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Hayek’s Road to Serfdom destroys a straw man
YouTube transcript. The Communist Manifesto Project YouTube Channel.
https://youtu.be/TTjwgybeGrQ
Audio
https://sites.google.com/site/communistmanifestoproject/home/audio-1/audio-page
Hello There
I have just finished rereading Frederick Hayek's book Road to Serfdom.
It was first published in 1944, and is something of a bible for
supporters of limited government and free markets.
As well as the book there is a condensed version by Reader's Digest that
Hayek approved of. And there is also a little picture book which is
available as a YouTube video and I have provided a link to that below.
Hayek's basic aim is to defend free market capitalism by characterizing
any alternative as government "planning" which will ultimately lead to
dictatorship and servitude. The planners are the "socialists" that come
in various varieties and include the national socialists better known as
the Nazis.
According to Hayek, this planning requires the central direction of
everything. All production decisions are made by central planners. And
these central planners will also remove from the individual any choice
over what they consume, what work training they receive and where they
will work and live. And to avoid any squabbles over what the outcome of
the plan should be you need a dictator to decide everything.
I agree that attempts to reduce, interfere with or eliminate the role of
markets can lead to very bad outcomes. The former Soviet Union and
present-day Cuba are good examples of this as is the crony capitalism
found virtually everywhere now. However, I do not see that these bad
outcomes are logically necessary. Consequently, I am in no way deflected
from my support for a communist future where markets would no longer exist.
Hayek claims that consumption decisions would have to be centralized if
the means of production are socially owned. However, he provides no
reasons for why production could not be guided by the preferences of
individual consumers. It is just part of his assumption that social
ownership means central decisions by society as a whole. As far as I
can see anything available now to determine consumer preferences would
still be available. For example, we have surveys and studies of spending
habits.
I also have trouble with his idea that people would have no freedom to
choose their jobs and jobs training. He says that if you do not have
wage changes inducing workers to enter or leave a line of work they will
have to be told where they are going to work. I cannot see how the
presence of rigid wages or even a guaranteed income would prevent
workers from choosing what jobs to apply for.
We then have the claim that production decisions would have to be
excessively centralized because of the absence of markets. Hayek
incorrectly assumes that enterprises could not have direct relations
with each other based on non-market cooperation and that instead any
dealings between them would have to be centrally directed.
Related to this is the idea that without private ownership you could not
use a decentralized price system. This is not something Hayek discusses
in Road to Serfdom but he does in his other writings. He was a leading
figure in the Austrian school of economics which has spilled a lot of
ink over this and they call it the socialist calculation problem.
Now I am in no position to set out how a future communist society would
organize itself nor do I feel I am obliged to. However, I think I can
say that there is nothing that prevents the effective use of a price
system just because those running economic undertakings are no longer
private owners or their representatives but instead are people you might
describe as custodians of social property.
When you cut through the rigmarole, all the Austrian school is doing is
arguing that only the profit motive can drive a properly functioning
price system because only it can provide the incentives to minimize
costs and to put resources to their most valued use. So that brings us
to the real debate which is whether it is possible to achieve a
communist society where financial reward disappears as a motivator and
is replaced by work becoming a want in its own right and by a desire to
contribute the best we can.
These guys also automatically assume that investment decisions under
communism would have to be excessively centralized in the hands of some
planning agency. I think that generally these decisions would be more
centralized than under capitalism but that would be because it makes
economic sense rather than out of necessity. However, one could possibly
imagine a set up where you have a multitude of agencies responsible for
allocating investment funds that would assess investment proposals from
industries, individual enterprises and start-ups. So there is nothing
limiting the extent of decentralization if required.
I don't claim that these are the final words on The Road to Serfdom but
I hope I have given you a fresh way to look at it.
See you next time.
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