Summary of The Road to Serfdom – Friedrich Hayek

The Road to Serfdom by Friedrich Hayek (or Friedrich August von Hayek) is a political-economic work that has made a significant impact on society through its promotion of liberalism.

Not sure you understand everything about political economy concepts? Don’t worry, our commentary focuses on the essential points for an easy and step by step understanding!

So Hayek goes back to how socialism, which for him is a kind of collectivism, has corrupted freedom.

He first explains that we are responsible:

We are willing to accept all explanations except one: that the present state of the world may be the result of a genuine mistake on our part.

Friedrich Hayek, The Road to Serfdom, Chapter 1

Economic freedom makes political freedom possible.

We have gradually abandoned that economic freedom without which personal and political freedom never existed.

Friedrich Hayek, The Road to Serfdom, Chapter 1

We are mistaken in our use of the word individualism. It does not mean selfish interests.

The word individualism is rather unhealthy nowadays, and it has come to mean selfishness.

Friedrich Hayek, The Road to Serfdom, Chapter 1

Spontaneous social forces are synonymous with the free market. Coercion is above all that which comes from the state, which for Max Weber (not quoted by Hayek) has a monopoly on legitimate physical violence, and which for Hayek is probably not legitimate.

There is a fundamental principle: that in the conduct of our affairs we should make the greatest possible use of spontaneous social forces, and resort as little as possible to coercion.

Friedrich Hayek, The Road to Serfdom, Chapter 1

For all that, Hayek is not a laissez-faire absolutist. Discernment is needed.

Probably nothing has done so much harm to the liberal cause as the stubborn insistence of some liberals on certain massive principles, such as above all the laissez-faire rule

Friedrich Hayek, The Road to Serfdom, Chapter 1

By “existing machinery” Hayek means the existing political system. Thus, socialism wanted to replace everything.

It was no longer a question of increasing or improving the existing machinery, but of scrapping it all and replacing it.

Friedrich Hayek, The Road to Serfdom, Chapter 1

Hayek recalls the past nature of socialism, which was for him properly “authoritarian”.

It is rarely remembered today that socialism in its early days was frankly authoritarian.

Friedrich Hayek, The Road to Serfdom, Chapter 2

The greatest and most harmful confusion of our time and of the twentieth century is that of having taken the word freedom as a synonym for power or wealth. Thus, he who was rich or powerful would have been free. But this is not freedom.

Before man could be truly free, it was necessary to break “the despotism of physical need” and to loosen “the constraints of the economic system”.

In this sense, the word freedom is obviously just another name for power or wealth.

Friedrich Hayek, The Road to Serfdom, Chapter 2

Observers, but also Hayek. Fascism and communism have many features in common.

[Observers] have been struck by the extraordinary resemblance in many respects between life under “fascist” and “communist” regimes.

Friedrich Hayek, The Road to Serfdom, Chapter 2

More than common traits, fascism and communism are said to have the same roots.

more and more people wondered whether these new tyrannies were not the result of the same tendencies.

Friedrich Hayek, The Road to Serfdom, Chapter 2

The “best way” does not mean the perfect way. But competition has a cherished place for liberals (a term that for Hayek has been overused, and that could be better translated as libertarian, even if it sounds too negative for Hayek’s taste)

Liberalism is based on the belief that competition is the best way to guide individual efforts.

Friedrich Hayek, The Road to Serfdom, Chapter 3

We return to this notion that “the best means” is not the perfect means. Authority, that is, the state, must be brought in if necessary. Hayek does not completely reject the State, on the contrary it has its role to play.

It is true that authority must be called in whenever it is impossible to make competition work

Friedrich Hayek, The Road to Serfdom, Chapter 3

Planism is a danger in Hayek’s eyes. Planism is the “Doctrine which advocates the regulation of the economy by planning.”(Dictionary of the French Academy 9th edition). But it was not necessary, it was put in place without having to resort to it.

It is therefore beyond doubt that the movement towards planism is the result of a deliberate action, and that no external necessity forces us to it.

Friedrich Hayek, The Road to Serfdom, Chapter 4

Hayek gives his definition of the collectivist system, of which socialism is a part:

The common feature of all collectivist systems may be defined (…) as the organization of the work of society for a definite social purpose.

Friedrich Hayek, The Road to Serfdom, Chapter 5

It is an evolution of our society that our moral code, that is to say our maxims, have been reduced and have reached a higher level of abstraction.

The rules that make up our moral code have gradually become fewer and more general.

Friedrich Hayek, The Road to Serfdom, Chapter 5

This time, Hayek gives the definition ofindividualism, which is not the selfish interest of each individual. He opposes individualism and the collectivist system.

To recognize the individual as the final judge of his own ends, to believe that as far as possible his own opinions should govern his actions, this is the essence of individualism.

Friedrich Hayek, The Road to Serfdom, Chapter 5

A new definition, that of capitalism. Doubled by a major assertion, namely that capitalism is inherent to democracy: only this system allows democracy to unfold.

If the word “capitalism” means a system of competition based on the free disposal of private property, it must be realized that only such a system allows democracy.

Friedrich Hayek, The Road to Serfdom, Chapter 5

Planning is an evil still vigorously rejected by Hayek. When the obligation comes from the top of the pyramid (the state), it is not possible for the base of the pyramid (the people, or rather each of the individuals who make up a people) to launch its own projects, that is, to use its freedom. It can be summarized in this equation: + planning = – freedom for the individual.

the more the State “plans”, the more difficult it becomes for the individual to make projects

Friedrich Hayek, The Road to Serfdom, Chapter 6

For Hayek, it is equality before the law that must be privileged. Material equality reduces the freedom of the individual. Now, the problem with socialism for Hayek is that it seeks more to ensure material equality (in concrete terms, that everyone is as close as possible to the same level of wealth) than to ensure equality before the law, which is the only thing that allows individual freedom.

formal equality before the law is in contradiction, indeed incompatible, with any governmental effort to achieve material or concrete equality among men

Friedrich Hayek, The Road to Serfdom, Chapter 6

Quite simply, Hayek defends money and currency. It is a tool that has allowed man to free himself from many constraints, and above all that has given him the choice. The choice to spend what he wants on what he wants, rather than being subject to the problem of barter or other exchange difficulties.

It would be much more accurate to say that money is one of the most magnificent instruments of freedom that man has ever invented.

Friedrich Hayek, The Road to Serfdom, Chapter 7

Hayek does not neglect the role of luck in economic success, especially in the capitalist system where competition takes place.

in competition, luck is as important as intelligence and foresight

Friedrich Hayek, The Road to Serfdom, Chapter 8

The rich are powerful is not the same as saying that only the powerful can become rich. In this alternative, Hayek prefers the first option.

Is not the world in which the rich are powerful better than the world in which only the powerful can acquire wealth?

Friedrich Hayek, The Road to Serfdom, Chapter 8

Here again, Hayek is not 100 percent dismissive of the role of the state. He is not, in a word, an anarchist. A catastrophe against which an individual is powerless can be, for example, an earthquake. The state then has a role to play in mitigating the resulting damage.

Whenever the community can act to mitigate the consequences of disasters against which the individual is powerless, it must do so.

Friedrich Hayek, The Road to Serfdom, Chapter 9

Hayek speaks of a counterproductive behavior. That of wanting to guarantee the economic and financial security of an agent, which can be a person or an organization. This disturbs the market, and by destabilizing the market, causes even greater dysfunction than what was originally intended to be protected.

the more one tries to ensure complete security by intervening in the market system, the more insecurity increases

Friedrich Hayek, The Road to Serfdom, Chapter 9

However, security is an essential asset to guarantee the freedom of each individual.

A certain degree of security is essential to safeguard freedom

Friedrich Hayek, The Road to Serfdom, Chapter 9

Certainly, freedom is an ideal and would bring many benefits. But freedom comes at a price, in the sense that it costs someone to possess that freedom, and even society in general. One has to make sacrifices to obtain freedom, but for Hayek it is worth it.

let us admit that freedom can only be obtained at a certain price

Friedrich Hayek, The Road to Serfdom, Chapter 9

Hayek wants to return to a popular belief, which must be destroyed immediately. This belief is to think that totalitarian systems, which are the object of his book, and which he presents as a consequence of socialism, are accidental. That would be like saying that nothing could have prevented it, that it is not the fault of the system, of the institutions. This is what Hayek rejects. The institutions and the governmental system, set up by men themselves, have indeed led to totalitarian systems. This is not just a coincidence.

This belief consists in admitting that the most repugnant aspect of the totalitarian system is due to some historical accident

Friedrich Hayek, The Road to Serfdom, Chapter 10

To diminish absolute power is to diminish the power that one man has over another. Indeed, according to the theories of the social contract, all power is voluntarily placed in the hands of the state. But the more we centralize this power, the more the State, at the top of the pyramid, can act on its subjects. On the contrary, decentralization, i.e., distributing power to lower and varied levels, allows for the dilution of this absolute power that was in the hands of the State, and thus gives more freedom to individuals. Now competition, at work in capitalism, is a vector of decentralization. It is therefore thanks to capitalism, to competition, that power is decentralized, and that man becomes freer individually.

To share or decentralize power is to diminish its absolute force: only the system of competition is capable of reducing, by means of decentralization, the power exercised by man over man.

Friedrich Hayek, The Road to Serfdom, Chapter 10

This is another common feature of National Socialism and Communism. They want to develop each field of research in a precise interest for society. They disdain pure science, as well as art for art’s sake, i.e. research for the sake of advancement and progress, without necessarily seeking an immediate and useful interest within the framework of a planism.

Pure science or art for art’s sake find as little grace in the eyes of the Nazis as they do in the eyes of socialist or communist intellectuals.

Friedrich Hayek, The Road to Serfdom, Chapter 11

In economic fields where there must be a monopoly (i.e., a single organization that controls the entire economic field), there is a choice: either the state controls the private organization that has the monopoly, or the state acquires and becomes the monopoly organization. Hayek much prefers the first choice, which is also the choice of the United States at that time.

If monopoly is really unavoidable, it is likely that the American plan of strict state control over private monopolies, rigorously applied, is better than state control.

Friedrich Hayek, The Road to Serfdom, Chapter 13

Again, it is a choice that is left to men: EITHER the market is free OR the market is controlled by a few people or organizations. Except that the market belongs to no one, everyone contributes to it, everyone is freer. In the second case, individuals are subject to the power of a few. For Hayek, an ardent defender of freedom as he understands it, the choice is of course immediately made: better the first possibility. Hayek adds that since there are only these two alternatives, he who would tend to realize the second one would progressively make the first one disappear, which is the only one that finds grace in his eyes.

There are only two possibilities, either a system directed by the impersonal discipline of the market, or another directed by the will of a few individuals; and those who strive to destroy the first contribute, knowingly or unknowingly, to creating the second.

Friedrich Hayek, The Road to Serfdom, Chapter 13

Assuming that there really was a stage of economic man, which Hayek denies, this would be the end of economic man. But for Hayek, the economy is indispensable to the freedom of each individual.

The “end of economic man” seems likely to become one of the dominant myths of our time

Friedrich Hayek, The Road to Serfdom, Chapter 14

It is true that man is subject to market forces. But these forces are impersonal. That is to say, they are not embodied, it is not one person who controls the others. They are mechanisms that only an omniscient man, that only a God could understand to a large extent. It is better that than anything else, namely that a few individuals control the behavior of others, after which there would be no more freedom. Hayek praises these impersonal forces, which have allowed civilization to be what it is today, and to have progressed so well. For Hayek there is indeed progress, which is why he is not conservative: on the contrary, market forces are mobile and move, adapt to people, change.

It is man’s submission to the impersonal forces of the market that, in the past, made possible the development of a civilization that otherwise would not have been able to develop

Friedrich Hayek, The Road to Serfdom, Chapter 14

It is interesting to note that Hayek admits exceptions. War, for example, can justify the imposition of a single goal. It should be remembered that this work was published in 1944.

individual freedom is incompatible with the supremacy of a single goal to which the whole society is permanently overburdened. The only exception to this rule is war or other temporary disasters

Friedrich Hayek, The Road to Serfdom, Chapter 14

Hayek lists the virtues essential to individualism, those that characterize it. For Hayek, these virtues are the ones that are least popular in society at the time – and still today.

It is true that the virtues least appreciated and least practiced today – independence, self-confidence, risk-taking, the ability to defend one’s opinions against the majority, the readiness to help one’s fellow man – are those on which the individualist society is essentially based.

Friedrich Hayek, The Road to Serfdom, Chapter 14

In Hayek’s idealist project, we find an international framework for the economy and for people. This framework is none other than a federalist state. But a minimal state that must guarantee individual freedoms, as he has described them throughout the book.

An international authority can contribute enormously to economic prosperity if it is content to maintain order and create conditions in which people can develop themselves.

Friedrich Hayek, The Road to Serfdom, Chapter 15

Against political authority, which he calls for, Hayek sees an economic authority as a counterproductive framework, harmful to the world. This economic authority would not serve individual liberties.

an international economic authority, with no political power and even strictly limited to a certain domain, can easily exercise the most tyrannical and irresponsible power.

Friedrich Hayek, The Road to Serfdom, Chapter 15

In this last quotation, Hayek again emphasizes the benefits of a federation, the only system that he sees as being internationally acceptable. In his logic of decentralization, competition and more individual freedom, the federation is the only system that can serve humans.

The federation is the application of the democratic method to international affairs, the only method of peaceful transformation that man has invented.

Friedrich Hayek, The Road to Serfdom, Chapter 15

If you liked this explanation of Hayek’s book, you will certainly be interested in the immense work of Adam Smith, the founding father of liberalism, of which we propose a similar step-by-step explanation: The Wealth of Nations – Adam Smith