A grad student in economics reads The Road to Serfdom


I have finished reading Friedrich August von Hayek’s magnum opus, The Road to Serfdom. There is much to commend it. I came to this work with a preconception about Hayek, that he was an impractical right-wing nut job. Yet reading the book made me realize that like Adam Smith, Hayek has been misrepresented by those who claim to be his biggest fans.

Hayek is a supporter of classical liberalism, but he is a tad lukewarm about the free market:

The liberal argument is in favour of making the best possible use of the forces of competition as a means of co-ordinating human efforts, not an argument for leaving things just as they are… where it is impossible to create the conditions necessary to make competition effective, we must resort to other methods of guiding economic activity.

Hayek thus argues in favour of environmental regulations, social services, and publicly funded infrastructure. The principle here is that if the government is to undertake a program, two conditions must be satisfied:
a) The price system is not the best option.
b) The program should be applied uniformly to all peoples.
Hence the profligate American bank bailouts would not please Hayek as a suitable economic policy; they satisfy neither of these two conditions. Indeed the vicissitudes of the economy are amplified for ordinary folk when privileged people (bankers) are guaranteed steady incomes and bonuses.

Thus Hayek argues with cogency and rigour that classical liberalism is the optimal ideology for society. Effortlessly weaving through the intricacies of politics, history and economics he disentangles the facts from the fiction and demonstrates how planned societies enslave us. Besides his spurious chapter on “The Prospects of International Order”, which appears to vindicate dangerous para-national organizations like the EU and WTO, I had little to complain about. I recommend this book to everybody, especially those who love freedom.

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