Increased Interest in Hayek

Bruce Caldwell at the Washington Post writes about an interesting phenomenon: how free-marketeer Friedrich Hayek’s book The Road to Serfdom, first published in 1944, is having a huge resurgence in sales.

What accounts for it? I would like to think that it’s due to the exceptional editing I did on the volume, but, alas, I think there is something larger going on.

First off, the November 2008 sales spike date certainly suggests that Obama’s election and the passing of control of both houses of Congress to the Democrats may have been an initial factor. The Republicans had been walloped, and some sought principled arguments that could be used to combat the policies of the party in power.

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But perhaps the biggest stimulus to sales was, well, the stimulus package. The macroeconomic analyses of John Maynard Keynes had gone quickly out of vogue in the 1970s, when a decade of stagflation delivered a death blow to the notion of Keynesian fine-tuning of the economy. But in early 2009, people were talking about Keynes again, and indeed the fiscal stimulus package, to the extent that it had a theoretical underpinning, would find one in Keynesian economics. (The Fed’s policy of flooding the financial system with liquidity, on the other hand, finds its grounding in the economic analysis of Milton Friedman, the father of monetarism, a doctrine that used to be portrayed in introductory macroeconomics classes as the chief rival to Keynesian thought.)

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In the end, however, I think that the underlying reason for the sustained interest in Hayek’s book is that it taps into a profound dissatisfaction in the public mind with the machinations of its government. Both Presidents Bush and Obama have presided over huge growth in the size of the federal government and in the size of the federal deficit, with little obvious effect on unemployment. Things seem out of control.

In short, the failures of Keyenesian economics and socialist centralized planning are becomming apparent to the people, and they are becoming interested in free market alternatives that free them from the imposed guidance of an aristocratic elite. Sounds good to me.

Todd Zywicki at the Volokh Conspiracy offers a further analysis on Caldwell’s observations:

The open question is whether it is compatible with democracy and freedom in the long-run for everyone to claim that their preferences should be on the menu of those that are worth being met.  Hayek drew the lesson from the 1930s that democratic government allocation of economic resources led in the short run to budget deficits, in the medium run to inflation and monetizing the debt, and in the long run dictatorship that imposed a standard of values on society (and totalitarian impulses designed to brainwash people into to subordinating their own preferences to the preferences of the collective).  A corollary is that when government allocates resources, rent-seeking and influence peddling become endemic to the system of trying to get your needs met rather than someone else’s.

And isn’t this in the end what all the fuss is about health care, cap and trade, financial regulation, and even deficit spending?  Although dressed up as questions of economics, as The Road to Serfdom makes clear, these are really questions of freedom and individual liberty.  Hayek’s eventual solution (as developed in Law, Legislation, and Liberty) was that it was both more efficient and more moral to have these basic allocational decisions made by impersonal processes like markets and the rule of law (especially the common law, as he understood it (perhaps in an unrealistic fashion)) rather than conscious political decisions as to who should get what.  But it seems to me that regardless of whether he offers the right solution, he certainly asks the right question and won’t let us sweep under the rug the core recognition that everyone one of these decisions are fundamentally issues of personal liberty and who gets to decide.

Americans enjoy our liberty, and the more the government control our economic choices, the less liberty we have. That should be the only argument anyone would ever need against socialism.

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