The Road from Serfdom

Forseeing the Fall

Thomas W. Hazlett from the July 1992 issue

(Page 6 of 6)

I'm afraid many of my British friends still believe, as Keynes believed, that the existing moral convictions of the English would protect them against such a fate. This is non- sense. The character of a people is as much made by the institutions as the institutions are made by the character of the people. The present British institutions contribute everything to change the British character. You cannot rely on an inherent "British character" saving the British people from their fate. But you must create institutions in which the old kinds of attitudes will be revived which are rapidly disappearing under the present system.

Reason: So there is really nothing the government can do prior to a change in public opinion?

Hayek: You can distinguish between positive and negative moves. The government should certainly cease doing a great many things it does now. In that sense it depends upon the government ceasing to do things, and then that would open the possibility for other developments which you cannot guide and direct. Take the general complaint about British entrepreneurs being inefficient, lazy , and so on. All of this is a result of institutions. You would soon drive out the inefficient entrepreneur if there was more competition. And you would soon find that they would work hard if it was in their interest to do so. It is the set of institutions which now prevails which creates the new attitudes which are so inimitable to prosperity.

Reason: If big government is really the culprit, why do Sweden and many Scandinavian welfare states seem to be prospering?

Hayek: Well, we mustn't generalize. Sweden and Switzerland are the two countries which have escaped the damages of two wars and have become repositories of a large part of the capital of Europe. In Switzerland, there is still some traditional instinct against government interference. Switzerland is a marvelous example where, when the politicians become too progressive, the people hold a referendum and promptly say, "No!"

Reason: Yet Sweden is reasonably successful...

Hayek: Yes. But there is perhaps more social discontent in Sweden than in almost any other country I have been. The standard feeling that life is really not worth living is very strong in Sweden. Although they can hardly conceive of things being different than what they're used to, I think the doubt about their past doctrines is quite strong.

Reason: From 1948 until about a decade ago. West Germany pursued pointedly free-market policies and experienced an economic recovery so vital as to be judged a "German Miracle." Yet, the Social Democrats are firmly in power today, and some American analysts have suggested that this indicates a basic flaw in the philosophy or strategy of the so-called Freiburg School, the group of free-market economists that led the "German Miracle." What mistakes did they make and what can we learn from their example?

Hayek: First, the idea that the Germans are now governed by a socialist government is just wrong. The present German chancellor admits--perhaps not publicly, but in conversation--that he is not a socialist. Secondly, until recently, the German trade unions were led by people who really knew what a major inflation is. And, until recently, all you needed to tell German trade unionists when they made excessive wage claims is that "this will lead to inflation," and they would collapse.

The German prosperity is due, to a very high degree, to the reasonableness of the German trade-union leaders which, in turn, was due to their experience with inflation.

Reason: A fellow Austrian great, the late Joseph Schumpeter, wrote Capitalism, Socialism and Democracy in 1942. In that book, Schumpeter predicted the collapse of capitalism due,not to its weakness (as Marx had predicted), but due to its strengths. Specifically, the tremendous economic abundance that would flower from the capitalist seed would produce an age of bureaucrats and administrators, displacing the innovators and entrepreneurs that had made it all possible. This, in turn, would undermine the social fabric upon which capitalism rested: a widespread acceptance and respect of private property. How does Schmpeter's thesis concerning the inherent political instability of capitalism fit in with your own theories on our road to serfdom?

Hayek: Well, there is some similarity in the nature of the prediction. But Schumpeter was really enjoying a paradox. He wanted to shock people by saying that capitalism was certainly much better but it will not be allowed to last, while socialism is very bad but it is bound to come. That was the sort of paradox he just loved.

Underlying this is the idea that certain trends of opinion-- which he correctly observed--were irreversible. Although he claimed the opposite, he had, in the last resort, really no belief in the power of argument. He took it for granted that the state of affairs forces people to think in a particular manner.

This is fundarnentally false. There is no simple under- standing of what makes it necessarv for people under certain conditions to believe certain things. The evolution of ideas has its own laws and depends very largelv on developments which we cannot predict. I mean, I'm trying to move opinion in a certain direction, but I wouldn't dare to predict what direction it will really move. I'm hoping that I can just divert it mod- erately. But Schumpeter's attitude was one of complete despair and disillusionment over the power of reason.

Reason: Are you optimistic about the future of freedom?

Hayek: Yes. A qualified optimism. I think there is an intellectual reversion on the way, and there is a good chance it may come in time before the movement in the opposite direction becomes irreversible. I am more optimistic than I was 20 years ago, when nearly all the leaders of opinion wanted to move in the socialist direction. This has particularly changed in the younger generation. So, if the change comes in time, there still is hope.

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The Road from Serfdom « Legal Club – National Economics University links to this page. Here’s an excerpt:

…leaders of opinion wanted to move in the socialist direction. This has particularly changed in the younger generation. So, if the change comes in time, there still is hope. Source: http://reason.com/archives/1992/07/01/the-road-from-serfdom from → Capitalism, Democracy, Federalism, Freedom, General, Legal History, Legal Principles, Political Science, Republic, Social concern, Studying Law Chưa có phản hồi nào. Ấn…