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Friday Interview: Hayek and His Most Important Book

Economist Bruce Caldwell discusses 'The Road to Serfdom'

Bruce Caldwell will serve as founding director of Duke University’s Center for the History of Political Economy, scheduled to begin operations this fall. Caldwell served as professor of economics at UNC-Greensboro when he edited what’s billed as the definitive edition of Friedrich von Hayek’s classic 1944 book, The Road to Serfdom. He discussed the book with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Kokai: This is a book that came out in 1944. It was very topical at the time, dealing with issues of concern to people of that day. More than 60 years later, why is it still considered so influential?

Caldwell: Well, it was a hugely important book, certainly in the debates that took place about socialism. The thesis of the book is that, contrary to what social democrats and good-hearted people believed at the time, his thesis was that you can’t really combine socialism, especially of the central-planning type, with freedom. And to make that argument in 1944 was just viewed as something beyond the pale. It certainly was an argument though, that, as time wore on, became quite evident.

Now for today, well, I’ll give you one example of some relevance for today. One of his major themes was that in times of war, national leaders will use the war to grow the size of government. And it doesn’t have to be a World War II sort of war. You can think of wars on poverty, wars against drugs, wars on terrorism. All of these are wars that the leaders have used to say we need to have more government, bigger government, more government involvement — and particularly if it’s a war that is open-ended. I mean World War II actually came to end. It’s hard to think that the war on terrorism would ever come to an end, or a war on poverty, or a war on drugs for that matter.

It means that the mandate for government to keep trying to — well, it didn’t work, so we need to try something else, and we need more resources. Often, particularly, it wasn’t just a resource issue. Civil liberties — the surrendering of civil liberties during wartime — is one of the things he was afraid of, worried about then, and I think is always appropriate to be worried about.

Kokai: In the introduction to this latest edition, you say that The Road to Serfdom was meant to be sort of an antidote to this notion that planning is a method used to solve all of the world’s problems.

Caldwell: Yes. Planning was viewed as a grand panacea. Don’t forget, he started this work in the Great Depression. The view was widespread that capitalism had failed massively. The solutions that were in place in other countries, such as fascism and communism, didn’t seem to be too attractive to at least most of the people in Britain, where he was writing. And so, socialist planning seemed to be the rational way to go. And there is a wonderful article about “middle opinion” in Britain in the 1930s, and virtually all of the intelligentsia — anyone who thought about anything — thought that socialism was the “middle way.” That was the term that was always used. And this was what he was trying to combat.

Kokai: One of the things that people who are fans of this book, or people even who know this book and are long-time critics, might be interested to learn, is that it started off as a memo.

Caldwell: Oh, it’s a wonderful story, really. It was a memo that he wrote to Lord Beveridge — William Beveridge, at the time, the director of the London School of Economics — in response to the idea that was widespread at the time that fascism was the last dying gasp of a failed capitalist system. The Marxists had predicted that capitalism would fail, and a great revolution would take place, and the masses would take over. But because that didn’t happen, in some countries during the Great Depression, what emerged was, particularly in Germany, fascism under Adolph Hitler. So the argument that was being made was that National Socialism, Nazism, was simply a capitalist response to the coming socialist revolution; it’s a last-ditch effort to avoid it. Hayek offered an alternative explanation, pointing out that National Socialism, in fact, is a form of socialism —that in terms of the interventions in the economy and their opposition to liberal policies in democracy, they had much more in common with another totalitarian system, like communism, than it did with — than either of them did — with liberalism. This is an argument, by the way, that I think most people today would find uncontroversial, and it shows you what sort of times he was living in, that it was viewed as a reactionary argument at the time.

Kokai: We talked a little bit about some of the problems that Hayek noted in The Road to Serfdom. What were the antidotes that he offered? What were the things that he said that governments should do?

Caldwell: Right. He wasn’t as clear in The Road to Serfdom. One of the criticisms that I think is a valid criticism of the book is that he talked about all of the problems with socialism but did not lay out in very much detail — he has a few pages, but not very much detail — of what should replace it. And I think he took those criticisms to heart because his next major book project — he actually had a book called The Sensory Order in between — but his next really big project was something called The Constitution of Liberty. He worked on it for four years. It wasn’t published until 1960, but it’s a book that is not really a blueprint but certainly articulates a liberal democratic market society: what it would look like, what its advantages are, what sorts of interventions might be necessary, and what its benefits are in terms of personal liberty.

Kokai: Now, one of the things that you also mention in the introduction is that this book has had strong positive and negative reactions since its publication. And I’m quoting from your introduction that “it continues to be a lightning rod as well as a Rorschach test, revealing as much about the reader’s prior commitments as it does about Hayek’s ideas.” Why is that true?

Caldwell: Well, I think particularly for people who read it back in the ’40s, the ones that would come back and read it again would think, “Gee, a lot of the stuff he is saying is not all that controversial.” So I think, on the one hand, one reason that there has been change is that the times have changed. But I think the Rorschach test and the lightning rod part are, in part, due to the fact that it appeared right at the end of World War II. It was published in 1944. But a Reader’s Digest edition appeared in April of 1945, just as the war in Europe was ending. And many people were saying, “Which way should we go?” And this Reader’s Digest edition, which is a 20-page edition of this much longer book, became widely disseminated and became iconic for people who were opposed to the New Deal or people who were trying to push the New Deal further. So it gained a reputation probably disproportionate to what is should have, in a sense, due to that Reader’s Digest condensation and the fact that, as a result, everybody knew about it and everybody took strong views on it.

Kokai: This book is still influential more than 60 years after its publication. Do you think it is still going to have some influence 60 years from now?

Caldwell: I don’t think the basic human desire to control social phenomena, control society through social policy, is ever going to dissipate. And, in fact, I think it is a noble desire. I think that Hayek, though, points out certain problems that people encounter when they try to plan a society. So I think that message is one that we would forget only at our peril. I’ll just put it that way.