rapidly moving toward such a state (of complete centralization of economic activity), this is largely because most people still believe that it must be possible to find some middle way between "atomistic" competition and central direction. (A) mixture of the two ways means that neither will really work and the result will be worse than if either system had been consistently relied upon."

Which will happen first - the abandonment of centrally planned solidarity because of the proven failure of centrally planned prosperity, or the reacceptance of both ideals because forced charity is tied to free markets? This is the danger of the Third Way.

Clearly, the Road to Serfdom is relevant to the current political scene at it provides insights into the old political balance which the new one builds on. The relevance comes through its ability to provide context and explanation of current politics like as the Third Way. Lest the Third Way's "voyage of rediscovery" go down the road to serfdom and holocaust, our leaders must be warned until we turn back and go down the right way.

Who will warn our leaders they're going the wrong way? On the 100th anniversary of Hayek's birth, over 150 people gathered at the F.A. Hayek auditorium in Washington, D.C. to celebrate Hayek's legacy. I overheard a few of them talk about Hayek's book.

"How could it not be relevant to the next century?" said a former student of Hayek's. "With our monetary policy being centrally directed by the Federal Reserve, and the opposition party seeking to imitate the Third Way, how could it not be? One of my teacher friends teaches the Road in his university classes. I may imitate his example. The book's an oldie but a goodie."

"The book is like a fine wine", said another guest as she poured a glass of cherry wine, "it gets better with age. We saw that communism collapsed of its own weight. Hayek _forsaw_ it. The ideas he argues can be empirically tested through twentieth-century history. The more centrally planned governance fails, the more power to Hayek's case."

"This book gives me courage to speak out against the Third Way." the gay young man in the corner confided. "When I read Hayek's words, I feel that I can carry on his legacy. His arguments give me a base to stand on, to at least question their assumptions. I am just happy to know someone like Hayek lived."

Somebody said, "Nobody's really arguing for central planning anymore. That part of the book is not really relevant to today's world. But it holds well in light of partial planning of today. Particularly since the fall of the Soviet Union, there are few places left to go if you want to go Red. So that danger is gone for now, if not forever. However, people forget the past, and every new generation needs to recall it. The World Wars and the ideas that caused them seem so far away - but they happened 50 years ago - only yesterday. How far away from us are the wars of the future - and in which direction are they in? For lack of extant examples of a purely totalitarian system like Nazi Germany only books like the Road to Serfdom that keep us from going down the highway to hell."

"No, the book doesn't explain how to make employers more responsive to employees, or how to run profitably run a non-profit. But it should be read by people trying to make the decision of what they want the government to be doing while they try to live life, and what they *don't* want the government to do! The book's like a highway out of yesterday - the yesterday out of a wrongfully restricted life and its failures and into the free world that tomorrow may bring if we make the right choices." her companion added.

A Chinese doctoral candidate in Austrian economics chimed in thoughtfully. "The book is timeless and not bound by the space of nations. I read it back home in China. It helps that the book does not criticize their opponents by their motives. We have much persuading of the Chinese leaders before we turn back from the way we are today. The problems it addresses affect people who have to choose between free dealings with each other or not, regardless of their race or whatnot. This book helps me looks at China from the outside."

"It holds up well when compared to later studies like the Ominous Parallels by Leonard Peikoff. Part of its appeal in the next century will be its age. It emotes the experience of the day. The author's courageous stand and the risk he took to speak against authority grant the book its authenticity. It was way out in right field when I first read it, but I predict it will be part of the book canon of the next century!"

To be fair, those going the Third Way *think* they're going the right way. Our leaders should at least listen to those who elected them. It is up to someone to warn them. Will you?

As Hayek wrote, "If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this justly and equitably." The book is relevant as long as this is true. It will always be.

So lest our leaders seek the leads in a political tragi-comedy, those who can should offer them a copy of the Road to Serfdom and inform them of its relevance to them. Just say:

"You're going the wrong way!"

Happy trails to you …