Steve Reads

After reading The Economics of Feasible Socialism, Hayek’s The Road To Serfdom promises to be a letdown. The whole premise of the former is that there is a third way between pure free-market capitalism and pure nationally-centralized collective socialism; that third way is “market socialism,” which shares a lot with capitalism but tries to the extent possible to democratize corporate governance. Market socialism realizes that democracy at all levels would be impossible — the Senate can’t spend all its time deciding how many tons of rubber to buy — but tries to democratize as much as possible. Nove is a good empiricist, also, which shows up in his diplomatic attitude toward those who disagree with him.

The Road To Serfdom — at least in the first 10% or so — seems to live in a dreamworld, by contrast. We’ve learned and thought a lot about how the market works since Hayek wrote his book, and it’s quite obvious now that the old view of one salesman selling one undifferentiated commodity to one consumer is incorrect: we live in a world of multinational corporations now, which is a fundamental change from what the dogma says about markets. Power relations are totally different now; it’s not nearly as clear as Hayek so far makes it out to be that it’s a choice of freedom versus collectivism. And Nove makes it obvious that Soviet-style collectivism just doesn’t work and that we ought to correct those collectivist mistakes.

I’m willing to bet that any economic system has imperfections. I agree with Hayek and Popper and a lot of others that the pursuit of Utopia leads all too often to hell. (“The perfect is the enemy of the good” and all that.) But that cuts both ways: the a world of perfect laissez-fair capitalism is no world that any of us would want to live in.

I hope that Hayek doesn’t turn out to be the letdown that he promises to be.