Contra Don Boudreaux, the Boot does not have a Soft Sole

Donald Boudreaux predicts his recent article in the Freeman, The Power of Freedom, will raise the ire of some libertarians. Boudreaux’s thesis is based on an empirical observation that the regulatory, bureaucratic state has not yet led to Orwell’s Nineteen Eighty Four; indeed, we are, in his words “better fed, clothed, housed, informed, educated, medically cared-for, traveled, rested, and entertained” compared to either, say 1930 or 1980. Boudreaux’s conclusion is that “the power of Freedom” is such that economic and social conditions can withstand or at least adapt to the predatory state. In short, the regulatory, bureaucratic state is not necessarily a “Road to Serfdom.”

It should be pointed out this is not new argument. It’s one made all the time by the political left in discounting Hayek’s “The Road to Serfdom,” although the political left has a much more sanguine view of the “Regulatory State” than Boudreaux. I addressed this issue in older post, Hayek, Social Insurance, and Serfdom. If you don’t feel like reading the post, here’s a summation:

Hayek’s argument in “The Road to Serfdom” was specifically against State Socialism, that is, centrally planned regimes that planned against competition. The argument really being made, in the historical context, is that Fabian Socialism and National Socialism led to the same thing, in the end. The likes of George Orwell, who was a man of the left, was in part influenced by Hayek’s work in composing the Socialist dystopias of Animal Farm and Nineteen Eighty Four.

To understand Hayek’s more general argument requires one to distinguish between “planning against competition” and “planning for competition.” In the latter sense of planning, things like Social Insurance are not antithetical to a liberal order. In the Hayekian conception, the welfare state itself, if constructed around planning for competition, is not a threat to liberalism. The problem, however, is that politics is not really about the art of “planning for competition.” The state that has the power to plan for competition also has the power to plan against competition. It is the latter which is the direct threat against liberalism.

To bring up Orwell again, I would note he also thought Capitalism would lead to to totalitarianism. His literary works addressed the Socialist path to tyranny. For the capitalist version, we will have to turn to how real life is writing this scenario.

On a number of previous occasions, I have used the term “catastrophic liberal institutional failure.” What I mean by this is the political status quo of permanent war. Liberalism may be compatible with some degree of the welfare state, and may be able to adapt to some degree of political rent-seeking, but it cannot survive the rent-seeking permanent war state. “War is the Health of the State” means simply that war is is the ultimate expression of collectivism. With perpetual war, you have the purest and most naked form of class conflict.

The “permanent war state” is not hyperbole. It is very real. There is a massive intelligence Stasi police apparatus in place. Utterly unaccountable and growing. And it’s not difficult to trigger experiencing the brunt of this. Boudreaux writes we are better-traveled than ever before. Well, I would encourage Boudreaux to assert his civil rights the next time he encounters the TSA when flying or US customs when traveling abroad. I imagine he probably just obeys. To do otherwise would threaten detention and could threaten one’s entire livelihood, if such depends on one’s ability to travel. When we talk about inalienable rights, we surely mean, among other things, the right to travel and the right to work without having to suffer cumbersome duties, restrictions, and permissions. In the National Security State, you have to have permission to travel and to work. This where we are heading and there going to be plenty of people who are going to get very rich from enforcing this.

In Orwell’s Nineteen Eighty Four, slogans like “Ignorance is Strength” and “War is Peace” are examples of DoubleThink but they also have empirical meaning. You have to read the tract “The Theory and Practice of Oligarchical Collectivism” to discern their empirical meaning. “Ignorance is Strength” explains how a restricted vocabulary called NewSpeak, which is a limited political vocabulary of invented words that have mutually contradicting meaning based on political context, enforces a doublethink reality. However, the tract itself is not written in NewSpeak, and we learn that “War is Peace” has a clear empirical meaning. That slogan means Peace for the ruling classes. Continuous war is not a war of nation-state ruling classes set against one another. Rather, continuous war is unabated war of the ruling classes against their own subjects.

In a previous post, Modeling Capitalist Regime Change, I made the case that moral hazard will eventually force a regime change in the political framework of markets. I noted the previous two regimes were Keynes/Bretton Woods and Chicago/Washington Consensus. The loss of resiliency of the Chicago framework demands a new political economy framework. It is this regime uncertainty that is the source of the current economic depression. But intellectually, there isn’t any new framework to transition to, at least one that doesn’t involve tearing down the State. So what we are seeing by default is the oligarchicalization of money and credit to enforce an artificially stable equilibrium that has little resiliency. This is why, for example, the US is heavily involved as of late in brokering a deal for increased political control of the currency markets. To enforce an artificial stability of a regime that has little resiliency will require more and more command and control and planning against competition. And in this way, one can see how (political) capitalism can converge to an authoritarian point. And Boudreaux’s empirical observations, which are drawn from previous regimes, are not applicable to the current regime.

On a final note, I would point out that Orwell did not include “Freedom is Slavery” in his little tract within Nineteen Eighty Four. Chapter 2 is missing in “The Theory and Practice of Oligarchical Collectivism.” In a sense, “Freedom is Slavery” doesn’t quite fit in with the empirical paradigm of the other two slogans(to do so, it would have to be reversed, “Slavery is Freedom”). I would merely point out, in an empirical sense, not to conflate capitalism with freedom. Boudreaux’s argument, logically extended, could be applied to China as a demonstration of the “power of freedom” at work. When freedom means “the freedom to obey,” the only power it represents is the power of the ruling class.


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