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The Road to Serfdom - Dr. F.A. Hayek


maplevalue
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Truly amazing to read this book in the context of the massive past, and continuing, government (including the Federal Reserve) intervention in the economy since March 2020. Some summaries/quotes below (from the IEA edition)

 

  • Pg15 government has no resources of its own, the only way a government can give one person money is to first take it from another person…doing so represents the forcible using of one person, through the tax system, to serves the purposes of another. That is a form of immorality akin to slavery”

  • Pg20 his greatest contribution lay in the discovery of a simple yet profound truth: man does not and cannot know everything, and when he acts as if he does, disaster follows. He recognized that socialism, the collectivist state, and planned economies represent the ultimate form of hubris, for those who plan them attempt – with insufficient knowledge – to redesign the nature of man.

  • Pg35 the more the state plans the more difficult planning becomes for the individual

  • Pg42 when economic power is centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery

  • Pg49 democratic assemblies cannot function as planning agencies. They cannot produce agreement on everything – the whole direction of the resources of the nation – for the number of possible courses of action will be legion.

  • Pg49 to draw up an economic plan in this fashion is even less possible than, for instance, successfully to plan a military campaign by democratic procedure.

  • Pg54 to make a totalitarian system function efficiently it is not enough that everybody should be forced to work for the ends selected by those in control, it is essential that the people should come to regard those ends as their own. This is brought about by propaganda and the complete control of all sources of information.

  • Pg57 hence the familiar fact that the more the state plans the more difficult planning becomes for the individual

  • Pg59 no difficulty about efficient control and planning were conditions so simple that a single person or board could effectively survey all the facts. But as factors which have to be taken into account become numerous and complex, no one centre can keep track of them….under competition – and under no other economic order – the price system automatically records all the relevant data

  • Pg60 any further growth in economic complexity far from making central direction more necessary, makes it more important than ever that we should use the technique of competition and not depend on conscious control

  • Pg68 with every grant of such security to one group the insecurity of the rest necessarily increases. If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole

  • Pg70 the guiding principle in any attempt to create a world of free men must be this: a policy of freedom for the individual is the only truly progressive policy

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For context, this book was written during WW2 when all the major economies were under total state control (war economy). Hayek is and economist of the  Austrian school, maybe the main proponent even. The Austrian school is a funny thing , it sounds reasonable and pure, but no country or government  has practiced their teachings ever as far as I know. So in a way it is irrelevant for the practitioner.

Edited by Spekulatius
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2 hours ago, maplevalue said:

Truly amazing to read this book in the context of the massive past, and continuing, government (including the Federal Reserve) intervention in the economy since March 2020. Some summaries/quotes below (from the IEA edition)

 

  • Pg15 government has no resources of its own, the only way a government can give one person money is to first take it from another person…doing so represents the forcible using of one person, through the tax system, to serves the purposes of another. That is a form of immorality akin to slavery”

  • Pg20 his greatest contribution lay in the discovery of a simple yet profound truth: man does not and cannot know everything, and when he acts as if he does, disaster follows. He recognized that socialism, the collectivist state, and planned economies represent the ultimate form of hubris, for those who plan them attempt – with insufficient knowledge – to redesign the nature of man.

  • Pg35 the more the state plans the more difficult planning becomes for the individual

  • Pg42 when economic power is centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery

  • Pg49 democratic assemblies cannot function as planning agencies. They cannot produce agreement on everything – the whole direction of the resources of the nation – for the number of possible courses of action will be legion.

  • Pg49 to draw up an economic plan in this fashion is even less possible than, for instance, successfully to plan a military campaign by democratic procedure.

  • Pg54 to make a totalitarian system function efficiently it is not enough that everybody should be forced to work for the ends selected by those in control, it is essential that the people should come to regard those ends as their own. This is brought about by propaganda and the complete control of all sources of information.

  • Pg57 hence the familiar fact that the more the state plans the more difficult planning becomes for the individual

  • Pg59 no difficulty about efficient control and planning were conditions so simple that a single person or board could effectively survey all the facts. But as factors which have to be taken into account become numerous and complex, no one centre can keep track of them….under competition – and under no other economic order – the price system automatically records all the relevant data

  • Pg60 any further growth in economic complexity far from making central direction more necessary, makes it more important than ever that we should use the technique of competition and not depend on conscious control

  • Pg68 with every grant of such security to one group the insecurity of the rest necessarily increases. If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole

  • Pg70 the guiding principle in any attempt to create a world of free men must be this: a policy of freedom for the individual is the only truly progressive policy

 

I think the following passage is also worth including from pages 66-67:

 

"But there are two kinds of security:  the certainty of a given minimum of sustenance for all and the security of a given standard of life, of the relative position which on person or group enjoys compared with others.  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:  so 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.  It is planning for security of the second kind which has such an insidious effect on liberty."

 

I think the parts you quote have to be read in the context of, and ultimately reconciled with, what I quoted above. 

 

 

 

 

 

 

 

Edited by KJP
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1 hour ago, Spekulatius said:

For context, this book was written during WW2 when all the major economies were until total state control (war economy). Hayek is and economist of the  Austrian school, maybe the main proponent even. The Austrian school is a funny thing , it sounds reasonable and pure, but no country or government  has practiced their teachings ever as far as I know. So in a way it is irrelevant for the practitioner.

 

What kind of "practioner" are you referring to, professional economists, government officials, someone else?  Any sophisticated economic theory has to get distilled down -- perhaps dumbed down -- into some type of folk version that politicians and the pubic can understand.  The folk version of Hayek probably is something like "free markets are good, regulation is bad."  That is probably one of the most influential economic theories of the last 75 years.  Many governments have pursued it extensively via, for example, denationalization and deregulation of various industries, such as the many denationalizations in the UK and the rolling back of the Permit Raj in India.  So, I think there's a good argument that Hayek's ideas, spread though Friedman and others, were some of the most influential of anyone post-1975. 

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53 minutes ago, KJP said:

 

What kind of "practioner" are you referring to, professional economists, government officials, someone else?  Any sophisticated economic theory has to get distilled down -- perhaps dumbed down -- into some type of folk version that politicians and the pubic can understand.  The folk version of Hayek probably is something like "free markets are good, regulation is bad."  That is probably one of the most influential economic theories of the last 75 years.  Many governments have pursued it extensively via, for example, denationalization and deregulation of various industries, such as the many denationalizations in the UK and the rolling back of the Permit Raj in India.  So, I think there's a good argument that Hayek's ideas, spread though Friedman and others, were some of the most influential of anyone post-1975. 

I was referring to politicians and government officials. Yes you are right, Hayek work has been influential. The time for this was really in the 80’s and 90’s, I think. Now we see some backlash, because a lot of people who vote thinks it has not benefited them. These economic theories only work if enough people see the benefit and believe in them. It feels like many people and decision makers believe in MMT now and it’s very convenient too.

Edited by Spekulatius
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  • 3 weeks later...

Awesome book. Listened on drive. It's so obvious that the fundamental problem is the concentration of power. How anyone can't see this, and that there are degrees of concentrations of power(govt is more concentrated/harder to reverse course than one business), is the reason it's so pathological and pervasive. Hard wired evidently. Damned heuristics misfiring in our modern world. 

 

Hayek does a great job of making this explicit and clear. 

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  • Parsad changed the title to The Road to Serfdom - Dr. F.A. Hayek

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