The Road to Serfdom

"This is not just one of the great libertarian texts of all time—and Mrs T was to an extent a libertarian, certainly in economic matters—but it’s one of the great counter-cultural texts of all time. Hayek, when he wrote it, was a professor at the LSE. The Beveridge Report had come out two years earlier and it was the year of the 1944 Education Act. He sees the state growing and growing and imposing its will and influence in all sorts of areas. Now, I can’t remember whether she read The Road to Serfdom . But if she didn’t read it, she was given lectures on it by people like Harris and Seldon. The IEA’s whole raison d’etre was based on The Road to Serfdom . Ayn Rand said that the difference between the welfare state and a totalitarian state is “only a matter of time.” That’s not a phrase that Hayek uses, but it’s exactly what he’s arguing in The Road to Serfdom . It’s not just about the illiberal nature of a state that tells you what to do—as in our current circumstances with the Covid crisis, where you can’t come and see me in my house. And you and I can’t sit down in a pub and have a drink together because the state has told us we can’t. “This is not just one of the great libertarian texts, but it’s one of the great counter-cultural texts of all time” Ironically, this is where Hayek thought welfarism was leading. Hayek believed—and Mrs Thatcher believed all this, as well—that socialism was about control and liberalism, in its true sense, was about letting people fend for themselves, to make their own decisions and go as they wished. And it’s absolutely crystal clear that Mrs Thatcher based her whole approach to government on that Hayekian principle. Oddly enough, Enoch didn’t like Hayek. Enoch thought he was an unduly rigid foreigner who didn’t understand our ways and customs. But actually, they agreed on most things, although they came to it from different angles. They both thought the state was dangerous and that public spending was not a good in itself. But I think Enoch felt that Hayek was trying to share his limelight on economic questions. He got a bit primadonna-ish and didn’t like the idea of it. But The Road to Serfdom like Freedom and Reality is a blueprint for large areas of Thatcherism. And so, if you want to understand Margaret Thatcher and the origins of Thatcherite thought you have go back to these two. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . You could go back to Adam Smith , which is what Enoch did. Enoch learned his economics from Adam Smith and Hayek was a great admirer of Adam Smith, of course, but Hayek tried to put it in terms that are relevant to the mid-20th century, at a time when he realised, in a way that I think Churchill didn’t, that a Labour government was probably going to turn up sooner rather than later and that there would be demand, after the privations of war, for welfarism on a quite excessive scale. He just wanted to warn people about where welfarism gets you. It creates control and a dependent relationship on government. And, as Mrs Thatcher realised, you don’t help people by paying them to do nothing. You help people by finding jobs they can do. I remember Ralph Harris saying to me—and he got this from Hayek—’If you pay people to be unemployed, you’ll have unemployment. If you stop paying them to be unemployed, jobs will turn up.’ She was touchy because she knew it was something that, as part of her programme, she ought to have done. She also knew that with three million people unemployed, you couldn’t just cut them off at the knees and say, ‘Well the state’s not going to help you.’ But I think she had a view that, had she been able to stay in power for 20 years, which I don’t think she ever dreamed of doing, the time would come when there would be high levels of employment. Then she could have started to reform the welfare state. It would have attracted the same criticism that David Cameron got when Iain Duncan Smith was doing it in the coalition government. I think she was also aware of the huge sentimental value of the National Health Service and that that was an argument she was never going to win. But, of course, she did try to bring huge economies to the National Health Service. And I think she rather enjoyed it when people got cross with her, particularly if they were in the medical profession. I remember in 1984 she introduced—or the DHSS introduced—a limited prescribing list. There were lots of branded drugs that cost five times as much as their generic equivalent—where the patent had expired. She pointed out that the government’s medical officers and scientists had said that the generic drugs were the same as the branded ones, and generic ones should be prescribed instead. The British Medical Association, the BMA, went completely bonkers, for the simple reason—though they called it clinical freedom—that a lot of these drug companies were giving huge backhanders to general practitioners. They were giving them computer systems, which people didn’t really have in the early 1980s. Doctors were taken away for golf weekends with their wives—or other people’s wives. The treats were enormous, and they all stopped, of course, when the limited list came in. The BMA sent out a spokesman to say that people were going to die because of this. But no one died because they all got the same drug as they were having before. No one had on his or her death certificate, from that period, that death was a result of a doctor being unable to prescribe the right medicines. I think she enjoyed humiliating these people, particular white-collar trade unions like the BMA. She found that amusing. But she knew there was a limit to which she could go. So, she brought some sort of internal market into the health service and abolished area health authorities in the early 1980s. She looked for places where there was a duplication of bureaucracy and overspending and tried to cut those but, actually, breaking the fundamental vow of ‘a health service, free at the point of use’ was never going to happen. I don’t know how far the Chinese economy is capitalist. Nor do I know how long the present model of the Chinese economy will be able to survive and grow without greater liberties being given to people. Singapore has an authoritarian capitalist system, or it did when I last went there and Harry Lee was still prime minister, but there’s obviously infinitely more liberty in Singapore than there is in China. There has to be proper mobility of labour and there has to be the means of spreading ownership, which you don’t have in China . “I think Hayek will ultimately be proved right everywhere” I think Hayek will ultimately be proved right everywhere. Incidentally, one reason I think Enoch didn’t like him was that Enoch did believe in a national health service. His father had been very ill in the late 1920s and they had had a real job finding all the money to pay for his care. That had a big effect on him. And I think for both him and Mrs Thatcher, the National Health Service became a bit of a no-no. Yes, it was. And he did it very well. It convinced him that there had to be some sort of state provision in a properly humane society. I think when he said that Hayek didn’t really understand how Britain worked, that was something at the front of his mind, that Hayek didn’t understand that we had to have a national health service, because we weren’t a brutal country like the Austria that had invited Hitler in. Of course, it would be extremely unfair to blame Hayek for any of that. He had left Austria in 1931, but I think Enoch thought there was a middle-European mentality, that didn’t understand the British way of life. But Hayek’s fundamental idea about the importance of the individual, of the free market economy, of allowing people to do as they wish without the state intervening, was absolutely fundamental Thatcherism and, of course, remains fundamental to the libertarian ideas that are held by the heirs of Mrs Thatcher today. I think almost certainly in dealing with the trade unions. We’ve had very little industrial action since. The country’s never been held to ransom since. There’s been the odd strike, of course, but people’s lives have not been damaged, nor has the productivity of the country. Trade unions now have virtually no power at all. They’re like friendly societies. Even the Labour party don’t take them seriously—well, Corbyn did, but he wasn’t serious either. But I don’t think you’ll see Keir Starmer paying much attention to the trade union movement. And in that sense she really shifted the consensus. Blairism was a tribute to Mrs T and how far she had moved the goalposts. In international terms, her effect on bringing down the Berlin Wall and her relationship with Gorbachev were very important. It’s just a shame that he’s been replaced with another form of tyrant, but at least it’s a tyrant who has, as yet, not moved too far beyond the boundaries of his own country. “Blairism was a tribute to Mrs T and how far she had moved the goalposts” Inflation hasn’t really existed for the last 20-odd years and I think that’s another of her legacies, that we understand the need to control the supply of money—although how that’s going to evolve from where we are at the moment, I don’t know. Get the weekly Five Books newsletter I think she changed thinking quite dramatically. How far she was responsible for the notion of us leaving the EU is debatable. That all started with Enoch. She just jumped on the wagon. But she jumped on the wagon in a very sincere way. The fact that, in the late 1980s, we at last had a prime minister who saw that there were things wrong with the European Union gave great momentum to people like Nigel Farage. I’ve known Nigel for 25 years and I know how inspired and motivated he was by Mrs Thatcher embracing the anti-EU cause. He was a Conservative at the time. But when John Major rowed back he left and joined UKIP and took UKIP over. I don’t give Dominic Cummings any credit at all for us having voted to leave. It was Nigel who did it. The Conservatives who were going to be convinced had already been convinced. They’d been convinced by a combination of Enoch Powell and Margaret Thatcher. It was the white working class Labour voters who had not been convinced. Nigel spoke directly to them and they came and did it. So, part of her legacy is that we’re not in the EU anymore, or soon won’t be. But she wasn’t the main actress. There were others who were very strongly involved, both before her and after."

"Hayek, when I thumb back through it and look at what I marked when I first read it, was the book that, to me, convincingly demonstrated what was already intuitive: namely, the utter futility, the illusion of government planning as a mechanism for uplifting those less fortunate. I read it together with dozens of other books, but the way he dissected and depicted the inexorable tendencies in statism to self-perpetuation of bureaucracies, matched what I thought was the evidence I saw around me. Well, post-college. In my mid 20s, probably. I think it did. That could be said of one or two of these others as well, especially the Friedman: something that clarifies and confirms an intuition or a tentative empirical judgment you’ve come to. At the time, in the 1970s, it wasn’t hard to look at the wreckage, and say, ‘This isn’t working – and the more government tries to do, the more bureaucracies it piles up, the more regulations it writes, the less well off people at large seem to be…’ With humility and caution. I think I would say that this is something you’ll see in the Postrel book as well, probably in several of these books. They led me to a view that government clearly has to establish rails around certain behaviour and economic activity. But simplicity, clarity of the rules, a caution about over-prescriptiveness in how to achieve a certain outcome or prevent a certain externality from happening – I think I probably first saw a lot of that in Hayek. For instance, I remember my first day on this job. We did a ton of things, we wanted to emphasise that a lot of change was afoot. But I went over to see our biggest regulatory agency – we had hundreds of people in the room or on the phone. It was an environmental management agency and I told them then, and I’ve told them since, that we did not intend to weaken or moderate a single rule that I knew of, in terms of environmental standards. But I said that what we were determined to do was to make regulation consistent, predictable and quick. We worked very hard on that. We measured to see if we were getting there. So I guess that, if you say, correctly, that this job involves overseeing necessary regulatory activity, that mentality came in some part from books like Hayek’s."

"The way in which our society has been reformed over the last four decades really does stem from the work of Friedrich Hayek and The Road to Serfdom in particular. In effect, it calls for the slimming down of the state, for the removal of large-scale state involvement in the economy, for a reduction in taxation, and for liberating individuals from the role of the state in their lives. When The Road to Serfdom was written in the 1940s, it was an outlying articulation of concern about the way in which Europe and the world would be rebuilt over the following decades. It was seen for decades as crank economic analysis. The concern of people like Hayek about the potential for the state to become increasingly oppressive and tyrannical was slightly hysterical at the time. When we think about the way in which Britain was successfully rebuilt in the post-war period—the achievements that were seen in increasing people’s lifespan and their health, in improving educational outcomes and economic activity through to the early 1970s—we can see the state was absolutely pivotal to that. What we can see from the 1980s onwards is that after the UK government adopted this view of society and the economy that Hayek endorsed, there was a long-term reduction in growth. We’ve seen a reduction in life expectancy in recent years. We see an increase in inequality, in poverty, in the need for charities and food banks—essentially to subsidize roles that the state used to take on. Britain is in a mess precisely because it adopted the work of Hayek along with others, such as Milton Friedman, who, ironically, benefited individually from state employment support during the New Deal era. What’s really interesting about The Road to Serfdom is that in many different respects, Hayek isn’t fundamentally concerned about the outcomes that neoliberalism produces. His primary concern is reducing coercion—that people ought not to be used as means to other people’s ends. His belief is that the creation of a welfare state, of large-scale nationalized industry, and all these state-led enterprises, is coercive because they have to be paid for through taxation. So if you get rid of them and reduce taxation, you reduce coercion and make society more just. The afterthought in Hayek’s work is something that looks very much like basic income. He says all of these things about the need for a largely unconstrained free market and a much smaller state, and then says, “There can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody.” There is always this caveat with neoliberal accounts of reform: the market can provide for us all dynamically and effectively, but in the background, we need this quite robust form of universal social security. So what you find in Hayek and other neoliberal thinkers is an endorsement of something like basic income, a recognition that actually the market can’t provide for us all securely, so we do need these mechanisms. And, of course, if we’ve got those guarantees, we have to fund them through taxation. So in the end, we see this internal contradiction in the work of people like Hayek: we have to demolish the state, but, actually, we then need it to be much larger and invasive in its provision of social security than it has ever been in Anglophone countries. Proponents of neoliberalism always focus on the former without recognizing the latter or, indeed, the contradictions in Hayek’s work. So it’s really important that when we think about the way in which Hayek has been adopted and the policies that have been pursued, that he himself recognizes the need for forms of social security that are currently being done away with in his name."

"The Road to Serfdom is a very polemical book. It was published in 1944. It’s a warning not exactly about Communism, but about the coming of statism in the West, about the ways that some of the governing élites that Hayek saw, especially in Britain, thought about governing. The book is really mostly about Britain. He talks about the dangers of central planning, of the attempt to take over the economic life of a society and to try and control it from the centre. It’s a book that is properly understood as a libertarian book, but it’s not libertarian in the way that a lot of contemporary libertarians would define themselves. It is a very, very sceptical book, and a very modest book. In a way, Hayek argues for limited government because he has a very limited view of human nature and human knowledge. I think he would call himself a Whig. I think he actually did call himself a Whig, when he was asked whether he was a libertarian or a conservative. It’s a book that shows that at its best, the libertarian strain of conservatism is a form of scepticism rather than of utopianism. It’s the least worst response to human limitations. Jefferson was a very different kind of libertarian because he believed in the power of reason, and the power of freedom, to lead, in the end, to a perfectly organised society. Jefferson was a libertarian in the sense that he didn’t want big government, and was very worried about government power, but he was also a radical individualist. He believed that if we left people to themselves, and if we allowed reason to flourish and govern, our problems really would be solved. Jefferson was incredibly utopian. Hayek is quite different from that. He worries about the notion that unimpeded reason ought to govern, he simply doesn’t think that’s possible, he doesn’t think we can know enough, he doesn’t think we can contain the dark side of human nature. So his libertarianism is very realistic and very prudent and very modest. He’s not really against all of the welfare state. He thinks we have to have a lot of respect for institutions that exist, because they will inherently contain knowledge that is greater than anything we can articulate explicitly. And in this sense he’s very much a Burkean. He believes in the kind of knowledge implicit in institutions rather than knowledge made explicit in constitutions. I think you look for ways to roll it back gradually. Burke in the Appeal draws a distinction between change and reform in politics. Reform is a way of building on what works about your society and fixing what doesn’t work. It doesn’t mean you leave things as they are; it means that in calling for change and in setting out change, you begin from where people live, you begin from what works in people’s lives. And today certainly some of that is the welfare state. But that doesn’t mean that’s where you end up. And I think it actually means resistance to radical expansions of the welfare state, to things that aren’t well-established, or that aren’t ancient. I think that in that mix there is a place for modern conservatism to make its case for a different kind of society, but not fundamentally different, not radically different. I think that inherent in The Road to Serfdom is a defensive populism, a defence of both the wisdom of the individual and the wisdom of society. What I mean by justified populist fervour is that what we’re seeing is a reaction to an extension and growth of the welfare state, that to my mind is justified. The question is what form will it take in response, what alternatives can it offer? That’s a place where conservatives can look to Burke, and Hayek to some extent. The answer is not obvious. It’s not clear what opposition to Obama’s policies has to amount to. I do think there is a place for resistance, a place for standing against the expansion of the welfare state and making a case for moving in a different direction."