In 1944 the Austrian economist, Friedrich August Von Hayek, published ‘The Road To Serfdom’. The book set out to argue that the free market is the only viable way of bringing about freedom and prosperity. Actually, the book does not talk so much about the virtues of free markets but rather the downsides of the alternative which, at the time, was central planning. Hayek’s argument was that we can only handle the complexities of reality in a bottom-up fashion, with individuals looking after their own self-interests while guided by pricing signals. This, he reckoned, would result in the efficient allocation of resources arising from what would now be called emergent behaviour.
On the other hand, if we instead relied on a centralised authority to determine resource allocation, such an authority would inevitably find the complexity of modern economies too much to handle. The only way the authority could gain some measure of control would be to exercise more power over the people, restricting their freedom and making them live their lives according to some plan. Thus, a socialist economy would become more authoritarian over time. As the title of the book said, Hayek reckoned socialism to be the road to serfdom.
It’s fair to say that the book remains one of the classic texts of neo-liberalism. Margaret Thatcher described Hayek as one of the great intellects of the 20th century, and he was awarded the Nobel Prize in economics in 1974. Even now, some 64 years after its publication, it is still regarded as a definitive refutation of leftist politics and proof that only neo-liberalism can deliver prosperity. You could say that Hayek is as important a figure to the free market as Karl Marx is to communism.
But, I wonder, does Hayek’s argument really successfully demolish every alternative to neo-liberalism? Does the selfish pursuit of money and the conversion of everything to a commodity to be bought and sold on the market still stand as the only way we can achieve peace and prosperity? Or are its advocates wrong to say there is no alternative?
I would say there is an alternative. We are no longer restricted to the either-or choice of laissez-faire capitalism or authoritarian central planning. There might just be a third way.
It’s worth baring in mind the time in which Hayek wrote his book and how things have changed since then. At the heart of his argument is the belief that the world is really, really complex and, because of this, far too much information is generated for a centralised authority to handle without imposing real restrictions on individual liberty. Only market competition guided by pricing signals can manage such complexity. But, remember, he was writing in 1944. Communications back then was a good deal more primitive than is the case today. There was not one satellite in orbit. Now we have many hundreds, if not thousands, constantly monitoring all kinds of stuff such as weather patterns, urban sprawl, how crops are faring and so on and so on. This amounts to a network of sensors englobing our planet and allowing for realtime feedback about all kinds of important things. Such a perspective simply didn’t exist when ‘Road’ was published.
The advances we have made in our ability to transmit information is truly remarkable. The numbers are hard to grasp as they are pretty astronomical, but let’s give ourselves some standard of comparison and see if that helps. The author James Martin proposed the ‘Shakespeare’ as the standard of reference for our ability to transmit information. One Shakespeare is equivalent to 70 million bits, enough to encode everything the Bard wrote in his lifetime.
Using a laser beam, you can transmit 500 Shakespeares per second. Sounds impressive, but in fact fibre optics technology can do much better. By using a technique called Wavelength Division Multiplexing, the bandwidth of a fibre can be divided into many separate wavelengths. Think of it as encoding information on different colours of the spectrum. Some modern fibres are able to transmit 96 laser beams simultaneously, each beam carrying tens of billions of bits per second or 13,000 Shakespeares.
But we are still not done, because many such fibres can be packed into a single cable. Indeed, some companies make cables with more than 600 strands of optical fibre. That is sufficient to handle 14 million Shakespeares or a thousand trillion bits per second.
Think about that. We can now transmit data equivalent to 14 million times Shakespeare’s lifetime’s output from one side of the planet to the other almost instantaneously. Of course, this is quantity of information and not necessarily quality (not everything we send over the Internet is of Shakespearean standards!) but the point is that we can now send an awful lot of information around the world whereas this was not possible in Hayek’s day.
It would do little good to transmit petabits of information if we did not also improve our ability to store and crunch that data. In 1944 computers barely existed. What computers did exist came in the form of room-sized electromechanical behemoths that consumed huge amounts of power and were so temperamental only specialised engineers could be trusted to go near them.
Ray Kurzweil once said, “if all the computers in 1960 had stopped functioning, few people would have noticed. A few thousand scientists would have seen a delay in getting printouts from their last submission of data on punch cards. Some businesses reports would have been held up. Nothing to worry about”. And this was in 1960, over a decade after Road was published.
Since then, Moore’s Law (related to the price-performance of computer circuitry) has increased the power of computers by billions of times. It has shrunk hardware from the room-sized calculators of old to swift, multi-tasking supercomputers that can easily slip into your pocket. The cost has been reduced from about 100 calculations per second per thousand dollars in 1960, to well over a billion cps by 2000. Such a reduction means we can treat computing as essentially free, as proven by the way people are constantly on their web-enabled devices without ever fretting about how much it is costing. Also, computers have become increasingly user-friendly over time, from devices that required considerable technical skill for even simple tasks to modern conveniences like Alexa that can be interacted with through ordinary conversation.
The result of all this technological progress is that we are now practically cyborgs from infancy, thanks to the near-constant access to enormously powerful and intuitive computational devices. We live as part of a vast, dense network of bio-digital beings, connected to one another regardless of distance and with ready access to all kinds of information and digital assistance.
What this has to do with Hayek’s argument was expressed in an opinion put forward by David Graeber: “One could easily make a case that the main reason the Soviet economy worked so badly was because they were never able to develop computer technology efficient enough to coordinate such large amounts of data automatically…now it would be easy”.
In part two, we will see how the Internet and other technological advances provide options that were not feasible when ‘Road’ was written.
When Hayek wrote his book there was no Internet. Nobody was a blogger. Not one video had been uploaded. There was not a single Wikipedia entry, not one modded videogame. Linux and bitcoin were not words in anyone’s vocabulary. Now, such things are a ubiquitous part of modern life and most of them are free, part of the collaborative commons. OK, the price of bitcoin went crazily high but its founder provided the underlying blockchain of technology gratis, and made its white paper public knowledge so anyone could improve and expand upon it to create stuff like a decentralised social media site built on a blockchain.
Indeed, there’s now a great many things we can do on a voluntary basis. Much of the content of the web owes its existence more to passion than the pursuit of money. Jeremy Rifkin calls this ‘collaboratism’. Collaboratism means engaging in work not because financial pressures or some authority compels you, but because the means of producing and distributing stuff has become cheap enough that anyone with any drive to do something has the means to flex their creative muscles, and to connect with others with complementary skills and weaknesses.
This kind of technological progress changes many things. For example, when you have ready access to manufacturing or logistical systems it makes more sense not to have private ownership of stuff (which nearly always entails that stuff sitting in storage not being used for most of its life) but rather using stuff as and when you need it, and then making it available for others to use when you don’t. Think, for example, of driverless cars that could be there when you need transport and make themselves available for others to use if not. If that car was your own private possession, it would probably be parked somewhere not being used by anyone for long stretches. What a waste of resources!
This is the kind of world advocated by the Zeitgeist Movement. Critics of Peter Joseph tend to dismiss him using the same arguments Hayek used in ‘Road’. But this is to fundamentally misunderstand Joseph’s position. He is in no way advocating any centralised control, but rather more efficient decentralised methods than the corrupt monetary systems that are leaking value from today’s markets.
As to why neo-liberals tend to mistake Zeitgeist’s resource-based economy for central planning, maybe it can be traced back to concept drawings by Jacques Fresco? His Venus project shows plans for cities whose infrastructure is organised into a circle, at the centre of which sits a big computer monitoring the various flows of information a city generates. Such an illustration sure makes it seem like a centralised authority is in charge.
But you have to bare in mind that this city-wide perspective is only one viewpoint. If we could zoom out, we would see that the spokes of this ‘wheel’ radiate out beyond the confines of the city to connect with other cities, such that it becomes a node in a web of interconnected smart cities. Or, you could zoom in to a more personal level, and see that each person is a node in the network thanks to the web-enabled devices they have ready access to. Just shift perspective and what seems like a centralised master computer turns out to be a node in a network.
I would make an analogy with the web of life. Imagine telling somebody that there is a digital programme, encoded in DNA, running evolution. Imagine that person demanding to know where, precisely, the computer running this programme is located, and also telling you evolution can’t possibly work because Hayek proved centralised planning is hopeless. This would be a fundamental misunderstanding, because the code of life is not to be found in any particular location, but rather distributed throughout the world. Nobody is in charge, there is no top-down authority commanding natural selection.
Similarly, when confronted with Zeitgeist’s outline for systems of feedback that would enable us to track the world’s resources and manage them according to the principles of technical efficiency, it’s always denounced by critics as central planning. It’s almost as if such people forget the Internet ever existed.
When Hayek wrote ‘Road,’ mass production was the most obvious manifestation of market competition’s drive to produce sellable commodities, and mass production at that time was largely dependent on factories powered by large stations. Those were hugely expensive means of production that only a minority could afford to own, and which were most efficiently run along fascist lines. You might have been free to quit your job but once you clocked in you become part of a vertically-integrated management structure and had authorities whose orders had to be obeyed (and who, for the most part, were more interested in lining their own pockets and those of the banking and governmental masters they answered to than rewarding your efforts).
In marked contrast, the technologies of the 21st century could enable production by the masses, for the simple reason that the means of production and distribution could become ever more accessible in terms of cost and ease-of-use. Few can own a factory but if the price-performance of atomically-precise manufacturing goes far enough, what is effectively a factory in a box could sit beside your printer, and if robots follow the same trajectory as computers they should go from being very limited, expensive and largely inaccessible labour-saving devices to cheap, versatile, user-friendly, ubiquitous helpers. We could all become owners of the means of production. Such a decentralised form of production works best when we act as collaborating individuals united by complementary strengths and weaknesses in laterally-scaled networks, which is quite different from the vertically-integrated management that jobs have traditionally been designed around.
When Hayek wrote ‘Road’, the only alternative to free markets he could imagine was central planning. But really, who could blame him? There was no satellite communication, hardly anybody had access to computers and the World Wide Web did not exist. In short there was none of the infrastructure that the digital commons needs to get off the ground, making it perfectly reasonable for Hayek not to consider collaboratism as a viable alternative to the selfish pursuit of money.
Now, the infrastructure is beginning to fall into place. We have a communications web, an information web, and the beginnings of a logistic web and energy web too. Thanks to advances in artificial intelligence, robotics, nanotechnology and more, we are approaching the point of near zero-marginal cost for the creation and delivery of all kinds of content, not just digital stuff but physical stuff too. We can now work together, forming groups and collaborating on projects out of passion rather than out of some selfish pursuit of monetary gain.
‘The Road To Serfdom still stands as an effective argument that market competition is preferable to central planning. But when you consider how laissez-faire principles brought about the financial crisis of 2008 (Wall Street really did take advantage of Ayn Rand devotee Alan Greenspan’s deregulation and the commodifying of political influence to make fraudulent activity legal and prey on people’s financial gullibility) and the impossibility of sustaining free market principles in anything that resembles the way market competition actually developed (covered in my essay series ‘This Is What You get’) I suspect that, were he alive today, Hayek would be championing the Zeitgeist movement as the best way of bringing about prosperity. In 1944 there may have been no viable alternative to neo-liberalism, but that’s changing.
“The Road To Serfdom” by Hayek
‘Zeitgeist Movement Defined’
‘The Zero-Marginal Cost Society’ by Jeremy Rifkin
‘Age Of Spiritual Machines and ‘The Singularity Is near’ by Ray Kurzweil
‘The Meaning Of The 21st Century’ by James Martin.
“Bullshit Jobs: A Theory” by David Graeber