The Road to Serfdom | Friedrich Hayek

Nor am I arguing that these developments are inevitable. If they were, there would be no point in writing this. -- Friedrich Hayek

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than commonly understood... Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. -- John Maynard Keynes

P.S. Part name was added by me.

Introduction

The supreme tragedy is still not seen that in Germany it was largely people of good will, men who were admired and held up as models in the democratic countries, who prepared the way for, if they did not actually create, the forces which now stand for everything they detest.

Mere hatred of everything German instead of the particular ideas which now dominate the Germans is, moreover, very dangerous, because it blinds those who indulge in it against a real threat.

Part I: Why People Want Central Planning

The abandoned road

• From individualism to collectivism
  • The development of our society since Renaissance has made us more and more inpatient to the slow growth. We turn to seek radical reorganization of the society to speed it up, ignoring that this can put the individualism and liberty in risk, which are exactly the source of our previous development of science, economy, and society.

  • We have progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past.

• The reversal of the direction in which ideas traveled in space
  English world <-> German world

  Most English and American socialists are still unaware that the majority of the problems they begin to discover were thoroughly discussed by German socialists long ago.

The Great Utopia

To the great apostles of political freedom the word had meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached. The new freedom promised, however, was to be freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us, although for some very much more than for others.

However, such a strong promise of freedom was proved to be in conflict with individual freedom:

Nobody saw more clearly than Tocqueville that democracy as an essentially individualist institution stood in an irreconcilable conflict with socialism.

Fascism is the stage reached after communism has proved an illusion, and it has proved as much an illusion in Stalinist Russia as in pre-Hitler Germany.

The French writers who laid the foundations of modern socialism had no doubt that their ideas could be put into practice only by a strong dictatorial government.

Individualism and Collectivism

Central planning reflects the how collectivism enforces its value system:

We must centrally direct economic activity if we want to make the distribution of income conform to current ideas of social justice. "Planning," therefore, is wanted by all those who demand that "production for use" be substituted for production for profit.

In this sense socialism means the abolition of private enterprise, of private ownership of the means of production, and the creation of a system of "planned economy" in which the entrepreneur working for profit is replaced by a central planning body.

Many people, on the other hand, who value the ultimate ends of socialism no less than the socialists refuse to support socialism because of the dangers to other values they see in the methods proposed by the socialists.

However, the enforcement of central planning is the same as the enforcement of coercive powers. History by far shows that this idea:

The question is whether for this purpose it is better that the holder of coercive power should confine himself in general to creating conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed "blueprint".

It regards competition as superior not only because it is in most circumstances the most efficient method known but even more because it is the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority.

Any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about an effective coordination of individual efforts, because price changes then cease to register all the relevant changes in circumstances and no longer provide a reliable guide for the individual’s actions.

It does not deny, but even emphasizes, that, in order that competition should work beneficially, a carefully thought-out legal framework is required and that neither the existing nor the past legal rules are free from grave defects.

The Inevitability of Planing

The technological development doesn't necessarily lead to central planning:

It should be noted, moreover, that monopoly is frequently the product of factors other than the lower costs of greater size. It is attained through collusive agreement and promoted by public policies. When these agreements are invalidated and when these policies are reversed, competitive conditions can be restored.

On the contrary, it's the increasing complexity that makes central planning infeasible and leaves free market the only solution:

Far from being appropriate only to comparatively simple conditions, it is the very complexity of the division of labor under modern conditions which makes competition the only method by which such coordination can be adequately brought about.

It is true that in such situations we may have to sacrifice a possible immediate gain as the price of our freedom ... But the argument for freedom is precisely that we ought to leave room for the unforeseeable free growth ... While it is true, of course, that inventions have given us tremendous power, it is absurd to suggest that we must use this power to destroy our most precious inheritance: liberty.

The intellectual history of the last sixty or eighty years is indeed a perfect illustration of the truth that in social evolution nothing is inevitable but thinking makes it so ... We all find it difficult to bear to see things left undone which everybody must admit are both desirable and possible.

Part II: Central Planning is In Conflict with Democracy & Rule of Law

Planning and Democracy

All kinds of collectivism aims at directing the whole sphere of the society according to a set of specific principles, e.g. a rank of values. Some may propose to setup such value systems by a democracy procedure. However, this is infeasible. In a democratic institute, agreements can be reached for general principles, but not for sophisticated affairs like prices of particular goods and wages for particular jobs, etc.

The various kinds of collectivism, communism, fascism, etc., differ among themselves in the nature of the goal toward which they want to direct the efforts of society. But they all differ from liberalism and individualism in wanting to organize the whole of society and all its resources for this unitary end and in refusing to recognize autonomous spheres in which the ends of the individuals are supreme... To direct all our activities according to a single plan presupposes that every one of our needs is given its rank in an order of values.

The fact is that in these fields legislation does not go beyond general rules on which true majority agreement can be achieved, while in the direction of economic activity the interests to be reconciled are so divergent that no true agreement is likely to be reached in a democratic assembly.

In a central planning state, the inability of the democratic institute will lead to the crave for dictatorship:

Evoke stronger and stronger demands that the government or some single individual should be given powers to act on their own responsibility ... The cry for an economic dictator is a characteristic stage in the movement toward planning.

It will at best be reduced to choosing the persons who are to have practically absolute power. The whole system will tend toward that plebiscitarian dictatorship in which the head of the government is from time to time confirmed in his position by popular vote, but where he has all the powers at his command to make certain that the vote will go in the direction he desires.

Planning leads to dictatorship because dictatorship is the most effective instrument of coercion and the enforcement of ideals and, as such, essential if central planning on a large scale is to be possible. The clash between planning and democracy arises simply from the fact that the latter is an obstacle to the suppression of freedom which the direction of economic activity requires.

Freedom is not for free. Democracy comes with the price that we must limits what we can achieve via public/collective movement & political means. I.e., the boundary of these movements/means is that they don't threat the values of individualism & freedom, which shall be treated as the ENDs themselves rather than practical instruments:

It is the price of democracy that the possibilities of conscious control are restricted to the fields where true agreement exists and that in some fields things must be left to chance.

The point which is so important is the basic fact that it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs ... This is the fundamental fact on which the whole philosophy of individualism is based.

(Liberty) is not a means to a higher political end. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for the security in the pursuit of the highest objects of civil society, and of private life. -- Lord Acton

Planning and the Rule of Law

What is the rule of law:

Government in all its actions is bound by rules fixed and announced beforehand—rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge... They are, or ought to be, intended for such long periods that it is impossible to know whether they will assist particular people more than others.

The Rule of Law thus implies limits to the scope of legislation: it restricts it to the kind of general rules known as formal law and excludes legislation either directly aimed at particular people or at enabling anybody to use the coercive power of the state for the purpose of such discrimination.

Central planning is in conflict with the rule of law:

When the government has to decide how many pigs are to be raised or how many busses are to be run, which coal mines are to operate, or at what prices shoes are to be sold, these decisions cannot be deduced from formal principles or settled for long periods in advance... If, on the other hand, the state were to direct the individual’s actions so as to achieve particular ends, its action would have to be decided on the basis of the full circumstances of the moment and would therefore be unpredictable.

In effect, it destructs the "rule of law" and becomes the "rule of status", leading to a unlimited and arbitrary legislative authority:

A necessary, and only apparently paradoxical, result of this is that formal equality before the law is in conflict, and in fact incompatible, with any activity of the government deliberately aiming at material or substantive equality of different people, and that any policy aiming directly at a substantive ideal of distributive justice must lead to the destruction of the Rule of Law.

It means in effect a return to the rule of status, a reversal of the “movement of progressive societies... By giving the government unlimited powers, the most arbitrary rule can be made legal; and in this way a democracy may set up the most complete despotism imaginable.

Part III: Central Planning Leads to Totalitarianism

Economic Control and Totalitarianism

The control of the production of wealth is the control of human life itself. -- Hilaire Belloc

Although the lack of money made us feel the lack of economic resource, it's not money the cause of economic restriction. On the contrary, money is the greatest tool we mankind have ever invented for the realization of personal freedom:

Because in modern society it is through the limitation of our money incomes that we are made to feel the restrictions which our relative poverty still imposes upon us, many have come to hate money as the symbol of these restrictions. But this is to mistake for the cause the medium through which a force makes itself felt.

If we strive for money, it is because it offers us the widest choice in enjoying the fruits of our efforts... It would be much truer to say that money is one of the greatest instruments of freedom ever invented by man.

This price is not determined by the conscious will of anybody... The obstacles in our path are not due to someone’s disapproving of our ends but to the fact that the same means are also wanted elsewhere.

And they are only too ready to believe that the choice is not really necessary, that it is imposed upon them merely by the particular economic system under which we live. What they resent is, in truth, that there is an economic problem.

The central control of production leads to a complete control of our consumptions - it will be the man in power who determines we to have what:

If all rewards, instead of being offered in money, were offered in the form of public distinctions or privileges, positions of power over other men, or better housing or better food, opportunities for travel or education, this would merely mean that the recipient would no longer be allowed to choose and that whoever fixed the reward determined not only its size but also the particular form in which it should be enjoyed.

The authority directing all economic activity would control not merely the part of our lives which is concerned with inferior things; it would control the allocation of the limited means for all our ends ... Since under modern conditions we are for almost everything dependent on means which our fellow-men provide, economic planning would involve direction of almost the whole of our life.

It would not only decide what commodities and services were to be available and in what quantities; it would be able to direct their distribution between districts and groups and could, if it wished, discriminate between persons to any degree it liked.

The central control of production leads to a complete control of available positions. Standardized enrollment criteria pushes humanity towards reduced diversity in terms of capacities and thoughts. Personal preference and motivation counts very little to the system. Individual itself tends to be reduced to a mere mean of society - a very dystopia type of fear:

But when the authority fixes the remunerations for a whole category and the selection among the candidates is made by an objective test, the strength of their desire for the job will count for very little.

We shall no longer be free to be rational or efficient only when and where we think it worth while; we shall all have to conform to the standards which the planning authority must fix in order to simplify its task ... It will have to reduce the diversity of human capacities and inclinations to a few categories of readily interchangeable units and deliberately to disregard minor personal differences.

Although the professed aim of planning would be that man should cease to be a mere means, in fact—since it would be impossible to take account in the plan of individual likes and dislikes—the individual would more than ever become a mere means, to be used by the authority in the service of such abstractions as the “social welfare” or the “good of the community.

We should be seriously deceiving ourselves if for these apprehensions we sought comfort in the consideration that the adoption of central planning would merely mean a return, after a brief spell of a free economy, to the ties and regulations which have governed economic activity through most ages, and that therefore the infringements of personal liberty need not be greater than they were before the age of laissez faire. This is a dangerous illusion.

Who, Whom?

By abolishing private property, the guaranty of our freedom is also abolished:

What our generation has forgotten is that the system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not. It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves. If all the means of production were vested in a single hand, whether it be nominally that of “society” as a whole or that of a dictator, whoever exercises this control has complete power over us.

The choice open to us is not between a system in which everybody will get what he deserves according to some absolute and universal standard of right, and one where the individual shares are determined partly by accident or good or ill chance, but between a system where it is the will of a few persons that decides who is to get what, and one where it depends at least partly on the ability and enterprise of the people concerned and partly on unforeseeable circumstances.
As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.

There is no definite rules/principles that can be defined/agreed to. Thus the ruling of a planed society can only be coercive and in effect only selectively benefits the groups favored by the ruling party:

It does not free us from the necessity of deciding in every particular instance between the merits of particular individuals or groups, and it gives us no help in that decision. All it tells us in effect is to take from the rich as much as we can. But, when it comes to the distribution of the spoils, the problem is the same as if the formula of “greater equality” had never been conceived.

What standards we have are derived from the competitive regime we have known and would necessarily disappear soon after the disappearance of competition. What we mean by a just price, or a fair wage is either the customary price or wage, the return which past experience has made people expect, or the price or wage that would exist if there were no monopolistic exploitation.

In deciding the relative importance of the different ends, the planner also decides the relative importance of the different groups and persons... This means, however, that he will necessarily exercise direct control over the conditions of the different people.

As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.

The groups whose conditions are relatively worsen, e.g. the middle class, could turn to support Fascism movements. Though they appear to support different groups than the socialists, they are exercising exactly the same principles. As Hayek has pointed out: "Fascism is the stage reached after communism has proved an illusion".

There can be little doubt that no single economic factor has contributed more to help these movements than the envy of the unsuccessful professional man, the university-trained engineer or lawyer, and of the “white-collared proletariat” in general, of the engine driver or compositor and other members of the strongest trade-unions whose income was many times theirs.

Fascism and National Socialism, on the other hand, grew out of the experience of an increasingly regulated society’s awakening to the fact that democratic and international socialism was aiming at incompatible ideals. Their tactics were developed in a world already dominated by socialist policy and the problems it creates. They had no illusions about the possibility of a democratic solution of problems which require more agreement among people than can reasonably be expected. They had no illusions about the capacity of reason to decide all the questions of the relative importance of the wants of different men or groups which planning inevitably raises, or about the formula of equality providing an answer. They knew that the strongest group which rallied enough supporters in favor of a new hierarchical order of society, and which frankly promised privileges to the classes to which it appealed, was likely to obtain the support of all those who were disappointed because they had been promised equality but found that they had merely furthered the interest of a particular class.

Security and Freedom

If all occupations' income are secured, freedom in choosing occupation wouldn't be allowed - otherwise who would choose those of a lower income and worse condition. On the other hand, if only some occupations are secured, it leads to de facto exploitation of other occupations:

Certainty of a given income can, however, not be given to all if any freedom in the choice of one’s occupation is to be allowed. And, if it is provided for some, it becomes a privilege at the expense of others whose security is thereby necessarily diminished... If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole.

Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. -- Benjamin Franklin

In a secured industrial system, it's not only the incentives in problem; without a market, people can't know what is really important for the society as a whole and therefore can't effectively direct their efforts:

The problem of adequate incentives which arises here is commonly discussed as if it were a problem mainly of the willingness of people to do their best. But this, although important, is not the whole, nor even the most important, aspect of the problem. It is not merely that if we want people to give their best we must make it worth while for them. What is more important is that if we want to leave them the choice, if they are to be able to judge what they ought to do, they must be given some readily intelligible yardstick by which to measure the social importance of the different occupations.

Security will become a privilege and define one social status. It will be something people willing to sell their liberty for:

And the more security becomes a privilege, and the greater the danger to those excluded from it, the higher will security be prized.

No wonder that in consequence the value attached to the privilege of security constantly increases, the demand for it becomes more and more urgent, until in the end no price, not even that of liberty, appears too high.

It is no longer independence but security which gives rank and status, the certain right to a pension more than confidence in his making good which makes a young man eligible for marriage, while insecurity becomes the dreaded state of the pariah in which those who in their youth have been refused admission to the haven of a salaried position remain for life.

Why the Worst Get on Top

The moral view a totalitarian regime leads to:

The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule; there is literally nothing which the consistent collectivist must not be prepared to do if it serves “the good of the whole,” because the “good of the whole” is to him the only criterion of what ought to be done.

Since it is the supreme leader who alone determines the ends, his instruments must have no moral convictions of their own.

Once you admit that the individual is merely a means to serve the ends of the higher entity called society or the nation, most of those features of totalitarian regimes which horrify us follow of necessity.

To enforce such a moral view, the totalitarian regime tends to convert people into the same simple creed and exploit hate as means of propaganda:

In the first instance, it is probably true that, in general, the higher the education and intelligence of individuals become, the more their views and tastes are differentiated and the less likely they are to agree on a particular hierarchy of values... It is, as it were, the lowest common denominator which unites the largest number of people... He will have to increase their numbers by converting more to the same simple creed.

It seems to be almost a law of human nature that it is easier for people to agree on a negative program—on the hatred of an enemy, on the envy of those better off— than on any positive task.

Power is not diminished by abolishing private property; on the contrary, it's instead infinitely heightened and centralized, to the extent comparable to slavery. It corrupts the man in power absolutely:

By concentrating power so that it can be used in the service of a single plan, it is not merely transferred but infinitely heightened... What is called economic power, while it can be an instrument of coercion, is, in the hands of private individuals, never exclusive or complete power, never power over the whole life of a person. But centralized as an instrument of political power it creates a degree of dependence scarcely distinguishable from slavery.

Power tends to corrupt, and absolute power corrupts absolutely. -- Lord Acton

In such a corrupted ladder of power, the worst almost always get on top:

They had, without knowing it, set themselves a task which only the ruthless ready to disregard the barriers of accepted morals can execute. That socialism can be put into practice only by methods which most socialists disapprove is, of course, a lesson learned by many social reformers in the past.

And as there will be need for actions which are bad in themselves, and which all those still influenced by traditional morals will be reluctant to perform, the readiness to do bad things becomes a path to promotion and power. The positions in a totalitarian society in which it is necessary to practice cruelty and intimidation, deliberate deception and spying, are numerous. Neither the Gestapo nor the administration of a concentration camp, neither the Ministry of Propaganda nor the SA or SS (or their Italian or Russian counterparts), are suitable places for the exercise of humanitarian feelings.13 Yet it is through positions like these that the road to the highest positions in the totalitarian state leads.

The End of Truth

To guide public opinion, one effective technique the totalitarian propaganda could use is to deprive the meaning of words:

And the most efficient technique to this end is to use the old words but change their meaning... The “collective freedom” he offers us is not the freedom of the members of society but the unlimited freedom of the planner to do with society what he pleases... But “freedom” or “liberty” are by no means the only words whose meaning has been changed into their opposites to make them serve as instruments of totalitarian propaganda... Gradually, as this process continues, the whole language becomes despoiled, and words become empty shells deprived of any definite meaning.

All channels of knowledge and information will be controlled and all views that could challenge the propaganda will be ruthlessly silenced:

And the whole apparatus for spreading knowledge— the schools and the press, radio and motion picture—will be used exclusively to spread those views which, whether true or false, will strengthen the belief in the rightness of the decisions taken by the authority; and all information that might cause doubt or hesitation will be withheld.

It is not difficult to deprive the great majority of independent thought. But the minority who will retain an inclination to criticize must also be silenced... Public criticism or even expressions of doubt must be suppressed because they tend to weaken public support.

To justify its policy, the totalitarian regime will construct a comprehensive theory for it. Therefore, science will become a political problem:

Plato’s “noble lies” and Sorel’s “myths” serve the same purpose as the racial doctrine of the Nazis or the theory of the corporative state of Mussolini.4 They are all necessarily based on particular views about facts which are then elaborated into scientific theories in order to justify a preconceived opinion.

Science for science’s sake, art for art’s sake, are equally abhorrent to the Nazis, our socialist intellectuals, and the communists. Every activity must derive its justification from a conscious social purpose... Once science has to serve, not truth, but the interests of a class, a community, or a state, the sole task of argument and discussion is to vindicate and to spread still further the beliefs by which the whole life of the community is directed.

The way in which differences of opinion in every branch of knowledge become political issues to be decided by authority.

The problem of unifying people's ideas is not that there will be only one idea allowed to be developed; the problem is there won't be any development of idea at all:

This interaction of individuals, possessing different knowledge and different views, is what constitutes the life of thought. The growth of reason is a social process based on the existence of such differences... By attempting to control it, we are merely setting bounds to its development and must sooner or later produce a stagnation of thought and a decline of reason.

Probably it is true enough that the great majority are rarely capable of thinking independently... (But) it shows a complete confusion of thought to suggest that, because under any sort of system the majority of people follow the lead of somebody, it makes no difference if everybody has to follow the same lead.

Part IV: Other Topics & Discussions

The Socialist Roots of Naziism

Still less was the cause, as so many people wish to believe, a capitalist reaction against the advance of socialism. On the contrary, the support which brought these ideas to power came precisely from the socialist camp.

The root of the idea of socialism is applying scientific control to the society. Although it was Marx who systematically formulated the socialistic ideals, the elements of freedom and democracy were in conflicts with socialism itself. By generations, these liberal elements more or less perished among the socialists:

Organization is to him, as to all socialists who derive their socialism from a crude application of scientific ideals to the problems of society, the essence of socialism... Marx and Marxism have betrayed this basic idea of socialism by their fanatic but utopian adherence to the abstract idea of freedom.

The doctrines which had guided the ruling elements in Germany for the past generation were opposed not to the socialism in Marxism but to the liberal elements contained in it, its internationalism and its democracy. And as it became increasingly clear that it was just these elements which formed obstacles to the realization of socialism, the socialists of the Left approached more and more to those of the Right.

Liberalism is a philosophy of life from which German youth now turns with nausea, with wrath, with quite peculiar scorn, for there is none more foreign, more repugnant, more opposed to its philosophy. German youth today recognizes the liberal as the archenemy.

Interestingly, the structure of Prussian nation was astonishingly similar to that of Chinese: "private person" as a concept provokes moral discomfort. The ideal moral model is the one who commit himself completely to the interests & goals of the collective, with contempt to "self-interest" and "personal rights". Trade, as an activity that promotes differentiation among the collective, individualism, and independence, is in some level demonized and deem need to be constrained in protection of the "commonweal":

The structure of the English nation is based on the distinction between rich and poor, that of the Prussian on that between command and obedience... In Prussia there existed a real state in the most ambitious meaning of the word. There could be, strictly speaking, no private persons. Everybody who lived within the system that worked with the precision of a clockwork, was in some way a link in it.

The “German idea of the state,” as formulated by Fichte, Lassalle, and Rodbertus, is that the state is neither founded nor formed by individuals, nor an aggregate of individuals, nor is its purpose to serve any interest of individuals. It is a Volksgemeinschaft in which the individual has no rights but only duties.

Is in the future trade to govern the state, or the state to govern trade? In the face of this question Prussianism and Socialism are the same… Prussianism and Socialism combat the England in our midst.

Such similarity may derive from their similar geographical environments and economic structures: both possess very significant landlocked cultural/economic/political traditions, which emphasizes collectivism rather than individualism to solve problems they face; scarifies rather than rights; obey rather than negotiate; monopolistic control rather than balance of power; eager to impose ones ideals to others rather than trust the order of the impersonal ruling... In these places, men are born to be collectivists.

It is no accident that on the whole there was more beauty and decency to be found in the life of the small peoples, and that among the large ones there was more happiness and content in proportion as they had avoided the deadly blight of centralization.

The Totalitarians is in Our Midst

Superstition to science leads scientists and engineers submitted more easily to totalitarianism. Such superstition is also utilized to root out the belief of the individual's value, liberty, and action:

It is well known that particularly the scientists and engineers, who had so loudly claimed to be the leaders on the march to a new and better world, submitted more readily than almost any other class to the new tyranny.

It is to be noted that the dogma that history is obedient to scientific laws is preached especially by partisans of arbitrary authority. This is quite natural, since it eliminates the two realities they most hate, i.e., human liberty and the historical action of the individual.

Organized capital & organized labor both have their versions of quest to an organized society. However, their fault are the belief that they will be able to have a say in such a society:

The impetus of the movement toward totalitarianism comes mainly from the two great vested interests: organized capital and organized labor... But they are as shortsighted as were their German colleagues in believing that they will be allowed not only to create but also for any length of time to run such a system.

Even in dealing with monopoly, state control is not an ideal solution: it (i) grants the monopoly a permanent position and (ii) makes critiquing the monopoly equivalent to critiquing the party, which will hardly be tolerated. A better option is state regulation that suppresses the monopoly's profit:

The conviction that this trend is inevitable is characteristically based on familiar economic fallacies—the presumed necessity of the general growth of monopolies in consequence of technological developments, the alleged “potential plenty,” and all the other popular catchwords which appear in works of this kind.

It means in most instances that a temporary monopoly is given the power to secure its position for all time—a power almost certain to be used. Where the power which ought to check and control monopoly becomes interested in sheltering and defending its appointees, where for the government to remedy an abuse is to admit responsibility for it, and where criticism of the actions of monopoly means criticism of the government, there is little hope of monopoly becoming the servant of the community.

Such a method of dealing with monopoly, which would rapidly make the position of the monopolist the least eligible among entrepreneurial positions, would also do as much as anything to reduce monopoly to the spheres where it is inevitable and to stimulate the invention of substitutes which can be provided competitively. Only make the position of the monopolist once more that of the whipping boy of economic policy, and you will be surprised how quickly most of the abler entrepreneurs will rediscover their taste for the bracing air of competition.

Material Conditions and Ideal Ends

The contempt for material consideration is a refusal of recognizing material restrains and obstacles. In such a view, the impersonal market force as a means of resource allocation is irrational. However, they don't see the fact the the only alternative is submitting to the arbitrary power of other men:

It is not any contempt for material welfare, or even any diminished desire for it, but, on the contrary, a refusal to recognize any obstacles, any conflict with other aims which might impede the fulfillment of their own desires, which distinguishes our generation.

The refusal to yield to forces which we neither understand nor can recognize as the conscious decisions of an intelligent being is the product of an incomplete and therefore erroneous rationalism... And it fails to see that, unless this complex society is to be destroyed, the only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men.

Those who demand it show by their very demands that they have not yet comprehended the extent to which the mere preservation of what we have so far achieved depends on the coordination of individual efforts by impersonal forces.

The ill desire of "breaking others' eggs" to achieve one's single-minded idealist can't but produces more severe damage, since it demolishes the ethical fences that individualistic values set:

The categorical and irresponsible “it must be done at all cost” of the single-minded idealist is likely to do the greatest harm... All this surely indicates that our moral sense has been blunted rather than sharpened. When we are reminded, as more and more frequently happens, that one cannot make omelettes without breaking eggs, the eggs which are broken are almost all of the kind which a generation or two ago were regarded as the essential bases of civilized life. And what atrocities committed by powers with whose professed principles they sympathize have not been readily condoned by many of our so-called “liberals”.

The virtues these people possessed—in a higher degree than most other people, excepting only a few of the smaller nations, like the Swiss and the Dutch—were independence and self-reliance, individual initiative and local responsibility, the successful reliance on voluntary activity, noninterference with one’s neighbor and tolerance of the different and queer, respect for custom and tradition, and a healthy suspicion of power and authority.

The Prospects of International Order

To successfully enforce a comprehensive social plan, it needs to push away external influence, i.e. restricting the flow of goods and people between nations. However, it inevitably increases the clashes of power:

Many kinds of economic planning are indeed practicable only if the planning authority can effectively shut out all extraneous influences; the result of such planning is therefore inevitably the piling-up of restrictions on the movements of men and goods.

If the resources of different nations are treated as exclusive properties of these nations as wholes, if international economic relations, instead of being relations between individuals, become increasingly relations between whole nations organized as trading bodies, they inevitably become the source of friction and envy between whole nations.

Economic transactions between national bodies who are at the same time the supreme judges of their own behavior, who bow to no superior law, and whose representatives cannot be bound by any considerations but the immediate interest of their respective nations, must end in clashes of power.

The socialists propose the solution of an international planning authority. However, it can only be put into practice with coercion since a unitary agreement of the plan around the globe could hardly be reached. The international authority can only be recognized as suppressive if a people's development must depends on its veto/approval:

Those who at least partly realize these dangers usually draw the conclusion that economic planning must be done “internationally,” i.e., by some supernational authority... But, as the scale increases, the amount of agreement on the order of ends decreases and the necessity to rely on force and compulsion grows... Planning on an international scale, even more than is true on a national scale, cannot be anything but a naked rule of force, an imposition by a small group on all the rest.

If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this justly and equitably... How many people in England would be prepared to submit to the decision of an international authority, however democratically constituted, which had power to decree that the development of the Spanish iron industry must have precedence over similar development in South Wales, that the optical industry had better be concentrated in Germany to the exclusion of Great Britain, or that only fully refined gasoline should be imported to Great Britain and all the industries connected with refining reserved for the producer countries.

A better solution is federation that provides a platform of "rule of law" in the international scale and only possesses the power to prevent the nations from harming each other. At the beginning, it may only be a very localized organization:

We cannot hope for order or lasting peace after this war if states, large or small, regain unfettered sovereignty in the economic sphere.

The principle of federation is the only form of association of different peoples which will create an international order without putting an undue strain on their legitimate desire for independence. Federalism is, of course, nothing but the application to international affairs of democracy, the only method of peaceful change man has yet invented... It confines international planning to the fields where true agreement can be reached.

That in the (unsuccessful) attempt to make it world-wide it had to be made weak and that a smaller and at the same time more powerful League might have been a better instrument to preserve peace.. The comparatively close association which a federal union represents will not at first be practicable beyond perhaps even as narrow a region as part of western Europe, though it may be possible gradually to extend it.

P.S. EU is an excellent representation of this idea.