Back on the Road to Serfdom

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by Thomas E. Woods, Jr.: Instead
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What follows
is the introduction I wrote to Back
on the Road to Serfdom
,
a just-released collection of esays on the resurgence of statism.
(Ignore Amazon’s claim that the book is shipping in 1–4
months; it is shipping now.)

It was not
difficult to predict a major consequence of the Panic of 2008:
disparaging the market economy and the free society is now more
chic than it has been in half a century. In light of recent events,
the argument runs, only a hopeless naïf would champion these
things. What we need now is greater supervision by our public
servants, and less adherence to the discredited dogmas of the
past.

Just how
much the free market was in fact responsible for the crisis, or
the extent to which government itself and its central bank may
have been the culprits (and thus whether the "free market"
could have been to blame in the first place), is the subject of
one of the essays in this volume. The unifying theme of this book,
though, is the brute fact that a shift toward statism is indeed
occurring, and that it will not end happily. History is littered
with foreign and domestic crises that became pretexts for the
expansion of government power, and the present instance appears
to be no exception.

When we argue
that the winds are blowing in the direction of an ever-larger
role of the state in American life, we must be careful not to
imply that prior to 2007–8 a broad consensus in favor of the free
market and against state coercion had taken root. Even during
the 1980s, when free-market ideas were said to be sweeping the
country, the net effects were modest. Larry Schwab makes a persuasive
case in his overlooked study The
Illusion of a Conservative Reagan Revolution
that the
transformation that was supposed to have overtaken America during
the 1980s was rather more limited than either liberals or conservatives
have been willing to admit. There is little evidence of a lasting
ideological shift among the population, and government grew rather
than shrank, with the federal budget doubling over the course
of the decade.

The failure
of conservatives to make significant inroads into the federal
apparatus was symbolized by the Contract with America, the series
of proposals Republicans promised to support on the eve of their
off-year landslide in 1994. What was portrayed as a bold array
of policy initiatives was in fact a timid and insignificant list
of changes that would have left the federal apparatus for all
intents and purposes unchanged. The Brookings Institution correctly
observed: "Viewed historically, the Contract represents the
final consolidation of the bedrock domestic policies and programs
of the New Deal, the Great Society, the post–Second World War
defense establishment, and, most importantly, the deeply rooted
national political culture that has grown up around them."

The GOP Pledge
of 2010 promised to eliminate an unspecified $100 billion from
the federal budget at a time of skyrocketing debt, record deficits,
and a budget approaching $4 trillion. History seemed to be repeating
itself.

In mid-2010,
though, F. A. Hayek's 1944 book, The
Road to Serfdom
, soared to the number-one slot on Amazon.com;
in a single week it sold, incredibly, upwards of forty thousand
copies. Although not the radical libertarian tract its critics
claimed at the time, it had a profound effect on many readers,
who found in it an intelligent critique of central planning and
its effects on individual liberty. Was it a sign of the times
that interest in a book like this would suddenly be revived? Had
a critical mass of the American public grown concerned that their
own country faced a watershed moment in its history involving
freedom and the state?

That remains
to be seen.

Hayek never
expected his small book to become an international sensation,
or to wind up on lists of the seminal works of the classical liberal
canon. Prior to the book's release, Hayek had been a professor
at the London School of Economics, where he earned a reputation
as one of the world's great economic theorists. His work developing
the Austrian School's theory of the business cycle won him the
Nobel Prize in 1974, four decades after he wrote it. His works
in economics were technical and difficult for a lay audience,
though, so the popular reception of The Road to Serfdom added
a new dimension to his career.

The genteel
Hayek dedicated his book "to socialists of all parties"
— people he believed were guilty of nothing more than intellectual
error. He proceeded to state his case firmly but without acrimony
or invective. (If anything, he may have been too accommodating,
conceding that certain interventions in the economy were acceptable
or even desirable.)

Some of Hayek's
book can seem dated today, since few now call for state ownership
of the means of production or for the kind of central economic
planning to which his criticisms apply — a welcome development
for which Hayek himself may take some share of the credit. The
problems we face stem from the mixed economy, as opposed to the
fully socialist ones that Hayek criticized. All over the world,
the impossible promises governments have made to their populations
are beginning to unravel. Millions of people have arranged their
lives in the expectation of various forms of government support
that will be mathematically impossible to provide.

Aggravating
this problem are the demographic trends at work across the developed
world, which faces an aging crisis that will strain its welfare
states to the breaking point. (As Foreign Policy magazine
reported, "The global population of children under 5 is expected
to fall by 49 million as of midcentury, while the number of people
over 60 will grow by 1.2 billion.") At the very moment that
some Americans are calling for a single-payer health-care system
in the United States, pointing to the alleged successes of such
systems in Europe, the finance ministers of those countries privately
concede that of course those programs are going to implode, and
that the collapse is only a matter of time.

What the
rising generations across the developed world are facing is a
genuine road to serfdom. They will have to work harder and longer
than did their parents just to tread water, if they can find work
at all in artificial economies battered by years of "stimulus"
and misdirected resources. Retirement will seem like something
out of science fiction. And to add insult to injury, they will
be putting in this effort on behalf of transfer programs that
are going to collapse anyway — Social Security, Medicare, pensions,
and so forth.

The economic
consequences of an expanded government presence in American life
are of course not the only outcomes to be feared, and this volume
considers a variety of them. For one thing, as the state expands,
it fosters the most antisocial aspects of man's nature, particularly
his urge to attain his goals with the least possible exertion.
And it is much easier to acquire wealth by means of forcible redistribution
by the state than by exerting oneself in the service of one's
fellow man. The character of the people thus begins to change;
they expect as a matter of entitlement what they once hesitated
to ask for as charity. That is the fallacy in the usual statement
that "it would cost only $X billion to give every American
who needs it" this or that benefit. Once people realize the
government is giving out a benefit for "free," more
and more people will place themselves in the condition that entitles
them to the benefit, thereby making the program ever more expensive.
A smaller and smaller productive base will have to strain to provide
for an ever-larger supply of recipients, until the system begins
to buckle and collapse.

We should
recall, though, that when the French classical liberal Frédéric
Bastiat spoke of "legal plunder," he was not thinking
exclusively of the use of state power to expropriate the rich
on behalf of the poor. He was thinking of all forms of state violence
employed to benefit one group at the expense of the rest of society.
The greater the scope of the state over the economy, the more
entrepreneurial energy will be misdirected into lobbying for special
privileges and loot, and less into ongoing efforts to please the
consumer.

The more
functions the state usurps from civil society, the more the institutions
of civil society will atrophy. Once supplanted by coercive government,
tasks that people used to perform on a voluntary basis come to
be viewed as impossible for civil society to manage in the absence
of government — even though civil society did indeed perform these
functions at one time. This spiritless population comes, in turn,
to look for political solutions even to the most trivial problems.

The more
the market is supplanted by a system of crony capitalism, the
more the very phenomenon of profit appears disreputable. How,
apart from some grant of privilege or other underhanded means,
could someone have grown wealthy? Journalist Hedrick Smith, in
his study The New Russians, found that this was the effect
of decades of Communism — anyone who seemed to be prospering became
a target of suspicion and envy. Entrepreneurship can scarcely
function in such an atmosphere.

Spanning
history, economics, religion, and the arts, the essays in this
collection constitute both a warning about and a corrective to
these trends.

Back on
the Road to Serfdom begins by considering how we got here.
Brian Domitrovic leads off with a look at what happened in the
twentieth century to give the federal government such broad sway
over the economy. In examining this development, he shows that
the historical record is clear: the more the authorities try to
steer the economy, the more erratic it becomes.

Carey Roberts
goes back even earlier than Domitrovic, to the era of the American
Founding. He traces the present resurgence of statism to the seminal
conflict between Thomas Jefferson and Alexander Hamilton, and
sets forth a refreshingly revisionist account of Hamiltonian economic
policies, which Americans are expected to revere as self-evidently
sensible and wise.

Per Bylund
then looks beyond America's shores to show how the welfare state
became the dominant model of government throughout the Western
world. He also punctures the myths of the welfare state that Americans
have been lectured about for decades. A native of Sweden working
on his doctorate in the United States, Bylund reveals that the
so-called Swedish model is hardly a dream for modern civilization.
In so doing, he rules out the default position of so-called progressives,
which is to claim that large welfare states are compatible with
long-run prosperity, and that there is nothing about the American
situation that higher levels of wealth confiscation cannot solve.
Moreover, he demonstrates that the welfare state harms not only
the economy but also individual liberty and civil society.

With Domitrovic,
Roberts, and Bylund having established the broader context for
the government's accelerating intrusions into the economy, Antony
Mueller looks at the more immediate causes of the recent financial
crisis. His essay is a valuable corrective to the standard account
of the economic downturn that has fueled so much of the recent
resurgence of statism. Professor Mueller's interpretation of the
crisis, which is informed by the Austrian School of economics,
also accounts for why the proposed remedies are likely to prolong
the economic malaise in those countries adopting them.

Free trade
has come under renewed attack across the political spectrum over
the course of the past generation. While some of the older arguments
in favor of domestic protection continue to be made, new ones
have recently been added to the traditional arsenal. We hear repeated
claims these days that unhampered trade is not in fact mutually
beneficial, and that although the overall number of widgets may
indeed increase under free trade, the interests of the working
classes in the developed world are grievously harmed. Mark Brandly
uncovers the flaws in these arguments in his robust defense of
the international division of labor.

Dane Stangler
discusses another vital element of the economy and society that
is threatened by state encroachment: entrepreneurial activity.
When we understand what entrepreneurship is, we realize how foolish
it is to expect the state to foster it, except perhaps by removing
barriers to economic activity.

Tim Carney's
essay builds on an area in which he has made such important contributions:
the relationship between government and big business. The superficial
account with which American schoolchildren are familiar conceives
of these two forces as antagonists. Both theory and history suggest
that the true nature of their interaction is rather more interesting,
and often involves collusion against the public interest rather
than the righteous regulation of private malefactors by wise public
servants.

Western religious
leaders have as a rule been scandalously naïve about the
nature of the state and sanguine about its expansion. Two of our
essayists subject the unexamined premises behind these arguments
to critical and fruitful scrutiny. John Larrivee deftly responds
to some of the more common criticisms of the free market that
may be heard in religious circles. Such criticisms, he shows,
undermine the role of values, faith, and civil society while opening
the door to more government intervention. In the next essay, Gerard
Casey of University College Dublin considers whether some Christians'
social-democratic views of wealth redistribution, the state, and
the market are justified in light of tradition and the Bible

The University
of Virginia's Paul Cantor, who attended Ludwig von Mises's seminar
at New York University in the early 1960s, has done much groundbreaking
work on markets and the arts, a tradition he continues in the
final essay of this volume. Here he explores the bureaucratization
of culture, and finds that this form of government planning, just
like all the others, grossly oversimplifies the phenomenon it
is attempting to control, and involves the hopeless task of substituting
top-down direction for the spontaneous and dispersed origins of
real culture.

Americans
are taught a great deal of civics-book nonsense about the nature
of the state, the benefits it confers, and the unbearable difficulties
we would face without its careful custodianship of society. In
reality, Americans are ruled by a patchwork of self-perpetuating
fiefdoms, which beneath a veneer of public-interest rhetoric seek
to pursue their own power and resources.

There is,
one would think, another way for human beings to live than this.
Ironically, it is government itself that is about to teach that
very lesson. When its grandiose schemes and promises inevitably
unravel, all that will be left is civil society managing its own
affairs, the very thing we have been taught to believe is impossible.

January
12, 2011

Thomas
E. Woods, Jr. [send him mail]
is the author of eleven books, including Nullification:
How to Resist Federal Tyranny in the 21st Century
,
and the New York Times bestsellers Meltdown:
A Free-Market Look at Why the Stock Market Collapsed, the Economy
Tanked, and Government Bailouts Will Make Things Worse
,
and The
Politically Incorrect Guide to American History
.
He is the editor of the just-released Back
on the Road to Serfdom
.
His latest book, Rollback:
Repealing Big Government Before the Coming Fiscal Collapse
,
will be released February 7. Visit his website
and blog
, follow him on Twitter
and Facebook,
and subscribe to his YouTube
Channel
.

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Best of Thomas Woods

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