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Hayek’s Political Argument against Socialism

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03/26/2021David Gordon

Friedrich Hayek’s The Road to Serfdom was a bestseller when it was published in 1944, and it has remained ever since one of the classic works in the literature of liberty. Many people, though, find it hard to understand. After Glenn Beck featured the book on his television show in 2010, resulting in a surge in demand for it, one noted speaker at Mises Institute events told me he found the book dense and difficult, and he predicted that Hayek’s new readers would soon turn away from the book in bafflement.

I’d like to discuss this week a helpful way of grasping the central argument of Hayek’s book found in Jeremy Shearmur’s book Hayek and After: Hayekian Liberalism as a Research Programme (Routledge, 1996). According to Shearmur, Hayek began as a socialist, and throughout his life retained much sympathy for socialist values. His dedication of The Road to Serfdom to "the socialists of all parties" by no means was insincere. But he came to believe that the ends of socialism could not be realized by socialist means, and he deemed it his duty to convey this view to a wide public.

Why does socialism inevitably fail to achieve the ends of prosperity, justice, and happiness it professes? The main answer will come as no surprise to readers of economic calculation is not possible in a socialist economy. Ludwig von Mises's argument to this effect overthrew Hayek's own commitment to socialism; and after he became aware of Mises's argument, he regarded market prices as essential to a functioning economic system.

Hayek saw that an analogous argument could be extended to the political sphere. Just as the socialist planner has no means to measure economic projects on a common monetary scale to judge their efficiency, the planner cannot combine the conflicting preferences of individuals into a coherent set of goals. Shearmur says,

Hayek argued that a planning authority will need to make decisions among various alternative ways in which resources could be utilized, and he claims that "there are within wide limits no grounds on which one person could convince another that one decision is more reasonable than the other."

What then can the planner do? Hayek suggests that the planner will attempt to impose his own set of priorities on society, and then he asks, "Isn’t this a very good brief characterization of tyranny?" The bulk of The Road to Serfdom consists of an account of how Nazism arose from ideas common in the German socialist movement; and Hayek shows in careful detail that the attempt to plan society negates freedom.

Hayek's analysis rests on a controversial premise. For his argument to work, it must not be the case that reason dictates a common set of values that most people readily grasp. If it does, then the planner may avoid the dilemma in which Hayek endeavors to place him. Since almost everyone will, if reasonable, agree on values, the planner need not impose his own preferences on an unwilling populace.

By the way, Hayek's argument, contrary to my mistaken belief for many years, does not depend on the assumption that there are no objective values. These can coexist on entirely good terms with his argument so long as people cannot readily grasp them or so long as the objective values most people can grasp do not suffice to resolve disputed social questions. Failing this, preferences will still conflict without hope of resolution.

If Shearmur’s account of Hayek's argument in The Road to Serfdom is correct, Hayek seems to have fulfilled the task he set himself. He aims to show that socialism subverts the values at which it ostensibly aims, and he appears to have done so. Should we then declare the Hayekian research program a success?

Not so fast, Shearmur says. Hayek has not shown that the unhampered free market is required by sound political theory. Socialism, we have seen, is out; but what about the welfare state? Isn’t it possible, for all Hayek's argument has shown, to proceed with Social Security, Medicare, antitrust, safety regulation, and other varieties of interventionism? Do these measures demand the unified scale of values that Hayek maintains leads to serfdom? Why do they require more than the concurrence of a democratic majority to institute?

If Hayek's program is to be declared a success, then, he needs to finish the job. He must extend his argument so that it applies to welfarism, in addition to full-scale socialism. Or must he? As Shearmur recognizes, a problem confronts his analysis. He thinks that Hayek's argument is incomplete because it does not by itself lead to support for the free market. But this assumes that Hayek was trying to defend an unhampered market: if he wasn’t, Hayek’s argument does not fail on his own terms.

As Shearmur acknowledges, Hayek did not in fact support the free market to the extent that Mises did.

Hayek is not an advocate of laissez-faire; he is not averse to government playing a considerable role; for example, in the area of the provision of public goods, in assisting with the smooth running of the market order, and also in meeting welfare needs…. In the light of the active role that he gives to government in The Road to Serfdom, one might wonder about the extent to which he can be described as a classical liberal there.

But in spite of his early sympathy for socialist values, Hayek became considerably more of a classical liberal later in his life; if a "rule of law" of the type he favored were put into effect, much of the contemporary welfare state would have to be dismantled.

In his effort to defend a more or less classical liberal society, Hayek increasingly turned to evolutionary considerations. Spontaneous orders, not governed by a conscious plan, can support larger populations than alternative forms of social organization. They will thus tend to supplant their more interventionist rivals, and they fully deserve to do so.

In his analysis of Hayek's evolutionist thought, Shearmur makes some very useful points. Hayek rightly calls the free market a spontaneous order, in the sense that no central plan controls its operation. But it does not follow that the market has to be established by a process of evolution, or that it is somehow better if it is. "At a theoretical level, it is also clear that Hayek's conservative enthusiasm for things evolved cannot be sustained." The products of evolution may be either good or bad, a commonplace Hayek often overlooked.

Furthermore, Hayek's method of judging societies has little to recommend it. Why should the society that can support the most people be held the most valuable? Shearmur amusingly terms this criterion "Hayek's revision of Bentham (from the Greatest Happiness of the Greatest Number to The Greatest Number)."

Readers who want comprehensive arguments against interventionism need to read Mises and Rothbard, instead of following Hayek into the morass of evolutionary speculation. Fortunately, Hayek’s bold and original argument against socialism does not depend on his evolutionary argument about human progress.

Note: The views expressed on are not necessarily those of the Mises Institute.

Contact David Gordon

David Gordon is Senior Fellow at the Mises Institute and editor of the Mises Review.

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