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Leo Rosten interviews Friedrich A. Hayek (Part I)


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Friedrich A. Hayek talks with Leo Rosten about his political writings. In particular, Dr. Hayek discusses the writing of The Road to Serfdom and its subsequent reception. The development of complex societies, along with reactions and failures thereof, and Marxism and socialism are explored. The importance of constitutions and the evolution of democracies with interest groups are also examined. Finally, Hayek and Rosten discuss mass media and journalism as critical sources of ideas in a free society and the view that public perception is a reflection of mass media.


Interview with Friedrich A. Hayek by Leo Rosten (Part I)
Thanks to Pacific Academy Advanced Studies for permission to distribute this program.

Digitized by: New Media - UFM.
Digitization: Mario Estrada, Jorge Samayoa; content analysis: Alex Weller; content reviser: Daphne Ortiz, Jennifer Keller; publication: Rebeca Zuñiga

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ROSTEN: Well, Dr. von Hayek, it's a pleasure to see you after years of reading you and, indeed, listening to you.  I was one of the auditors of a course you gave at the London School of Economics many, many years ago.  Tell me, did you begin, in your intellectual life as an adult, did you begin as a Fabian?  were you a socialist?  were you an Adam Smith man? 
HAYEK: Oh no.  You see.  You could describe it as Fabian.  Well, there were, in fact, Fabians in Austria, too, but I didn't know them.  The influence which led me to economics was really Walter Rathenau's conception of a grand economy.  
He had himself been the raw materials dictator in Germany, and he wrote some very persuasive books about the reconstruction after the war.  And [those books] are, of course, socialist of a sort--central planning, at least, but not a proletarian socialism.  They were very persuasive, indeed.  And I found that really to understand this I had to study economics.  
The first two books of economics [I encountered], which I read while I was fighting in Italy, were so bad that I'm surprised they didn't put me permanently off economics; but when I got back to Vienna somebody put me on to Karl Menger and that caught me definitely. 
ROSTEN: Had you read the English economists, the classical economists? 
HAYEK: At that time, no.  Adam Smith I had read fairly early, but that's the only one--and in a German translation.  You see, English is really the third foreign language I learned; it's now the only one I can speak.  But I was tortured all my childhood being taught French--irregular verbs and nothing else--and consequently never learned to speak it really.  I picked up Italian during the war in Italy--well, sort of Italian. 
ROSTEN: Very different from the rest. 
HAYEK: I don't dare to speak it in polite society.  That gave me the confidence to take up English, and ultimately, of course, I really learned it when as a young man after my degree I went to the United States.  My first experience with American English was in New York in 1923 and '24. 
ROSTEN: I didn't know you'd come to the United States that early. 
HAYEK: It was before the time of the Rockefeller Foundation; so it was at my own risk and expense.  I arrived in New York in March 1923 with twenty-five dollars in my pocket, with a series of letters of recommendation by [Joseph] Schumpeter, which each earned me a lunch and nothing else. 
ROSTEN: Had you known Schumpeter in Vienna? 
HAYEK: Not really, but he was a visiting professor at Columbia [University] before the war; so when [Ludwig von] Mises and [Friedrich von] Wieser learned that I wanted to go, they sent me to Schumpeter, who was then a chairman of the bank.  
He had just been minister of finance and was now chairman, and he equipped me with a number of letters of ministerial size, which I had to get a separate folder for to carry them to America.  I delivered them all; so I met all the famous old economists.  They all were very kind to me, but did nothing.  
I'd gone over there on a promise of a job from Jeremiah W. Jenks, the head trust specialist.  But when I arrived, he was away on holiday; so I ran out of money.  I then was greatly relieved that the very morning I was to start as a dishwasher in a Sixth Avenue restaurant, a telephone call came that Jenks had returned and was willing to-- I have ever since bitterly regretted that I cannot say I started my career in America [as a diswasher]. 
ROSTEN: Now, you say you began as a Fabian socialist, under the influence of Walter Rathenau.  In those days, of course, this was a kind of intellectual socialism, and you mentioned the fact that it wasn't proletarian.  Did it interest you that so many of the German, Russian, Austrian intellectuals were the ones who became the Marxists, not the masses.  It was an intellectual movement that spread with enormous-- 
HAYEK: Oh, enourmous, but--  Well, you see, I spent my university days already arguing with these Marxists--my opponents were Marxists and Freudians.  
We had endless discussions, and it was really what I thought was the poverty of the arguments of the Marxists which turned me against socialism.  And, incidentally or not, I'll let you in on another thing: both the Marxists and the Freudians had the dreadful habit of insisting that their theories were irrefutable--logically, absolutely cogent.  
And, that led me to see that a theory which cannot be refuted is not scientific, and that made me later praise [Karl] Popper when he spelled the same idea out, which he had gained in the same experience.  He was a few years younger; so we didn't know each other.  But we both went through this experience, arguing all the time with Marxists and Freudians. 
ROSTEN: They were both ideologists of a very strong sort. 
HAYEK: Oh, very strong; all very good arguers, and very anxious to discuss. 
ROSTEN: They also had, I think, the power of an evangelical movement and a humane movement.  By this I mean that those of us who listened to you and read you, or studied under people like Jacob Viner or Frank Knight or Lionel Robbins, always had to come to terms with the fact that the system, the free market system, was not humane, and that we felt that the society had to undertake something.  
Remember, this was the Depression, and we were seeing unemployment and poverty, banks failing, people scared and people killing themselves because their earnings had been wiped out; and when the New Deal came along, it seemed that here was the humane answer.  
And, indeed, my parents, who were socialists, stopped voting socialist, even though they liked and loved Norman Thomas, and began to vote for [Franklin] Roosevelt.  We all felt that at last government had developed a "heart."  Did any of this make-- 
HAYEK: No.  Well, I didn't see it that way, but of course it tallies completely with what I am doing at the moment.  You may be amused that a few days ago, when I was returning the last volume of Law, Legislation and Libertyfor being printed, I inserted one sentence into it: "Man was civilized very much against his wishes."  It's really the innate instincts which are coming out. 
ROSTEN: That's a very Freudian statement. 
HAYEK: In a way.  Well, it's Freudian and anti-Freudian, because Freud, of course, wanted to relieve us of these repressions, and my argument is that by these repressions we became civilized. 
ROSTEN: His whole point is that civilization is the repression of guilt, and that without that you can't have-- 
HAYEK: In his old age, of course. 
ROSTEN: --and the repression of aggression, of the hostility. 
HAYEK: When he wrote Civilization and Its Discontents, he was already getting upset by what his pupils were making of his original ideas. 
ROSTEN: Quite so.  Quite so.  I was interested that your works in the last ten years have become, or have returned to, a much more social-philosophical scale than your earlier ones.  But let's start with the earlier ones.  You created a furor in the United States, England, and I imagine around the world, with The Road to Serfdom,
because it came out at a time when you were a lone voice speaking in the wilderness about the terrible dangers which were inherent in turning over to government--even good government by a good and well-intentioned people--powers which were both dangerous and inexorable.  If you were to write that book over again, first, would you make any changes? and secondly, what would you call it?
HAYEK: Well, I suppose I would still call it the same, although I was never quite happy with the title, which I really adopted for sound.  The idea came from [Alexis de] Tocqueville, who speaks about the road to servitude; I would like to have chosen that title, but it doesn't sound good.  So I changed "servitude" into "serfdom," for merely phonetic reasons. 
ROSTEN: Has it occurred to you since then that this was one reason there was so much vicious response, because the English and the Americans could not believe that they were in danger of becoming serfs.  It seemed unthinkable. 
HAYEK: There wasn't the vicious reaction in England.  In fact, the English socialists, or most of them, had all themselves become a little apprehensive already at the time. 
ROSTEN: That early? 
HAYEK: Oh, yes.  The book was received in England in the spirit in which I had meant it to be understood: as a serious argument.  In fact, I'll tell you one story: Barbara Wootton, who wrote one book against me, told me, "You know, I had been at the point of writing a rather similar book, but you have now so overstated the case that I have to turn against you." 
ROSTEN: She said you had overstated the case-- 
HAYEK: --against socialism. 
ROSTEN: --against planning. 
HAYEK: The United States reception was completely different.  Of course, it came here at the height of the enthusiasm for the New Deal.  All the intellectuals had just discovered their new great idea, and the extent to which I was abused here-- [I suffered the] worst [abuse], incidentally, by a man who had been my colleague at the-- 
ROSTEN: Herman Finer.  I think that's the most savage book I've ever read. 
HAYEK: But there's a comic part.  I think I can now tell you the story behind it.  Herman Finer had come to hate the London School of Economics, and particularly Harold Laski, because when he had come to the United States and war broke out, he had asked for a leave, an extension of leave, and it was denied him because he was needed for teaching.  
And he was so upset about this that he turned against the London School of Economics, and particularly Laski.  Then it happened that I was the first member of the London School of Economics on which he could release all his hatred of the place.  So I had to suffer for Harold Laski. 
ROSTEN: I am horrified to hear you adopt so simple a psychological point of view. 
HAYEK: It was contributory. 
ROSTEN: May I suggest another point.  It takes a good deal of sophistication and poise to accept a system which is full of apparent paradoxes.  The socialist system is very persuasive and very simple to explain to people.  The government will take care of making sure that resources are sensibly and rationally distributed, that people will get what they deserve.  There will be no unemployment; there will be no war; there will be no depression.  
The system that you have described, and that actually is in the great tradition in economics, is one which demands a very high degree of equilibrium, in the presence not only of complexity but of apparent indifference to human happiness.  
That is, profits are wicked and cruel; workers are exploited; imperialism, the search for profits, brings war.  And the evidence seems visible.  What I'm trying to suggest is that people like Finer, and many political scientists and sociologists, were reacting to what they believed--or felt threatened by--was an intellectual performance of great complexity which "ignored the human problems of the time."  Is this correct? 
HAYEK: You know, we're coming up to what I am doing at the moment.  In fact, what I am writing at the moment is called "The Reactionary Character of the Socialist Conception."  
My argument there is essentially that our instincts were all formed in the small face-to-face society where we are taught to serve the visible needs of other people.  Now, the big society was built up by our obeying signals which enabled us to serve unknown persons, and to use unknown resources for that purpose.  It became a purely abstract thing.  
Now our instinct still is that we want to see to whom we do good, and we want to join with our immediate fellows in serving common purposes.  Now, both of these things are incompatible with the great society.  
The great society became possible when, instead of aiming at known needs of known people, one is guided by the abstract signals of prices; and when one no longer works for the same purposes with friends, but follows one's own purposes.  Both things are according to our instincts still very bad, and it is these "bad" things which have built up the modern society. 
ROSTEN: May I ask you to comment on the fact that it isn't the instinct--because we have been raised that way and I don't think that instincts vary very much according to how you're raised, except in intensity--but [because of] the fact that people need to have some kind of religious structure.  
Now, you can qualify the word "religion," [but people need] some scale of what is good and what is evil, some scale of what is worth and not worth living for.  Our Judeo-Christian tradition tells us "Love thy neighbor," "Am I my brother's keeper?" and as you very shrewdly pointed out, we start with the family as a little society in which we take care of each other.  
And the mother gives food from her plate to the child, or says to the child, "Now, don't be greedy; give a little to so-and-so.  Just because you're older and stronger does not mean that you have the right to it."  And the whole structure of a religiously supported and religiously cemented social system is involved when you come to deal with-- 
HAYEK: Oh, exactly, exactly.  But it's that very characteristic which refers to the neighbor, the known fellow man.  And our society is built on the fact that we serve people whom we do not know. 
ROSTEN: Roosevelt was shrewd enough to say to Latin America, "we shall be your good neighbors.  We want to be good neighbors."  He didn't realize he was so confirming Hayek.  But how do you respond to this?  Do you find that in societies which have a different religious structure, or a different ethos, that it is permissible to run the society without such values? or that power is in and of itself sufficient? 
HAYEK: Well, that's a very long story; I almost hesitate to talk about it.  After all, we had succeeded, so long as the great mass of the people were all earning their living in the market, either as head of a household or of a small shop and so on.  Everybody learned and unquestionably accepted that what had evolved was--the capitalist ethic was much older than capitalism--the ethics of the market.  
It's only with the growth of the large organizations and the ever-increasing population that we are no longer brought up on this ethic.  At the same time that we no longer learned the traditional ethics of the market, the philosophers were certainly telling them, "Oh, you must not accept any ethical laws which are not rationally justifiable."  
These two different effects--no longer learning the traditional ethics, and actually being told by the philosophers that it's all nonsense and that we ought not to accept any rules which we do not see have a visible purpose--led to the present situation, which is only a 150-year event.  The beginning of it was 150 years ago.  
Before that, there was never any serious revolt against the market society, because every farmer knew he had to sell his grain. 
ROSTEN: Do you think that Marx, who was not alone and who, after all, had his own predecessors-- First of all, his misreading of history was always to me so astonishing, even when I first read it.  
For example, when he suggests, in effect, that all wars are carried on for purposes of profit as part of the profit-making system-- All you had to do was pick up a map of the world and look at the ferocity and the horrors of wars in the East, say, or in Africa, or a history book of the religious wars, which were very harsh wars, and so on.  
It is interesting that he captured, and that his disciples then captured, with kind of an umbrella, all of our troubles.  They did not distinguish society from a capitalist society; they did not distinguish the group from a capitalist group.  
They found a convenient way of saying to people, "The reason you are miserable, or inadequate, or short, or weak, is because the system has been so unjust."  And this appeal, then not so much to the Germans as to the Russians, was that it was implemented by, to me one of the great tragic disasters of the human race, Lenin, who taught Hitler. 
HAYEK: Oh, sure.  Well, you see, I think the intellectual history of all this is frightfully complex, because this idea of necessary laws of historical development appears at the same time in [Georg Wilhelm Friedrich] Hegel and [Auguste] Comte.  
So you had two philosophical traditions--Hegelian idealism and French positivism--really aiming at a science which was supposed to discover necessary laws of historical development.  But it caught the imagination-- [It] not only [caught] the imagination but it appeased certain traditional feelings and emotions.  
I mean, as I said before, once you put it out that the market society does not satisfy our instincts, and once people become aware of this and are not from childhood taught that these rules of the market are essential, of course we revolt against it. 
ROSTEN: The interesting thing is the unawareness that people can have about the impersonal consequences of a system.  My own intellectual history was enormously affected by the book that you edited, Capitalism and the Historians, in which you have a chapter.  
That's a remarkable book because, in effect, what it says is that all that my generation had been taught about the horrors of the Industrial Revolution, based almost entirely on the work of the Hammonds [Barbara and J. L.] was a terribly incorrect and a terribly superficial statement.  
And I think it was [T. S.] Ashton who points out that, of course, if you went into the slums of London and saw the poverty there, you thought these people were poorly off; but they thought they were very well off.  
He quotes the letters of the clergyman, who would come to visit London, saying, "I just saw the Jenkinses.  Isn't it marvelous.  Only last year they were starving in the ditches and sleeping in the barns and had no shoes; their children now are shod and go to school," and so on. 
HAYEK: Well, I've long believed that misery becoming visible, not appearing for the first time but being drawn to the attention of the urban population, was really the cause even of an improvement of the status of the poorest class.  But so long as they-- 
ROSTEN: You mean it improved the status of the privileged classes. 
HAYEK: Oh, it did improve.  But, you see, the people who lived so miserably in town really had been drawn to the town because they were so much better off than they had been before.  You mentioned this book which I edited.  Again, as in the former instance of the one on collectivist economic planning, it was that I found that the general public just did not know the most important work which was being done by the historians.  
In this case, not only Ashton but [W. H.] Hutt.  Hutt's study was of the early industrialization and the misrepresentation by certain parliamentary commissions in inquiring into the state of the poor.  For purely political reasons they had distorted the real facts. 
ROSTEN: Have you ever run across a book by a young Cambridge graduate called Prelude to Imperialism
HAYEK: I've only seen the title; no, I don't know the book. 
ROSTEN: It's an extraordinary book, because it's in the tradition of Ashton and Hutt.  What he did was to examine the letters of the Christian missionaries who went to Africa--the letters back to their societies--and what emerges is as startling a transformation of our impressions of what went on in Africa as the one dealing with the Industrial Revolution.  
The most exploited group in Africa were the wives of the missionaries.  They worked much harder than the natives, because they had to teach them their own language, and make a vocabulary, and sing the songs, raise the vegetables, and be the nurses and the doctors, and settle the quarrels. 
HAYEK: I can quite believe it; it never occurred to me. 
ROSTEN: But the book is full of extraordinary examples of what I like to say are the nonvisible and much more significant consequences.  For example, if you were to take ninety percent of the graduating students of the colleges of the United States and ask them what a bank or a banker does, what percentage do you think would answer to your satisfaction? 
HAYEK: Hardly any. 
ROSTEN: Yet they have all been exposed to banks, bankers, economics, and professors.  How many of them would know what an executive does? 
HAYEK: Well, that is extraordinarily difficult to explain, you know--that I know from my own experience.  The business schools are doing quite a good job, but the economics students know nothing about it. 
ROSTEN: The ignorance of people about the things they vote about is, of course, very depressing.  One must temper one's disillusionment with the fact that these are very complicated [issues], and by uttering the heresy that not all people are intelligent.  
And you run into the problem of what the fate of the democracy will be when the crises become more acute and depend on more "technical signals," to use your expression, or "information," to use mine. 
HAYEK: Well, I'm very pessimistic about this.  You see, my concern has increasingly become that in democracy as a system it isn't really the opinion of the majority which governs but the necessity of paying off any number of special interests.  
Unless we change the organization of our democratic system, democracy will-- I believe in democracy as a system of peaceful change of government; but that's all its whole advantage is, no other.  
It just makes it possible to get rid of what government we dislike, but the omnipotent democracy which we have is not going to last long.  What I fear is that people will be so disgusted with democracy that they will abandon even its good features. 
ROSTEN: If you had magical powers and were to set about restructuring the system-- A friend of mine, in making a witticism, prompted me to retort by saying, "That's a good rule; let's pass a law that for every law that [the U.S.] Congress passes it must simultaneously repeal twenty others." 
HAYEK: Twenty others; yes, I agree. 
ROSTEN: At least twenty.  But what would you do? 
HAYEK: Oh, in the long run, the only chance is to alter our constitutional structure and have no omnipotent single representative assembly, but divide the powers on the traditional idea of a separation of powers.  
[You would] have one which is confined to true legislation in the sense of general rules of conduct, and the other a governmental assembly being under the laws laid down by the first: the first being unable to discriminate; the second, in consequence, being unable to take any coercive action except to enforce general laws.  
Because the present system-- You see, I believe Schumpeter is right in the sense that while socialism can never satisfy what people expect, our present political structure inevitably drives us into socialism, even if people do not want it in the majority.  That can only be prevented by altering the structure of our so-called democratic system.  
But that's necessarily a very slow process, and I don't think that an effort toward reform will come in time.  So I rather fear that we shall have a return to some sort of dictatorial democracy, I would say, where democracy merely serves to authorize the actions of a dictator.  And if the system is going to break down, it will be a very long period before real democracy can reemerge. 
ROSTEN: Two points, if I may: the Schumpeter book--I assume you mean Capitalism, Socialism and Democracy--which was to me a stupendous piece of work, makes the horrifying point that capitalism will be destroyed because of its successes. 
HAYEK: In a way it's true. 
ROSTEN: Would you comment on that? 
HAYEK: Well, capitalism has, of course, raised expectations which it cannot fulfill.  Unless we take from government the powers to meet the demand of particular groups, which are raised by their success, I think it will destroy itself.  This applies to both capitalism and democracy. 
ROSTEN: Does it strike you as ironic that perhaps the most influential group, in terms of political leverage, is not the business group or the capitalist group in the United States at all, but the unions? 
HAYEK: Oh, you know, my main interest is England; so I cannot be unaware of this. 
ROSTEN: I hope that we're in better shape than England. 
HAYEK: In that respect, you are still a little behind English development.  But I used to say, when I knew the United States better than I do now, that in America, fortunately, the unions are just a capitalist racket; but it's no longer true. 
ROSTEN: Unions are part of the establishment in the United States. 
HAYEK: Well, so they are in England--much more so.  But they did believe, basically, in capitalism, but I fear this is changing. 
ROSTEN: In the United States, certainly, the unions have been much more flexible and less doctrinaire. 
HAYEK: Yes. 
ROSTEN: And it would seem to me that no matter how one read history, in a free society it's impossible to prevent people from meeting out of a feeling of their joint interests in order to-- 
HAYEK: Oh, I have no objection against unions as such.  I am for--what is the classical phrase?--freedom of association, of course, but not the right to use power to force other people to join and to keep other people out.  
It's the privileges which have been granted to unions in America only by the judicature--in England by law, seventy years ago--that they can use force to prevent people from doing the work they would like, which is the crux, the dangerous aspect of it.  While I think unions are fully justified--as a matter of fact, I support freedom of association--freedom of association means free to join and not to join. 
ROSTEN: Freedom of nonassociation. 
HAYEK: Yes, yes. 
ROSTEN: One interesting fact about this is that the Communist party tried to infiltrate the unions in the United States in the early thirties and the late twenties, and were quite savagely and quite successfully--and I think quite intelligently--kept out of the leadership.  This was to a much lesser degree true in England.  They don't call themselves Communists; they say they're Marxists. 
HAYEK: No, but they do want to destroy the present capitalist system. 
ROSTEN: And the stewards, or what we would call the foremen, are surprisingly candid about that.  The responses in the polls--  For instance, a friend of ours, Mark Abrams, who is also at the London School [of Economics], did a poll in which he asked a group of stewards at one of the large factories--I think it was [British] Leyland, which was in very serious trouble; it was really bankrupt and was being held up by the government-- 
he said, "But if your demands are met, don't you realize it will wreck the company, it will wreck the industry?"  They said, "But that's exactly what we want!"  I don't think you would find an American labor leader who's responsible who would say that. 
HAYEK: They certainly wouldn't admit it. 
ROSTEN: No, I have the feeling you wouldn't have it anyway. 
HAYEK: Probably, yes; you're probably right. 
ROSTEN: That's why I said, to a degree, that the experience in England--to which I have returned often; it's a country I love--the depth of the class distinction, which is just beginning to disappear, has created degress of bitterness which I've never found in the United States.  There is a hatred. 
HAYEK: You see, my impression of England may be wrong in the sense that I only really know the south.  All you are speaking about is the north of England, where I think this feeling prevails.  But if you live in London-- Right now my relations are mainly in the southwest of England, where my children live, and I don't find any of this sharp resentment.  
And the curious thing is that in the countryside of southwest England, the class distinctions are very sharp, but they're not resented.  They're still accepted as part of the natural order. 
ROSTEN: That is so, and one puzzles about that.  But as in all of these social things, you can make certain guesses.  Are you impressed, as you get older, as I get older, by the unbelievable intensity with which people maintain their beliefs, and the difficulty of getting people to change their minds in the face of the most extraordinarily powerful evidence? 
HAYEK: Well, one has to be if one has preached this thing for fifty years without succeeding in persuading. 
ROSTEN: You mean you still are the voice in the wilderness?  Well, you can hardly say that. 
HAYEK: No, you see, now I'm in the habit of saying that when I was young only the very old people believed in the sort of libertarian principles in which I believe; 
when I was in my middle age nobody else did, and I was the only one; I have now lived long enough to have the great pleasure of seeing it reviving among the younger generation, people in their twenties and early thirties.  There is an increasing number who are turning to our position.  
So my conclusion is that if the politicians do not destroy the world in the next twenty years, there is good hope, because there's another generation coming up which reacts against this.  But the chance that they will destroy the world in the next twenty years, I'm afraid, is fairly high. 
ROSTEN: The difficulty of contending with government power, when even the press is dominantly committed to the faith or the ideology that you think wrong, only increases the difficulties of the problem.  
That is, we do have a very, very free press, a free radio, and a free television, but the system which has produced the people who do the writing and the thinking and the talking and so on is such that your hope for a rise of the libertarians, let us call it, seems to me to be a faint one, given the opposition. 
HAYEK: Well, I'm not so pessimistic as I used to be on this subject, as a result of recent experience.  It has long been a puzzle to me why what one commonly calls the intellectuals, by which I don't mean the original thinkers but what I once called the secondhand dealers in ideas, were so overwhelmingly on the Left.  That [phenomenon], of course, provides sufficient explanation of why a whole generation influenced by this has grown up.  
And I have long been convinced that unless we convince this class which makes public opinion, there's no hope.  But it does seem now that it's beginning to operate.  There is now a reaction taking place in that very same class.  While even ten years ago there was hardly a respectable journal--either newspaper or periodical--to be found that was not more or less on the Left, that is changing now.  
And I seriously believe that this sort of thing in twenty or thirty years may have changed public opinion.  The question is whether we have so much time. 
ROSTEN: When you think of the likelihood of a recession, which most economists say will happen, whether we're in it now or we'll have it at the beginning of '79, you think of the human responses to that recession.  You think of the man and his wife and three children, and he's thrown out of work, and there isn't a job anywhere except 500 miles away, and it's in a different business, and so on.  
Will you not have a revival then of the feeling that the system has let them down, the system has failed, that again we are having unemployment, again we are having inequity? 
HAYEK: There will certainly be a reaction of this sort, but I rather hope that for the idea of the system, government will be substituted.  I think people are beginning to see that the government is doing a great deal of harm, and this myth of "the system" which is responsible for everything can be exposed, and I think is gradually being weakened.  
I may be overoptimistic on this, but I believe government is now destroying its reputation by inflation. 
ROSTEN: Isn't that because inflation is the easiest way in which to meet the demands of the interest groups? 
HAYEK: Oh, surely, but at the same time people do see that this is a constant concession to the expediency of the moment, at the price of destroying the whole system. 
ROSTEN: Are you a complete monetarist? 
HAYEK: Yes, in the sense that I am absolutely convinced that inflation is done by government; nobody else can do anything about it. 
ROSTEN: By printing of money. 
HAYEK: Yes.  Of that I have no doubt; I believe Milton [Friedman] does oversimplify a little-- 
ROSTEN: Milton Friedman, I should say. 
HAYEK: --by concentrating too much on the statistical magnitude relation between the total quantity of money and the price level.  It isn't quite as simple as this.  But for all practical purposes we are really--our differences are fine points of abstruse theory--wholly on the same side. 
ROSTEN: The inflation-- The political uses of inflation are so attractive and so powerful, but as you say, people begin to realize thay they're being gulled, they're being cheated.  Sure they get ten dollars a week more, but look at how much more they pay in social security withholding, and how much more they pay--
Two things astound me that parallel this growing awareness about what inflation does: there has not been a growing awareness about the appalling shabbiness of official figures on almost everything.  That is, the figures on inflation itself are outrageously underestimated-- 
HAYEK: The figures on unemployment, on the other hand-- 
ROSTEN: Unemployment is overestimated because they ask a person if he's employed or unemployed, and the person says he's unemployed, and that includes many housewives who don't want a job, or don't care about the job.  But it's morally more justifiable to say, "Oh, I've been trying to get a job" than to say "Who wants to work?"  
But it's surprising to me that the figures on both of these very significant indices are continually being put out, the president has regular press conferences, every member of the cabinet [knows them], and no one says, "Tell us, how did you get these figures? how much faith do you put in them? and can we believe them?" 
HAYEK: Do you read the Wall Street Journal
ROSTEN: Oh, yes! 
HAYEK: There you get all the facts very clearly put, and it has no effect. 
ROSTEN: When you were talking about the growth of new voices-- The Wall Street Journalhas become a national newspaper in a way that it wasn't; it was thought of as a trade journal.  I often think that just as you might have chosen a different name for The Road to Serfdom, they would be better off if it wasn't the Wall Street Journal, because to the Midwest that already means bankers and so on. 
HAYEK: Of course, yes. 
ROSTEN: But also the rise of a magazine like the Public Interest, which has become influential far beyond its circulation, and in the intellectual community.  I was interested that one of your fellow Nobel laureates, who I think would be classed as a liberal, Paul Samuelson, in a column several years ago--it was quite a startle--raised the question as to whether imperialism really pays.  
He had been reading people like Hutt, I suspect, and [John] Jewkes, I suspect, and possibly [Alec] Cairncross, and he came to this extraordinary conclusion.  He said, "I would be hard-put to know how to prove it," and explains why.  
He says on balance it would be very hard to say--this is not to say that, of course, some Englishmen profited--but on balance that the total input, as compared to where it might have gone, that this necessarily represented English interests as against Indian.  
He said, "I couldn't try to make that case."  What he in effect said was we really can no longer continue to hold that position, which was one of the great props, I think, in socialism. 
HAYEK: Well, you see, Samuelson--I think he's an honest person, and he's moving in the right direction.  He probably started--well, I wouldn't say far on the Left--but anyhow it was predominantly what you here call liberal, and what I call socialist ideas.  But he does see the problems; there are others who don't.  Even Nobel laureates.
ROSTEN: Well, you were a colaureate with a man who probably didn't agree at all with you, right? 
HAYEK: Well, [Gunnar] Myrdal-- 
ROSTEN: But he's not really an economist, is he? 
HAYEK: Oh, yes. 
ROSTEN: I always thought of him as a sociologist because of his work on the American Negro. 
HAYEK: He started with exactly the same sort of problems I did. 
ROSTEN: Is that right?
HAYEK: Forty years or fifty years ago. 
ROSTEK: Which of the English economists do you feel are beginning to follow the pattern or reexamining what you would call the socialist, what I would call the liberal, tradition? 
HAYEK: Well, among the young people, no single very eminent person, but the work being done by the Institute of Economic Affairs in London is, of course, absolutely first class.  They are so very good because they are taking up particular problems and illustrating in point after point how the present system doesn't work.  
I think they have gradually achieved a position of very great influence indeed, and that is really the main source of resistance.  It creates a coherent body of opinion which is probably more important than any of the periodicals or newspapers in England. 
ROSTEN: You had said earlier that with Schumpeter you agreed that one of the problems of the free market, or the free society, is that the economic base thereof, capitalism, arouses expectations it cannot fulfill.  I wish you would comment on the passion, the drive, or the delusion, or whatever you want to call it, but the power of the movement for equality. 
HAYEK: Well, it's, I think, basically a confusion.  The idea of equality before the law is an essential basis of a civilized society, but equality before the law is not compatible with trying to make people equal. 
Not to make people equal who are inevitably, unfortunately, very different in thousands of respects, to make them equally or to treat them differently.  So between these two conceptions of equality is an irreconcilable conflict.  Material equality requires political discrimination, and ultimately really a sort of dictatorial government in which people are told what they must do.  
I think egalitarianism-- Well, I would even go further: our whole morals have been based on our esteeming people differently according to how they behave, and the modern kind of egalitarianism is destructive of all moral conceptions which we have had. 
ROSTEN: Coming to that problem from an entirely different discipline, since I was in political science and political theory, I have two comments: first, in all of the debates on the [U.S.] Constitution-- In the Federalists the United States had a collection of political brains such as I think existed nowhere in history except in Athens. 
HAYEK: I entirely agree, yes. 
ROSTEN: The most unbelievable brilliance, resilience, and flexibility.  Two very interesting things: nowhere did they worry about the growth of federal power--on the contrary, they were reasonably convinced that the states would be so jealous of their sovereign rights that they would have to coax them into the union and bring them dragging their heels.  
But the idea of a federal system, which has become a Leviathan, so far as I remember, is nowhere to be found.  It's one of the few examples in which their predictive activities were blank. 
HAYEK: Yes. 
ROSTEN: Now, the equalitarian idea would have seemed to them ludicrous, because what they said was that the kind of society we're trying to form, the very diversity and richness of life, of the farmer to till his soil, of the hunter to do this, and so on--
The awareness that they had of the fact that freedom would give people an opportunity to express themselves and live their kind of lives, even unto what they believed in or what church they went to, or whether they went to church or not-- None of them, incidentally, used the word "God," you know, but rather "Providence," "Divine Providence." 
HAYEK: Well, the one who I think came nearest to seeing the danger of excessive power of the federal government was [James] Madison, a man of whom I think most highly. 
ROSTEN: He wrote the Fifth [Amendment].
HAYEK: Yes.  As for the others, certainly, you're quite right. 
ROSTEN: He also picked up the point of Aristotle about the middle class-- 
HAYEK: Yes. 
ROSTEN: --in a most powerful way.  Incidentally, it just occurred to me-- We're sitting here talking and I couldn't help but think how few economists I know with whom I could carry on this kind of discussion.  
In that sense, if I may say so, you are unique, and I'm reminded of the fact that in the United States there were not separate fields called economics and political science.  It was called political economy, and it seems to me a great tragedy that the fields were split. 
HAYEK: I agree, and I even more regret that there's a complete split between economics and law.  You see, in my time on the Continent, you could study economics only as part of a law degree.  That was very beneficial, and I still maintain, as I once put it, that an economist who is only an economist cannot even be a good economist. 
ROSTEN: I'm so glad to hear you say that.  Incidentally, just as you mentioned the rise of a libertarian movement among the young economists, it's interesting how many new centers there are called the study of law and economics, or economics and law.  There's one down in Florida. 
HAYEK: I'm going there in February, yes. 
ROSTEN: I always anticipate you, or I'm behind you.  Let me ask you this question: What would you think if you were talking to a group of working men who said, "These two eggheads and highbrows, they talk on a high level, but I've got a wife and kids to support, and I can't possibly raise them on the salary I'm getting today.  
It's a rotten society.  We have moved twenty times, we were burned out, insurance didn't pay," whatever.  
What do you think a society owes, if you want to use that term?  I'm not talking about the The Social Contract, which was written by another very talented but I think crazy man.  What do you think the society owes those of its members who are law-abiding? 
HAYEK: Well, "owes," I think, is a somewhat inappropriate expression; but I think you can reasonably expect a tolerably wealthy society to guarantee a uniform minimum floor below which nobody need descend.  
The people who cannot earn a certain very low minimum in the market should be assured of physical maintenance beyond this.  But I'm afraid even this cannot be generalized, because only a tolerably wealthy society can physically do it.  The Indians couldn't possibly do it, and many of the other-- 
ROSTEN: You mean India, not the American Indians. 
HAYEK: Oh no.  East Indians, yes.  The same is true of many of the underdeveloped countries.  
But once you have reached a certain level of wealth, I think it's in the common interest of all citizens to be assured that if their widows or their children by some circumstances become unable to support themselves, they would be assured of a certain very low minimum, which on current standards would be miserable but still would secure them against extreme deprivations.  But beyond that I don't think we can do anything. 
ROSTEN: Do you say we can't do it because we really don't have the resources, or the GNP, or-- 
HAYEK: No, it would destroy the motive to keep our system going. 
ROSTEN: Yes.  Now, if people who were getting this minimum income-- I should hasten to add that I'm sure you do not mean the minimum wage, which is a different animal. 
HAYEK: Oh, no.  On the contrary.
ROSTEN: But if people could supplement that income by part-time work, handyman work, and so on-- 
HAYEK: Oh, that's all right.  I wouldn't object to that.
ROSTEN: You wouldn't deduct that? 
HAYEK: No.  Most of the people I have in mind would really not be able to make much of an extra income.  But if some widow who had to live on that small minimum income did take in some washing in her kitchen, I just would not notice it. 
ROSTEN: Well, you would certainly agree that-- I asked what does the society owe, and I feel that, in that sense, a society does owe its people certain things.  First military protection. 
HAYEK: Oh, yes, of course. 
ROSTEN: You can't go out and buy a few bombs to protect your house and so on.  We owe, the society owes, and the legislators and the people who have been elected freely-- 
HAYEK: That would reform the society before we get this protection.
ROSTEN: Exactly.  We don't want to be eaten by the nearby cannibals, whatever name they may have. 
ROSTEN: Incidentally, you were surprisingly lenient, it seemed to me, on the Soviet Union. 
HAYEK: In The Road to Serfdom?
HAYEK: Well, you forget that it was our ally in war at the time I wrote and published it. 
ROSTEN: Well, what year did it come out? 
HAYEK: In '44. 
ROSTEN: This was just shortly after the execution of [Henrik] Ehrlich and [Viktor] Alter and the Katine Forest and all of that.  No, I'm not criticizing you-- 
HAYEK: We didn't know about these things yet.  You see, in fact, I say it came out in '44, but it was mostly written in '41 and '42. 
ROSTEN: I see.  And you felt that it was unwise-- 
HAYEK: I just had to restrain myself to get any hearing.  Everybody was enthusiastic about the Russians at that time, and to get a hearing, I just had to tune down what I had said about Russia. 
ROSTEN: I see, yes. 
HAYEK: You asked me before whether there is anything I would do differently to the book now.  Apart from that which is directed against the sort of socialism which is largely abandoned by the official Socialist party, I would certainly speak much more openly about the Communist system than I did in that book. 
ROSTEN: It's interesting I said earlier how people do not change their opinions.  Even today some of the American intellectuals--the literary community; it's stretching the point to say the intellectual community, but the literary community and the breastbeatings and the mea culpas--temper their due revelation in ways that make me very angry.  
I went to the Soviet Union very early on, just after Roosevelt recognized it, and spent four months there.  We studied in something called the First Moscow University.  When I came back, people wanted to know [about it].  I said, "Hell, you know, one thing that worries me terribly is that they're going to have to become anti-Semitic."  My sociologist friends were horrified and asked why, and I said, "Because Jews ask questions."  
I tried to find two Jews in Moscow, and I was told they were on vacation; I was told they would be back; and I was told this, and I was told that.  [My friends] said, "But you're wrong; this is a dreadful thing to say.  In fact, it is against the law to be anti- Semitic!"  I said, "My dear man, they're punishing the Jews today not because they're Jews but because their fathers were jewelers."  They could actually not get into the university...
Dock windowTable of Contents
Early intellectual ideas
Early experience in the United States
New Deal
The Road to Serfdom
Intellectuals and complexity
Religion interacting with social evolution
Failures of Marxism
Industrial Revolution
Lack of knowledge among the public
Reforms of constitutional structures
Joseph Schumpeter's Capitalism, Socialism and Democracy
Communist Party in the United States
Journalism and the spread of ideas
Recession and inflation
Mass media
Research on socialism
Equality and federalism
What does society owe its members?
The USSR and The Road to Serfdom
Final credits
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