The road not taken: Hayek's slippery slope to serfdom.

• Author: McInnes, Neil
• Position: Economist and author Friedrich Hayek

This is another story about a book, a curious book that went from bestseller to oblivion and back several times over. The millions of copies it sold in a score of languages "completely discredited" its author, exactly as he foresaw it would. Although he was regarded as one of the leading theoretical economists of the century, the economists of the University of Chicago (whose university press had published the offending book) refused to have him on their faculty. No matter, by living to be over ninety he buried not only them but also the very notion of a planned economy, which had been the target of his essay. The book in question is Friedrich Hayek's The Road to Serfdom. Looking back to its publication fifty-four years ago one can easily see the reasons both for its enduring fame and for the discredit it brought on its author.

Published in the United States and Britain while the war against Nazi Germany was still raging, the book said that the democracies risked going the same way as Germany because their politicians and their intellectuals had fallen for the idea that an economy could be centrally planned, and they would soon be putting that idea into practice under the name of postwar reconstruction. In fact, Hayek said, central planning led, via cumulative attempts to mend its inevitable failures, to "a servile state" (he recalled Hilaire Belloc's 1913 book of that name). It led to serfdom, to a condition "scarcely distinguishable from slavery." Moreover, any attempt at getting a little bit pregnant in this domain, by toying with moderate planning and a "middle way" between capitalism and socialism, would set the democracies on a slippery slope that would end, more slowly but just as surely, in that same serfdom. The free market was not only more efficient economically but indispensable for political and cultural freedom. Its enemies were intellectuals, meddling politicians - and unbridled democracy, which is to say, oppression and spoilation by demagogues invoking the unrestricted will of the majority.

Hayek began by saying, "This is a political book." That is what economists say when they want to disarm criticism, and to be judged by looser standards. In fact, it was not a political book but a quite unpolitical one, in that it took no account of the political climate of the day - which happened to be a climate that would persist for the next thirty years, "les trente glorieuses", as they are now called. Schumpeter's review noted that it "takes surprisingly little account of the political structure of our time", and Eric Roll meant the same thing when he called it "a wholly unhistorical book." Still, Hayek was right to see that it contained enough politics, cut across enough academic demarcation lines, to outrage the economists - especially since most of them at the time were working for the government and taking its view of the economy.

It would, he said, "damage my professional standing" and "alienate my colleagues." Indeed, it did: "After The Road to Serfdom, I felt that I had so discredited myself professionally I didn't want to give offense again. I wanted to be accepted in the scientific community." He never was: "I can feel it to the present day [1979]. Economists very largely tend to treat me as an outsider, somebody who had discredited himself by writing a book like The Road to Serfdom.... Some of my more leftish acquaintances (with considerable cheek) gave me to understand that in their opinion I had ceased to be a scientist and had become a propagandist."

Similar prejudice had almost prevented the book being published at all. Like Orwell's Animal Farm a few months later, and for comparable reasons, it was turned down by several publishers, one of whose readers said it was "unfit for publication by a reputable house." In the event, it was an instant popular success on both sides of the Atlantic and has been continuously in print in one or other of twenty languages ever since; there was a new French edition in 1993 and a fiftieth anniversary edition in English in 1994. Most readers probably knew it through a Reader's Digest condensation, prepared by Max Eastman, of which over one million copies were distributed through the American Book of the Month Club. Hayek got no money out of that version, for the University of Chicago gave it to the Reader's Digest for nothing. This led to accusations that the publication was being subsidized by Big Business, which it probably was.

Though always available, Hayek's ideas have been in and out of fashion to a degree unusual even in the modish subject of economics. He was Keynes' peer as a technical economist in the 1920s but he disappeared under "the Keynesian avalanche" of the 1930s. He resurfaced as a prophet in 1944 but thereafter fell to the rank of an intellectual outcast and hate figure whose new books, said Samuel Brittan, were greeted with scorn that constituted "an intellectual disgrace." The Nobel Prize of 1974 (which Hayek had to share with that archeconomic planner Gunnar Myrdal) prepared his resurrection as a cult figure of the Radical Right, supposedly influential in the counsels of Ronald Reagan and Margaret Thatcher. The collapse of communism was seen as vindicating his work and, more importantly, it produced a new generation of Hayekians among the economists of the former Soviet empire. In the West, however, he is now promised a new spell in oblivion by the communitarians and by all those who dismiss as mere "Cold War liberalism" the impressive achievement of Isaiah Berlin, Arthur Koestler, Karl Popper, and Friedrich Hayek. The last named would no doubt have taken this vicissitude as he took all the others, with the patient courtesy of the petty nobility of AustroHungarian Vienna.

Born there in 1899 into a family of academics on both sides, Hayek fought for the Habsburgs in the Great War as an airborne artillery spotter on the Italian front. In chaotic postwar Vienna he had Fabian sympathies until he came under the formidable influence of Ludwig von Mises, for whom he worked as a researcher after taking degrees in economics and law. His brilliance at theoretical economics induced Lionel (later Lord) Robbins to offer him a chair at the London School of Economics in 1931. His assignment was to take on Cambridge, from where Keynes reigned supreme. He did so, and if Keynes won the ensuing stoush, some economists are no longer sure he deserved to. Hayek moved to Chicago (not the economics department) in 1950, and later taught at Freiburg in Breisgau and Salzburg. He died in 1992, too far into dotage to appreciate that his ideas had won out in the Soviet Union. Those ideas had first been set before the public from the LSE, a school founded by the Webbs, where, after working for years under the administration of William Beveridge (father of Britain's welfare state) and alongside Harold Laski (chairman of the Labour Party), Hayek had produced The Road to Serfdom, an extraordinary solecism.

The way it came about helps to explain the book's odd mixture of sound theory and wild exaggeration. The was evacuated to Cambridge when London was bombed, and Hayek found himself in quarters generously provided by Keynes, with very few students and fewer colleagues, because economists were called up for war duties. Hayek always said that working for the government corrupted economists, and in this case war service had won them over to planning, no doubt necessary for victory but which many now contemplated extending into peacetime. There was no danger of Hayek being called up because, although he had taken out British nationality in 1938, he was too recently an enemy alien to be trusted. After all, other refugee scholars had been rounded up and shipped on the infamous Dunera to concentration camps in Australia, and Popper was in New Zealand.

"I was in an extraordinarily privileged position", he said later. It produced in him the conviction that he was alone on the watch; all the other competent men were busy, economic questions had fallen into the hands of "amateurs and cranks", and a vast socialist conspiracy was afoot to hand free markets over to the planners. He wrote, said Samuel Brittan, "as if he were a voice crying in the wilderness, as if most of his friends were socialists, as if almost all intellectuals are socialists, as if socialism had become a kind of official religion."

There had indeed been, during the war, extensive regimentation of the economy and of much social and intellectual life. The Atlantic Charter had appealed to democracy's least enterprising, most servile inclinations by promising government-purveyed "freedom from want" and "freedom from fear", no doubt at the cost of vast new bureaucratic interventions. Beveridge had already produced his model for a welfare state, to which the Tories were as committed as the Labour Party - and which would be copied across Europe. A year before Hayek's book appeared, the Scottish philosopher John Anderson had anticipated many of its arguments in his article "The Servile State" (to be found in his Studies in Empirical Philosophy):

It can scarcely be denied ... that the capitalist countries are moving in the direction of regimentation...