The Road to Serfdom with The Intellectuals and Socialism The Road to Serfdom with The Intellectuals and Socialism FRIEDRICH A. HAYEK the condensed version of the road to serfdom by f. a.
hayek as it appeared in the april 1945 edition of reader 9s digest The Institute of Economic Affairs 5 This combined edition T rst published in Great Britain in 2005 by The Institute of Economic Affairs 2 Lord North Street Westminster London SW1P 3LB in association with ProT le Books Ltd This condensed version of The Road to Serfdom was T rst published in Great Britain in 1999 in the 8Rediscovered Riches 9 series by The Institute of Economic Affairs, and reissued as Occasional Paper 122 in 2001 This condensed version of The Road to Serfdom © Reader 9s Digest , reproduced by kind permission The Road to Serfdom is published in all territories outside the USA by Routledge. This version is published by kind permission. 8The Intellectuals and Socialism 9 previously published in Great Britain in 1998 in the 8Rediscovered Riches 9 series by the Institute of Economic Affairs 8The Intellectuals and Socialism 9 © The University of Chicago Law Review 1949.
Reproduced by kind permission. All other material ... more. less.
copyright © The Institute of Economic Affairs 2005 Every effort has been made to contact the copyright holders associated with this edition. The IEA will be pleased to include any corrections in future printings.<br><br> The mission of the Institute of Economic Affairs is to improve public understanding of the fundamental institutions of a free society, with particular reference to the role of markets in solving economic and social problems. The moral right of the authors has been asserted. All rights reserved.<br><br> Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the publisher of this book. A CIP catalogue record for this book is available from the British Library. ISBN 0 255 36576 4 Many IEA publications are translated into languages other than English or are reprinted.<br><br> Permission to translate or to reprint should be sought from the Director General at the address above. Typeset in Stone by MacGuru firstname.lastname@example.org Printed and bound in Great Britain by Hobbs the Printers The authors 7 Foreword by Walter E. Williams 10 THE ROAD TO SERFDOM Foreword by Edwin J.<br><br> Feulner Jr 19 Introduction: Hayek, Fisher and The Road to Serfdom by John Blundell 22 Preface to the Reader 9s Digest condensed version of The Road to Serfdom 34 Summary 35 The Road to Serfdom (condensed version) 39 Planning and power 40 Background to danger 42 The liberal way of planning 45 The great utopia 47 Why the worst get on top 51 Planning vs. the Rule of Law 57 Is planning 8inevitable 9? 59 Can planning free us from care?<br><br> 61 Two kinds of security 66 Toward a better world 70 CONTENTS 7 The Road to Serfdom in cartoons 71 THE INTELLECTUALS AND SOCIALISM Foreword by Edwin J. Feulner Jr 93 Introduction: Hayek and the second-hand dealers in ideas by John Blundell 96 The Intellectuals and Socialism 105 About the IEA 130 Friedrich A. Hayek Friedrich A.<br><br> Hayek (1899 31992) was born in Vienna and obtained two doctorates from the University of Vienna, in law and political economy. He worked under Ludwig von Mises at the Austrian Institute for Business Cycle Research, and from 1929 to 1931 was a lecturer in economics at the University of Vienna. His T rst book, Monetary Theory and the Trade Cycle, was published in 1929.<br><br> In 1931 Hayek was made Tooke Professor of Economic Science and Statistics at the London School of Economics, and in 1950 he was appointed Professor of Social and Moral Sciences at the University of Chicago. In 1962 he was appointed Professor of Political Economy at the University of Freiburg, where he became Professor Emeritus in 1967. Hayek was elected a Fellow of the British Academy in 1944, and in 1947 he organised the conference in Switzerland which resulted in the creation of the Mont Pèlerin Society.<br><br> He was awarded the Nobel Prize in Economics in 1974 and was created a Companion of Honour in 1984. In 1991 George Bush awarded Hayek the Presidential Medal of Freedom. His books include The Pure Theory of Capital, 1941, The Road to Serfdom, 1944, The Counter-Revolution of Science, 1952, The Constitution of Liberty, 1960, Law, Legislation and Liberty, 1973 39, and The Fatal Conceit, 1988.<br><br> THE AUTHORS the road to serfdom with the intellecuals and socialism 8 9 the authors John Blundell John Blundell is Director General of the Institute of Economic Affairs. He was previously President of the Institute for Humane Studies at George Mason University and the Atlas Economic Research Foundation, founded by the late Sir Antony Fisher to establish 8sister 9 organisations to the IEA. He serves on the boards of both organisations and is a former Vice President of the Mont Pèlerin Society.<br><br> Edwin J. Feulner Jr Edwin J. Feulner Jr has served as President of the Heritage Founda- tion since 1977.<br><br> He is a past President of the Mont Pèlerin Society. He previously served in high-level positions in both the legislative and executive branches of the United States federal government. He received his Ph.D.<br><br> from the University of Edinburgh and was awarded the Presidential Citizen 9s Medal by Ronald Reagan in 1989 for 8being a leader of the conservative movement by building an organisation dedicated to ideas and their consequences ... 9 Walter E. Williams Walter Williams is John M. Olin Distinguished Professor of Economics at George Mason University, Fairfax, Virginia.<br><br> In addition, he serves as an Adjunct Professor of Economics at Grove City College in Grove City, Pennsylvania. He has also served on the faculties of Los Angeles City College, California State Univer- sity Los Angeles, and Temple University in Philadelphia. He is the author of over eighty publications that have appeared in schol- arly journals such as Economic Inquiry , American Economic Review , Georgia Law Review , Journal of Labor Economics and Social Science Quarterly , as well as popular publications such as Newsweek , The Freeman , National Review , Reader 9s Digest , Cato Journal and Policy Review .<br><br> Dr Williams serves on the boards of directors of Citizens for a Sound Economy, the Reason Foundation and the Hoover Institution, and on the advisory boards of the IEA, the Landmark Legal Foundation, the Alexis de Tocqueville Institute, the Cato Institute and others. He has frequently given expert testimony before Congressional committees on public policy issues ranging from labour policy to taxation and spending. He is a member of the Mont Pèlerin Society and the American Economic Associa- tion.<br><br> 10 foreword 11 order later expressed in the writings of British philosophers such as John Stuart Mill and David Hume. What happened in Germany? Hayek explains, 8The supreme tragedy is still not seen that in Germany it was largely people of good will who, by their socialist policies, prepared the way for forces which stand for everything they detest 9.<br><br> Hayek 9s explana- tion for the rise of Nazism was not understood and appreciated in 1944, and it is still not fully understood and appreciated today. Collectivism, whether it is in Germany, the former Soviet Union, Britain or the USA, makes personal liberty its victim. How do we combat collectivism?<br><br> Hayek provides some answers in The Intellectuals and Socialism . In a word or two, those who support the liberal social order must attack the intellectual foundations of collectivism. Hayek urges that an understanding of just what it is that leads many intellectuals toward socialism is vital.<br><br> It is neither, according to Hayek, selT sh interests nor evil intentions that motivate intellectuals towards socialism. On the contrary, they are motivated by 8mostly honest convictions and good intentions 9. Hayek adds that it is necessary to recognise that 8the typical intellectual is today more likely to be a socialist the more he is guided by good will and intelligence 9.<br><br> Joseph A. Schumpeter differed, seeing Hayek 9s assessment as 8politeness to a fault 9. 2 Hayek argues that the roots of collectivism have nowhere orig- inated among working-class people.<br><br> Its roots lie among intellec- tuals 3 the people Hayek refers to as 8second-hand dealers in ideas 9 3 who had to work long and hard to get working-class people to 2 J. Schumpeter, review of The Road to Serfdom , Journal of Political Economy , June 1946: 269 3270. FOREWORD Friedrich A.<br><br> Hayek was one of the twentieth century 9s greatest philosophers. While he is best known for his work in economics, he also made signiT cant contributions in political philosophy and law. The publication for which Professor Hayek is most widely known is The Road to Serfdom , written during World War II, the condensed Reader 9s Digest version of which is presented here along with what might be seen as his follow-up, The Intellectuals and Socialism , T rst published by the University of Chicago Law Review in 1949.<br><br> A focal point of The Road to Serfdom was to offer an explana- tion for the rise of Nazism, to correct the popular and erroneous view that it was caused by a character defect of the German people. Hayek differs, saying that the horrors of Nazism would have been inconceivable among the German people a mere T fteen years before Adolf Hitler 9s rise to power. Indeed, 8throughout most of its history [Germany was] one of the most tolerant European countries for Jews 9.<br><br> 1 Other evidence against the character defect argument is that the writings of some German philosophers, such as Johann Wolfgang von Goethe, Wilhelm von Humboldt and Friedrich Schiller, served as inspiration for ideas about the liberal 1 Thomas Sowell, The Economics and Politics of Race , William Morrow & Company, New York, 1983, p. 86. the road to serfdom with the intellecuals and socialism 12 foreword 13 radio stations, on satellite and over the internet, reaching tens of millions of people worldwide each week.<br><br> Much to socialist dismay, the most popular and successful talk radio shows are those hosted by conservative/free market hosts. Then there are the bloggers 3 the electronic equivalent of conservative/free market journal- ists 3 who are constantly at the ready to challenge and reveal news stories. While there have been monumental changes in the ideas marketplace, the last bastion of solidly entrenched socialism lies on college and university campuses around the world.<br><br> Hayek argues that 8It is perhaps the most characteristic feature of the intellectual that he judges new ideas not by their speciT c merits but by the readiness with which they T t into his general concep- tions, into the picture of the world which he regards as modern or advanced 9. Professor Thomas Sowell puts the argument in another way that encompasses Hayek 9s. 3 Sowell says that there are essentially two visions of how the world operates 3 the constrained vision and the unconstrained.<br><br> The constrained vision sees mankind with its moral limitations, acquisitiveness and ego as inherent and immutable. Under this vision, the fundamental challenge that confronts mankind is to organise a system consisting of social mores, customs and laws that make the best of the human condi- tion rather than waste resources trying to change human nature. It is this constrained vision of mankind that underlies the thinking and writings of Adam Smith, Edmund Burke and Alexander Hamilton, among others.<br><br> 3 Thomas Sowell, A Con@ ict of Visions: Ideological Origins of Political Struggles , Wil- liam Morrow & Company, New York, 1987. accept the vision they put forward. The intellectuals or second- hand dealers in ideas to whom he refers are journalists, teachers, ministers, radio commentators, cartoonists and artists, who Hayek says 8are masters of the technique of conveying ideas but are usually amateurs so far as the substance of what they convey is concerned 9.<br><br> In 1949, when Hayek wrote The Intellectuals and Socialism , the second-hand dealers in collectivist ideas were a dominant force. He appeared to be pessimistic about the future of liberty because those who were on the conservative/free market side of the political spectrum were weak, isolated and had little voice. In 1947, Hayek, along with several other distinguished free market scholars, addressed some of the isolation by founding the Mont Pèlerin Society.<br><br> The purpose of the Society was to hold meetings and present papers and exchange ideas among like-minded scholars with the hope of strengthening the principles of a free society. The Mont Pèlerin Society now has over 500 members worldwide, and can boast that eight of its members have won Nobel Prizes in economics. Since Hayek wrote The Intellectuals and Socialism there has been nothing less than monumental change in the marketplace of ideas.<br><br> In 1949, there was only one free market organisation 3 The Foundation for Economic Education, founded by Leonard Read. Today there are over 350 free market organisations in 50 countries, including former communist countries. The major media no longer has the monopoly on news and the dissemina- tion of ideas that it once had.<br><br> Network television faces competi- tion from satellite and cable television. Talk radio has exploded. The Rush Limbaugh Show , on which I have served as occasional substitute host for over thirteen years, is carried on 625 different the road to serfdom with the intellecuals and socialism 14 foreword 15 the case, strongly defend polar opposite policies?<br><br> I believe part of the answer is that they make different initial premises of how the world works. If one 9s initial premise is that an employer needs so many workers to perform a particular job, then enacting a higher minimum wage means that all the workers will keep their jobs. The only difference is that they will receive higher wages and the employer will make less proT t.<br><br> Thus, enacting a higher minimum wage clearly beneT ts low-skilled workers. By contrast, if one 9s initial premise is that there are alternative means to produce a product, and employers will seek the least-cost method of doing so, then raising the minimum wage will cause employers to seek substitutes such as automation or relocation overseas, thereby reducing the amount of workers they hire. With the latter vision, one can have the interests of low-skilled workers at heart and oppose an increase in the minimum wage, because it reduces opportunities for low-skilled workers.<br><br> If Hayek is correct in his assessment of socialists, it would appear that it is a simple task to empirically show that there are alternative methods of production and that employers are not insensitive to increases in the cost of workers. The second part of the strategy is to make better, unassailable arguments for personal liberty. Any part of the socialist agenda can be shown as immoral under the assumption that people own themselves.<br><br> The idea of self ownership makes certain forms of behaviour unambiguously immoral. Murder, rape and theft are immoral simply because they violate a person 9s property rights to himself. Government programmes such as subsidies to farmers, bailouts for businesses, and welfare or medical care for the indigent are also immoral for the same reason.<br><br> Government has no resources of its very own. The only way government can give By contrast, the unconstrained vision sees mankind as capable of perfection and capable of putting the interests of others T rst. Sowell says that no other eighteenth-century writer 9s vision stands in starker contrast to that of Adam Smith than William Godwin 9s in Enquiry Concerning Political Justice .<br><br> Godwin viewed intention to beneT t others as the essence of virtue that leads to human happi- ness. BeneT ts to others that arise unintentionally are virtually worthless. Sowell says, 8Unlike Smith, who regarded human self- ishness as a given, Godwin regarded it as being promoted by the very system of rewards used to cope with it 9.<br><br> 4 In the last paragraph of The Intellectuals and Socialism , Hayek says, 8Unless we [true liberals] can make the philosophic founda- tion of a free society once more a living intellectual issue, ... . the prospects of freedom are indeed dark 9.<br><br> If Hayek is correct that neither selT sh interests nor evil intentions motivate intellectuals towards socialism, there are indeed grounds for optimism. Educa- tion offers hope. We can educate them, or at least make others immune, to the errors of their thinking.<br><br> I think the strategy has at least two principal components. First, there is not a lot to be gained by challenging the internal logic of many socialist arguments. Instead, it is the initial premises that underlie their arguments that must be challenged.<br><br> Take one small example. One group of people articulates a concern for the low- skilled worker and argues for an increase in the minimum wage as a means to help them. Another group of people articulating the identical concern might just as strongly oppose an increase in the minimum wage, arguing that it will hurt low-skilled workers.<br><br> How can people who articulate identical ends, as is so often 4 Ibid., p. 24. the road to serfdom with the intellecuals and socialism 16 one person money is to T rst take it from another person.<br><br> Doing so represents the forcible using of one person, through the tax code, to serve the purposes of another. That is a form of immor- ality akin to slavery. After all, a working deT nition of slavery is precisely that: the forcible use of one person to serve the purposes of another.<br><br> Well-intentioned socialists, if they are honest people as Hayek contends, should be able to appreciate that reaching into one 9s own pockets to assist one 9s fellow man is laudable and praise- worthy. Reaching into another 9s pocket to do so is theft and by any standard of morality should be condemned. Collectivists can neither ignore nor dismiss irrefutable evidence that free markets produce unprecedented wealth.<br><br> Instead, they indict the free market system on moral grounds, charging that it is a system that rewards greed and selT shness and creates an unequal distribution of income. Free markets must be defended on moral grounds. We must convince our fellow man there cannot be personal liberty in the absence of free markets, respect for private property rights and rule of law.<br><br> Even if free markets were not superior wealth producers, the morality of the market would make them the superior alternative. walter e. williams John M.<br><br> Olin Distinguished Professor of Economics George Mason University, Fairfax, Virginia May 2005 The views expressed in Occasional Paper 136 are, as in all IEA publications, those of the author and not those of the Institute (which has no corporate view), its managing trustees, Academic Advisory Council members or senior staff. The Road to Serfdom John Chamberlain characterised the period immediately following World War II in his foreword to the T rst edition of The Road to Serfdom as 8a time of hesitation 9. Britain and the European continent were faced with the daunting task of reconstruction and reconstitution.<br><br> The United States, spared from the physical destruction that marked Western Europe, was nevertheless recov- ering from the economic whiplash of a war-driven economic recovery from the Great Depression. Everywhere there was a desire for security and a return to stability. The intellectual environment was no more steady.<br><br> The rise and subsequent defeat of fascism had provided an extremely wide U ank for intellectuals who were free to battle for any idea short of ethnic cleansing and dictatorial political control. At the same time, the mistaken but widely accepted notion that the unpre- dictability of the free market had caused the depression, coupled with four years of war-driven, centrally directed production, and the fact that Russia had been a wartime ally of the United States and England, increased the mainstream acceptance of peace-time government planning of the economy. At this hesitating, unstable moment appeared the slim volume of which you now hold the condensed version in your hands, F.<br><br> A. Hayek 9s The Road to Serfdom. Occupying his spare time between September 1940 and March 1944, the writing of The Road 19 FOREWORD the road to serfdom with the intellecuals and socialism 20 foreword 21 destinely behind the emerging iron curtain.<br><br> It is no exaggeration to say that The Road to Serfdom simultaneously prevented the emergence of full-blown socialism in Western Europe and the United States and planted seeds of freedom in the Soviet Union that would T nally bear fruit nearly 45 years later. Socialist catch- phrases such as 8collectivism 9 were stricken from the mainstream political debate and even academic socialists were forced to retreat from their defence of overt social planning. But the true value of The Road to Serfdom is to be found not in the immediate blow it dealt to socialist activists and thinkers 3 as important as that was 3 but in the lasting impression it has made on political and economic thinkers of the past 55 years.<br><br> By Hayek 9s own admission, 8this book ... has unexpectedly become for me the starting point of more than 30 years 9 work in a new T eld 9. 3 edwin j.<br><br> feulner jr November 1999 foreword 21 3 Although these words were written in 1976 it is safe to say that the inU uence of The Road to Serfdom guided Hayek 9s work until his death in 1992. to Serfdom was in his own words more 8a duty which I must not evade 9 1 than any calculated contribution to his curriculum vitae. As Hayek saw it, he was merely pointing out 8apprehensions which current tendencies [in economic and political thought] must create in the minds of many who cannot publicly express them ... 9 2 But as is often the case, this duty-inspired task had tremendous conse- quences unintended by the author.<br><br> Hayek employed economics to investigate the mind of man, using the knowledge he had gained to unveil the totalitarian nature of socialism and to explain how it inevitably leads to 8serfdom 9. His greatest contribution lay in the discovery of a simple yet profound truth: man does not and cannot know every- thing, and when he acts as if he does, disaster follows. He recog- nised that socialism, the collectivist state, and planned economies represent the ultimate form of hubris , for those who plan them attempt 3 with insufT cient knowledge 3 to redesign the nature of man.<br><br> In so doing, would-be planners arrogantly ignore traditions that embody the wisdom of generations; impetuously disregard customs whose purpose they do not understand; and blithely confuse the law written on the hearts of men 3 which they cannot change 3 with administrative rules that they can alter at whim. For Hayek, such presumption was not only a 8fatal conceit 9, but also 8the road to serfdom 9. The impact of the simple ideas encapsulated in The Road to Serfdom was immediate.<br><br> The book went through six impressions in the T rst 16 months, was translated into numerous foreign languages, and circulated both openly in the free world and clan- the road to serfdom 20 1 F. A. Hayek, The Road to Serfdom, Routledge, London, 1944, p.<br><br> v. 2 Ibid., p. vii.<br><br> 22 Treatise on Money ) 3 had been ripped apart by Hayek in a two-part journal review. Keynes had shrugged off the attack with a smile, saying as they passed one day in Clare Market: 8Oh, never mind; I no longer believe all that. 9 Hayek was not about to repeat the demolition job on The General Theory in case Keynes decided, at some future point, that he no longer believed in 8all that 9 either 3 a decision I heard Hayek regret often in the 1970s. War came and the LSE was evacuated from central London to Peterhouse College, Cambridge.<br><br> Typically, Keynes arranged rooms for his intellectual arch-rival Hayek at King 9s College where Keynes was Bursar and 3 also typically 3 Hayek volunteered for T re duty. That is, he offered to spend his nights sitting on the roof of his college watching out for marauding German bombers. It was while he sat out there at night that he began to wonder about what would happen to his adopted country if and when peace came.<br><br> It was clear to Hayek that victory held the seeds of its own destruction. The war was called 8the People 9s War 9 because 3 unlike most previous wars 3 the whole population had fought in one way or another. Even paciT sts contributed by working the land to feed the troops.<br><br> Hayek detected a growing sense of 8As in war, so in peace 9 3 namely that the government would own, plan and control everything. The economic difT culties created by the war would be immense: people would turn to government for a way out. And so, as Hayek penned his great classic, The Road to Serfdom , he was moved not only by a love for his adopted country but also by a great fear that national planning, that socialism, that the growth of state power and control would, inevitably, lead the UK and the US to fascism, or rather National Socialism.<br><br> introduction 23 3 J. M. Keynes, A Treatise on Money , Macmillan, London, 1930.<br><br> My story begins with a young Englishman named Lionel Robbins, later Lord Robbins of Clare Market. In 1929, at the age of only 30, he had been appointed Professor of Economics at the London School of Economics and Political Science (LSE), a college of the University of London. He was arguably the greatest English economist of his generation, and he was U uent in German.<br><br> This skill alerted him to the work of a young Austrian economist, Friedrich Hayek, and he invited his equally young counterpart to lecture at the LSE. Such was the success of these lectures that Hayek was appointed Tooke Professor of Economic Science and Statistics at the LSE in 1931, and became an English citizen long before such status had become a 8passport of convenience 9. In the 1930s John Maynard Keynes was in full U ow.<br><br> He was the most famous economist in the world, and Hayek was his only real rival. In 1936 Keynes published his infamous General Theory of Employment, Interest and Money . 2 Hayek was tempted to demolish this nonsense but he held back, for a very simple and very human reason.<br><br> Two years earlier, a now forgotten Keynesian tract ( A 22 INTRODUCTION HAYEK, FISHER AND THE ROAD TO SERFDOM 1 1 This introduction is based on a speech given by the author on 26 April 1999 to the 33rd International Workshop 8Books for a Free Society 9 of the Atlas Economic Research Foundation (Fairfax, VA) in Philadelphia, PA. 2 J. M.<br><br> Keynes, The General Theory of Employment, Interest and Money, Macmillan, London, 1936. upon row of years 3 decades even 3 of copies of Reader 9s Digest . So how did our T ghter pilot Fisher come across our academic Hayek?<br><br> What follows is the story I have pieced together. Not all parts of it are accepted by all interested parties, but the pieces do T t. So this is my story and I 9m sticking to it.<br><br> The marriage of true minds The Road to Serfdom was published in March 1944 and, despite wartime paper shortages, it went through T ve reprints in the UK in 15 months. In spite of this, owing to wartime paper rationing, the publishers, Routledge, were unable to keep up with demand and Hayek complained that The Road to Serfdom had acquired a reputation for being 8that unobtainable book 9. 4 It was such an incredible hit that Hayek lost track of the reviews and critics were moved to write whole books attacking him in both the UK and the US.<br><br> Dr Laurence Hayek, only son of F. A. Hayek, owns his late father 9s own T rst edition copy of The Road to Serfdom as well as the printers 9 proof copy with Hayek 9s corrections.<br><br> On the inside back cover of the former Hayek began listing the reviews as they came out. The list reads as follows: Tablet 11/3/44 (Douglas Woodruff) Sunday Times 12/3 (Harold Hobson one or two sentences) 9/4 (G. M.<br><br> Young) Birmingham Post 14/3 (TWH) introduction 25 4 Quoted in R. Cockett, Thinking the Unthinkable: Think Tanks and the Economic Counter-Revolution, 1931 31983, Fontana, London, 1995, p. 85.<br><br> Antony Fisher, the man who did So let me talk now about The Road to Serfdom and one man in particular who was moved by its lessons to do something. That man is the late Antony George Anson Fisher, or AGAF as we referred to him, and still do. Fisher came from a family of mine owners, members of parlia- ment, migrants and military men.<br><br> He was born in 1915 and soon followed by his brother and best friend Basil. His father was killed by a Turkish sniper in 1917. Brought up in South East England by his young widowed mother, an independent New Zealander from Piraki, Akaroa, AGAF attended Eton and Cambridge, where he and his brother both learnt to U y in the University Air Squadron.<br><br> On graduating, Antony 9s several initiatives included: " a car rental T rm 3 a success " a plane rental T rm 3 also a success; and " the design and manufacture of a cheap sports car called the Deroy 3 a failure because of a lack of power. At the start of the war Antony and Basil volunteered for the RAF and were soon U ying Hurricanes in III Squadron in the Battle of Britain. One day Basil 9s plane was hit by German T re.<br><br> He bailed out over Selsey Bill but his parachute was on T re and both plane and man plummeted to the ground, separately. A totally devastated Antony was grounded for his own safety, but used his time productively to develop a machine (the Fisher Trainer) to teach trainee pilots to shoot better. He was also an avid reader of Reader 9s Digest .<br><br> Every copy was devoured, read aloud to his family, heavily underlined and kept in order in his study. His T rst child, Mark, recalls a wall of Antony 9s study lined with row the road to serfdom 24 introduction 27 coincide with the US book publication. He arrived to T nd himself a celebrity: .<br><br> . . I was told all our plans were changed: I would be going on a nationwide lecture tour beginning at NY Town Hall .<br><br> . . Imagine my surprise when they drove me there the next day and there were 3,000 people in the hall, plus a few score more in adjoining rooms with loudspeakers.<br><br> There I was, with this battery of microphones and a veritable sea of expectant faces . 6 Now I get to the detective work. That late spring/early summer of 1945 saw both Hayek and Fisher on the move.<br><br> Hayek had spent the whole of the war at Cambridge but now it was safe for the LSE to return to London. Fisher had spent the war stationed all over the UK training pilots in gunnery and rising to the rank of Squadron Leader. He too was on the move to the War OfT ce (now the Ministry of Defence) in central London, just a ten-minute walk from the LSE.<br><br> Laurence Hayek and the LSE both conT rm the dates of Hayek 9s move, while Fisher 9s RAF record, recently obtained from the Ministry of Defence by his elder son Mark, clearly dates his. Forty years later both Hayek and Fisher were not overly helpful about exactly what happened next. Hayek in particular used to claim he had absolutely no recollection whatsoever of Fisher ever coming to him for advice.<br><br> Fisher on the other hand was always very clear and very consistent about the dialogue 3 almost verbatim 3 but not so helpful on exactly how it happened. Here is how I believe it came about. 6 Interview with Hayek in The Times, 5 May 1985, quoted in Cockett, op.<br><br> cit., pp. 100 3101. Yorkshire Post 29/3 Financial News 30/3 Listener 30/3 Daily Sketch 30/3 (Candidus) Times Literary Supplement 1/4 Spectator 31/3 (M.<br><br> Polanyi) Irish Times 25/3 Observer 9/4 (George Orwell) Manchester Guardian 19/4 (W) But, as Hayek said to me in 1975, they started coming so fast he lost track and stopped recording them. In early 1945 the University of Chicago Press published the US edition of The Road to Serfdom and, like Routledge in the UK, found themselves unable to meet the demand for copies owing to paper rationing. However, in April 1945 the book T nally reached a mass audience when the Reader 9s Digest published their condensed version.<br><br> 5 (Hayek thought it impossible to condense but always commented on what a great job the Reader 9s Digest editors did.) Whereas the book publishers had been dealing in issues of four or T ve thousand copies, the Reader 9s Digest had a print run which was measured in hundreds of thousands. For the T rst and still the only time, they put the condensed book at the front of the magazine where nobody could miss it 3 particularly a Digest junkie like Fisher. The Reader 9s Digest appeared while Hayek was on board a ship en route to the USA for a lecture tour which had been arranged to the road to serfdom 26 5 John Blundell discusses the contents of that issue of the Reader 9s Digest in detail in 8Looking back at the condensed version of The Road to Serfdom after 60 years 9, Economic Affairs , Vol.<br><br> 24, No. 1. Finally on this issue, let me quote Fisher 9s own words of 3 July 1985 when he spoke at a party at the IEA to celebrate its 30th birthday.<br><br> (This would have been the 30th anniversary of the IEA 9s T rst book in June 1955 rather than incorporation in November 1955 or the actual opening in 1957.) At that party in July 1985 Fisher said: It was quite a day for me when Friedrich Hayek gave me some advice which must be 40 years ago almost to the day and which completely changed my life. Friedrich got me started . .<br><br> . and two of the things he said way back are the things which have kept the IEA on course. One is to keep out of politics and the other is to make an intellectual case .<br><br> . . if you can stick to these rules you keep out of a lot of trouble and apparently do a lot of good.<br><br> As I said, 30 years later, on countless occasions, Hayek did not dispute the event or disown the advice, he simply said he could not remember. But it is of course very Hayekian advice and very much in keeping with his classic essay 8The Intellectuals and Socialism 9, which came out just a few years later and which has just been republished by the IEA. 8 This was hardly a blueprint for action 3 8reach the intellectuals 9 3 and indeed the next decade saw little direct fallout from that conversation, although three American intellectual entrepreneurs who had also sought out Hayek did get the ball rolling in the US.<br><br> The road to the IEA Hayek taught at the LSE, got divorced in Arkansas, remarried, moved to Chicago and wrote The Constitution of Liberty . introduction 29 8 F. A.<br><br> Hayek, The Intellectuals and Socialism, Rediscovered Riches No. 4, IEA, Lon- don, 1998. Fisher, the Digest junkie, is already politically active and is also worried about the future for his country.<br><br> The April 1945 edition lands on his desk as he is moving to London and, after reading the cover story, he notes on the front that the author is at the Univer- sity of London. A phone call establishes that the LSE is back in place and, one lunchtime or late one afternoon, Fisher makes the short walk from his ofT ce to the LSE and knocks on Hayek 9s door. Fisher also recalled the physical setting of Hayek 9s ofT ce in minute and accurate detail, including its proximity to that of the dreaded Harold Laski.<br><br> Fisher claimed that after small talk (which neither excelled at) the conversation went like this: Fisher I share all your worries and concerns as expressed in The Road to Serfdom and I 9m going to go into politics and put it all right. Hayek No you 9re not! Society 9s course will be changed only by a change in ideas.<br><br> First you must reach the intellectuals, the teachers and writers, with reasoned argument. It will be their inU uence on society which will prevail, and the politi- cians will follow. I have this quote framed above my desk alongside Keynes 9s famous line: 8The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.<br><br> Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual inU uences, are usually the slaves of some defunct economist. 9 7 the road to serfdom 28 7 Keynes, The General Theory of Employment, Interest and Money , op. cit., p.<br><br> 383. distinctive IEA approach of short monographs containing the very best economics in good, jargon-free English, written by academics (mostly) or quasi-academics, in language accessible to the layman but still of use to the expert. In the early days it was hard to T nd authors, hard to raise money and hard to get reviews and sales.<br><br> At times everybody had to down pens to raise money or quickly pick up pens to co-author a paper. The T rst clear success of this venture 3 inspired by The Road to Serfdom , advised by Hayek, implemented by Fisher and run by Harris and Seldon 3 was the repeal of Resale Price Main- tenance in 1964, a fantastic reform. It effectively outlawed the prevailing practice by which manufacturers priced goods 3 they literally stamped the price on the article 3 and discounting was illegal.<br><br> There was no such thing as shopping around. This change alienated the small-business vote and put the Tories out for six years, but it transformed the UK economy and allowed a nation of shopkeepers to spread their wings. It was clearly heralded by a 1960 IEA study, Resale Price Maintenance and Shoppers 9 Choice by Basil Yamey.<br><br> 11 Other successes followed and the IEA 9s impetus grew, but what was happening to Hayek and Fisher? Hayek had moved from Chicago back to Europe, and in December 1974 received the Nobel Prize. He was 75 and his health had not been good.<br><br> He was also depressed. However the prize (and the big cheque) cheered him up no end. Fisher had sold the chicken business for millions and had put a large part of his minority share into an experimental turtle farm in the Cayman Islands.<br><br> Well, the experiment worked brilliantly but introduction 31 11 B. S. Yamey, Resale Price Maintenance and Shoppers 9 Choice, Hobart Paper No.<br><br> 1, IEA, London, 1960. Fisher tried stockbroking, became a farmer, wrote a very prescient monograph, 8The Case for Freedom 9, 9 imported the idea of factory-farming of chickens, championed liberty in many different campaigns, visited the US looking for institute models he could copy, published The Free Convertibility of Sterling by George Winder, 10 incorporated the Institute of Economic Affairs, hired Ralph Harris and, as he always did, having hired the talent let it rip with a very hands-off approach to management. (When in 1987 he entrusted to me the future of the Atlas Economic Research Foundation, the body dedicated to building new IEAs around the world, he made it very clear that he was there if I wanted his help but that he really did expect me to crack on on my own.) To begin with, in the late 1950s, it was not at all clear what the IEA would do.<br><br> The exchange control book by Winder had been short, easily understood and on a fairly narrow but important topic. It had sold out its 2,000 print run very quickly because of Henry Hazlitt 9s review in Newsweek . Unfortunately the printer who had also sold the book for Antony went bankrupt, and the 2,000 names and addresses of the purchasers were lost.<br><br> But Fisher had visited the Foundation for Economic Education in Irvington- on- Hudson, New York, had been exposed to its magazine, The Freeman , and still adored Reader 9s Digest . Harris had been a party political man turned academic turned editorial writer, while Arthur Seldon, the T rst editorial director, had been a research assistant to the famous LSE economist Arnold Plant before becoming chief economist of a brewers 9 association. Out of this mish-mash of experiences 3 academic, business, political, journalistic 3 came the the road to serfdom 30 9 A.<br><br> Fisher, The Case for Freedom, Runnymede Press, London, undated. 10 G. Winder, The Free Convertibility of Sterling, The Batchworth Press for the Insti- tute of Economic Affairs, London, 1955.<br><br> Fisher incorporated the Atlas Economic Research Foundation to be a focal point for institutes and to channel funds to start-ups. By the time of his death in 1988 we listed 30-plus institutes in 20 or so countries. By 1991 we were listing 80 and I now count about 100 in 76 countries.<br><br> All of this can be traced back to this young economist, his book, the Reader 9s Digest condensation, and a young RAF ofT cer . . .<br><br> through the IEA . . .<br><br> through CIS/PRI/ASI/Manhattan and Fraser . . .<br><br> to 100 institutes in 76 countries today, who together are literally changing the world. To illustrate our impact, let me T nish with a story from Lord Howell of Guildford, a minister in the 1980s. He came into my ofT ce recently and pointed at the big boardroom table where I work every day and which was donated by Antony in the late 1960s.<br><br> Howell said: 8You know, John, it was at that table that we T rst got serious about privatisation in 1968. The idea T zzled in the 1970s, took off in the 1980s and in the 1990s burns brightly around the world. 9 I replied: 8Yes, it burns so brightly that last year world- wide privatisation revenues topped $100 billion for the T rst time. 9 So it is quite a story we have to tell and it all begins here with the condensed version of The Road to Serfdom and the cartoon version drawn to my attention only recently by Laurence Hayek. Read the condensed version, now published in our 8Rediscovered Riches 9 series for the T rst time since its original appearance in the Reader 9s Digest , and wonder on all the changes it led to: all the misery avoided and all the prosperity created.<br><br> john blundell November 1999 introduction 33 the environmentalists closed down his largest market 3 the US. 12 He refused to hide behind limited liability and used the balance of his fortune to pay off all debts. 1974 3 now 30 years after The Road to Serfdom 3 was a big year for Fisher too, because, free from business concerns, he was able to respond to businessmen and others around the world who noted the IEA 9s growing inU uence and came to him for advice.<br><br> Sowing the seed So the entrepreneur turned T ghter pilot turned gunnery trainer turned stockbroker turned dairy farmer turned chicken pioneer turned turtle saviour became the Johnny Appleseed of the free- market movement, going all over the world and setting up new IEA-type operations. First he joined the very young Fraser Institute in Vancouver, BC; quickly moved on to help Greg Lindsay and the Centre for Independent Studies in Australia; hired David Theroux, recently departed from the Cato Institute, to set up the PaciT c Research Institute in San Francisco; gave support to the Butler brothers and Madsen Pirie as they founded the Adam Smith Institute in London; and incorporated with William Casey the Manhattan Institute where, as they did so, they sat on movers 9 boxes in an otherwise empty ofT ce. It took ten years to give birth to Institute No.<br><br> 1 3 the IEA. For all but twenty years it was the only one in the family; in just six years T ve more were born, and then the fun really started. In 1981 the road to serfdom 32 12 For a full account see P.<br><br> and S. Fosdick, Last Chance Lost: Can and Should Farming Save the Green Sea Turtle?, Irvin S. Naylor, York, PA, 1994.<br><br> " Is there a greater tragedy imaginable than that in our endeavour consciously to shape our future in accordance with high ideals we should in fact unwittingly produce the very opposite of what we have been striving for? " The contention that only the peculiar wickedness of the Germans has produced the Nazi system is likely to become the excuse for forcing on us the very institutions which have produced that wickedness. " Totalitarianism is the new word we have adopted to describe the unexpected but nevertheless inseparable manifestations of what in theory we call socialism.<br><br> " In a planned system we cannot conT ne collective action to the tasks on which we agree, but are forced to produce agreement on everything in order that any action can be taken at all. " The more the state 8plans 9 the more difT cult planning becomes for the individual. " The economic freedom which is the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right.<br><br> 35 SUMMARY (Jacket notes written by Hayek for the first edition) 8In The Road to Serfdom 9, writes Henry Hazlitt in the New York Times, 8Friedrich A. Hayek has written one of the most important books of our generation. It restates for our time the issue between liberty and authority.<br><br> It is an arresting call to all well-intentioned planners and socialists, to all those who are sincere democrats and liberals at heart, to stop, look and listen. 9 The author is an internationally known economist. An Austrian by birth, he was director of the Austrian Institute for Economic Research and lecturer in economics at the University of Vienna during the years of the rise of fascism in Central Europe. He has lived in England since 1931 when he became Professor of Economic Science at the University of London, and is now a British citizen.<br><br> Professor Hayek, with great power and rigour of reasoning, sounds a grim warning to Americans and Britons who look to the government to provide the way out of all our economic difT culties. He demonstrates that fascism and what the Germans correctly call National Socialism are the inevitable results of the increasing growth of state control and state power, of national 8planning 9 and of socialism. In a foreword to The Road to Serfdom John Chamberlain, book editor of Harper 9s, writes: 8This book is a warning cry in a time of hesitation.<br><br> It says to us: Stop, look and listen. Its logic is incontest- able, and it should have the widest possible audience. 9 34 PREFACE TO THE READER 9S DIGEST CONDENSED VERSION OF THE ROAD TO SERFDOM The Reader 9s Digest condensed version of The Road to Serfdom " What our generation has forgotten is that the system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not. " We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may prevent its use for desirable purposes.<br><br> " We shall all be the gainers if we can create a world T t for small states to live in. " The T rst need is to free ourselves of that worst form of contemporary obscurantism which tries to persuade us that what we have done in the recent past was all either wise or unavoidable. We shall not grow wiser before we learn that much that we have done was very foolish.<br><br> the road to serfdom 36 The author has spent about half his adult life in his native Austria, in close touch with German thought, and the other half in the United States and England. In the latter period he has become increasingly convinced that some of the forces which destroyed freedom in Germany are also at work here. The very magnitude of the outrages committed by the National Socialists has strengthened the assurance that a totalitarian system cannot happen here.<br><br> But let us remember that 15 years ago the possibility of such a thing happening in Germany would have appeared just as fantastic not only to nine-tenths of the Germans themselves, but also to the most hostile foreign observer. There are many features which were then regarded as 8typically German 9 which are now equally familiar in America and England, and many symptoms that point to a further development in the same direction: the increasing veneration for the state, the fatal- istic acceptance of 8inevitable trends 9, the enthusiasm for 8organi- zation 9 of everything (we now call it 8planning 9). The character of the danger is, if possible, even less understood here than it was in Germany.<br><br> The supreme tragedy is still not seen that in Germany it was largely people of good will who, by their socialist policies, prepared the way for the forces which stand for everything they detest. Few recognize that the rise of fascism and Marxism was not a reaction against the socialist trends of the 39 THE ROAD TO SERFDOM (condensed version, published in the Reader 9s Digest , April 1945 edition) of some single body power formerly exercised independently by many, an amount of power is created inT nitely greater than any that existed before, so much more far-reaching as almost to be different in kind. It is entirely fallacious to argue that the great power exercised by a central planning board would be 8no greater than the power collectively exercised by private boards of directors 9.<br><br> There is, in a competitive society, nobody who can exercise even a fraction of the power which a socialist planning board would possess. To decentralize power is to reduce the absolute amount of power, and the competitive system is the only system designed to minimize the power exercised by man over man. Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?<br><br> In every real sense a badly paid unskilled workman in this country has more freedom to shape his life than many an employer in Germany or a much better paid engineer or manager in Russia. If he wants to change his job or the place where he lives, if he wants to profess certain views or spend his leisure in a particular way, he faces no absolute impediments. There are no dangers to bodily security and freedom that conT ne him by brute force to the task and environment to which a superior has assigned him.<br><br> Our generation has forgotten that the system of private property is the most important guarantee of freedom. It is only because the control of the means of production is divided among many people acting independently that we as individuals can decide what to do with ourselves. When all the means of produc- tion are vested in a single hand, whether it be nominally that of the road to serfdom 41 preceding period but a necessary outcome of those tendencies .<br><br> Yet it is signiT cant that many of the leaders of these movements, from Mussolini down (and including Laval and Quisling) began as socialists and ended as fascists or Nazis. In the democracies at present, many who sincerely hate all of Nazism 9s manifestations are working for ideals whose realization would lead straight to the abhorred tyranny. Most of the people whose views inU uence developments are in some measure social- ists.<br><br> They believe that our economic life should be 8consciously directed 9, that we should substitute 8economic planning 9 for the competitive system. Yet is there a greater tragedy imaginable than that, in our endeavour consciously to shape our future in accord- ance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for? Planning and power In order to achieve their ends the planners must create power 3 power over men wielded by other men 3 of a magnitude never before known.<br><br> Their success will depend on the extent to which they achieve such power. Democracy is an obstacle to this suppres- sion of freedom which the centralized direction of economic activity requires. Hence arises the clash between planning and democracy.<br><br> Many socialists have the tragic illusion that by depriving private individuals of the power they possess in an individualist system, and transferring this power to society, they thereby extin- guish power. What they overlook is that by concentrating power so that it can be used in the service of a single plan, it is not merely transformed, but inT nitely heightened. By uniting in the hands the road to serfdom 40 independence which 100 years before had hardly seemed possible.<br><br> The effect of this success was to create among men a new sense of power over their own fate, the belief in the unbounded poss- ibilities of improving their own lot. What had been achieved came to be regarded as a secure and imperishable possession, acquired once and for all; and the rate of progress began to seem too slow. Moreover the principles which had made this progress possible came to be regarded as obstacles to speedier progress, impatiently to be brushed away.<br><br> It might be said that the very success of liber- alism became the cause of its decline. No sensible person should have doubted that the economic principles of the nineteenth century were only a beginning 3 that there were immense possibilities of advancement on the lines on which we had moved. But according to the views now dominant, the question is no longer how we can make the best use of the spontaneous forces found in a free society.<br><br> We have in effect undertaken to dispense with these forces and to replace them by collective and 8conscious 9 direction. It is signiT cant that this abandonment of liberalism, whether expressed as socialism in its more radical form or merely as 8organization 9 or 8planning 9, was perfected in Germany. During the last quarter of the nineteenth century and the T rst quarter of the twentieth, Germany moved far ahead in both the theory and the practice of socialism, so that even today Russian discussion largely carries on where the Germans left off.<br><br> The Germans, long before the Nazis, were attacking liberalism and democracy, capit- alism, and individualism. Long before the Nazis, too, the German and Italian social- ists were using techniques of which the Nazis and fascists later made effective use. The idea of a political party which embraces the road to serfdom 43 8society 9 as a whole or that of a dictator, whoever exercises this control has complete power over us.<br><br> In the hands of private indi- viduals, what is called economic power can be an instrument of coercion, but it is never control over the whole life of a person. But when economic power is centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery. It has been well said that, in a country where the sole employer is the state, opposition means death by slow starvation.<br><br> Background to danger Individualism, in contrast to socialism and all other forms of totalitarianism, is based on the respect of Christianity for the individual man and the belief that it is desirable that men should be free to develop their own individual gifts and bents. This philo- sophy, T rst fully developed during the Renaissance, grew and spread into what we know as Western civilization. The general direction of social development was one of freeing the individual from the ties which bound him in feudal society.<br><br> Perhaps the greatest result of this unchaining of individual energies was the marvellous growth of science. Only since indus- trial freedom opened the path to the free use of new knowledge, only since everything could be tried 3 if somebody could be found to back it at his own risk 3 has science made the great strides which in the last 150 years have changed the face of the world. The result of this growth surpassed all expectations.<br><br> Wherever the barriers to the free exercise of human ingenuity were removed, man became rapidly able to satisfy ever-widening ranges of desire. By the begin- ning of the twentieth century the working man in the Western world had reached a degree of material comfort, security and personal the road to serfdom 42 The liberal way of planning 8Planning 9 owes its popularity largely to the fact that everybody desires, of course, that we should handle our common problems with as much foresight as possible. The dispute between the modern planners and the liberals is not on whether we ought to employ systematic thinking in planning our affairs.<br><br> It is a dispute about what is the best way of so doing. The question is whether we should create conditions under which the knowledge and initia- tive of individuals are given the best scope so that they can plan most successfully; or whether we should direct and organize all economic activities according to a 8blueprint 9, that is, 8consciously direct the resources of society to conform to the planners 9 partic- ular views of who should have what 9. It is important not to confuse opposition against the latter kind of planning with a dogmatic laissez faire attitude.<br><br> The liberal argument does not advocate leaving things just as they are; it favours making the best possible use of the forces of competi- tion as a means of coordinating human efforts. It is based on the conviction that, where effective competition can be created, it is a better way of guiding individual efforts than any other. It emphas- izes that in order to make competition work beneT cially a care- fully thought-out legal framework is required, and that neither the past nor the existing legal rules are free from grave defects.<br><br> Liberalism is opposed, however, to supplanting competition by inferior methods of guiding economic activity. And it regards competition as superior not only because in most circumstances it is the most efT cient method known but because it is the only method which does not require the coercive or arbitrary intervention of authority . It dispenses with the need for 8conscious social control 9 and gives individuals a chance to decide whether the prospects of the road to serfdom 45 all activities of the individual from the cradle to the grave, which claims to guide his views on everything, was T rst put into practice by the socialists.<br><br> It was not the fascists but the socialists who began to collect children at the tenderest age into political organizations to direct their thinking. It was not the fascists but the socialists who T rst thought of organizing sports and games, football and hiking, in party clubs where the members would not be infected by other views. It was the socialists who T rst insisted that the party member should distinguish himself from others by the modes of greeting and the forms of address.<br><br> It was they who, by their organization of 8cells 9 and devices for the permanent supervi- sion of private life, created the prototype of the totalitarian party. By the time Hitler came to power, liberalism was dead in Germany. And it was socialism that had killed it.<br><br> To many who have watched the transition from socialism to fascism at close quarters the connection between the two systems has become increasingly obvious, but in the democracies the majority of people still believe that socialism and freedom can be combined. They do not realize that democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something utterly different 3 the very destruction of freedom itself. As has been aptly said: 8What has always made the state a hell on earth has been precisely that man has tried to make it his heaven. 9 It is disquieting to see in England and the United States today the same drawing together of forces and nearly the same contempt of all that is liberal in the old sense.<br><br> 8Conservative socialism 9 was the slogan under which a large number of writers prepared the atmosphere in which National Socialism succeeded. It is 8conser- vative socialism 9 which is the dominant trend among us now. the road to serfdom 44 The great utopia There can be no doubt that most of those in the democracies who demand a central direction of all economic activity still believe that socialism and individual freedom can be combined.<br><br> Yet socialism was early recognized by many thinkers as the gravest threat to freedom. It is rarely remembered now that socialism in its beginnings was frankly authoritarian. It began quite openly as a reaction against the liberalism of the French Revolution.<br><br> The French writers who laid its foundation had no doubt that their ideas could be put into practice only by a strong dictatorial government. The T rst of modern planners, Saint-Simon, predicted that those who did not obey his proposed planning boards would be 8treated as cattle 9. Nobody saw more clearly than the great political thinker de Tocqueville that democracy stands in an irreconcilable conU ict with socialism: 8Democracy extends the sphere of individual freedom, 9 he said.<br><br> 8Democracy attaches all possible value to each man, 9 he said in 1848, 8while socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude. 9 To allay these suspicions and to harness to its cart the strongest of all political motives 3 the craving for freedom 3 socialists began increasingly to make use of the promise of a 8new freedom 9.<br><br> Socialism was to bring 8economic freedom 9 without which polit- ical freedom was 8not worth having 9. To make this argument sound plausible, the word 8freedom 9 was subjected to a subtle change in meaning. The word had formerly meant freedom from coercion, from the arbitrary power the road to serfdom 47 a particular occupation are sufT cient to compensate for the disad- vantages connected with it.<br><br> The successful use of competition does not preclude some types of government interference. For instance, to limit working hours, to require certain sanitary arrangements, to provide an extensive system of social services is fully compatible with the preservation of competition. There are, too, certain T elds where the system of competition is impracticable.<br><br> For example, the harmful effects of deforestation or of the smoke of factories cannot be conT ned to the owner of the property in question. But the fact that we have to resort to direct regulation by authority where the conditions for the proper working of competition cannot be created does not prove that we should suppress competition where it can be made to function. To create conditions in which competition will be as effective as possible, to prevent fraud and deception, to break up monopolies 3 these tasks provide a wide and unquestioned T eld for state activity.<br><br> This does not mean that it is possible to T nd some 8middle way 9 between competition and central direction, though nothing seems at T rst more plausible, or is more likely to appeal to reason- able people. Mere common sens