Saturday, 10 August 2013

Keynes on "The Road to Serfdom"

It is well known that John Maynard Keynes said of Hayek's "The Road to Serfdom":
In my opinion it is a grand book [...] Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement.
What was not known, to me at least, is what Keynes said later in the letter from which the above quote comes. At the end of his letter to Hayek, Keynes wrote,
I come finally to what is really my only serious criticism of the book. You admit here and there that it is a question of knowing where to draw the line. You agree that the line has to be drawn somewhere [between free-enterprise and planning], and that the logical extreme is not possible. But you give us no guidance whatever as to where to draw it. In a sense this is shirking the practical issue. It is true that you and I would probably draw it in different places. I should guess that according to my ideas you greatly underestimate the practicability of the middle course. But as soon as you admit that the extreme is not possible, and that a line has to be drawn, you are, on your own argument, done for since you are trying to persuade us that as soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice.

I should therefore conclude your theme rather differently. I should say that what we want is not no planning, or even less planning, indeed 1 should say that we almost certainly want more. But the planning should take place in a community in which as many people as possible, both leaders and followers, wholly share your moral position. Moderate planning will be safe if those carrying it out are rightly orientated in their own minds and hearts to the moral issue. This is in fact already true of some of them. But the curse is that there is also an important section who could almost be said to want planning not in order to enjoy its fruits but because morally they hold ideas exactly the opposite of yours, and wish to serve not God but the devil. [...] What we need is the restoration of right moral thinking - a return to proper moral values in our social philosophy. If only you could turn your crusade in that direction you would not feel quite so much like Don Quixote.
It seems Keynes believed in philosopher-kings, disinterested, public-spirited people working wholly for the public good. I wish him luck with that. But his point about the "slippery path" is one often made with regard to Hayek's argument.


DR Baker said...

This is a fantastic find and greatly explicates Keynes's thinking on Hayek's arguments. The slippery slope is a critique that applies much more widely to modern economics in a way that is often not appreciated.

"You agree that the line has to be drawn somewhere, and that the logical extreme is not possible. But you give us no guidance whatever as to where to draw it. In a sense this is shirking the practical issue."

This criticism applies as well to deregulation or anti-tax positions widely present in modern conservative/libertarian positions. Most would argue that some regulation and some tax is justified within the economy, but puritan economic theory gives no indication where that line may be drawn. In fact, under common economic assumptions, there can be no justification to deviate from the market result. It leaves us with no way to analyze practical questions within public policy.

Thank you for the interesting post.
Daniel Baker

Matt Nolan said...

I remember reading that back in the day, and I do see where you are coming from!

However, I suspect the key difference between people's interpretation of his statement depends on what we term "moral issues".

In fact, the entire debate about how government works as a means of "co-ordination" alongside prices and choice as a means of "co-ordination" depends on both a description of what would happen, and a moral judgment about how to interpret that.

I read Keynes as saying that, although I also agree with you that he appeared to indicate more faith in governments ability to co-ordinate than many of us with our current experience would see as practical.