The Road to Serfdom was originally an analysis of Nazism, arguing that the Nazi regime was not caused by a character defect of the German people, but rather the result of socialist trends in the previous era.

Many believed that the competitive system had to be substituted by economic planning. According to Hayek, planning is useless in modern complex society, as all data cannot be recorded, and activities cannot be adjusted accordingly.

In order to succeed planners must extend power over individuals. Democracy is an obstacle to obtaining this power, because democratic institutions cannot conclude detailed plans and have to rely on "experts". The integration of plans requires an organisation or people with specific powers. Concentrated power in the form of a dictatorship is the most effective way for the necessary coercion.

Equally, the Rule of Law is impractical in a planned economy. The planners have to respond to changes in circumstances, and cannot be accountable ahead of events. A planned society must legalise arbitrary action, because somebody has to decide about how to proceed. The more the state can plan, the less the individual can.

Hayek argues that the tastes and views differentiate the higher people's education and intelligence. These different standards make planning more complex. The largest group with equivalent standards is those with low standards. This group however is not large enough, and leaders will tend to increase this group with the docile and the gullible. Leaders can make the group more coherent through a negative programme. In the totalitarian machine there will be special opportunities for the ruthless and the unscrupulous. Once you admit that the individual is merely a means to an end, the horrors of totalitarianism follow of necessity.

Hayek considers the system of private property a prerequisite to freedom. However, freedom is not laissez-faire unlimited. Individuals should be given the best conditions for planning, and should be helped by conditions for competition. This could include a legal framework limiting working hours, requiring sanitary arrangements, and providing an extensive system of social services is fully compatible with the preservation of competition. And although Hayek argues that redistribution of wealth can only be absolute, as other principles will be arbitrary, he also states that the state can provide a general level of sustenance and social insurance to the population.

Where organised labour and organised capital in Germany strived for monopolies. Hayek attacked monopolies and the regulation of competition, e.g. price and wage setting. Without the freedom money gives us, whoever would fix the rewards for our actions would determine not just the size of our reward, but also how it would be enjoyed. Given the division of labour required for our complex needs, that power would be absolute, and would include our employment.

I based this (highly personal) summary on the notes I took while reading this book. Now that I read them back they seem to be a lot more radical then when I read the text. State planning, industrial development and equivalent policies have been on the decline since the 1970's, and still exist mostly at the level of the various trade blocks (e.g. the United States versus the European Union). Socialism as a system to organise society or the economy has lost all its credentials outside North Korea.

If any viable alternative strategy exists than it is France's with its grands projets, national champions, and consequent elitism. Still, most of France's economy is based upon competition, and French corporations compete successfully around the globe. Other challengers are the tiger economies and particularly China. China executes quite a few misallocations for the sake of national pride. On their road to development the often dictatorial tiger economies accepted a certain amount of sacrifice for establishing viable industries. Still much of the economy was and is run via the invisible hand. This willingness to sacrifice for the sake of future generations is mostly lost in Europe and particularly in the United States.

It can also be noted that private ownership is a prerequisite for freedom, but not a defining factor, as the late colonial regimes and the post-colonial regimes in Singapore and Hong Kong proof (this does not go against Hayek, he just does not mention the case).

Although I find Hayek's analysis pretty radical, his recommendations are nowadays for the most part utterly mainstream in character. Given Hayek's acceptance of social security even nanny state advocates like the Scandinavian social democrats can embrace his conclusions. Beyond the examples above, collective salary bargaining may be among the last vestiges of "planning". Such bargaining occurs in a highly competitive environment however.

One of the many introductions to my edition claims that Hayek "prevented the emergence of full blown socialism in Western Europe and the United States". I doubt that. When I studied economics and business administration in the 1980's in Amsterdam, Hayek got about as much mentioning as the socialist economic system of Yugoslavia. I am not the only one. When New Zealand reserve bank governor Donald Brash was asked to give a speech about Hayek he had no idea that his Thatcherite ideas were rooted in Hayek's work.

My condensed version of the Road to Serfdom also contains an essay about "The Intellectuals and Socialism". Hayek claims that socialism is a theoretical construct, and as such an intellectual rather than a working class movement. Intellectuals are "professional second hand dealers in ideas" who greatly influence public opinion. You don't need to be an original thinker or even intelligent to be an intermediary in the distribution of ideas, as long as you can readily talk or write about a wide range of ideas: journalists, teachers, religious ministers, writers, technicians, scientists and doctors all perform this role. Their need to create a reputation is favouring the politically correct. Beyond their own field of expertise people tend to follow the communis opinion. They have to fit into the framework of the dominant Weltanschauung.

Intellectuals often don't have practical experience in the field of running a business, and often have no inclination to join the conservative order. Intellectuals' knowledge is mostly superficial, and of no use beyond the short term. Intellectuals love abstraction, and socialism has Utopian qualities, and lacks interest in technical details and practical difficulties. This does not mean that these intellectuals are not men of honour, and mostly have no intention to harm society.

Hayek's analysis reminds me of the 1970's when communists would rally "intellectuals" of assorted backgrounds for whatever cause. With the demise of the Bildungselite at least here in the Netherlands, this seems very much a thing of the past also.

It does still seem to fit the business elite pretty well however. Its omnipotent, omni-knowledgeable, and omni-remunerated CEO's, governing "straight from the gut" over global empires after reading some leadership books bought in an airport store seem to fit this description of "professional second hand dealers in ideas" just perfectly. I can't wait for creative destruction to take care of them. ( )

'The condensed version of 'The road to serfdom' by F A Hayek as it appeared in the April 1945 edition of 'Reader's Digest'.