The Road to Serfdom

Democratic socialism presents a fundamental contradiction because complex central planning cannot be achieved through democratic consensus. Democratic assemblies lack the capacity to agree on and execute highly detailed economic blueprints. This inherent impasse forces the delegation of technical tasks to independent bodies or economic dictators. The populace is effectively stripped of its democratic power, replacing representative government with authoritarian command.

Advocates of central planning often claim that economic control is separate from personal freedom. Economic control actually dictates the means for all human ends. When a central authority manages production and distribution, it inherently decides which societal needs are met and which are ignored. This total control strips individuals of their autonomy to allocate their own resources according to their personal values.

A free society operates under a framework of formal, impartial, and predictable rules that apply equally to everyone. Central planning destroys this neutral framework because planners must constantly make ad hoc decisions to balance competing interests and allocate resources. The law ceases to be an instrument used by the people to navigate their own lives and instead becomes a weapon used by the government to impose its chosen outcomes on specific groups.

Totalitarianism is a necessary condition for the execution of a centralized economy rather than an accidental byproduct. Forcing compliance with a comprehensive economic plan requires leaders who are completely willing to disregard ordinary morals and employ coercion. Collectivist systems naturally elevate ruthless individuals who build power by uniting the gullible majority around the lowest common denominator. This unity is almost always achieved by directing mass hatred toward a scapegoat minority.

To maintain power and execute a comprehensive plan, authoritarian regimes must make the populace believe the government's goals are completely their own. This requires an extensive propaganda apparatus that redefines familiar words to mean their exact opposites. Concepts like liberty, justice, and law are stripped of their original meanings to justify state control. Science and independent inquiry are similarly corrupted, repurposed entirely to serve the interests of the state rather than the pursuit of objective truth.

Fascism and Nazism emerged as the totalitarian culminations of collectivism rather than its opposite. The founders and philosophers of the Nazi movement originated from Marxist traditions and were united by their shared hatred of classical liberalism, free markets, and individual rights. Both systems view the state as an organic, supreme whole where individuals possess no inherent personal rights and exist solely to fulfill duties to the collective.

Macroeconomic intervention attempts to stabilize the economy by managing aggregate demand to prevent catastrophic unemployment. Pumping purchasing power into a deflating system offers temporary relief but triggers long-term instability. Injecting credit distorts the natural pricing signals of the market and causes severe malinvestment. This artificial expansion forces an unsustainable structure of production that must eventually collapse, inevitably leading to deeper economic crises driven by inflation.

The intellectual critique of centralized control eventually provided the foundation for a political shift away from state dominance. Political leaders dismantled the postwar consensus of heavy state intervention by attacking nationalized industries and the influence of powerful trade unions. Reducing the power of the state to dictate economic outcomes successfully expanded the sphere of individual choice and restored market competition.

Although Western democracies avoided rapid totalitarianism, the expansion of the modern regulatory state represents a slower slide toward a similar loss of liberty. Governments continuously intervene in markets to subsidize favored industries, mandate employment terms, and restrict entry into various professions. These actions substitute the collective decisions of the state for the private choices of individuals, steadily eroding economic independence and creating a population dependent on political authorities.