“Freddie” Hayek is, of course, famous for the epic rap battles between him and his arch-nemesis, the maverick economist and Bloomsbury groupie John Maynard Keynes. Keynes may have been more charismatic, but Hayek had the edge in writing. The Road to Serfdom is a compelling and passionate defence of free-market economics and is much more readable than Keynes’s dense The General Theory of Employment, Interest and Money. Even the title is snappier. (The General Theory wasn’t written for a popular audience, though — Essays in Persuasion is a better read, although maybe less influential.)
Hayek does come across as a bit of a Cassandra, terrified that a bit of well-meaning socialism is just the first step on the slippery slope to fascism, totalitarianism and, well, serfdom. The shrillness of his warnings is explained by the context: he was writing during the second world war, and saw echoes in contemporary American society of Germany in the interwar years. He grew up in Austria before living and working in the USA and England, so he was well-placed for this comparison.
Some of the views in this book seem a bit uncompromising, but I think that is partly because it is not just a dry theoretical work. It’s a polemic, intended to convince the West not to take a disastrous wrong turn. He was trying to save the world, so the tone is quite understandable.
And he’s not the dog-eat-dog devil-take-the-hindmost free-marketeer that he is sometimes painted as. He does advocate such progressive measures as universal basic incomes, seeing it as a way to break class-based economic hierarchies:
Let a uniform minimum be secured to everybody by all means; but let us admit at the same time that with this assurance of a basic minimum all claims for a privileged security of particular classes must lapse, that all excuses disappear for allowing groups to exclude newcomers from sharing their relative prosperity in order to maintain a special standard of their own.
This despite his trenchant observation that the “freedom” preached by some (socialists, according to him) is not universally-desired political freedom (from coercion, despotism, etc.) but more complex economic freedom (from want, from the strait-jacket of circumstance). UBI can give us some of this economic freedom, but Hayek worries that it’s a short socialist step from there to an imposed equal distribution of wealth, and communism and fascism (which are not as far apart as you might think).
Hayek dislikes socialism for two reasons. First, socialist policies prevent free markets from working at their maximum efficiency. This may be true, though maximising market efficiency is not necessarily a worthy goal in itself. It may cause other problems, such as excessive inequality. Perhaps a slightly less efficient market might lead to better outcomes overall.
The second reason is that socialist policies require central planning, and so give too much power to the planners, leading to totalitarianism. Instead of political leaders controlling the economy, Hayek prefers a free market economy where nobody is in charge.
That sounds like a good idea, but of course some people do have a large amount of influence on the economy: very wealthy people and organisations can use their money and near-monopoly positions to influence other companies and the government in their favour. This is probably less bad than out-and-out fascism but it’s far from a happy free-market utopia.
Someone will always be pulling the strings of the economy. The only question is who.