The Road to Serfdom
The most important change which extensive government control produces is a psychological change, an alteration in the character of the people.
Socialism can be put into practice only by methods of which most socialists disapprove.
Contemporary events differ from history in that we do not know the results they will produce.
While history runs its course, it is not history to us. It leads us into an unknown land, and but rarely can we get a glimpse of what lies ahead.
One need not be a prophet to be aware of impending dangers.
If in the long run we are the makers of our own fate, in the short run we are the captives of the ideas we have created.
Only if we recognize the danger in time can we hope to avert it.
The rise of fascism and naziism was not a reaction against the socialist trends of the preceding period but a necessary outcome of those tendencies.
Is there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?
When the course of civilization takes an unexpected turn—when, instead of the continuous progress which we have come to expect, we find ourselves threatened by evils associated by us with past ages of barbarism—we naturally blame anything but ourselves.
The very success of liberalism became the cause of its decline. Because of the success already achieved, man became increasingly unwilling to tolerate the evils still with him which now appeared both unbearable and unnecessary.
Socialism in its beginnings was frankly authoritarian. The French writers who laid the foundations of modern socialism had no doubt that their ideas could be put into practice only by a strong dictatorial government.
To the great apostles of political freedom the word ["freedom"] had meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached. The new freedom promised, however, was to be 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.
The relative ease with which a young communist could be converted into a Nazi or vice versa was generally known in Germany, best of all to the propagandists of the two parties.
Fascism is the stage reached after communism has proved an illusion.
In Germany before 1933, and in Italy before 1922, communists and Nazis or Fascists clashed more frequently with each other than with other parties. They competed for the support of the same type of mind and reserved for each other the hatred of the heretic.
While to many who have watched the transition from socialism to fascism at close quarters the connection between the two systems has become increasingly obvious, in the democracies the majority of people still believe that socialism and freedom can be combined.
Whether we should wish that more of the good things of this world go to some racial élite, the Nordic men, or the members of a party or an aristocracy, the methods which we shall have to employ are the same as those which could ensure an equalitarian distribution.
We must centrally direct economic activity if we want to make the distribution of income conform to current ideas of social justice.
It must always be remembered that socialism is a species of collectivism and that therefore everything which is true of collectivism as such must apply also to socialism.
It must always be remembered that socialism is a species of collectivism and that therefore everything which is true of collectivism as such must apply also to socialism.
The liberal argument is in favor of making the best possible use of the forces of competition as a means of coordinating human efforts, not an argument for leaving things just as they are.
[Economic liberalism] is the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority.
It is necessary in the first instance that the parties in the market should be free to sell and buy at any price at which they can find a partner to the transaction and that anybody should be free to produce, sell, and buy anything that may be produced or sold at all. And it is essential that the entry into the different trades should be open to all on equal terms and that the law should not tolerate any attempts by individuals or groups to restrict this entry by open or concealed force. Any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about an effective coordination of individual efforts, because price changes then cease to register all the relevant changes in circumstances and no longer provide a reliable guide for the individual's actions.
To prohibit the use of certain poisonous substances or to require special precautions in their use, to limit working hours to to require certain sanitary arrangements, is fully compatible with the preservation of competition.
The preservation of competition [is not] incompatible with an extensive system of social services—so long as the organization of these services is not designed in such a way as to make competition ineffective over wide fields.
The main condition on which the usefulness of the system of competition and private property depends [is] that the owner benefits from all the useful services rendered by his property and suffers for all the damages caused to others by its use.
It is impossible to assume control over all the productive resources without also deciding for whom and by whom they are to be used. Although under this so-called "competitive socialism" the planning by the central authority would take somewhat more roundabout forms, its effects would not be fundamentally different, and the element of competition would be little more than a sham.
Aspiring monopolists regularly seek and frequently obtain the assistance of the power of the state to make their control effective.
In social evolution nothing is inevitable but thinking makes it so.
Far from being appropriate only to comparatively simple conditions, it is the very complexity of the division of labor under modern conditions which makes competition the only method by which such coordination can be adequately brought about.
We all find it difficult to bear to see things left undone which everybody must admit are both desirable and possible. That these things cannot all be done at the same time, that any one of them can be achieved only at the sacrifice of others ... can be appreciated only by a painful intellectual effort.
There is little question that almost every one of the technical ideals of our experts could be realized within a comparatively short time if to achieve them were made the sole aim of humanity.
In our predilections and interests we are all in some measure specialists. And we all think that our personal order of values is not merely personal but that in a free discussion among rational people we would convince the others that ours is the right one.
Extreme technical excellent out of line with general conditions is evidence of a misdirection of resources.
The various kinds of collectivism, communism, fascism, etc., differ among themselves in the nature of the goal toward which they want to direct the efforts of society. But they all differ from liberalism and individualism in wanting to organize the whole of society and all its resources for this unitary end and in refusing to recognize autonomous spheres in which the ends of the individuals are supreme.
It is not difficult to see what must be the consequences when democracy embarks upon a course of planning which in its execution requires more agreement than in fact exists.
The effect of the people's agreeing that there must be central planning, without agreeing on the ends, will be rather as if a group of people were to commit themselves to take a journey together without agreeing where they want to go: with the result that they may all have to take a journey which most of them do not want at all.
It is a superstition to believe that there must be a majority view on everything.
Many separate plans do not make a planned whole—in fact, as the planners ought to be the first to admit, they may be worse than no plan.
It is the price of democracy that the possibilities of conscious control are restricted to the fields where true agreement exists and that in some fields things must be left to chance.
Democratic government has worked successfully where, and so long as, the functions of government were, by a widely accepted creed, restricted to fields where agreement among a majority could be achieved by free discussion; and it is the great merit of the liberal creed that it reduced the range of subjects on which agreement was necessary to one on which it was likely to exist in a society of free men.
It is now often said that democracy will not tolerate "capitalism." If "capitalism" here means a competitive system based on free disposal over private property, it is far more important to realize that only within this system is democracy possible. When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself.
Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom. As such it is by no means infallible or certain.
Planning leads to dictatorship because dictatorship is the most effective instrument 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.
Democratic control may prevent power from becoming arbitrary, but it does not do so by its mere existence.
Nothing distinguishes more clearly conditions in a free country from those in a country under arbitrary government than the observance in the former of the great principles known as the Rule of Law. Stripped of all technicalities, this means that a government in all its actions is bound by rules fixed and announced beforehand—rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one's individual affairs on the basis of this knowledge.
The distinction we have drawn before between the creation of a permanent framework of laws within which the productive activity is guided by individuals decisions and the direction of economic activity by a central authority is thus really a particular case of the more general distinction between the Rule of Law and arbitrary government. Under the first the government confines itself to fixing rules determining the conditions under which the available resources may be used, leaving to the individuals the decision for what ends they are to be used. Under the second the government directs the use of the means of production to particular ends.
If the state is precisely to foresee the incidence of its actions, it means that it can leave those affected no choice.
The more the state "plans," the more difficult planning becomes for the individual.
Those most immediately interested in a particular issue are not necessarily the best judges of the interests of society as a whole.
Planning necessarily involves deliberate discrimination between particular needs of different people, and allowing one man to do what another must be prevented from doing.
It cannot be denied that the Rule of Law produces economic inequality—all that can be claimed for it is that this inequality is not designed to affect particular people in a particular way.
To give different people the same objective opportunities is not to give them the same subjective chance.
To produce the same result for different people, it is necessary to treat them differently.
Formal equality before the law is in conflict, and in fact incompatible, with any activity of the government deliberately aiming at material or substantive equality of different people, and any policy aiming directly at a substantive ideal of distributive justice must lead to the destruction of the Rule of Law.
The Rule of Law, more than the rule of contract, should probably be regarded as the true opposite of the rule of status.
To call private property as such, which all can acquire under the same rules, a privilege, because only some succeed in acquiring it, is depriving the word "privilege" of its meaning.
For the Rule of Law to be effective, it is more important that there should be a rule applied always without exceptions than what this rule is. Often the content of the rule is indeed of minor importance, provided the same rule is universally enforced.
Every state must act and every action of the state interferes with something or other. But that is not the point. The important question is whether the individual can foresee the action of the state and make use of this knowledge as a datum in forming his own plans.
The Rule of Law was consciously evolved only during the liberal age and is one of its greatest achievements, not only as a safeguard but as the legal embodiment of freedom.
To say that in a planned society the Rule of Law cannot hold is not to say that the actions of the government will not be legal or that such a society will necessarily be lawless. It means only that the use of the government's coercive powers will no longer be limited and determined by pre-established rules.
Strictly speaking, there is no "economic motive" but only economic factors conditioning our striving for other ends.
Because in modern society it is through the limitation of our money incomes that we are made to feel the restrictions which our relative poverty still imposes upon us, many have come to hate money as the symbol of these restrictions. But this is to mistake for the cause the medium through which a force makes itself felt. It would be much truer to say that money is one of the greatest instruments of freedom ever invented by man. It is money which in existing society opens an astounding range of choice to the poor man—a range greater than that which not many generations ago was open to the wealthy.
So long as we can freely dispose over our income and all our possessions, economic loss will always deprive us only of what we regard as the least important of the desires we were able to satisfy.
The power conferred by the control of production and prices is almost unlimited.
Nothing makes conditions more unbearable than the knowledge that no effort of ours can change them.
That in a competitive society most things can be had at a price—though it is often a cruelly high price we have to pay—is a fact the importance of which can hardly be overrated. The alternative is not, however, complete freedom of choice, but orders and prohibitions which must be obeyed and, in the last resort, the favor of the mighty.
That people would wish to be relieved of the bitter choice which hard facts often impose upon them is not surprising. But few want to be relieved through having the choice made for them by others. People just wish that the choice should not be necessary at all. And they are only too ready to believe that the choice is not really necessary, that it is imposed upon them merely by the particular economic system under which we live. What they resent is, in truth, that there is an economic problem.
It is significant that one of the commonest objections to competition is that it is "blind." It is not irrelevant to recall that to the ancients blindness was an attribute of their deity of justice.
The fact that the opportunities open to the poor in a competitive society are much more restricted than those open to the rich does not make it less true that in such a society the poor are much more free than a person commanding much greater material comfort in a different type of society.
Who will deny that a world in which the wealthy are powerful is still a better world than one in which only the only powerful can acquire wealth?
It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves.
While people will submit to suffering which may hit anyone, they will not so easily submit to suffering which is the result of the decision of authority.
Inequality is undoubtedly much more readily borne, and affects the dignity of the person much less, if it is determined by impersonal forces than when it is due to design.
It is because successful planning requires the creation of a common view on the essential values that the restriction of our freedom with regard to material things touches so directly on our spiritual freedom.
The conflict between the Fascist or National Socialist and older socialist parties must, indeed, be very largely regarded as the kind of conflict which is bound to arise between rival socialist factions. There was no difference between them about the question of its being the will of the state which should assign to each person his proper place in society. But there were, as there always will be, most profound differences about what are the proper places of different classes and groups.
Independence of mind or strength of character is rarely found among those who cannot be condiment that they will make their way by their own effort.
Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken.
Men are not likely to give their best for long periods unless their own interests are directly involved.
It has well been said that, while the last resort of a competitive economy is the bailiff, the ultimate sanction of a planned economy is the hangman.
Either both the choice and the risk rest with the individual or he is relieved of both.
Those who are willing to surrender their freedom for security have always demanded that if they give up their full freedom it should also be taken from those who are not prepared to do so. For this claim it is difficult to find a justification.
With every grant of compete security to one group the insecurity of the rest necessarily increases.
It seems to be almost a law of human nature that it is easier for people to agree on a negative problem—on the hatred of an enemy, on the envy of those better off—than on any positive task.
One of the inherent contractions of the collectivist philosophy is that, while basing itself on the humanistic morals which individualism has developed, it is practicable only within a relatively small group. That socialism so long as it remains theoretical is internationalist, while as soon as it is put into practice, whether in Russia or in Germany, it becomes violently nationalist, is one of the reasons why "liberal socialism" as most people in the Western world imagine it is purely theoretical, while the practice of socialism is everywhere totalitarian. Collectivism has no room for the wide humanitarianism of liberalism but only for the narrow particularism of the totalitarian.
Many liberal socialists are guided in their endeavors by the tragic illusion that by depriving private individuals of the power they possess in an individualist system, and by transferring that power to society, they can thereby extinguish power.
To split or decentralist power is necessarily to reduce the absolute amount of power, and the competitive system is the only system designed to minimize by decentralization the power exercised by man over man.
The most effective way of making everybody serve the single system of ends toward which the social plan is directed is to make everybody believe in those ends.
If all the sources of current information are effectively under one single control, it is no longer a question of merely persuading the people of this or that. The skillful propagandist then has the power to mold their minds in any direction he chooses, and even the most intelligent and independent people cannot entirely escape that influence if they are long isolated from all other sources of information.
The most effective way of making people accept the validity of the values they are to serve is to persuade them that they are really the same as those which they, or at least the best among them, have always held, but which were not properly understood or recognized before. The people are made to transfer their allegiance from the old gods to the new under the pretense that the new gods are really what their sound instinct had always told them but what before they had only dimly seen. And the most effective technique to this end is to use the old words but change their meaning ... the worst sufferer in this respect is, of course, the word "liberty."
Facts and theories must thus become no less the object of an official doctrine than views about values ... the probable effect on the people's loyalty to the system becomes the only criterion for deciding whether a particular piece of information is to be published or suppressed.
It is entirely in keeping with the whole spirit of totalitarianism that it condemns any human activity done for its own sake and without ulterior purpose.
To deprecate the value of intellectual freedom because it will never mean for everybody the same possibility of independent thought is completely to miss the reasons which give intellectual freedom its value. What is essential to make it serve its function as the prime mover of intellectual progress is not that everybody may be able to think or write anything but that any cause or idea may be argued by somebody.
To "plan" or "organize" the growth of the mind, or, for that matter, progress in general, is a contradiction in terms. The idea that the human mind ought "consciously" to control its own development confuses individual reason, which alone can "consciously control" anything, with the interpersonal process to which its growth is due. By attempting to control it, we are merely setting bounds to its development and must sooner or later produce a stagnation of thought and a decline of reason.
The tragedy of collectivist thought is that, while it starts out to make reason supreme, it ends by destroying reason because it misconceives the process on which the growth of reason depends.
A state which allows such enormous aggregations of power to grow up [as the monopolistic organization of industry] cannot afford to let this power rest entirely in private control.
The higher wages which the monopolist is in a position to pay are just as much the result of exploitation as his own profit.
Very frequently even measures aimed against the monopolists in fact serve only to strengthen the power of monopoly. Every raid on the gains of monopoly, be it in the interest of particular groups or of the state as a whole, tends to create new vested interest which will help to bolster up monopoly.
Private monopoly is scarcely ever complete and even more rarely of long duration or able to disregard potential competition. But a state monopoly is always a state-protected monopoly—protected against both potential competition and effective criticism. It means in most instances that a temporary monopoly is given the power to secure its position for all time—a power almost certain to be used.
There is no other possibility than either the order governed by the impersonal discipline of the market or that directed by the will of a few individuals; and those who are out to destroy the first are wittingly or unwittingly helping to create the second.
Before we accept this claim, or treat the change as praiseworthy, we must inquire a little further how far it is true.
The only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men.
The refusal to yield to forces which we neither understand nor can recognize as the conscious decisions of an intelligent being is the product of an incomplete and therefore erroneous rationalism.
It should never be forgotten that the one decisive factor in the rise of totalitarianism on the Continent, which is yet absent in England and America, is the existence of a large recently dispossessed middle class.
It may sound noble to say, "Damn economics, let us build up a decent world"—but it is, in fact, merely irresponsible.
What our generation is in danger of forgetting is not only that morals are of necessity a phenomenon of individual conduct but also that they can exist only in the sphere in which the individual is free to decide for himself and is called upon voluntarily to sacrifice personal advantage to the observance of a moral rule.
Only when we ourselves are responsible for our own interests and are free to sacrifice them has our decision moral value. We are neither entitled to be unselfish at someone else's expense nor is there any merit in being unselfish if we have no choice. The members of a society who in all respects are made to do the good thing have no title to praise.
A movement whose main promise is the relief from responsibility cannot but be antimoral in its effect, however lofty the ideals to which it owes its birth.
There is all the difference between demanding that a desirable state of affairs should be brought about by authorities, or even being willing to submit provided everyone else is made to do the same, and the readiness to do what one thinks right oneself at the sacrifice of one's own desires and perhaps in the face of hostile public opinion.
The virtues which are less esteemed and practiced now—independence, self-reliance, and the willingness to bear risks, the readiness to back one's own conviction against a majority, and the willingness to voluntary cooperation with one's neighbors—are essentially those on which the working of an individualist society rests. Collectivism has nothing to put in their place, and in so far as it already has destroyed them it has left a void filled by nothing but the demand for obedience and the compulsion of the individual to do what is collectively decided to be good.
The first prerequisite for success in propaganda directed to other people is the proud acknowledgement of the characteristic values and distinguishing traits for which the country attempting it is known to the other peoples.
Neither good intentions nor efficiency of organization can preserve decency in a system in which personal freedom and individual responsibility are destroyed.
Economic transactions between national bodies who are the same time the supreme judges of their own behavior, who bow to no superior law, and whose representatives cannot be bound by any considerations but the immediate interest of their respective nations, must end in clashes of power.
Planning on an international scale, even more than is true on a national scale, cannot be anything but a naked rule of force, an imposition by a small group on all the rest of that sort of standard and employment which the planners think suitable for the rest.
Exclusive control of an essential commodity or service (as, for example, air transport) is in effect one of the most far-reaching powers which can be conferred on any authority.
There can be no international law without a power to enforce it.