11-15-2005, 09:23 PM
Interesting and old, yet informative article that wraps a context...
Not sure if I agree with the concluding observations of the article (granted, this was from 1994), but what do resident experts think?
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The road to serfdom - fifty years on. (economist F.A. von Hayek's lasting influence)
History Today; 5/1/1994; Cockett, Richard
* March 10th, 1994, saw the fiftieth anniversary of the publication of F.A. Hayek's The Road to Serfdom, which can lay claim to being the single most influential political book published in Britain during this century. Indeed, The Road to Serfdom exercised as profound an influence upon subsequent generations of intellectuals and politicians as did The Communists Manifesto, written almost a century before in 1848. Much as Marx and Engels succeeded in reorientating European politics along class lines, so Hayek succeeded in establishing a new fault line in political discourse, between the freedom of the individual and the power of the state -- the rhetoric that has informed all political debate in this country since the 1970s. Hayek's book was addressed to |The Socialists of all Parties', and if Socialism as a living doctrine is now confined to the fringes of politics, this is largely due to the intellectual campaign waged against what Hayek would have preferred to call |collectivism' from 1944 until his death in 1992.
The origins of The Road to Serfdom are to be found in an obscure academic debate of the 1930s, the |Economic Calculation' debate, which ranged the surviving free-market economists in Britain -- expertly marshalled by Lionel Robbins at the London School of Economics -- against those who advocated a greater role for the state in the economic affairs of the nation. The most prominent intellectual exponent of the latter view was, of course, John Maynard Keynes, and the battle between the economic liberals and the Keynesians during the 1930s in the correspondence columns and articles of the academic journals was later to dominate the political battle between all the major parties after the war.
The immediate background to the |Economic Calculation' debate was the Great Depression, and the two sides originally developed their arguments over the appropriate role of the state in the economy as a direct response to the government's search for a solution to the problems of the depression. They first locked horns on the Economic Advisory Council set up by Ramsay MacDonald in 1929 -- a sort of inter-war equivalent of today's |Seven Wise Men' appointed by Norman Lamont to advise the Treasury. However, the economic liberals and the Keynesians could trace their intellectual antecedents further back than 1929. The Keynesians could claim a lineal descent from the Fabians of the 1880s, who had first advanced practical collectivist measures for the redistribution of wealth by the state guarantee of a |national minimum for all', whereas the economic liberals owed their intellectual inspiration not only to the original |laissez-faire' economists such as Adam Smith, but also to the Austrian economist, Ludwig Von Mises, the first great modern critic of Socialism.
Von Mises' book Socialism, published in 1922, was the first coherent intellectual attack on Socialism, collectivism and planning -- which Von Mises lumped all together. In his famous chapter on |Economic Calculation' he demonstrated that without a price mechanism in a socialist state, |All economic change ... would involve operations the value of which could neither be predicted beforehand nor ascertained after they had taken place. Everything would be a leap in the dark'. <b>Hayek's life work would be to refine the work of Von Mises, his teacher in Vienna, and, more importantly, make this work accessible to a wider public. </b>
Hayek arrived in Britain from Vienna in 1931 to take up a position as Tooke Professor of Economic Science and Statistics at the LSE, a post he held until leaving for the United States in 1951. Lionel Robbins was the primary sponsor of his academic career in Britain, and the Robbins/Hayek partnership was to be as important to the development of economics in this country as that other Anglo-Austrian partnership of Russell and Wittgenstein was to be in the field of philosophy. (Hayek was also Wittgenstein's second cousin).
At the heart of the debate between Robbins, Hayek and the economic liberals on the one hand, and the Keynesians on the other during the 1930s, was the issue of how to sustain the Western model of liberal democracy in the face of the depression and unemployment that had plagued Britain since 1918. <b>The two camps agreed on ends, but disagreed profoundly on means.</b> To Keynes, liberal democracy could only be saved from going the way of Russia, Germany or Italy by the state taking on a greater burden of economic management, moving towards |Liberal Socialism', which he defined as a system |... where we can act as an organised community for common purposes and to promote economic and social justice, whilst respecting and protecting the individual -- his freedom of choice, his faith, his mind and its expression, his enterprise and his property'. Keynes' system of macro-economics and demand-management was to be characterised as the |middle-way', supposedly combining the best of the Soviet type system of planning with the traditional virtues of classical liberalism. This blend came to be known as |Butskellism' in the 1950s.
To Hayek, on the other hand, |Liberal Socialism' was a contribution in terms and the |middle way' a dangerous fallacy. <b>Taking his cue from Von Mises, Hayek argued that any increase in state intervention and planning to maintain high rates of employment would not preserve liberal democracy, but ultimately destroy it, because without the operation of a price mechanism and a free-market the government would have to actively intervene at such a detailed (or |micro') level in the economy that the freedom of the individual to plan his or her own economic and social life would eventually be completely eroded -- the road to serfdom. </b>The side effect of the Keynesian utopia would be runaway inflation, as governments were forced to print more money to compensate for the lack of a price mechanism as state industries became uncompetitive and unproductive. In order to try and control such inflation governments would have to impinge on the economic life of each individual in exactly the way that Keynes had sought to avoid -- the |wages and prices' freezes and |solemn and binding' TUC declarations of the 1960s and 1970s.
This was the kernel of the debate between Hayek and Keynes. Unfortunately for Hayek, the Second World War provided a huge impetus towards the collectivist and planned economy envisaged by the Keynesians, and much of the collectivist economic wisdom of the time was embodied in government reports such as the Beveridge Report of 1942 and the White Paper on Employment of 1944. It was for this reason that Hayek set out to write The Road to Serfdom in the autumn of 1942, as a warning as to where such legislation might lead.
Whereas Keynes, the brilliant self-publicist and fluent journalist, had already attracted a large intellectual and political following by the start of the war, principally because his ideas seemed to offer comparatively painless remedies to hard-pressed governments, the arguments of the economic liberals had gone largely by default.
The Road to Serfdom was written to correct the balance; Hayek called it his |war duty' to speak out. It was thus a self-consciously polemical book, summarising the arguments of the economic liberals in the Economic Calculation debate in clear and provocative language. In his aim to bring their arguments against collectivism to the centre of the political debate, Hayek succeeded beyond even his own expectations.
In the midst of wartime Britain, busily planning for the |New Jerusalem', the book came as a bolt from the blue, <b>with its attack on the safe assumptions of the planners and its startling assertion that socialism, as in Germany, would only lead to National Socialism -- Nazism.</b> In particular, it gave the Conservative Party its theme for the 1945 general election. Churchill's celebrated reference to a socialist Gestapo in his opening election broadcast was but a garbled interpretation of Hayek's main thesis, as re-cycled to Churchill by the Party Chairman, Ralph Assheton. Conservative Central Office was so convinced of the propaganda value of the book that they were prepared to sacrifice a good proportion of their precious paper ration to rush out an abridged version of it for the election campaign.
Thus, at the moment of apotheosis for socialism, with Labour's landslide victory in the general election, Hayek had raised the flag of economic liberalism for future generations to rally round. The book's influence on certain Conservatives and Liberals was profound, and early readers of The Road to Serfdom included the young Somerville chemistry student Margaret Roberts. More importantly, Hayek's book gave the economic liberals a rallying point for future international co-operation that would develop a positive programme of policies such as privatisation and Trades Union Reform.
<b>Out of the publicity surrounding the publication of The Road to Serfdom Hayek brought together many of the leading anti-Keynesian economists in the world for the first conference of the Mont Pelerin Society in Switzerland in 1947. Their number included not only Von Mises and other members of the |Austrian School', but also several prominent British economists, the founders of the highly influential German school of the |Social Market Economy and the young Chicago professor Milton Friedman. </b>From 1947 to the 1980s the Mont Pelerin Society acted as a Comintern of the free-market, attracting to its conferences all the most important politicians and intellectuals interested in economic liberalism, including, from this country, Enoch Powell, Sir Geoffrey Howe, John Biffen and numerous academics, journalists and political activists.
As a direct result of reading the Readers Digest edition of The Road to Serfdom, Antony Fisher founded the Institute of Economic Affairs in London, which was to be the most important fount of free-market ideas in post-war Britain, and vitally important to the growth of the |New Right' in the 1980s. Fisher was to go on to found an international network of similar |think-tanks' around the globe which played similar roles in America and Eastern Europe.
The Centre for Policy Studies and the Adam Smith Institute both owed their intellectual inspiration to Hayek and the work of the IEA. Indeed, it would be hard to think of any other intellectual in Britain -- besides his arch rival Keynes -- who has had such a widespread impact on post-war British history as Hayek, and certainly not with the publication of one book. Margaret Thatcher herself was in no do this point. On Hayek's ninetieth birthday in 1989 she wrote to him that |none (of what her governments had achieved) would have been possible without the values and beliefs to set us on the right road and provide the right sense of direction. The leadership and inspiration that your work and thinking gave us were absolutely crucial, and we owe you a great debt'.
And what of The Road to Serfdom today? One can see the history of the last two centuries in Britain in terms of dialectical cycles of liberalism versus collectivism. The first cycle comprised the triumph of liberalism over mercantilism and feudalism lasting from the 1770s to the 1890s, a period divisible into two halves -- one prior to the 1820s, when the ideological war (of Adam Smith et al.) was fought and won, and the period thereafter, when economic liberalism became the ruling orthodoxy of all governments, whether they be led by Gladstone or Disraeli. The second cycle began in the 1880s and ended in the mid-1970s, and can be divided into the periods 1880 to the 1930s when the ideological battle against economic liberalism was fought and won (by the Fabians and Keynes) and the era of the 1940s to the 1970s when collectivism (or Butskellism) was likewise the ruling orthodoxy of all governments.
The third cycle began in the 1930s and is still in progress. The first part of this cycle was the period from those original debates on the Economic Advisory Council to the mid-1970s, when the ideological battle for economic liberalism was, again, fought and won by <b>Von Mises, Hayek and the IEA</b>; the second part of this cycle is still extant, the time from the mid-1970s to the mid-1990s, <b>when the ideas of Hayek and the economic liberals became the ruling orthodoxy of all parties and governments.</b>Â After the Butskellite consensus, we now have the consensus of Major-Smith during the 1990s, <b>when very little divides the two main parties on the central principles of economic management</b>. The intellectual movement inspired by <b>The Road to Serfdom has now run its course, and the political economy of Major-Smith now awaits its Hayek.</b>
COPYRIGHT 1994 History Today Ltd.
<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-rajesh_g+Nov 13 2005, 11:39 PM-->QUOTE(rajesh_g @ Nov 13 2005, 11:39 PM)<!--QuoteEBegin-->Interesting link posted by Kautilya on BR..
http://www.mises.org/story/1952
[right][snapback]41120[/snapback][/right]
<!--QuoteEnd--><!--QuoteEEnd-->
Not sure if I agree with the concluding observations of the article (granted, this was from 1994), but what do resident experts think?
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The road to serfdom - fifty years on. (economist F.A. von Hayek's lasting influence)
History Today; 5/1/1994; Cockett, Richard
* March 10th, 1994, saw the fiftieth anniversary of the publication of F.A. Hayek's The Road to Serfdom, which can lay claim to being the single most influential political book published in Britain during this century. Indeed, The Road to Serfdom exercised as profound an influence upon subsequent generations of intellectuals and politicians as did The Communists Manifesto, written almost a century before in 1848. Much as Marx and Engels succeeded in reorientating European politics along class lines, so Hayek succeeded in establishing a new fault line in political discourse, between the freedom of the individual and the power of the state -- the rhetoric that has informed all political debate in this country since the 1970s. Hayek's book was addressed to |The Socialists of all Parties', and if Socialism as a living doctrine is now confined to the fringes of politics, this is largely due to the intellectual campaign waged against what Hayek would have preferred to call |collectivism' from 1944 until his death in 1992.
The origins of The Road to Serfdom are to be found in an obscure academic debate of the 1930s, the |Economic Calculation' debate, which ranged the surviving free-market economists in Britain -- expertly marshalled by Lionel Robbins at the London School of Economics -- against those who advocated a greater role for the state in the economic affairs of the nation. The most prominent intellectual exponent of the latter view was, of course, John Maynard Keynes, and the battle between the economic liberals and the Keynesians during the 1930s in the correspondence columns and articles of the academic journals was later to dominate the political battle between all the major parties after the war.
The immediate background to the |Economic Calculation' debate was the Great Depression, and the two sides originally developed their arguments over the appropriate role of the state in the economy as a direct response to the government's search for a solution to the problems of the depression. They first locked horns on the Economic Advisory Council set up by Ramsay MacDonald in 1929 -- a sort of inter-war equivalent of today's |Seven Wise Men' appointed by Norman Lamont to advise the Treasury. However, the economic liberals and the Keynesians could trace their intellectual antecedents further back than 1929. The Keynesians could claim a lineal descent from the Fabians of the 1880s, who had first advanced practical collectivist measures for the redistribution of wealth by the state guarantee of a |national minimum for all', whereas the economic liberals owed their intellectual inspiration not only to the original |laissez-faire' economists such as Adam Smith, but also to the Austrian economist, Ludwig Von Mises, the first great modern critic of Socialism.
Von Mises' book Socialism, published in 1922, was the first coherent intellectual attack on Socialism, collectivism and planning -- which Von Mises lumped all together. In his famous chapter on |Economic Calculation' he demonstrated that without a price mechanism in a socialist state, |All economic change ... would involve operations the value of which could neither be predicted beforehand nor ascertained after they had taken place. Everything would be a leap in the dark'. <b>Hayek's life work would be to refine the work of Von Mises, his teacher in Vienna, and, more importantly, make this work accessible to a wider public. </b>
Hayek arrived in Britain from Vienna in 1931 to take up a position as Tooke Professor of Economic Science and Statistics at the LSE, a post he held until leaving for the United States in 1951. Lionel Robbins was the primary sponsor of his academic career in Britain, and the Robbins/Hayek partnership was to be as important to the development of economics in this country as that other Anglo-Austrian partnership of Russell and Wittgenstein was to be in the field of philosophy. (Hayek was also Wittgenstein's second cousin).
At the heart of the debate between Robbins, Hayek and the economic liberals on the one hand, and the Keynesians on the other during the 1930s, was the issue of how to sustain the Western model of liberal democracy in the face of the depression and unemployment that had plagued Britain since 1918. <b>The two camps agreed on ends, but disagreed profoundly on means.</b> To Keynes, liberal democracy could only be saved from going the way of Russia, Germany or Italy by the state taking on a greater burden of economic management, moving towards |Liberal Socialism', which he defined as a system |... where we can act as an organised community for common purposes and to promote economic and social justice, whilst respecting and protecting the individual -- his freedom of choice, his faith, his mind and its expression, his enterprise and his property'. Keynes' system of macro-economics and demand-management was to be characterised as the |middle-way', supposedly combining the best of the Soviet type system of planning with the traditional virtues of classical liberalism. This blend came to be known as |Butskellism' in the 1950s.
To Hayek, on the other hand, |Liberal Socialism' was a contribution in terms and the |middle way' a dangerous fallacy. <b>Taking his cue from Von Mises, Hayek argued that any increase in state intervention and planning to maintain high rates of employment would not preserve liberal democracy, but ultimately destroy it, because without the operation of a price mechanism and a free-market the government would have to actively intervene at such a detailed (or |micro') level in the economy that the freedom of the individual to plan his or her own economic and social life would eventually be completely eroded -- the road to serfdom. </b>The side effect of the Keynesian utopia would be runaway inflation, as governments were forced to print more money to compensate for the lack of a price mechanism as state industries became uncompetitive and unproductive. In order to try and control such inflation governments would have to impinge on the economic life of each individual in exactly the way that Keynes had sought to avoid -- the |wages and prices' freezes and |solemn and binding' TUC declarations of the 1960s and 1970s.
This was the kernel of the debate between Hayek and Keynes. Unfortunately for Hayek, the Second World War provided a huge impetus towards the collectivist and planned economy envisaged by the Keynesians, and much of the collectivist economic wisdom of the time was embodied in government reports such as the Beveridge Report of 1942 and the White Paper on Employment of 1944. It was for this reason that Hayek set out to write The Road to Serfdom in the autumn of 1942, as a warning as to where such legislation might lead.
Whereas Keynes, the brilliant self-publicist and fluent journalist, had already attracted a large intellectual and political following by the start of the war, principally because his ideas seemed to offer comparatively painless remedies to hard-pressed governments, the arguments of the economic liberals had gone largely by default.
The Road to Serfdom was written to correct the balance; Hayek called it his |war duty' to speak out. It was thus a self-consciously polemical book, summarising the arguments of the economic liberals in the Economic Calculation debate in clear and provocative language. In his aim to bring their arguments against collectivism to the centre of the political debate, Hayek succeeded beyond even his own expectations.
In the midst of wartime Britain, busily planning for the |New Jerusalem', the book came as a bolt from the blue, <b>with its attack on the safe assumptions of the planners and its startling assertion that socialism, as in Germany, would only lead to National Socialism -- Nazism.</b> In particular, it gave the Conservative Party its theme for the 1945 general election. Churchill's celebrated reference to a socialist Gestapo in his opening election broadcast was but a garbled interpretation of Hayek's main thesis, as re-cycled to Churchill by the Party Chairman, Ralph Assheton. Conservative Central Office was so convinced of the propaganda value of the book that they were prepared to sacrifice a good proportion of their precious paper ration to rush out an abridged version of it for the election campaign.
Thus, at the moment of apotheosis for socialism, with Labour's landslide victory in the general election, Hayek had raised the flag of economic liberalism for future generations to rally round. The book's influence on certain Conservatives and Liberals was profound, and early readers of The Road to Serfdom included the young Somerville chemistry student Margaret Roberts. More importantly, Hayek's book gave the economic liberals a rallying point for future international co-operation that would develop a positive programme of policies such as privatisation and Trades Union Reform.
<b>Out of the publicity surrounding the publication of The Road to Serfdom Hayek brought together many of the leading anti-Keynesian economists in the world for the first conference of the Mont Pelerin Society in Switzerland in 1947. Their number included not only Von Mises and other members of the |Austrian School', but also several prominent British economists, the founders of the highly influential German school of the |Social Market Economy and the young Chicago professor Milton Friedman. </b>From 1947 to the 1980s the Mont Pelerin Society acted as a Comintern of the free-market, attracting to its conferences all the most important politicians and intellectuals interested in economic liberalism, including, from this country, Enoch Powell, Sir Geoffrey Howe, John Biffen and numerous academics, journalists and political activists.
As a direct result of reading the Readers Digest edition of The Road to Serfdom, Antony Fisher founded the Institute of Economic Affairs in London, which was to be the most important fount of free-market ideas in post-war Britain, and vitally important to the growth of the |New Right' in the 1980s. Fisher was to go on to found an international network of similar |think-tanks' around the globe which played similar roles in America and Eastern Europe.
The Centre for Policy Studies and the Adam Smith Institute both owed their intellectual inspiration to Hayek and the work of the IEA. Indeed, it would be hard to think of any other intellectual in Britain -- besides his arch rival Keynes -- who has had such a widespread impact on post-war British history as Hayek, and certainly not with the publication of one book. Margaret Thatcher herself was in no do this point. On Hayek's ninetieth birthday in 1989 she wrote to him that |none (of what her governments had achieved) would have been possible without the values and beliefs to set us on the right road and provide the right sense of direction. The leadership and inspiration that your work and thinking gave us were absolutely crucial, and we owe you a great debt'.
And what of The Road to Serfdom today? One can see the history of the last two centuries in Britain in terms of dialectical cycles of liberalism versus collectivism. The first cycle comprised the triumph of liberalism over mercantilism and feudalism lasting from the 1770s to the 1890s, a period divisible into two halves -- one prior to the 1820s, when the ideological war (of Adam Smith et al.) was fought and won, and the period thereafter, when economic liberalism became the ruling orthodoxy of all governments, whether they be led by Gladstone or Disraeli. The second cycle began in the 1880s and ended in the mid-1970s, and can be divided into the periods 1880 to the 1930s when the ideological battle against economic liberalism was fought and won (by the Fabians and Keynes) and the era of the 1940s to the 1970s when collectivism (or Butskellism) was likewise the ruling orthodoxy of all governments.
The third cycle began in the 1930s and is still in progress. The first part of this cycle was the period from those original debates on the Economic Advisory Council to the mid-1970s, when the ideological battle for economic liberalism was, again, fought and won by <b>Von Mises, Hayek and the IEA</b>; the second part of this cycle is still extant, the time from the mid-1970s to the mid-1990s, <b>when the ideas of Hayek and the economic liberals became the ruling orthodoxy of all parties and governments.</b>Â After the Butskellite consensus, we now have the consensus of Major-Smith during the 1990s, <b>when very little divides the two main parties on the central principles of economic management</b>. The intellectual movement inspired by <b>The Road to Serfdom has now run its course, and the political economy of Major-Smith now awaits its Hayek.</b>
COPYRIGHT 1994 History Today Ltd.
<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-rajesh_g+Nov 13 2005, 11:39 PM-->QUOTE(rajesh_g @ Nov 13 2005, 11:39 PM)<!--QuoteEBegin-->Interesting link posted by Kautilya on BR..
http://www.mises.org/story/1952
[right][snapback]41120[/snapback][/right]
<!--QuoteEnd--><!--QuoteEEnd-->