In recent months there appears to have been a resurgence of scholarly interest in F. A. Hayek’s classic of political economy, The Road to Serfdom. Academics have been focusing in particular on the validity of the book’s central argument regarding the instability of liberal democracy and the stability of totalitarianism.
Hayek argues that totalitarianism does not result from a dramatic or sudden change in the popularly accepted role of government. Rather, societies drift into totalitarianism as a result of a long series of seemingly minor, incremental expansions of government activity.
Step by step, well-meaning government interventions that may seek the amelioration of genuine social problems lead the citizens of a free society to accept an ever-greater role for the state until every sphere of human activity becomes government controlled. The more the logic of interventionism takes hold, the harder it is for that tide to be turned back towards freedom.
Despite the undoubted influence of The Road to Serfdom, it may seem that the book’s central argument has been refuted by the experience of the twentieth century. Certainly, many governments, the UK being one example, adopted substantial interventionist policies without sliding all the way into totalitarianism.
Indeed, it was totalitarian states, such as fascist Germany and Italy, that returned to market economies and democratic government. Contra to Hayek’s thesis, it would seem that a mixed economy can be sustained for many decades without a descent into totalitarianism, whereas totalitarianism appears to be inherently unstable.
However, recent data published by the Centre for Economics and Business Research should give pause for thought to anyone uncritically accepting this analysis. In large parts of Britain the economy is now dominated by government: the proportion of regional GDP derived from state spending in Northern Ireland is now 77.6%; in Wales it is 71.6%; in the North East of England it is 66.4%; and in Scotland the figure is 60.3%.
By comparison, spending as a proportion of GDP in Nazi Germany was 34% and in Mussolini’s Italy it was 31% (1937 figures, see here). This is not to suggest that these societies were in any way preferable to contemporary Britain, but it does show that in terms of the growth of the state parts of the UK are in unprecedented territory by international and historical comparison.
What is remarkable is that this enormous expansion of the economic role of the state has been achieved without the creation of the kind of totalitarian apparatus that Hayek believed would be necessary for the government to control even a relatively small proportion of economic activity. It can be argued that he did not foresee that power would be exercised in much more subtle way in the modern state. People do not have to be forced to pay income tax at gunpoint, for example; rather income tax is automatically removed from people’s salaries, leaving many barely aware of its extraction.
The Road to Serfdom remains a classic of political economy. But whereas it is has become commonplace to argue that Hayek overstated the inevitability of the slide from the mixed economy to totalitarianism, when we take into account the changing nature of power in the modern state, it may be the case that Hayek under-estimated the precariousness of free societies. When whole sectors of economic life can be nationalised without the need to mobilise the means of organised violence then freedom is in a truly perilous state.