The Road to Serfdom
John Robson has written a nice review of Friedrich Hayek's The Road to Serfdom (1944). It's not often you get to read about that classic, so we thought Robson's description of the thrust of the book worth re-producing (no link available):
Hayek's main point is not the immediate unforeseen consequences. It is that the staggering complexity of the economy, the extraordinary number and range of decisions undertaken every day by every citizen, cannot be comprehended by any one mind.
In a market economy it doesn't have to be. The baker does not need to know how his competitors sell at the price they do, what difficulties farmers in Ukraine face or anything else of that sort. He only needs to know that if he charges too much for bread his customers will march out his door, and if he pays too much for flour the bailiff will march in.
The state of the planner is quite different. He must know where the baker's customers might go instead, and why, and what would happen next. To devise a master plan to coordinate everything, ensuring the flour he has assigned to every baker is produced in the right amount and delivered to the right places on time, he must understand how all these decisions feed back on one another (for instance, bakers' suppliers eat bread). And he can't. The spontaneous coordination produced by each independent actor acquiring and using the information he needs about his situation cannot be replicated by gathering all that information in one place. There's just too much of it.
As a result, any intervention looses a flood of second, third and fourth-order unintended consequences that spill back on one another. Planners must start rushing about engaging in ever-more desperately ad hoc intervention, wielding authority that cannot be resisted (or there is no plan) or foreseen or controlled by elected bodies because there is no time for orderly rules and procedures in the face of the growing chaos. And arbitrary power, no matter how well-intentioned, is incompatible with freedom. It reduces citizens to serfs.
Eric Scheske read the book at age 17, at the bidding of his father. Although he can't say he explicitly understood everything he read, the theme of the book has stuck with him ever since.
