Friedrich A Hayek is the author of The road to Serfdom. He was an Austrian economist. He wrote the book in 1944. The book cites and uses the influence of Karl Marx and other German philosophers who primed German citizens to embrace the totalitarian rule of Adolf Hitler. During the Great Depression of the 1930s, there are some issues raised about capitalism and thus boosted the support for socialism among the people of democratic countries. It is also in this book that Hayek warns citizens of America, Britain and other democracies around the world not to put their freedom at risk when the adorned the goals of socialism.
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In the book, the road to serfdom, one searches for a principle such as the non-aggression axiom of libertarianism which would serve as a rudder with which to steer the ship of political-economic philosophy. Hayek specifically renounces the existence of such a principle: 'There is nothing in the basic principles of liberalism to make it a stationary creed; there are no hard-and-fast rules fixed once and for all'. He clearly states that there is no principle. He further singles out free enterprises as precisely the wrong path. 'Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez faire' Lacking such an axiom or postulate, Hayek needlessly weakens his case for the market.
Hayek calls for exceptions to the rule of laissez-faire capitalism with regard to 'handling of the monetary system'. Later, he reiterates this Keynesian point: 'there is ... the supremely important problem of combating general inflations of economic activity and the recurrent waves of large-scale unemployment which accompany them. 'Hayek has demonstrated precisely how government monetary policy leads to temporal misallocations of investments such as the great depression .The author further makes contributions to the Austrian theory of the business cycle which convincingly demonstrates the imprudence of granting to the state expansionary monetary power.
In the third chapter of the road to serfdom, Hayek makes concessions to socialism. He does this by warning against 'a dogmatic laissez-faire attitude' where he assigns the state the role of limiting the hours a person has to work. As we clearly know this is a recipe for disaster. Interventionists of all sorts try to take credit for the decline in the length of the work day. In their view, rapacious capitalists would never have allowed labour output to decline to a daily eight hours had this decision been left up to them.
'There is no reason why in a society which has reached the general level of wealth which ours has attained . . . security against severe physical privation the certainty of a given minimum of sustenance . . . should not be guaranteed to all without endangering general freedom. . . . There can be no doubt that some minimum of food, shelter and clothing; sufficient to preserve health and the capacity to work, can be assured to everybody'. This statement as we see it is quite problematic on both the moral grounds and pragmatic. The only justification of transfer of finds between one citizen to another is based on voluntarism.
In contrast, a system of social services, let alone an extensive one, can only be financed through the force implicit in the tax-subsidy system. As for Hayek's contention that we can engage in activities of this sort on a massive scale without endangering freedom, there is little reason to be optimistic. With large-scale welfare has developed the welfare-rights movement; the rent-seeking society we have become as a result has endangered freedom if only because of the sheer size of governmental budgets.
Hayek, unfortunately, joins this tradition in calling for the state to 'make competition as effective and beneficial as possible - and to supplement it where, and only where, it cannot be made effective' To be sure, he tries to distance his position from that of the socialists by making the following distinction: What I mean by 'competitive order' is almost the opposite of what is often called 'ordered competition'.
The purpose of a competitive order is to make competition work; that of so called 'ordered competition', almost always to restrict the effectiveness of competition. But this is a distinction without a real difference. In both cases the government will not leave the marketplace to its own devices; in both cases the public sector is impinging on the private; in both cases the proponents of these schemes, Hayek as well as the avowed central planners, say they are urging intervention in order to improve things.
There is the mention of a great political thinker known as Tocqueville that democracy stands in an irreconcilable conflict with socialism: 'Democracy extends the sphere of individual freedom' then he goes further and mentions that 'Democracy attaches all possible value to each man...... while socialism makes each man a mere agent, a mere number'. It is here that we begin to notice that democracy and socialism have nothing in common but one word: equality. Notice that democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.
He further claimed that a planned economy would produce a substantially larger output than the competitive system is being progressively abandoned by most students of the problem. Yet it is this false hope as much as anything which drives along the road to planning. In his book he further reiterates that individual freedom cannot be reconciled with the supremacy of one single purpose to which the whole of society is permanently subordinated. To a limited extent we ourselves experience this fact in wartime, when subordination of almost everything to the immediate and pressing need is the price at which we preserve our freedom in the long run.
In his book, Hayek mentions the building of a better world. He states that we must have the courage to make a new start. That there will always be obstacles and we must clear them with which human folly has recently encumbered our path and release the creative energy of individuals. He further mentions that there must be the creation of favorable conditions to progress rather than planning to progress. The guiding principle in any attempt to create a world of free men must be a policy of freedom for the individuals is only truly progressive policy.
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