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Thoughts on ‘The Road to Serfdom’: Chapter 7, “Economic Controls and Totalitarianism”

In Arts & Letters, Austrian Economics, Book Reviews, Books, Conservatism, Economics, Epistemology, Essays, History, Humane Economy, Humanities, Justice, Law, Libertarianism, Literature, Philosophy, Western Civilization, Western Philosophy on October 2, 2013 at 8:45 am

Slade Mendenhall

Slade Mendenhall is an M.Sc. candidate in Comparative Politics at the London School of Economics, with specializations in conflict and Middle Eastern affairs. He holds degrees in Economics and Mass Media Arts from the University of Georgia and writes for The Objective Standard and themendenhall.com, where he is also editor.

The following is part of a series of chapter-by-chapter analyses of Friedrich Hayek’s The Road to Serfdom, conducted as part of The Mendenhall’s expanding Capitalist Reader’s Guide project. Previous entries can be found here: Introduction, Chapter 1, 2, 3, 4, 5, and 6.

In “Economic Control and Totalitarianism”, the subject of Hayek’s seventh chapter, we find him at his best, with a clarity and reason that we have not seen since chapter two, “The Great Utopia.” In chapter seven, Hayek expounds upon numerous themes within the titular subject: the inextricability of dictatorial control and economic planning, the fallacy of believing that economic controls can be separated from broader political controls, the inevitability in a planned economy of controls extending to individuals’ choice of profession, and the interrelation of economic and political freedom. What aspects of the chapter we might find to criticize arise either from a desire for him to take his line of thinking a step further than he does or already established mistakes carried over from previous chapters. Despite a few minor missteps, however, Hayek’s chapter is, overall, an exceedingly positive contribution.

He begins by stating what is, to many self-deceiving advocates of socialism, a jarring observation: that planned economies, following their natural course, ultimately always require dictatorial rule. “Most planners who have seriously considered the practical aspects of their task,” Hayek writes, “have little doubt that a directed economy must be run on more or less dictatorial lines” (66). Without fully restating the argument here, Hayek implicitly rests upon the description of this tendency that he spelled out in chapter 5, “Planning and Democracy”: power in a planned system gradually consolidates into a central committee or single dictator as a matter of organizational efficiency, with a decisive central leadership winning out over the gridlock and inefficiencies of a democratic body. The point is as valid and well made here as it was then.

Where Hayek expounds upon this is in refuting one of the false promises often made by planners as they reach for the reins of a country’s economy: “the consolation… that this authoritarian direction will apply ‘only’ to economic matters” (66). Contrary to the suggestion that controls will be limited to economic affairs, Hayek asserts that economic controls in the absence of broader political controls are not simply unlikely, but impossible. Rather than simply detailing in a typical way the interrelationship of economic and other activities, Hayek acknowledges the inseparability of the two, writing, “It is largely a consequence of the erroneous belief that there are purely economic ends separate from the other ends of life” (66). He later elaborates:

“The authority directing all economic activity would control not merely the part of our lives which is concerned with inferior things; it would control the allocation of the limited means for all our ends. And whoever controls all economic activity controls the means for all our ends, and must therefore decide which are to be satisfied and which not. This is really the crux of the matter. Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends” (68).

Hayek’s point is, in the context of modern economic education, a largely underappreciated and mishandled one. Economics instructors have, with time, lost the important skill of contextualizing economic interests within the broader scope of other human pursuits, instead treating them either as abstract ideas toyed with in a vacuum without real-world ramifications or preaching the ‘economics is everything’ doctrine to the exclusion of other analytical tools and frameworks.

Hayek, whether by virtue of writing at a time less bound by such false dichotomization of the field or simply due to his exceptional qualities as an economic thinker, successfully avoids both traps. “Strictly speaking,” he writes,

“there is no ‘economic motive’ but only economic factors conditioning our striving for other ends. What in ordinary language is misleadingly called the ‘economic motive’ means merely the desire for general opportunity, the desire for power to achieve unspecified ends. If we strive for money it is because it offers us the widest choice in enjoying the fruits of our efforts” (67).

Hayek rightly acknowledges money as a profoundly empowering economic good, calling it “one of the greatest instruments of freedom ever invented by man” that “opens an astounding range of choice to the poor man, a range greater than that which not many generations ago was open to the wealthy” (67).

Chapter seven goes on to briefly characterize the pervasiveness of central planning, and its propensity to spread to all areas of a society. Hayek recognizes that the much-eluded question of socialism-versus-capitalism is not simply one of which decisions individuals are to make for their lives, but whether the decision is to be theirs at all:

“The question raised by economic planning is, therefore, not merely whether we shall be able to satisfy what we regard as our more or less important needs in the way we prefer. It is whether it shall be we who decide what is more, and what is less, important for us, or whether this is to be decided by the planner” (68).

Those on both sides of the aisle in the United States today, who fail in so many matters to appreciate the distinction between individuals choosing the right thing for their lives and a government official imposing their choice (be it right or wrong) upon them, would do well to heed Hayek’s warning. Modern American political thinking, caught between an increasingly authoritarian left (taken directly from Marx and Rousseau, or updated via modern incarnations like Krugman, Sunstein, and Stiglitz) and a right that has yet to extend its limited government spirit to all areas of economics—much less censorship and social issues—has a great deal to learn from an Austrian economist’s words written some seventy years ago.

One element of central planning that utopian-minded young socialist idealists evade is that labor, being an input, must, in a controlled economy be as controlled as any other good—if not more so. This does not mean simply the control of wages or the maintenance of union. Ultimately, it means government control over the quantity of individuals in a given profession, conducted in the interest of keeping wages in a given field high and ensuring that there is an adequate supply of expertise to meet all of the economy’s needs. This means at some point dictating who can and cannot enter a given field of work.

Hayek writes,

“Most planners, it is true, promise that in the new planned world free choice of occupation will be scrupulously preserved or even increased. But there they promise more than they can possibly fulfill. If they want to plan they must control the entry into the different trades and occupations, or the terms of remuneration, or both” (71).

How many young socialists on college campuses across the country would not object to being torn from their chosen course of study and compelled to study for degrees in which they had no interest, to spend their lives in careers they did not love? That is the fate that they ask for, whether they recognize it as such or not. Would they accept it willingly? Would they “become a mere means, to be used by the authority in the service of such abstractions as the ‘social welfare’ or the ‘good of the community’” (72), bowing their heads subserviently to spend a life on a path that was chosen for them, for the good of society? Perhaps some. And perhaps others would recognize the nature of what they profess to believe in and renounce it. Either way, it is a reality that should be presented to them in those terms by those who see socialism for what it is.

Towards the end of the chapter, Hayek makes several key observations that would prove all the more true in the decades after his writing.  He notes the decline of references by advocates of socialism to the functional superiority of socialism. Gradually witnessing their system being discredited, but doubling-down on their dogma, the socialists of the mid-20th century came to look less and less like those of the early 20th century, who believed in the system as a technically superior model for society. Instead, their arguments turned egalitarian in nature,  “advocat[ing] planning no longer because of its superior productivity but because it will enable us to secure a more just and equitable distribution of wealth” (74). Little did Hayek know how far that trend would go with the rise of the New Left and its legacies, stretching up to the present and the current American administration.

Finally, in another point that has proven all the more true since the time of his writing, Hayek recognizes that the extent of planning proposed by socialism, empowered by modern modes of control, is that much greater than the control and subjugation that occurred under the days of monarchy and feudalism. In reading it, one is brought to wonder how much greater that mechanism of control is today, with NSA surveillance, a growing regulatory state, and ever more executive agencies maintaining armed units to impose their rules, than at Hayek’s writing in 1943.

Hayek’s seventh chapter is a valuable and, for the same reasons, saddening one for the way that it makes us reflect upon the applicability of his words and ideas to our current political environment. Though our current condition is far from totalitarian in nature, the same principles apply, to a lesser extent, in all areas where government intrudes to control markets, alter incentives, or provide special advantages to some at the expense of others.

Human beings are rational animals. We respond to the incentives around us. In the presence of a government that seems increasingly, explicitly willing to toy with those incentives to alter our behavior to suit models and ideals for our lives that are not our own, how much do we lose that we never knew we had? In what ways are our options limited? Need it be by a government edict that tells a young man who would study to be a doctor that doctors are no longer needed, and he should apply to be an engineer instead? No. It may be as subtle as inflating the price of his education through government loan programs, regulating the field he seeks to enter, and subjecting him to entitlement programs that tell him that his life’s work is not his own; that he works and exists in the service of society as a whole. And at that point, the difference between our condition and the ill fate that Hayek describes becomes one not of kind, but of degree.

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Liberty and Shakespeare, Part Two

In Arts & Letters, Austrian Economics, Economics, History, Humanities, Law, Law-and-Literature, Legal Education & Pedagogy, Liberalism, Libertarianism, Literary Theory & Criticism, Literature, Shakespeare, Western Civilization on May 22, 2012 at 8:08 am

Allen Mendenhall

The following essay orginally appeared here at Mises Daily.

The Later Works (1973 to present)

It is well settled that James Boyd White’s The Legal Imagination (1973)[29] catalyzed the law-and-literature movement as we know it today. A professor in the Department of English, Department of Classics, and College of Law at the University of Michigan, White brings a unique interdisciplinary perspective to bear on this field that he more or less founded. He remains prolific even in his old age, having published a string of books on a wide variety of topics having to do with legal rhetoric and legal or literary hermeneutics. Since White’s landmark tour de force in 1973, several legal scholars have followed in his footsteps, venturing into literature (broadly defined to include novels, plays, poems, short stories, essays, and so on) to make sense of legal culture and legal texts. Some of the resulting scholarship has been quite good — some, however, more than slightly wanting.

Shortly after White’s “overture,” the work of literary PhDs like Robert Weisberg (PhD, English, 1971, Harvard University; JD, 1979, Stanford University), Richard H. Weisberg (PhD, French and comparative literature, 1970, Cornell University; JD, 1974, Columbia University), and, among others, Stanley Fish (PhD, English, 1962, Yale University) lent credibility to a field seen as dubious by law-school deans and territorial literature professors.[30] Today the movement seems to be picking up, not losing, momentum, in part due to the interdisciplinary nature of the project and in part due to the literati heavyweights who have used the movement as an opportunity to enlarge their celebrity status (to say nothing of their salaries).

The vast array of Shakespeare-focused works that flew under the banner of law and literature during the 1970s, ’80s, and ’90s actually undermined the entire field. Titles like Michael Richmond’s “Can Shakespeare Make You a Partner?” (1989)[31] signaled a practical but nonscholastic rationale for lawyers to turn to Shakespeare’s texts. Works most commonly addressed during this period include The Merchant of Venice, King Lear, Hamlet, and Measure for Measure.[32] In the rush to canonize Shakespeare in this budding genre that sought to include humanities texts in professional schools, even the conspiracy theories of a Supreme Court justice, John Paul Stevens, became authoritative readings.[33] Stevens is not the only Supreme Court justice with an opinion on the Shakespeare authorship debate, as the following chart by the Wall Street Journal[34] makes clear:

Shakespeare’s Court
The Supreme Court on the likely author of Shakespeare’s plays:
Active Justices
Roberts, Chief Justice No comment.
Stevens Oxford
Scalia Oxford
Kennedy Stratford
Souter “No idea.”
Thomas No comment.
Ginsburg “No informed views.”*
Breyer Stratford
Alito No comment.

*Justice Ginsburg suggests research into alternate candidate, Florio.

Retired Justices
O’Connor Not Stratford
Blackmun* Oxford
Brennan* Stratford

*Deceased

That Supreme Court justices have weighed in on Shakespeare’s authorship is more a study in itself and less a constructive contribution to Shakespeare scholarship. Not long after Stevens’s law-review article, at any rate, some creative attempts to render the Shakespeare as lawyer or other conspiracy theories surfaced. Law professor James Boyle, for instance, penned a novel, The Shakespeare Chronicles (2006),[35] dealing with the obsessive search for the “true” author of Shakespeare’s works. I suspect that Boyle would admit that The Shakespeare Chronicles, being fiction, does not represent scholarship, even if its production required rigorous scholarly research. Read the rest of this entry »

The Problem with Legal Education; or, Another Piece About the Aimlessness, Pointlessness, and Groundlessness of Law School

In Arts & Letters, Humanities, Law, Legal Education & Pedagogy, Pedagogy, Teaching, Writing on July 27, 2011 at 2:23 pm

Allen Mendenhall

The latest issue of Academic Questions (Summer 2011: Vol. 24, No. 2) devotes most of its content to legal education.  Published by the National Association of Scholars, Academic Questions often features theme issues and invites scholars from across the disciplines to comment on particular concerns about the professoriate.  (Full disclosure: I am a member of the NAS.)  Carol Iannone, editor at large, titles her introduction to the issue “Law School and Other Tyrannies,” and writes that “[w]hat is happening in the law schools has everything to do with the damage and depredation that we see in the legal system at large.”  She adds that the contributors to this issue “may not agree on all particulars, but they tell us that all is not well, that law school education is outrageously expensive, heavily politicized, and utterly saturated with ‘diversity’ mania.”  What’s more, Iannone submits, law school “fails to provide any grounding in sound legal doctrine, or any moral or ethical basis from which to understand principles of law in debate today.”  These are strong words.  But are they accurate?  I would say yes and no.

Law school education is too expensive, but its costs seem to have risen alongside the costs of university education in general.  Whether any university or postgraduate education should cost what it costs today is another matter altogether.

There is little doubt that law schools are “heavily politicized,” as even a cursory glance at the articles in “specialized” law journals would suggest.  These journals address anything from gender and race to transnational law and human rights.

But how can law be taught without politicizing?  Unlike literature, which does not always immediately implicate politics, law bears a direct relation to politics, or at least to political choices.  The problem is not the political topics of legal scholarship and pedagogy so much as it is the lack of sophistication with which these topics are addressed.  The problem is that many law professors lack a broad historical perspective and are unable to contextualize their interests within the wider university curriculum or against the subtle trends of intellectual history.

In law journals devoted to gender and feminism, or law journals considered left-wing, you will rarely find articles written by individuals with the intelligence or learning of Judith Butler, Camille Paglia, or Eve Sedgwick.  Say what you will about them, these figures are well-read and historically informed.  Their writings and theories go far beyond infantile movement politics and everyday partisan advocacy.    Read the rest of this entry »

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