In the recent discussion of Hayek I think there may have been a conflation
of two theses attributed to Hayek. I contributed to this because I used
both terms interchangeably, but should not have.
1. Let us call the inevitability thesis the idea that once a society
engages in a little bit of planning/ government intervention in markets/
whatever, it inevitably (in the sense that once the process begins, there
is no turning back) ends up in a totalitarian state. Hayek is sometimes
accused of saying this. He denies that that is his thesis in Introduction
(p. 4) of The Road to Serfdom, in the preface to the 1976 edition of
Road, and in his letter to Samuelson. Some may think that Hayek believes
this because the Reader's Digest and cartoon versions certainly suggest
it.
2. Hayek DOES claim that if a society tries to implement the full scale
planning (full nationalization of the means of production) that at least
some on the left were calling for during World War II, that it could not
be accomplished without giving up political liberties. His argument is
basically an Austrian variant of what later came to be Arrow's
impossibility theorem. This is an inevitablity thesis that Hayek does
endorse. I argue in my intro to Road to Serfdom that the proper test of
his claim is to see how many countries that have embraced full scale
planning have also limited political and civil liberties. I conclude that
experience so far supports Hayek's thesis.
3. A third claim, which might be called a slippery slope claim, or a claim
about the problems of interventionism, or "the muddle of the middle," is
the warning that intervention can lead (or in stronger version, inevitably
leads) to further and further interventionism. This warning is certainly
present in Road to Serfdom; how strong a version of it is debateable.
As a general claim, the strong version of number 3 (intervention
inevitably leads to more intervention) seems to me to be wrong. But it
also seems to me that as a general warning it is plausible in certain
well-defined instances. One of these is price-fixing, which is something
Hayek always railed against. If one considers the standard price-fixing
examples from Eco 101: rent controls, say, or agricultural price supports,
the initial intervention is typically followed by lots of additional
interventions (try reading the NYC law code on rent controls!) that
result in ludicrous outcomes like paying farmers not to farm, or
sublettors paying "key fees" to gain the right to sublet apartments.
The other way that interventionism tends to perpetuate itself, mentioned
by Hayek in the 1956 Foreword to the American paperback edition of Road to
Serfdom, is to help to create and support the belief in the polity that
the government has both a duty and the ability successfully to intervene
whenever some group is discontented. Wages too low? Raise the minimum.
Rents too high? Fix a maximum price. And when government programs don't
work - for US examples, think of FEMA, Homeland Security, or the war in
Iraq - the answer too often is - we just didn't spend enough money.
Whatever one thinks about number 3, though, it is separable from numbers
one and two.
Bruce Caldwell
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