The stories coming out of America are heartbreaking. 45 million Americans are on food stamps. One can find stories about ‘tent cities’ across America. The pictures of some American cities such as Detroit appear to be very run down and depressed. Today’s headline video on MSN Canada reports that the US “Misery Index,” which measures unemployment and inflation, is at a 28 year high. The talk of “recovery” must be some sort of propaganda because it certainly does not seem real.
The first appendix to Hayek’s The Road to Serfdom, which he entitled Nazi-Socialism, written in the spring of 1933, should be assigned reading for understanding today’s economic and political situation. In this appendix, Hayek gave a laundry list of symptoms of the Nazi-variety of socialism. Hayek mentioned the Nazi’s fierce hatred of: “anything capitalistic—individualistic profit seeking, large scale enterprise, banks, joint-stock companies, department stores, ‘international finance and loan capital,’ the system of ‘interest slavery’ in general…” (246). All of these symptoms can certainly be found in today’s political debates. The hatred of the banks and international finance, especially because of the bailouts, is prevalent. The idea of “soaking the rich” seems to be in vogue; hence, our modern version of attacking individualistic profit seeking. The symptom of attacking department stores probably finds its modern day parallel in some people’s distaste of Wal-Mart.
Another parallel between Nazism and our current situation, also found in Hayek’s appendix, is this: “If rule by force by some privileged group is to be justified, its superiority has to be accepted for it cannot be proved” (247). The term ‘rule by force’ is certainly inconsistent with the ‘Rule of Law.’ The Rule of Law restricts government’s activity to what is spelled out ahead of time in a constitution and a bill of rights or other written rules and laws. Of course, the Rule of Law did not exist in Nazi Germany. As Hayek asked rhetorically, “But who would suggest for that reason that the Rule of Law still prevails in Germany” (119)? The modern day parallel is the use of presidential executive orders and the Patriot Act’s evisceration of the Bill of Rights. Another good example would be Obama’s decision to go to war in Libya without getting Congressional approval. The attitude is that the president can do whatever he wants without any restrictions. This is also called arbitrary government.
The one part of Hayek’s appendix that jumped out at me was when he wrote: “The collectivist and anti-individualist character of German National Socialism is not much modified by the fact that it is not a proletarian but a middle class socialism…”(247, emphasis mine). What, on earth, is a “middle class socialism”? I had never heard of that term before; hence, I wanted to find out what Hayek meant. On page 144 of The Road to Serfdom, Hayek defined the term in the following quotation (all emphasis again is mine).
There is a great deal of truth in the often heard statement that fascism and National Socialism are a sort of middle-class socialism—only that in Italy and Germany the supporters of these new movements were economically hardly a middle class any longer. It was to a large extent a revolt of a new underprivileged class against the labor aristocracy which the industrial labor movement had created.
To drive the point home, Hayek wrote (emphasis mine): “It should never be forgotten that the one decisive factor in the rise of totalitarianism on the Continent … is the existence of a large recently dispossessed middle class” (215).
Totalitarianism is caused by the existence of a large and recently dispossessed middle class. Dispossessed means that someone has been ousted or dislodged. In other words, the former middle class has been demoted to a lower underprivileged class status.
A related issue was the infighting among labor. Hayek argued on pages 144-145 that an internal war had broken out between the Nazi-supporting labor and the old socialist party-supporting labor. Hayek wrote:
Nor can there be much doubt that in terms of money income the average member of the rank and file of the Nazi movement in its early years was poorer than the average trade-unionist or member of the older socialist party—a circumstance which only gained poignancy from the fact that the former had often seen better days and were frequently still living in surroundings which were the result of this past. (144)
Therefore, one has to wonder what will happen to America with so many people in misery and on food stamps? What inspired me to write this blog was a comment from my good friend from Connecticut. She mentioned how everything was going so well in her life and now it is all gone for her. Life is much harder. She never expected to be living like this now. Things have moved down in life for her. This type of sentiment is exactly what Hayek picked up on in The Road to Serfdom. Has America currently bred a group large enough to be a modern day version of what Hayek called “a large recently dispossessed middle class”? Moreover, will we see infighting among labor? Will we see well-paid unions of today playing the role of what Hayek called “the older socialist parties”? This will be the group of labor enjoying the status of “haves.” Will we see the food stamp receivers of today playing the role of what Hayek called the “large recently dispossessed middle class”? This will be the group of labor suffering with the status of “have not.”
What may spark a Nazi-style revolt is the talk of reducing the funding to the food stamp program. One has to wonder whether such discussion is deliberately meant to instigate a revolt. Of course, I do not know the future and can only speculate. However, the combination of symptoms suggests to me that the future will be much more totalitarian and repressive.
Hayek, F. A. 2007. The road to serfdom: Text and documents. Vol. 2 of The collected works of F. A. Hayek. Chicago: University of Chicago Press.