HOW MUCH POWER SHOULD THE GOVERNMENT HAVE TO REGULATE AND PLAN THE ECONOMY?

The Road to Serfdom by F.A. Hayek is described as an “unimpeachable classic work in political philosophy, intellectual and cultural history, and economics.” Originally published in 1944 it was seen as heretical for its passionate warning against the dangers of state control over the means of production.

While it was written to warn his readers about the socialistic roots of Nazism, Fascism and Communism during World War II, The Road to Serfdom prophetically described what would happen in Europe, China, Great Britain, and even in the United States. I would like this book to be required reading in civics, political science, economics, history and philosophy classes. It is as relevant today as when it was written.

Hayek argues that the free market in goods, labor, ideas, and speech is incompatible with the coercive power of central government to plan our economy. Personal freedom and individual responsibility is endangered by state control. The objective and impartial Rule of Law is threatened when politicians and government agencies choose winners and losers in business and employment. Policies aimed at achieving the ideal of distributive justice (i.e. economic equality), leads to the destruction of the Rule of Law. There can be no liberty without law.

There is conflict between different kinds of law: one is the Rule of Law, general principles laid down beforehand, the ‘rules of the game’ which enables individuals to foresee how the coercive apparatus of the state will be used, or what he and his fellow-citizens will be allowed to do, or made to do in stated circumstances. The other kind of law gives in effect the authorities power to do, or made to do what it thinks fit to do.

Government agencies are given broad powers without being bound by fixed rules so that they have almost unlimited discretion in regulating activities of citizens and companies. Yet true Rule of Law would limit the scope of such powers and legislation so that they could not be aimed at particular people or companies in a discriminatory way.

The following excerpt is classic.

“As soon as the state takes upon itself the task of planning the whole economic life, the problem of the due station of the different individuals and groups must inevitably become the central political problem. As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power. There will be no economic or social questions that would not be political questions in the sense that their solution will depend exclusively on who wields the coercive power, on whose are the views that will prevail on all occasions…..That a government which undertakes to direct economic activity will have to use its power to realize somebody’s ideal of distributive justice is certain. But how can and how will it use that power? By what principles will it or ought it to be guided?”

The issues facing our nation, and indeed the whole world, have to do with political and economic power. These are influenced by moral values and our spiritual beliefs. “Power corrupts, and absolute power tends to corrupt absolutely.” (Lord Acton) Ideas have consequences. Hayek’s ideas are worth taking note of again.