This author was recommended to me by someone who found out I was doing an economics reading list. I was not really looking forward to this work, as it Hayek was someone I'd never heard of and he seemed more of a minor figure such that reading him would take from others I would otherwise read as part of this list. When I read a bit about him, I was even more put out; he sounded like a huge right-wing, free-market capitalism fan, for which I already had a few such books on my list. I figured Smith and Marx to be enough in terms of older classics, Keynes and Galbraith for moderns, and then the rest would be applied and contemporary.
And indeed, as I started out on this book, Hayek's hit me in a lot of wrong ways. He seemed just too big a fan of the free market without any sort of government oversight. But as I read further, he made more and more sense—and he also seemed at times to contradict himself. That is, he seemed very heavy on avoiding government intervention in the economy, but then would backtrack and say that some intervention was okay. In some ways, it reminded me of the way Elizabeth Warren claims to be a friend of capitalism—but only capitalism done the right way.
What Hayek's book is really doing is arguing against socialism—whether on the right or the left. He was writing near the end of World War II, when the troubles that had risen to the fore in Germany with the National Socialists were very apparent. And he was fearful, he notes, that too many other nations, such as the United States and Britain, were drifting toward the same sort of socialist frenzy under the inane idea that socialism solves problems and creates a more equitable society. (He notes that this is actually more a book on politics than on economics, which seems true, save the economics has much to do with his political views.)
Here's where Hayek's big critique of such thinking really gives one much to ponder. He notes that when the government imposes its will on the forces of the market in the name of providing equity, it denies freedom to the people it rules. A planned economy essentially means that certain people will not be able to do as they wish, be it start a particular type of business, sell a particular item, or do a particular job. In that sense, socialism leads inevitably to totalitarianism. In this way of thinking, I would have to agree. The problem, of course, is that simply letting the market dictate things doesn't necessarily lead to a greater amount of freedom; that's because when a private corporation corners a market, now it's just the private corporation that dictates one's ability to start a new business, sell a particular item, or do a particular job. Which are you going to ask to control your fate? Hayek doesn't spend much time on this latter possibility—except he does at some point note the problems with monopolies. In that sense, he seems to imply that ultimate economic freedom for people can only exist when we are talking about small-time capitalists, not multinationals that control the fate of millions. And in that, too, I would agree, save that some industries require such an outlay of capital that they are impossible to run with such a small footprint. The guy down the street cannot decide that he's going to start building commercial airplanes with a small savings or a small loan; there are reasons there are really only a couple of viable commercial airplane manufacturers. In those sort of endeavours, it seems we really do have to fall back on either government involvement or a near monopoly.
And just as one thinks Hayek is espousing total free markets, he pulls back, admitting in places that the government does have a role to play. It is there to keep markets fair (this is where I thought of Warren), so that fraud and monopoly don't twist the market in ways that remove opportunity for everyone. He even at some point notes that the government should be involved in health care, which seems very much more of a socialist kind of argument in many people's views. Once the government starts getting involved in such things, it seems, it warps the market—that's not necessarily a bad thing. It's really a matter of the tradeoff one is willing to make, where one is willing to cede authority and freedom in the hope that a central-planning bureaucrat will be able to do better. I wouldn't want to live completely at the whim of the free market, nor would I want to live totally under the thumb of a government decision maker. Where that balance is is hard to say.
A late chapter in the book discusses a kind of world government. There, he argues against a socialist world government, noting that were we to have such, certain nation-states would insist on cornering the market in certain areas. There would not be the sharing of resources as one would hope. Instead, there would be resentment, the keeping down of certain nations and of the development of their own industries. Instead, he advocates a kind of world government that instead of mandating things would simply prohibit certain things—what sounds to me in some ways what would become the United Nations. One nation, for example, cannot invade another, lest all the other nations then unite to keep such an invasion from happening. Thus, we would have peace. Of course, the issue with this is apparent from the lack of success the UN has had. I mean, it requires other nations to be willing to sacrifice to stop another nation from taking advantage of others. But beyond that, what's the difference between a prohibition and a mandate? On some level, are they not similar things? If we refrain from mandating that a nation provides a living wage to its citizens, but prohibit a nation from starving its people, what's the difference?
Anyway, in the end, I'm glad Hayek was recommended to me. I found it particularly interesting reading in our current times.
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