The Road to Serfdom, Chapters 7 and 8

Meeting Name: Jagongbi (Let’s Study Liberalism and Soar)

Book Title: The Road to Serfdom

Coverage: Chapters 7 and 8

Date and Time: Wednesday, November 20, 2024, 6:30 p.m.

Format: Offline reading group (Jongno)

Participants: J, mori, Mimi

Written by: mori

Chapter 7 Economic Control and Totalitarianism

Political Freedom and Economic Freedom (p.185)

Dictatorship in the economic sphere and political dictatorship are not separate things.

“There are no purely economic ends. The ultimate aims of the ordinary man’s activities are never economic.”

Economic factors merely exist as means for achieving non-economic ends.

What is called the “economic motive” in fact means the desire for general opportunities, that is, the desire for power to achieve one’s ends.

This is because money provides the widest range of choices.

A lack of money makes people feel constrained, so they come to hate money as the symbol of constraint, but in fact they mistake for the cause the medium through which power is felt. This is nothing more than an unfulfilled desire for power.

It is closer to the truth to say that money is one of the greatest instruments of freedom ever invented by man. If compensation is given not in money but in some other specific form—honor, privilege, education, and so on—it only means that the recipient is not allowed to choose.

If one wants to issue consciously directed commands over a complex system of interrelated activities to any significant degree, a single staff of experts must direct it, and a supreme commander whose authority is not bound by democratic procedures must hold final responsibility and power. This is such an obvious consequence that it hardly requires general agreement. Our planners reassure us that authoritarian command will be confined “only” to economic matters. (p.185)

There is often an implication that by giving up freedom in matters that are less important, or ought to be less important, in our lives, we will gain greater freedom to pursue higher values. On these grounds, people who detest political dictatorship often applaud dictatorship in the economic sphere. (p.186)

Except in pathological cases such as the miser who knows nothing except money itself, there are no purely economic ends. The ultimate aims of sensible ordinary people’s activities are never economic. Strictly speaking, there is no such thing as an “economic motive.” There are only economic factors that condition the range of means with which we strive to attain non-economic ends. Though the term “economic motive” is often misused in ways that easily cause misunderstanding, it really means only the desire for general opportunities, that is, the desire for power to achieve ends not yet specified. (pp.186–187)

In modern society, many people feel relative poverty and the resulting constraints because of the limited amount of their monetary income. They therefore come to hate money, the symbol of these constraints. But this is the error of mistaking for the cause the medium through which some power is felt. It is far closer to the truth to say that money is one of the greatest instruments of freedom ever invented by man. (p.187)

Contempt for Merely Economic Problems

(p.188)

The reason economic values are considered less important than others is that, with respect to economic matters, we are free to decide what is more important and what is less important. Or, in present society, we ourselves are the ones who solve the economic problems of our own lives. (p.189)

Economic planning ultimately means that we as individuals cannot decide what each of us values more highly. The economic freedom promised to us by planners means that they will make the painful choices involved in solving economic problems for us. In other words, “economic planning would involve direction of almost the whole of our life.” (p.191)

The issue is who makes the decisions. The question raised by economic planning is not simply whether we will be able to satisfy our more or less important needs in the way we prefer. It is whether we ourselves will decide what is more important and less important, or whether that will be decided by the planner. (p.190)

Control of Production Is Control of Consumption

(p.192)

The source of the government’s power over all consumption is its control over production. In a competitive society, freedom of choice is based on the fact that if one person refuses to satisfy our wishes, we can go to another competitor who will. But with a monopolist who faces no competition, we can only hope for his mercy. Government authority is the most powerful monopolist. Fundamental control over all consumption is secured by obtaining control over production. In a planned society, the source of the authority’s power over all consumption in society will be its control over production. (p.192)

Planning and Occupational Choice

(p.194)

The two aspects of our lives—production and consumption—cannot be separated. One’s occupation determines a large part of one’s life. Freedom to choose one’s occupation is far more important than freedom to consume during leisure time. By setting compensation, the planning authority will prevent many people from trying to enter various fields just as effectively as if it explicitly barred entry into them. (p.196)

A person with lower competitiveness but a strong desire for a certain occupation can begin working in it while accepting lower pay. But if the authority determines the level of rewards, even this opportunity is taken away. If the authority sets and enforces standards in order to simplify its task, incentives disappear for behavior that differs from the standard and is more efficient. The individual is reduced to a mere means serving abstract goals such as “social welfare” and the “common good.” (p.197)

Conditions in a planned society are, without exception, the same as those set by a giant organization, and may even be worse, because there is no escape.

(p.197, English p.99)

If the planning authority must set standards in order to simplify its task, and everyone must act in accordance with those standards, then there is no longer any incentive for people to act in ways that differ from the standards and are more rational or efficient. In a planned society, people no longer try to be rational or efficient unless they are compelled to do so. To carry out the immense task of planning the whole economy, the planning authority must simplify human abilities and dispositions into a very small number of categories, to the point that people quickly become interchangeable units, and it must deliberately ignore fine individual differences. Although the declared goal of planning is to ensure that people are no longer mere means, in reality the individual will become more than ever a mere means by which the authority serves abstract ends such as “social welfare” or the “common good.” This is because it is impossible from the outset for economic planning to take into account what people personally like and dislike. (pp.197–198)

Command and Prohibition as the Only Alternative to the Price System

(p.198)

The abolition of the price system does not lead to complete freedom of choice, but to command and prohibition, and ultimately to the mercy of the powerful. In a competitive society, one can have most things if one is willing to pay for them, even if at times the price is too high. This fact has great significance. The replacement of the price system means not complete freedom of choice, but commands and prohibitions that must be obeyed, and ultimately the mercy of the powerful. In a market economy, we are allowed to sacrifice less important things in order to preserve higher values. If those who complain demand that such choices should not be permitted in a market economy and that someone else should choose for us, that is a very strange demand and one that does not respect individual dignity. (pp.198–199)

The Myth of Plenty (p.200)

The pain of choice imposed by hard reality: not a desire for someone else to choose for us, but a wish that such choices were unnecessary in the first place.

Public anger is a reaction to the pain of choice—that is, to the very existence of economic problems. Socialist promises of “potential plenty” exploit this sentiment by suggesting that economic problems will disappear.

It is now generally acknowledged that a planned economy cannot be as productive as a competitive system.

Now people support the planned economy not because of productivity, but because they believe it will guarantee a fair and equal distribution of wealth.

When people are faced with the bitter choices that hard reality often imposes, it is not surprising that they want to escape from such choices. But few people want someone else to choose for them. They merely wish that such choices were unnecessary altogether. And all too hastily they may come to believe that such choices are in fact unnecessary, and that the inevitability of choice is merely something imposed by the economic system under which we live. That is where the problem arises. What they are really angry at is the mere fact that economic problems exist. Those who have fallen for the delusion that economic problems will no longer exist have been led by irresponsible promises of “potential plenty” to think as if their hopes had been confirmed. (p.200)

Economists with socialist inclinations no longer defend central planning on the grounds of superior productivity. Instead, they support it because they believe central planning guarantees a fairer and more equal distribution of wealth. This is the only serious argument left in favor of a planned economy. (p.202)

The Unprecedented Expansion of Totalitarian Control (p.202)

Was the age of the free economy merely a brief exception? If we return to central planning, would the suppression of freedom be less severe than before?

Because the division of labor advanced during the age of freedom, most of our lives now depend on the economic activities of others, and central direction affects everyday life far beyond economic activity.

A socialist planned economy requires zeal for the “satisfaction of collective needs.” True economic freedom does not mean freedom from having to think about economic matters, but the freedom to hold the right to choose, together with the risks and responsibilities that follow from it.

The development of the division of labor has produced a control environment more intense than in the past.

If, in response to such concerns, we reassure ourselves that the free economy was only a brief holiday, and that adopting central planning merely means returning to the old bonds and regulations that governed economic activity through most of history, and if we then take comfort in thinking that infringements on personal liberty would not be so serious compared to the period before laissez-faire, we are seriously deceiving ourselves. (pp.202–203)

The means of control available in those times went little beyond general direction, and even where such control was most complete, it was limited to the individual’s participation in the social division of labor. In that age, there remained a wider sphere of activity in which people were still self-sufficient, beyond the reach of control, and there the individual could choose freely. But now the situation is completely different. During the age of freedom, the division of labor advanced continuously, and nearly all our activities became part of the social process. If competition is replaced by central planning, the central planning authority must direct most of our lives to an extent incomparable with the past. We have now become dependent in almost every respect on the economic activities of others, so central direction does not stop at economic activity. (pp.203–204)

We often hear it said that political freedom is deceptive without economic freedom. This is quite true. But it is true in almost the opposite sense from that intended by our planners when they use the phrase. The economic freedom that is the prerequisite of all other freedom cannot be, as the socialists promise, freedom from the need to concern oneself with economic matters. “Freedom from economic care” can be achieved only by taking from the individual both the necessity and the opportunity to choose. True economic freedom, therefore, means the freedom to have the right to choose, together with the risks and responsibilities that accompany that right. (pp.204–205)

Can state intervention in the economic sphere coexist with political democracy? Is republican logic—that interference is possible so long as there is no domination—valid here?

Why do we hate money? And yet why do we love it?

Why do we regard economic values as the most trivial? Are not the things we truly value in fact still tied to economic problems?

Why does government control restrict our freedom of choice?

If the price-setting system does not function properly, what should a responsible government do? What is the reality behind the left-wing fantasy of “poverty amid plenty”?

Chapter 8 Who, Whom?

The birth of the absolute ruler, indoctrination, and the beginning of mobilizing children

Questions Before We Begin

Why is competition desirable?

For people born with genes that make them lose in competition, would a competitive society not be hell? Would it not be ideal to mix competition and planned control appropriately?

Might exploited young men in their twenties become the cornerstone of a liberal revival?

Freedom and Property (p.209)

Competition is desirable precisely because it is “blind” (the blindness of justice).

What matters is the unpredictability of the concrete outcomes of competition. (Rewards and punishments are not distributed according to someone’s opinion, but are determined by each person’s ability and luck.)

The choice is not between receiving what one ought to receive and having one’s reward determined by chance. The real choice is whether rewards are determined by a few people, or by one’s own efforts and chance.

It is obvious that opportunities in a competitive society are unfair, but that does not change the fact that the poor in a competitive society are far freer than people who enjoy comfort in other types of society.

We have lost sight of this important point because we have forgotten the meaning of unfreedom.

“What our generation has forgotten is that the system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not.” (p.211)

The power a millionaire has over me is far less than the power the lowest-ranking official can exercise over me. A world in which the rich have power is still better than a world in which only those in power can acquire wealth.

Marx said that the evolution of private capitalism with a free market was the precondition for all our democratic freedoms.

Inequality is much more tolerable, and affects a person’s dignity far less, when it is determined by impersonal forces rather than by intentional design.

When a planning authority exists, improving one’s position becomes a matter not of predicting and preparing for the future, but of influencing the authority.

The opportunities open to the poor in a competitive society are far more restricted than those open to the rich. Nevertheless, it remains true that the poor in a competitive society are far freer than people in other kinds of society who enjoy greater material comfort. In a competitive system, it is possible for someone who starts poor to accumulate great wealth, and that great wealth depends on oneself, not on the favor of those in power. The competitive system is the only system in which no one can forbid someone from trying to attain great wealth. (p.211)

Division of Property Is Division of Power

When property is divided among many people, none of them possesses exclusive power to determine a particular person’s income and status. (p.213)

The System of Private Property Gives Freedom to All

What our generation has forgotten is that the system of private property is the most important guarantee of freedom not only for those who own property, but equally for those who do not. No one can have complete power over us, and the reason each of us as an individual can decide what we will do is precisely that control over the means of production is divided among many people acting independently. (p.213)

Planning Cannot Stop

Because all economic phenomena are closely interdependent, it is difficult to stop planning at the point we desire. Once the free functioning of the market is obstructed beyond a certain point, the planner cannot avoid expanding that control until it becomes comprehensive. (p.215)

Planning and the Distribution of Income (p.210)

Under a planned economy, all socioeconomic problems become political struggles for power, depending on the views of those who control the government.

Distributive Justice and Absolute Equality (p.220)

The socialist movement that sought distributive justice through complete equality failed to win support. More recently, socialism promises a more just and more equal distribution, advocating not absolute equality but “greater equality.” In practice, this means little more than taking as much as possible from the rich, while offering no real answer to the problem of distributing the spoils. The government directs economic activity and must use its power to realize someone’s ideal of distributive justice. On all these questions, there is only one simple principle: complete and absolute equality for every individual in every respect that can be controlled by human beings. But the idea that people find this kind of mechanical equality desirable is far removed from reality. No socialist movement that aimed at complete equality ever rose beyond a negligible level. What socialism promised was not absolute equality, but “greater equality.” (pp.220–221)

Absolute Equality and Greater Equality (p.222)

Absolute equality clearly defines the planner’s task, but the desire for “greater equality” is only a negative desire arising from dislike of the present situation. In practice, this principle means no more than taking as much as possible from the rich. But when one confronts the problem of distributing the spoils, the formula of “greater equality” cannot serve as a substantive standard of distribution. (p.222)

Conflicts Over Just Prices, Fair Wages, and Proper Status (p.223)

The standards we generally have for just prices and fair wages are derived from the competitive system. Once the competitive system disappears, there is no way to use these as standards. Not only in determining income between industries, but also within industries, the need to differentiate among individuals does not disappear.

The Totalitarian Control Prepared by Socialism (p.226)

Restrictions on material freedom come to violate intellectual freedom. For planning to succeed, a common view of essential values must be created, and to this end socialism seeks to use education. But education cannot make moral and ethical views identical. Therefore, socialists try to secure unconditional acceptance of a common creed through education, and in this way an instrument of indoctrination is created. All these instruments devised by socialists were merely later used by fascism. (p.228)

Turning Children into Political Organizations

Those who first began drawing children into political organizations from the earliest age, in order to ensure that they would grow into excellent proletarians, were not fascists but socialists. (p.228)

Competition is an unpredictable process whose results may be unfair. Is it still right?

Why should we maintain a competitive society even if competition is unfair? Under what conditions is inequality acceptable?

Might Pyongyang’s elite be better off than South Korea’s underprivileged?

Why is government intervention harmful to preparing for the future?

Why is everything in our society becoming a political issue?

Why are we not satisfied with equal distribution alone?

How can we know what a just price is?

Why do material control and constraints on freedom also infringe on intellectual freedom?

Why did the left and fascism so highly develop methods of education and indoctrination?

Why do liberals dislike the mobilization of children for demonstrations or political activity? Why does the left attach meaning to mobilizing children for demonstrations or political activity?

If resentment among the underprivileged toward elite aristocratic unions grows, can liberal forces expand?

How will young people’s anger at a society in which a university degree alone no longer guarantees a stable life affect the totalitarianization of the state?

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Original title: <노예의 길> 7장, 8장

Author: Jayujuui Ipmun Dokseo Toron Moim

Date: 2024-11-20

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=2&idx=27112