The road to Serfdom

Hayek provides us with 2 main thesis/ ideas in the book:

Associates Nazis and Communists as part of the same endeavor

"As sides of the same coin"

"Branches of the same tree"

Suggested that Nazis and Communists were somewhat similar

It was a scandal to say something like this, since by 1944, Nazis and Communists were on
war fighting each other for land
The labor party also had some connection to soviet ideas and that party was in Government
with Churchill. Although very leftist they were very loyal to Churchill.
In the US, they didn't find his idea that wrong
By 1945, Churchill wins the war and reads Hayek and writing his speech and includes 1
sentence from the book. "It seems that our labor party wants to turn the police into a sort of
Gestapo". By saying this, it was one of the reasons he lost the election!

After the 2nd world war, Nazis and communists won't be a threat, because

They may never get back to power.

People will turn against them very easily
Most people won't vote for them
It will be very hard for them to win elections in western Europe

Why are we on the road to serfdom?

As we move forward, the destination would be serfdom because it is an INTERNAL PROBLEM

(not external as the war)
A feeling is coming from within that one day we will wake up in serfdom. It is us, supporters
of liberty that will feel serfdom
We will end up in a total state because we will give it ALL power

"We will try to solve everything from state and not from markets!"
"We will reach Nazi/ communist goal in an unwilling way"

What will be the concept that will make us go all the way to serfdom?

The problem will be SOCIAL JUSTICE!

It will have to be something that people take as good. People will cheer this concept without
really discussing the topic
Social Justice is a noble idea, but that could lead us to serfdom
What is justice? And why are we putting social near by? Why are we increasing the
redundancy?
"Justice is already a social phenomena."

--> This is when the argument really starts!

Hayek will try to argue that there is a problem in general in society when we conceive that
we can mold or direct society towards a very determinant value/ idea/ purpose.

When we were at war in the years before the publication of the book, state took everything
from us and gave us instructions on what to do due to the circumstances.
The government told us something and we needed to comply. There is a certain value that
we all want to grasp.

"In these times, we surrender freedoms for a better tomorrow."

However, in times of peace how can we recover all our liberties?

--> Hayek says that might be hard and social justice is an end we might want to achieve and
by doing so we mobilize our freedoms to achieve it.

Hayek said:

"Let me go back to Greece and let me tell you this: In ancient Greece, they proposed a
division between social orders made by design and created by people as well as social
structures that were created. On the other hand there were things that we simply natural,
they belong to nature."

Every time human action is involved, you get an order that is artificial. (Nature vs Nurture)
Usually when someone created something we have an artificial object. When there is no
human action, we have nature. (things that are independent from our will, everything we
can't interact with)

"Nurture: the product of human action (but not of human design)"

This distinction is not entirely accurate and tries to pursue all his life saying that whatever
involves human action is not only artificial

"There are things that do not belong to nature, but are not entirely artificial."

Such as...

Markets: the result of human action, but not human design!

According to Hayek there are 2 kinds of human action: (new way to split reality)

By design: human is the one who constructs, is artificial --> MADE ORDER
(ex: systems of oppression, legislation)
NOT designed/ by interaction--> SPONTANEOUS ORDER
(ex: markets, price mechanisms, nobody can design it, laws, language) --> all of us, through
interaction created these institutions

The Socialist Calculation: It would be possible to plan the economy while following the laws
of supply and demand. A sort of socialist capitalism. Hayek denied the possibility of such
calculation

-> These 2 human actions are metaphors for the cold war! Spontaneous order exists in the
West, but NOT in the East"

Main features of these orders:

MADE ORDER

Unifying purpose or a sense of purposes

"During the cold war, soviet Russia wanted to be leaders in the steel industry. They hired the
people and gave them place to go and a role. After taking the role, instructions would be
given on what to do."

Particular position in the hierarchy that would contribute to that centrally determined
purpose
Particular function centrally determined
Very clear and specific instructions

"We don't run an organization with rules, but rather with commands!"

"When an instruction is precise, it is a command"

"Everything that is not specifically allowed, is forbidden"

SPONTANEOUS ORDER

There is NO unifying purpose, but each individual may have a purpose

Nobody is telling us to do this or that
There is no such a thing as a "national purpose"

" A market works without agreement, without purposes and works better when people are
different"

Positions and functions in the society are the result of interaction!

"For Hayek, luck was very important in the spontaneous order since future is very uncertain"
"Nobody can know more about the market, than the market itself. We can ask everything to
AI, but they do not know the oil prices for tomorrow"

There are general rules, equal to everybody that tell us what we can't do! (negatively
formulated)

"everything that is not forbidden, is permitted"

According to Hayek, the Made Order was more efficient since there is a specific unifying
purpose that will make individuals work harder to achieve the goal.

In the long run, the Spontaneous order processes more knowledge that anyone else.
Spontaneous order is like a game of chance, we might try our own tactics and train better
that the opponent. We increase our luck by allowing everyone to promote their own
purposes. Through trial and error, society will choose the one that is most desirable. We
don't know in the future who will contribute to our success. We allow everyone to be free

Safety net: nobody can fall bellow this common floor, but everyone can compete above it.

Very different from....

Distributive Justice: according to equality, merit, effort

"We know that in a free capitalistic society, there is no distribution according to merit. The
fact that we can't mix financial status and moral merit is good for society. It is good to be an
unknown if somebody is rich and bad or poor but good. There is no correspondence
between financial status and moral merit."

MADE ORDER

"exogenous order"
"arrangement"
"construction"
"artificial"

SPONTANEOUS ORDER

"self-generating/ endogenous order"

"made up of individuals and organizations"

"orderly structures that are a result of human action, but NOT human design"
"result of evolution, that nobody foresaw/ designed"

"It has no particular purpose, although our awareness of its existence may be important for
the successful pursuit of a variety of different purposes"
"may achieve any degree of complexity... comprising more facts than any human brain can
grasp"

"system of abstract relations between elements with an abstract properties not intuitively
perceivable"

"... we shall thereby be able to influence only the general character and nit the detail of the
resulting order"

"we will have less power over the details of the order than we would of one which we
produce by arrangement"

"in society some perfectly regular behavior of the individual could only produce disorder"

"... an order originally formed itself spontaneously because individuals followed rules which
had not been deliberately made, but had arisen spontaneously"

"spontaneous order IS DIFFERENT to the spontaneous origin of the rules on which it rests"

Rule of LAW = MADE ORDER

Morals and Customs = Spontaneous order

"In organizations only the purpose and function will be commanded, leaving the details to
be decided on the basis of respective knowledge and skills"

"rules governing a spontaneous order must be independent of purpose and be the same at
least for whole classes of members"

"should be rules applicable to an unknown number of people"

"we cannot improve the results by specific commands that deprive its members of the
possibility of using their knowledge for their purposes"