The Road to Serfdom, Chapters 5 and 6

Group name: Jagongbi (Let’s Study Liberalism and Soar)

Book title: The Road to Serfdom

Coverage: Chapters 5 and 6

Date and time: Wednesday, November 13, 2024, 6:30 PM

Format: Offline book club meeting (Jongno)

Participants: J, mori, Mimi

Written by: Mimi (Chapter 5), mori (Chapter 6)

Chapter 5. Planning and Democracy

It is necessary to fully understand what “planning” means in the title of Chapter 5. In Hayek’s The Road to Serfdom, repeated understanding and recollection of terminology are necessary if one is not to lose the way. The “planning” in the chapter title refers to the “planned economy” against which Hayek warned.

Hayek explains that the common characteristic of all collectivist systems is the conscious organization of society’s labor in order to achieve a clearly defined social goal. (p. 133)

At the time, socialists’ chief complaints about society were that it was “not subjected to control directed toward a single purpose” and that society’s activities were being “dragged along by the whims and fantasies of irresponsible individuals.” Hayek keenly focuses on this point and discusses individual liberty and collectivism.

Hayek says that collectivism, communism, and fascism differ in the nature of the ends they seek to achieve by mobilizing society’s efforts, but that all of them differ from liberalism or individualism in that they seek to organize the whole of society and all resources for one purpose, and refuse to recognize any autonomous sphere in which individual ends are regarded as supreme. (p. 134)

He explains that collectivism is, in effect, totalitarianism, and that the symbols of totalitarianism’s “social goal” or “common purpose” have usually been explained through vague expressions such as “common good,” “general welfare,” or “general interest.” (p. 134)

These totalitarian terms do not possess a clear meaning sufficient to specify a particular guide to action, and the welfare and happiness of millions cannot be measured on a single scale, large or small. In other words, national happiness can only be expressed as a comprehensive scale of values in which all the wants of individuals are ranked. Hayek makes clear that such a scale of values exists only in the mind of the individual. (p. 135)

Therefore, the conclusion individualists draw is that, within a defined sphere, individuals must be able to act according to their own values and preferences. Hayek emphasizes that the essence of this is recognizing the individual as the final judge of his own ends—that is, the importance of the belief that one’s own views should govern one’s own actions. (p. 138)

He states that individualism limits common action to cases where individuals’ views coincide, and that a common purpose should not be the final end of each individual, but rather a means that can be used for individuals’ differing ends. (p. 139)

He also says that once the public sector, in which the state controls all means, exceeds a certain proportion of the whole sector, the effects of public-sector action come to dominate the entire system. This is a warning about the danger of control: even if the state directly controls only a large part of available resources, government decisions will greatly affect the rest of the economic system, and thus the government will indirectly control almost everything. (p. 140)

In carrying out “planning,” it is necessary to shed light on the results that appear when a democratic country undertakes it, particularly the process that demands more agreement than actually exists. A major defining characteristic of the planned economy is the fact that “planning” creates a situation in which we must “agree” on far more issues than we are ordinarily accustomed to, and that in a planning system we cannot limit collective action only to tasks on which we can agree; once any one action is to be taken, we are compelled to reach agreement on all issues. (p. 142)

To emphasize once more, “planning” not only creates a situation requiring agreement on a much larger number of subjects, but also forces agreement to be manufactured on everything. Thus, even if it were the unanimous will of the people that Parliament should draw up a comprehensive economic plan, neither the people nor their representatives would necessarily agree on any particular plan. (p. 142)

Meanwhile, Hayek says that if democratic assemblies are incapable of dealing with the matters entrusted to them, this will inevitably produce dissatisfaction with democratic institutions, leading Parliament to be regarded as incompetent, and giving rise to the belief that for efficient planning to occur, “direction” must be separated from politics—that is, entrusted to experts, bureaucrats, or independent autonomous bodies. (p. 142)

At this point, it is worth pausing to consider Hayek’s examples of Professor Harold Laski and Sidney Webb, both major Labour Party theorists of the time, and the inference that their socialist theories may have influenced the Donoughmore Committee; this is something that can also be connected to many phenomena in modern society. Yet it is once again a contradiction of planning that even experts inevitably come to impose their own preference systems upon the community that is the object of planning. (p. 147)

Hayek illuminates the essence of the problem as the inherent contradiction of the task imposed on Parliament itself. What Parliament is asked to do from the outset is not to legislate what members can agree on, but to achieve unified agreement on “total control” at the national level. But the majority system is not suited to this task. Hayek points out the error of majority rule by explaining that majority rule is a method that yields rational results when choosing one among limited alternatives. We should also think carefully about the tendency and possibility of preferring some particular plan to having no plan at all. (p. 148)

Hayek kindly and meticulously explains, point by point, the errors of comprehensive economic planning. Again and again, he demonstrates that “planning” is totalitarianism.

Just when one feels like shouting that one has finally fully understood Hayek’s “planning,” Hayek presents another difficult problem. He now turns to “democracy.”

Here, the star lecturer is Lord Acton. Lord Acton said, “Liberty is not a means to a higher political end. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for security in the pursuit of the highest objects of civil society and of private life.” (p. 154)

Hayek makes clear that democracy is essentially a means for safeguarding internal peace and individual liberty, and a utilitarian device. (p. 154)

Accordingly, he reminds us that democracy itself is by no means free from defects, nor is the institution guaranteed, and that there have often been cases in which more cultural and spiritual freedom was granted under dictatorial rule than in democratic states. He once again emphasizes that the value of liberty exists as a supreme value above democratic institutions. (p. 155)

We must not misunderstand Hayek as defending dictatorship for the sake of liberty. I would like to call Hayek a scholar of process. In following the course of Hayek’s argument, moments of insight continue one after another, as though liberalism itself were a process. The key point is not that dictatorship inevitably constructs liberty, but rather that we must again reflect on the fact that planning drives us toward dictatorship. The reason is that dictatorship is the most effective means of enforcing and carrying through the ideal of planning, and if centralized planning is possible, dictatorship becomes inevitable by that fact alone. (p. 154)

Hayek warns that the true dictatorship of the proletariat, even if formally democratic, will destroy individual freedom more thoroughly than any dictatorship has ever done once it begins centrally controlling the economic system. (p. 155)

As I follow Hayek’s concise, penetrating development of logic, I understand the mechanism of thought, and it feels as though a floating circuit diagram is finding its place. I also realize that over the course of my life, a “planning” (economic-type) mindset has already survived within me quietly yet deeply. Because of this, I still cannot form a clear image of a society without “planning.” At what point, from when, could a society without planning have been realized? I try to recall as far back as memory reaches. When I reflect this important concept back upon myself in a metaphysical way, I feel something living and dynamic. I become aware of, and arrange, the vital minutiae I must not overlook.

Chapter 6. Planning and the Rule of Law

Rule of law = 법치 (rule of law)

The Rule of Law (p. 159)

The criterion for distinguishing a free society from a society of arbitrary government is whether the principle of the rule of law exists.

If government action is fixed and constrained by the rule of law, individuals can predict circumstances and make plans.

The government confines its work to establishing rules that determine the conditions under which available resources may be used; individuals decide the purposes for which resources are used.

Rules are a means of helping people predict one another’s actions.

If the government takes charge of planning, it comes to decide the use and allocation of each resource, and thus cannot avoid deciding whose interests matter more in the end (left-wing partisanship).

Since not only those entrusted with enforcing the law but legislators as well can make mistakes, the core point is sufficiently clear: the discretion entrusted to enforcement bodies exercising coercive power should be reduced as much as possible. Every law changes the means people may use in pursuing their goals, and therefore restricts individual liberty to some degree. But under the rule of law, the government is prevented from wrecking individuals’ efforts through arbitrary ad hoc action. Within known rules of the game, the individual can freely pursue his personal aims and desires, confident that the powers of government will not be used deliberately to frustrate his efforts.

Formal (abstract) law and substantive (concrete) law (p. 163)

Installing traffic lights vs. directing people which road to take

Formal law can be used by individuals in making their own plans because it makes it possible to predict how the state will act in particular situations. Merely instrumental rules do not favor specific ends or specific persons, because we simply cannot know in advance by whom and in what way those rules will be used.

Precisely because of our ignorance of the exact results of controls, we should avoid adopting certain methods of control.

The logical basis of the rule of law (p. 123)

“Is it right for the state to hold its own views on moral issues and impose them on its members?”

Economic grounds: the state should establish only rules and allow individuals private freedom so that each can make plans effectively.

The more the state plans, the harder it becomes for individuals to plan.

Moral and political grounds: true law must consist of general rules whose specific effects cannot be predicted in advance (as opposed to concrete commands).

Policies whose specific effects are foreseeable inevitably mean that the government takes someone’s side and imposes those values on people. It chooses for them the goals they are to pursue.

The moment the specific effects of law become foreseeable, law loses its function as a mere means used by people and is transformed into a means by which the legislator compels people for his own purposes.

That is, the state loses its function as a utilitarian instrument and becomes a “moral” institution.

The collectivist state is “moral,” whereas the liberal state is not “moral.” (p. 167)

How to test the principle of fairness: apply the principle to issues where losses are also clearly visible (e.g., medical professionals’ wages).

The law must be continually revised in line with fairness and rationality. As more and more cases leave the specification of circumstances to the discretion of judges or authorities, vague formulas are introduced in legislation and adjudication, and arbitrariness and uncertainty in law and the judiciary increase. This leads to disregard for law and the judiciary, and law and the judiciary decline into mere tools of policy (the decay of the rule of law and the disappearance of the Rechtsstaat).

Since planning inevitably causes discrimination among beneficiaries, it means a return to a status society in which specific persons designated by the authorities enjoy legal privileges.

The “rule of law,” meaning the rule of formal law, means that there are no legal privileges enabling the authorities to designate someone to enjoy them; in this sense, it is the opposite of “arbitrary government” and serves as a safeguard preserving “equality before the law.”

The conflict between formal equality and substantive equality (p. 170)

Policies that pursue the substantive ideal of distributive justice inevitably end in the destruction of the rule of law.

To give different people the same result, they must be treated differently.

For the rule of law to be effective, the rules must apply always and without exception; the key is that such rules make it possible to predict other people’s actions accurately.

Specific situations may arise in which the application of a rule feels unjustified, but what matters is that it applies in all cases without exception.

Even if, under the same rules, only some succeed in obtaining what everyone could obtain, that is not a privilege.

There is confusion in which unpredictability regarding effects leads to the mistaken belief that the state does nothing.

Every state must act, and every action of the state necessarily entails interference; what matters is whether individuals can predict the state’s actions.

So long as the rules made by the state are created for permanent application and are not used to advantage or disadvantage specific groups, state action does not conflict with the principle of liberty.

The rule of law and human rights (p. 177)

If there are limits on legislative power, then there is also recognition of the “inalienable rights of the individual” and the “indefeasible rights of man.”

The dilemma of intellectuals who advocate central planning regarding “human rights”: rights are limited to the quantity and conditions compatible with the “common welfare.”

“The community has the right to do whatever seems necessary for the protection of the interests of the community… what constitutes an injury to the community interest is, of course, decided by the authorities.” (p. 178)

The consistent attitude of early socialist activists was that individual rights are merely a “metaphysical ideal,” and that in an ideal society there are no individual rights.

Questions

- Why is a free society possible only under the rule of law?

- Is it right for the state to have moral standards? Is the state an arena for realizing an ideal society, or merely a tool?

- Why, in a state that seeks to realize an ideal society, do the legislature and judiciary decline into rubber stamps?

- What are the nature and function of the National Assembly Advancement Act, the authority for ex officio introduction of bills, and the fast-track procedure?

- How far should state intervention go?

- Is the dictatorial state of the Democratic People’s Republic of Korea not a democracy?

- Is even a bad law still law?

- Should legislative power be limited for the sake of human rights?

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Original title: <노예의 길> 5장, 6장

Author: Ja-yujuui Ipmun Dokseo Toron Moim

Date: 2024-11-13

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=2&idx=27102