• Milton Friedman Society

What is "Serfdom"?

By Erica Balbinot

In 1974, Friedrich Von Hayek, one of the most influential representatives of liberalism, won the Nobel prize in Economics for his contribution to the analysis of the interdependences between economic and social phenomena. He believed that only a society with free markets, based on the values of entrepreneurship and innovation, could flourish and prosper. Hayek preferred most activities to stay in private hands. However, he saw the need for a limited role for government, to perform the tasks of which markets were incapable, such as preventing crime or providing a basic safety net through a comprehensive system of social insurance.

His masterpiece, “The Road to Serfdom”, published in 1944, is a book about the social rights and freedom of individuals: the lesson Hayek wanted to convey is that there is no compromise between these two, since freedom is a non-negotiable, ethical and anthropological value.

Freedom is indeed the foundation of the society itself. And this society should be based on a free-enterprise system, in which the individual must be able to plan his business and future without the dynamism of a central authority hanging above his head. Decisive factors for the development of a more equal and free society are in fact free competition and the limitation of public interventions by the state.

So, what does the word “Serfdom” refer to? According to Hayek, socialism is serfdom itself: whilst democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.

Western democracies, including the UK and the US, have progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past. Society has mistakenly tried to ensure continuing prosperity by centralized planning, which inevitably leads to totalitarianism. Planning, because it is coercive, is an inferior method of regulation, while the competition of a free market is superior because it is the only method by which individuals’ activities can be adjusted to each other without an arbitrary intervention of authority. His argument against socialism is straightforward. Every economic system must answer a basic question: what is to be produced? In a market system, the question is answered every day through the forces of demand and supply. Nonetheless, such mechanism does not exist when the state owns the means of production. Hayek portrays a situation in which no consensus can be gained as to what to produce, and that this leads people to become frustrated, and willing to cede their decision-making power to others.

The main targets of Hayek’s book were Fascism and Socialism. However, since in those years URSS was an ally of the UK and US, he preferred to refer to Nazism, instead of Communism. Indeed, the right-wing and the left-wing extremisms cannot be seen as two separate and different phenomena, as they both threaten individual freedoms, because of the increasingly extensive forms of coercive control over the individual. This is the reason why in a totalitarian society the worst people emerge: the most ruthless figures such as Stalin, Hitler or Himmler gained their position not by chance. It was the inevitable outcome of an attempt to control the whole society from above. Moreover, Hayek explains that whoever controls the economic means also controls everything else, as this person or entity has the power to decide which purposes shall be satisfied and which ones shall not.

It follows that the main issue with all these despotic regimes is that they were not able to adapt to the challenges of Modern Era, thus having to succumb under the weight of their ethical unworthiness and economic inefficiencies.

What is the ideal socio-political system then? Well, Hayek argues that since the idea of merging different states into a single country is not practicable, the principle of federalism must be applied. But why so? One of the main advantages of federalism is that it can be organized in a way that makes harmful planning difficult to implement, yet desirable ones possible.

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