Hayek's The Road To Serfdom (1944)

The fall of the Berlin Wall in 1989 and the subsequent collapse of communist regimes in Eastern Europe was the affirmation of a lifetime of work by Friedrich A. Hayek (1899-1992), one of the most prominent and distinguished political economists of the 20th Century. Using his experiences derived from living in Austria, and later Britain, during the expansion of socialism and communism in Europe during the 1920s and 1930s, Hayek created political theory that still resonates among today’s economists and market. He was the recipient of the 1974 Nobel Prize in Economic Science and made major contributions to the understanding of government intervention, economic calculation under socialism, and development of the social structure. Hayek would

A. Hayek’s most famous work, The Road to Serfdom (1944), was originally written to warn his fellow British citizens of the dangers of socialism, but gained popularity worldwide by economists and politicians alike. His basic argument was that government control of our economic lives amounts to totalitarianism. Hayek wrote, “Economic control is not merely control of a sector of human life which can be separated from the rest, it is the control of the means for all our ends” (Butos, 2012). Socialism attempts to solve economic and social ills by applying scientific principles to government planning and control of the economy. In order for socialism to be effective, central planning must be in place. Hayek transformed the debate over socialism from a moral question to a practical one. It was not whether individuals were virtuous enough for socialism, but whether or not organizing a society around socialism is

Hayek. This theory is an application of a general principle of monetary theory. Monetary changes alter spending patterns, including both “real spending” and spending on assets. These temporary spending pattern changes affect relative prices and hence the pattern of use of productive resources. These two factors alone make possible a pattern prediction that monetary changes will misdirect production and create a potential economic crisis. When the monetary alteration lessens or ends, the misdirection of production and the accompanying “existence of discrepancies between the distribution of the demand among the different goods and services and the allocation of labor and other resources among the production of those outputs” (Cochran, 2011, p. 278) will be discovered and resources will have to be reallocated to uses more consistent with underlying real