Economy & Business

Camino de Servidumbre

Demonstrators attack police vehicles during protests in Caracas, May 1, 2017. (Reuters photo: Carlos Garcia Rawlins)
The road to serfdom runs through Venezuela.

In his classic monograph on central planning, The Road to Serfdom, F. A. Hayek noted something that seemed like a paradox: “Socialism can be put into practice only by methods of which most socialists disapprove,” he wrote. He argued that “the old socialist parties were inhibited by their democratic ideals” and that they “did not possess the ruthlessness required for the performance of their chosen task.” But that was not always to be the case: For every “liberal in a hurry” there is a V. I. Lenin, a Fidel Castro, a Mao Zedong, a Ho Chi Minh, a Che Guevara, an Erich Honecker ready to roll up his sleeves and start slitting throats.

Our so-called democratic socialists and their progressive allies always pronounce themselves shocked by this, though of course they have long indulged it, well past the point of being able to plausibly pronounce themselves surprised by any of it. From the New York Times’s heroic efforts to not notice the repression and terror in the Soviet Union to Senator Ted Kennedy’s working on behalf of the KGB, from Noam Chomsky’s denial of the Cambodian genocide to modern Democrats’ love affair with Fidel Castro, there is no gulag brutal enough and no pile of corpses high enough to stir in the modern progressive the sort of outrage he might feel upon, say, learning that General Electric took advantage of an accelerated capital depreciation schedule for tax purposes.

People are starving in Venezuela. That, too, is familiar enough to students of the history of socialism. The Ukrainian language contains a neologism—holodomor—necessitated by the fact that the socialist rulers of that country used agricultural policy to murder by starvation between 2 million and 5 million people who were guilty of the crime of resisting the socialists’ agricultural policy. In the 1990s, famine killed something on the order of 10 percent of the population of North Korea, where people were reduced to cannibalism. A recent study found that the average Venezuelan has lost nearly 20 pounds in the past year as food supplies dwindle. Venezuela was, within living memory, the wealthiest country in Latin America.

There are two ways of thinking about economics: Many progressives (and many right-wing populists) believe that economics is less of a science and more of an ideology, that all of that talk about scarcity and supply and demand is mostly mumbo-jumbo deployed by people who are getting their way to ensure that they keep getting their way. The alternative view (the view of most economists) is that economics is an effort to describe something real, that while it is important to understand the difference between the map and the territory, all those economic models and demand curves add up to a description of an aspect of reality that is not subject to negotiation and is not a matter of mere opinion.

That was what concerned Hayek and his colleagues in what has become known as the Austrian school of economics, Ludwig von Mises prominent among them. They believed that the central-planning aspirations of the socialists were not simply inefficient or unworkable but impossible to execute, even in principle, owing to the way in which knowledge is dispersed in society. Drawing on more recent work in fields ranging from physics to computer science, modern complexity theorists have expanded enormously on those insights, arguing that markets, like evolution, are complex beyond comprehending even in principle, hence unpredictable and unmanageable. As he famously summarized it: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” From this Hayek, an old-fashioned liberal, concluded that while there might be room in a free and open society for a broad and generous welfare state, the project of providing benefits to poor and vulnerable people must be understood as distinct from the socialist project, which is to put economic production under political discipline. And this has been born out in our own experience: Sweden is simultaneously a free-trading, entrepreneurship-driven capitalist society and a society with a large and expensive (and recently reformed) welfare state. Sweden, sometimes held up as the model of good socialism, has in fact been following a policy of privatization and libertarian-ish reforms for 20 years, with an explicit commitment of moving away from an economy of government planning to an economy of market choice.

But men do not like being told that they cannot do that which they wish to do, and this is particularly true of men who have a keen interest in political power. Hayek believed that efforts to impose central planning on economies were doomed to fail, and that this failure would not be met with humility but with outrage. When socialist policies produced their inevitable economic consequences, the first reaction would be to try to pass laws against the realization of those economic consequences. We saw a good deal of that in Venezuela, for instance with the imposition of currency controls when excessive social-welfare spending produced hyperinflation.

The average Venezuelan has lost nearly 20 pounds in the past year as food supplies dwindle.

But those efforts are of course doomed to failure as well, which leads to outright political repression, scapegoating, and violence. In Venezuela, strongman Hugo Chávez, who was adored by American Democrats ranging from the Reverend Jesse Jackson to former representative Chakka Fattah and any number of Hollywood progressives, undertook to silence opposition media by insisting that they were simply fronts for moneyed elites working to undermine the work of democracy. (It will not escape your notice that our own progressives are making precisely the same argument in the matter of Citizens United, a First Amendment case considering the question of whether the government could prohibit the showing of a film critical of Hillary Rodham Clinton.) His protégé, Nicolás Maduro, has continued in the same vein.

Today in Venezuela, soldiers are brutalizing protesters in the streets. Opposition leaders are murdered. The press is muzzled. And people are desperately hungry—but not the party bosses, strangely enough.  

Socialism is either the unluckiest political movement in the history of political movements, one that just happens to keep intersecting with the careers of monsters, or there is something about socialism itself that throws up monsters. There is nothing wrong with Venezuelans, and nothing unusual about them: Here at home, our own progressives dream of imprisoning people for holding unpopular political views, nationalizing key industries, and shutting down opposition media. They have black-shirted terrorists attacking people with explosives on college campuses for the crime of holding non-conforming political views. And they aren’t averse to a little old-fashioned Stalinism, either, provided there’s a degree or two of separation: Bernie Sanders, once an elector for the Socialist Workers party, remains the grumpy Muppet pin-up of the American Left.

“Socialism can be put into practice only by methods of which most socialists disapprove,” Hayek told us.

Are we really so sure?


Venezuela on the Brink

Venezuela Reaches the End of the Road to Serfdom

Socialism Is Killing Venezuelans


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