The History Behind Hayek’s Road to Serfdom

The Road to Serfdom is by far F.A Hayek’s most well-known book. It’s also his most controversial work. After it’s first publication, many intellectuals in the United States greeted the book with intense condescension:

Isaiah Berlin wrote to a friend in April 1945 that he was “still reading the awful Dr. Hayek.” The economist Gardiner Means did not have Berlin’s fortitude; after reading 50 pages he reported to William Benton of the Encyclopedia Britannica that he “couldn’t stomach any more.” The philosopher Rudolf Carnap, writing to Hayek’s friends Karl Popper, apparently could not muster even the stamina of Means: “I was somewhat surprised to see your acknowledgement of von Hayek. I have not read his book myself; it is much read and discussed in this country, but praised mostly by protagonists of free enterprise and unrestricted capitalism, while all leftists regard him as a reactionary. (Hayek and Caldwell 2007: 3)

This doesn’t even include the more recent critiques. As much as the book is despised, it has also been embraced by many politicians, pundits, and academics on the right. It’s a seminal work that has influenced thousands if not millions of people. But I’m not here to deal with the controversial message of The Road to Serfdom. Instead, I thought that I would take a look at some of Hayek’s historical claims, specifically those pertaining to the intellectual origins of the Nazis and the rise of Nazi Germany.

Before I actually examine the accuracy of Hayek’s history on Nazi Germany, I thought it would be beneficial to look at not only what Hayek really said, but the history leading up to the writing of the publication. Like many controversial works, The Road to Serfdom is a books that is misinterpreted as much as it is loved (or hated) by those who embrace (or reject) it’s far reaching ideas.

The British, Naziism, and Socialism

In Bruce Caldwell’s introduction to Hayek’s, Road to Serfdom, he has a fantastic section on the history leading up to the publication of the book. On March 1st, 1933, Hayek delivered a lecture called The Trend of Economic Thinking. In that lecture, Hayek asked some simple questions: Why were economists disregarded by the public? Why was the knowledge of economists, which was apparently so very useful, considered by the public to be so out touch with reality? To answer these question, Hayek drew upon the intellectual history of Germany, specifically pointing at the Germany Historical School. He claimed that the public was being influenced by these economists who, by criticizing the general theory of economics, had undermined the the credibility of economic reasoning in general:

I refer to the methods of the famous Historical School in Economics. Although in the proper sense of a school aiming at the replacement of theoretical analysis by description, this is now a thing of the past, yet it is of tremendous historical importance because of its influence on popular thought at the present time.

It is clear that anything which justified the treatment of practical problems as something unique, determined only by their own historical development, was bound to be greeted as a welcome relief from the necessity of controlling emotions by difficult reasoning. It was just this advantage which the historical method afforded. Refusing to believe in general laws, the Historical School had the special attraction that its method was constitutionally unable to refute even the wildest of Utopias, and was, therefore, not likely to bring the disappointment associated with theoretical analysis. Its emphasis on the unsatisfactory aspects of economic life, rather than upon what was owed to the working of the existing system, and what would be the consequences if we tried directly to control some of the recognised evils, strongly recommended it to all those who had become impatient. (Hayek 1933: 125-126)

Hayek’s choice of the German Historical School was significant on several levels. First, the German Historical School was the chief rival of the Austrian School of economics. Secondly, the German Historical School were the architects of numerous social welfare reforms, which were embraced by Otto von Bismarck while at the same time repressing socialists. In fact, Hayek probably wrote this speech to show his audience the parallels between the Germany of Bismarck and the Germany of the 1930s. In Hayek’s mind, the similarities between Bismarck’s policies and the actions of Adolf Hitler were too great to go unnoticed. Only a month earlier had Hitler taken the position of Chancellor of the Weimar Republic and already convinced President Paul von Hindenburg to sign anti-socialist and anti-communist legislation.

As the situation continued to deteriorate in Germany, Hayek took more and more issue with the British intellgentsia’s interpretation of the events. Many in Britain saw Naziism as a capitalist inspired movement and as last ditch effort by the bourgeoisie to delay the inevitable doom of capitalism. In response to these claims, Hayek wrote a memo titled “Nazi-Socialism“*  in the Spring of 1933, where he attempted to rebut such arguments, claiming that Nazism represented a culmination of anti-liberal tendencies that had grown since Bismarck’s time (This also goes back to the German Historical School). In 1938, Hayek expanded this short memo into a longer essay titled “Freedom and the Economic System”, which made similar but more detailed arguments. He then proceeded to republish the essay in 1939, adding more ideas, noting how the price system is a mechanism for coordinating knowledge. It’s from these memos and pamphlets that many of the ideas that would later appear in Road to Serfdom can be seen. While Hayek certainly developed some new arguments against socialism during this time period, some of his arguments weren’t new at all and were taken from the socialist debates between his mentor Ludwig von Mises and other prominent socialists.

So by 1939, many of the elements for Hayek’s book were present. But while many of the pieces were there, they were are scattered. It wouldn’t be until after Hayek’s experience during the British war effort that he would combine his ideas into a coherent whole.

It’s interesting to see how F.A Hayek responded to the events in Germany during the 1930s and how he incorporated that into his thoughts on history and economics. Whether he is wrong or not is another question, but it’s important to see how his ideas evolved within their historical context and to criticize his arguments without that context would be misguided.

*Ironically, in this memo, Hayek seems to be making the argument that many take away from “Road to Serfdom”, that interventionism will inevitably lead to totalitarianism:

Nothing, however, would be less justifiable than that the nations of western Europe should look down on the German people because they have fallen victims to which, in this country seems a kind of barbarism. What must be realized is that this only the ultimate and necessary outcome of a process of development in which the other nations have been for a long time steadily following Germany, albeit at a considerable distance. The gradual extensions of the field of state activity, the increase in restrictions on international movements of both men and goods, sympathy with central economic planning and the widespread playing with dictatorship ideas, all tend in this direction.

Of course, as Bruce Caldwell shows, this argument is wrong. But, Hayek does seem to use the “inevitability” argument in this memo. Now, Hayek does use the word “tend ” , so perhaps I should be a bit more tentative with my claim. It could just be bad writing on Hayek’s part. But it’s an interesting little tidbit.

References:

1. Hayek, Friedrich August Von., and Bruce Caldwell. The Road to Serfdom: Text and Documents ; the Definitive Edition. Chicago, IL: Univ. of Chicago, 2007. Print.

2. Hayek, F. A. Von. “The Trend of Economic Thinking.” Economica 40 (1933): 121-37. Print.

 
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6 Comments

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6 responses to “The History Behind Hayek’s Road to Serfdom

  1. The case might be that advocates of both interpretations are talking over each other. I think it’s true that there is an argument about inevitability in RtS. If a government is influenced by an intellectual culture of hyper-rationalism — a culture with a taste for central planning —, and if that government continues to be influenced in that way, it will inevitably become socialist. But, Hayek isn’t saying, “Therefore, all democracies that tax and regulate are therefore destined to socialism.” There can be a liberal democracy — that taxes and regulates — which respect the limits to planning, which will not inevitably become socialist. I don’t think that many critics of the RTS appreciate the difference.

    • Based on my first reading of RtS, although I hesitated to conclude that Hayek was make an argument about inevitability (mainly because of Caldwell’s introduction), I did think that Hayek’s arguments were akin to positive reinforcement or a positive feedback loop.

      I wish RtS was a better written book, it might have cleared up much of the confusion and controversy surrounding it. In my opinion, the main reason that so many fans and critics misinterpret the text is because the writing can be hard to follow. If it wasn’t for Caldwell’s introduction, I probably would have been one of those people.

  2. I absolutely agree that it is helpful to understand Hayek’s context (just like any other author) when reading the book. This does not mean that this information about context changes whether a book is right or wrong, just that the context is helpful for understanding the claims presented. It is hard for us to really understand the climate that Hayek was dealing with and the forces that he was trying to argue against.

    I remember on reading The Road to Serfdom that the historical context was quiet confusing. Hayek is making many claims about the development of historical ideas that were, at least from my limited understanding of the development of German thought, unclear or even unfair. I am definitely not well read enough on the topic to judge whether Hayek was correct in his explanation of the development of ideas.

    I look forward to more posts on this from you.

    • I do think Hayek’s history of Germany can be very wonky at times. I’ll right several posts about that soon enough, so you can be the judge about that. I also think that Hayek was very unfair to the German Historical School. I know he doesn’t take an explicit jab at them in RtS, but he attacks them elsewhere in his other writings prior to RtS.

      Either way, this is a really interesting subject. The history of Germany is really fascinating and re-reading Hayek’s RtS was more enjoyable that I thought it would be (I didn’t like the book during my first read). I also realized how much I enjoy reading Caldwell, so I definitely need to read more of his stuff.

  3. Pingback: Hayek on the Nazis | Economics and Society

  4. Pingback: On the Similarities between F.A. Hayek and William L. Shirer | Irrepressible Thought

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