The End of the Road to Serfdom

Future students of our age may well treat Friedrich Hayek’s The Road to Serfdom and James R. Otteson’s The End of Socialism as bookends on an era. Hayek raises the specter of state collectivism in his classic work from 1944. In this new book, Otteson charts socialism’s end, in both senses of that word: the goals it fails to realize as well as its inevitable collapse.

To my mind, The End of Socialism makes three distinct claims, all important. First, Otteson articulates what socialism is and isn’t by highlighting its differences with capitalism, its archrival. Second, he demonstrates socialism’s practical problems, its failure to deliver the promised goods. Finally, recognizing that something may be appealing in theory even if horrible in practice, he offers a sustained moral critique of socialism, showing it to be as unattractive on the philosophical drawing board as it is in a political regime.

We’ll take each point in turn, before ending with some concluding remarks.

First, consider the terms themselves. Someone may object to being called a socialist or, for that matter, a capitalist! In the face of these concerns, the author helpfully reminds us that few on either side approve of the terms—at least the term applied to their own position. Marx himself popularized the word “capitalism,” whereas so-called “capitalists” like Adam Smith used other descriptors for their system, such as “commercial society.” But Otteson, quoting Caesar, says the die is cast: “for better or for worse,” capitalism and socialism have become the “preferred terms.”

As a further concession, he generally speaks not of socialists simpliciter but “socialist-inclined” ideas or advocates. Such nuances are not inconsequential; they allow the labelling of people or ideas, but in an inoffensive and straightforward way.

Otteson’s discussion of the differences between socialism and capitalism is worth the price of the book. Quite frankly, it will be where I turn whenever anyone asks me to delineate the difference between the two. According to him, socialism and capitalism differ about human nature, values, and policies. First, human nature: whereas socialists see humans as altruistic and cosmopolitan, capitalists see people as self-interested and localized, connected to, and products of, specific times and places. Socialists begin with human nature but don’t end there; they have hopes for humanity that Otteson labels “unconstrained,” in contrast to the constrained view of capitalism that sees human nature as “more enduring and thus more immune from attempts at institutional engineering.”

It’s not just competing attitudes about human nature. Consider values: socialists value equality, community, and cooperation; capitalists favor liberty, the individual, and competition. Or policy: capitalists champion private property and free exchange; socialists focus on public or common property and regulated exchange.

These distinctions may make one think that socialism and capitalism both have something to offer humanity—differences in degree but not in kind. Not so, according to the author. Capitalism is superior both in what it produces and in the moral vision it offers.

Otteson gives specific, wide-ranging examples to demonstrate the failure of socialist or socialist-leaning policies. I’ll mention three. First, an example from history: Jamestown, Virginia was a colony “organized on a principle of equal distribution and communal ownership.” People starved to death, but not simply because the challenges of acquiring food in the New World were formidable: “It turned out that some settlers preferred to starve, even to death, rather than work if they thought that someone else would get what they produced.”

For a more contemporary example, he turns to Sweden. An economic powerhouse in the early 20th century as the result of free-market reforms in the 1860s, Sweden arrived at stagnation in the 1990s as the result of decades of increasing centralization and welfare spending (85–86). When Sweden began reversing its economics malaise in the 2000s by rejecting its previous socialist policies, the country began to flourish again—a result unsurprising from a capitalist viewpoint, but startling from a socialist one (86).

I’ll mention one final example in passing; it’s also the most eye-popping one. John W. Dawson and John J. Seater claim that federal regulations have prevented the economy from growing so much that, in Otteson’s words, “the median household in the United States could have been, instead of its actual $53,000, an incredible $330,000” in constant dollars. This claim is surely controversial. Nevertheless, given the obviousness of the Jamestown and Sweden cases, it’s plausible.

What does it all show? Put poetically, regardless of its highfalutin claims, socialism is an emperor without clothes, full of sound and fury, signifying nothing. Put simply, socialism is broke.

But the obviousness of socialism’s failures—or the failures of socialist-inclined policies—matters less than one would think. That’s because Otteson doesn’t simply tackle whether or not socialism works. He questions, as I said at the outset, whether or not socialism is as laudable as its admirers believe. This question is an important one: after all, if the only problem with socialism is that it doesn’t work, then its advocates can still reasonably hope that, in the right conditions—albeit conditions in the very distant future—socialism will flourish. (This hope seems especially likely to be entertained by socialists given that, as Otteson notes, they generally take a more elastic view of human nature.)

That’s why Otteson’s moral critique of socialism is so important, and so powerful. It turns out not to matter whether socialism can deliver the goods in practice. Even if it could—and it can’t!—it could only achieve its goals by eviscerating the moral character of the inhabitants of the society that implemented it.

To show why, he highlights autonomy and judgment as “two features of our moral personalities” that are “united by notions of dignity and hence respect.” Socialism is a moral failure because it attacks who we are as moral agents.

First, socialist-inclined theories and theorists ignore or marginalize individual autonomy in order to advance their agendas. Otteson offers specific examples, including this:

Sarah Conly argues that because people ‘don’t reason very well,’ ‘can’t really understand the facts they are presented with,’ and thus might ‘harm themselves,’ we need ‘simply to save people from themselves by making certain courses of action illegal.’

Otteson’s response:

The moral objection to Conly’s argument . . . is that its mandate to override people’s decentralized decisions and choices . . . cannot take place without authorizing some group of people a scope of agency that is denied to others.

By contrast, a capitalist trusts the man on the street—both his local knowledge (to which no centralized planner has access) as well as his gumption, his industrious drive to better his financial condition.

Second, socialist-inclined policies undermine judgment. In a capitalist-inclined economy, citizens regularly receive societal feedback from their actions. Giving and receiving feedback—from being underdressed for cold weather to telling an inappropriate joke at a dinner party—is crucial to one’s development as a person. We do people no harm when we let them see the consequences of their actions; on the contrary, we help them develop a proper judgment. But “when we do not, we do not.”

Robert Nozick’s slogan in Anarchy, State, and Utopia (1974) is “liberty upsets patterns.” Otteson’s is “uniqueness plus liberty results in diversity.” His jingle may not be as catchy as Nozick’s, but it’s just as true.

And Otteson’s slogan taps into something widely celebrated in our culture: diversity. Diversity in outcomes is the wonderful result of different hopes and dreams meeting specific opportunities and challenges. He puts the point elegantly: “Far from being the benchmark, then, substantive material equality among a population of unique moral agents should be the rare, even bizarre, exception.” When people receive the feedback other people want to give them—even when it’s negative—they can use that information to pursue their dreams. They are helped, even if they’re not encouraged, because they see what works, and they see what doesn’t. That’s a good thing, and capitalism can help people in this way. Socialism can’t.

As the above should make clear, I think The End of Socialism is exceptional, worthy of high praise and a wide readership. In fact, it’s my choice for the Intercollegiate Studies Institute’s Henry and Anne Paolucci Book AwardThe End of Socialism hits the rare, sweet spot for an academic book: it’s simultaneously accessible and thought-provoking.

In his conclusion, Otteson quotes from G. A. Cohen’s Why Not Socialism? (2009). Cohen disapprovingly writes, “The market, one might say, is a casino from which it is difficult to escape.” Otteson’s response? “And yet no one has ever built walls to keep citizens in capitalist countries.” Exactly.

Reader Discussion

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

on June 12, 2015 at 11:52:07 am

There are no right conditions for socialism. It is and has been a disaster and nightmare for decades, why not?, its primary beneficiaries are the bureaucracy and those toadies and free loaders who slither best to the seats of government, a bonanza for the slime of society, those who would not hold up banks or mug old ladies but use their positions of personal wealth and influence, bribes, aka political contributions, to maximize their wealth and be at the seats of power.
Any country that seeks economic growth on a consistent basis must allow for a free marker. It need not be the anarchical state but it's growth must depend on the multiplicity of sources of wealth and investment.
A look at the mess we are in and heading for worse is a lesson for those who care to think about centralized power and bureaucracy.

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john trainor
on June 13, 2015 at 11:45:04 am

[…] The End of the Road to Serfdom […]

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Providing the Poor the Tools to Fish - Freedom's Floodgates
on June 14, 2015 at 07:58:35 am

To any any honest and objective person free market Capitalism,despite its problems and sometimes rough edges, has lifted more people more quickly out of poverty and into the middle classes and above then any other social/economic system in history. Socialism,or collectivism in its many forms,is not about advancing the standard of living of people or the betterment of that abstraction called society. Its all about irrational emotions. Emotions such as hate,envy,coveting and a lust for power. With that said,at least in the West and especially in America,the socialist "ideal" in practice and reality has not "ended" or even slowed down over the past years. Judging by the size of government and the amount of wealth extracted from the semi-free market economies of the West the tipping point has been reached where the collectivists,call them socialists if one wishes,have taken control of the seats of power,economically,socially and politically. As things now stand,there is no chance for a counter revolution or a turning back of the collectivist tide simply because the cancer of socialism has mastitised in the body politic to the point of no return. You can see this in the statistics on the amount of people either employed by or living off of the state. It is a voting majority and any kind of countering of this is wishful thinking. The only thing that can be done by the productive minority in the Economic Class is to wait till the whole system collapses and then try to pick up the pieces and restore liberty. This may be years judging by the amount of wealth that has been created and is still being created over the past several decades. It takes a long time to eat through the amount of wealth that has been created. But eventually when the wealth runs out so will Socialism's rule. Hopefully.

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libertarian jerry
on June 15, 2015 at 07:00:56 am

Moral Vision ...?? LOL ... Without boundaries there is nothing but greed & corruption ...Without the ' Rule of Law ' there is No Sanctity or Any Vision of Truth & Justice ... Humans are a Mess , on either side of the line ... The Founders knew this to be true ... So do Bankers & Jesus Christ ...

Our Descendents into Debt Slavery is unprecedented in the Modern age ... Yes this has happened before ... After each Financial Cycle & the Extreme it brings ... Consequences ... The Race to the Bottom , continues

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Ken A Morse
on June 15, 2015 at 08:22:56 am

The problem with using the term "socialism" is that many people insist that it only refers to an economic system where property is owned by the government rather than individuals. However, there is little substantive difference between the government owning property and the government controlling how private property is used.

In any case, I think "capitalism vs. socialism" doesn't capture the issue nearly as well as "individualism vs. collectivism," which I wrote about here:
Individualism vs. Collectivism

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Mark Cancellieri
on June 15, 2015 at 12:44:20 pm

I read your ideas.
Well said.

The money system is the basic mechanism by which the current redistribution survives.
Temporarily, of course.

A people's money system is only a reflection of their moral character.

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on June 15, 2015 at 14:07:36 pm

Everyone I have heard engage in your argument, “Nothing but greedy and corrupt" and "humans are a mess" conveniently neglects the most important aspect of commerce and trade. Free will. Greed and corruption exist in both philosophies.

With politics in a free society the People have the right as well as the responsibility to police their representatives, from the local Councilman to the POTUS. In a socialist society the people have no recourse as the Ruling Class is responsible to no one but themselves and their leadership. In our current state of the nation, the People have only just begun to police our political powers. Unfortunately the People have allowed the status quot to go unchecked for too long here.

With commerce and trade your general argument obviously ignores 70% of all commerce in this country, small and medium size business and the consumer. A greedy and corrupt vendor can be and is usually identified by his customers. Providing substandard products and services results in ever reducing return business. The vendor has a choice, provide suitable products and services or go out of business. In a socialist state we are back to the Ruling Class who isn’t effected by or cares about the consumer’s dissatisfaction.

And as far as “humans are a mess”, do you believe a Ruling Class needs to make life decisions for the general populous? Well that would mean you, being ruled would have no recourse but to do as you are told because by your own admission, as a human, you are a mess and cannot manage your own life. Is this true?

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William Senger
on June 15, 2015 at 22:16:40 pm

We are a Nation Founded on Laws ... Justice comes from the Objective enforcement of those Laws ... The Founders were students of History, they understood the Invisible hand of the Mkt place as well as ' Bread and Circuses ... All the perplexities, confusions, and distress in America arise, not from defects in their constitution or confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit, and circulation. John Adams, Letter to Thomas Jefferson, August 25, 1787

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Ken A Morse
on June 27, 2015 at 09:41:23 am


There is plenty of good reason, with evidence uncovered daily, weekly and consistently throughout the years of the hypocrisy and failures of government, the failed promises of politicians, the lies and spin of the mainstream media and newspapers, the greed and exploitation of the financial sector and the “just us” mentality of above-the-law enforcers who are supposed to uphold justice.

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Ken A Morse

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.